Audit and Finance Committee

HOLOGIC, INC.
CHARTER OF THE AUDIT AND FINANCE COMMITTEE
OF THE BOARD OF DIRECTORS

I. PURPOSE

The primary functions of the Audit and Finance Committee (the “Committee”) of the Board of Directors (the “Board”) of Hologic, Inc. (the “Company”) are to assist the Board of Directors with the oversight of (i) the Company’s financial reporting process, accounting functions, financing and capital allocation strategies, internal audit functions and internal controls and (ii) the qualifications, independence, appointment, retention, compensation and performance of the Company’s registered public accounting firm.

The term “registered public accounting firm” as used herein shall mean the public accounting firm registered with the Public Company Accounting Oversight Board (the “Accounting Board”) under Section 102 of the Sarbanes-Oxley Act of 2002 which performs the independent auditing function for the Company.

Although the Committee has the powers and responsibilities set forth in this Charter, the role of the Committee is oversight. It is not the duty of the Committee to conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of Company management, and subject to audit by the Company’s registered public accounting firm.

II. COMPOSITION AND INDEPENDENCE

The Committee shall consist of not less than three members of the Board appointed by resolution of the Board and shall serve at the discretion of the Board.  All the members of the Committee shall satisfy the independence and composition requirements under the listing standards and other applicable rules of the Nasdaq Stock Market (“Nasdaq”), or such other stock market on which the Company’s securities may be listed from time to time, subject to any permitted exceptions thereunder, the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Securities and Exchange Commission (the “SEC”), and shall be free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee.  Each member of the Committee must be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement and cash flow statement.  At least one of the Committee members must satisfy Nasdaq’s financial sophistication requirements and the Board shall use diligent efforts to assure that at least one member of the Committee qualifies as an “audit committee financial expert,” as defined by SEC rules.  No member of the Committee can have participated in the preparation of the Company’s or any of its subsidiaries’ financial statements at any time during the past three years.

The Committee’s chairperson shall be designated by the Board or, if it does not do so, the Committee members shall elect a chairperson by vote of a majority of the Committee.

III. MEETINGS AND PROCEDURES

The Committee shall meet no less than four times per year, or more frequently as circumstances require. The Committee may request that members of management, representatives of the registered public accounting firm, internal auditors and others attend meetings and provide pertinent information, as necessary. In order to foster open communications, the Committee shall meet at such times as it deems appropriate or as otherwise required by applicable law, rules or regulations in separate executive sessions to discuss any matters that the Committee believes should be discussed privately.  The Committee may meet by telephone or video conference or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time and may take action by written consent.  A majority of the members of the Committee, or a duly appointed subcommittee thereof, shall constitute a quorum.

IV. RESPONSIBILITIES AND DUTIES

The operation of the Committee will be subject to the provisions of the Bylaws of the Company, as in effect from time to time, and to Section 141 of the Delaware General Corporation Law.  Subject to the foregoing, the Committee shall have the following authority and responsibilities.

A. General Matters

  1. The Committee, in its capacity as a committee of the Board, shall be directly responsible for the appointment, compensation, retention (including termination) and oversight of the work of any registered public accounting firm (including resolution of disagreements between management and the registered public accounting firm regarding financial reporting) engaged for the purpose of preparing or issuing its audit report or related work. Any such registered public accounting firm shall report directly to and be accountable to the Committee.
     
  2. To the extent required by applicable law, rules and regulations, the Committee shall pre-approve all audit, audit-related and non-audit services (including the fees and terms thereof) permitted to be provided by the Company’s registered public accounting firm, subject to certain de minimus exceptions for permitted non-audit services described in Section 10A(i)(1)(B) of the Exchange Act, which shall be approved by the Committee.
     
  3. The Committee shall have the authority to engage independent counsel and other advisers, as it determines necessary to carry out its duties. The Committee shall receive appropriate funding from the Company, and determine the extent of funding necessary for payment of (i) compensation to any registered public accounting firm for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, (ii) compensation to any independent counsel and other advisers retained to advise the Committee, and (iii) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
     
  4. The Committee, by vote of a majority of the members of the Committee, may form subcommittees consisting of one or more members of the Committee and delegate to such subcommittees authority to perform specific functions, including without limitation pre-approval of audit, audit-related and non-audit services, to the extent permitted by applicable law, rules and regulations.  Without limiting the foregoing, any decision of a subcommittee to pre-approve audit, review, attest and non-audit services shall be presented to the Committee at its next scheduled meeting.

B. Oversight of the Company’s Relationship with the Independent Auditors

With respect to any registered public accounting firm that proposes to perform audit services for the Company, the Committee shall:

  1. On an annual basis, review and discuss all relationships the registered public accounting firm has with the Company in order to consider and evaluate the registered public accounting firm’s continued independence. In connection with its review and discussions, the Committee shall: (i) require that the registered public accounting firm submits to the Committee a formal written statement (consistent with the independence standards as then in effect) delineating all relationships and services that may impact the objectivity and independence of the registered public accounting firm; (ii) discuss with the registered public accounting firm any disclosed relationship, services or fees (audit, audit-related and non-audit) that may impact the objectivity and independence of the registered public accounting firm; (iii) review the registered public accounting firm’s statement of the fees billed for audit, audit related and non-audit services, which statement shall specifically identify those fees required to be disclosed in the Company’s annual proxy statement;  (iv) satisfy itself as to the registered public accounting firm’s independence; and (v) obtain and review a report by the registered public accounting firm describing their internal quality control procedures and any material issues raised by the most recent internal quality review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years and any steps taken to deal with such issues.
     
  2. Ensure the rotation of the lead (or coordinating) audit partner and other significant audit partners as required by applicable law, rules and regulations. 
     
  3. Establish clear hiring policies for employees or former employees of the registered public accounting firm proposed to be hired by the Company that meet the SEC regulations and the stock exchange listing standards. In addition, on an annual basis, confirm that the registered public accounting firm is not disqualified from performing any audit service for the Company due to the fact that any of the Company’s chief executive officer, chief financial officer, controller, chief accounting officer (or a person serving in an equivalent position) was employed by that registered public accounting firm and participated in any capacity in the audit of the Company during the one-year period preceding the date of the initiation of the audit of the current year’s financial statements.
     
  4. Establish with the registered public accounting firm, the scope and plan of the work to be performed by the registered public accounting firm as part of the audit for the fiscal year.
     
  5. Review all communications provided to the Committee by the registered public accounting firm in accordance with PCAOB Auditing Standard No. 16 including, without limitation, the auditors' evaluation of the quality of the Company's financial reporting, information relating to significant unusual transactions and the business rationale for such transactions and the auditors' evaluation of the Company's ability to continue as a going concern.

C. Financial Statements and Disclosure Matters

 With respect to the Company’s financial statements and other disclosure matters, the Committee shall:

  1. Review and discuss with management and the registered public accounting firm the Company’s quarterly financial statements and disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations.
     
  2. Review and discuss with management and the registered public accounting firm the Company’s annual audited financial statements, the report of the registered public accounting firm thereon and disclosures in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and recommend to the Board whether to include in the Company’s annual report on Form 10-K the audited financial statements and the report of the registered public accounting firm thereon.
     
  3. Review and discuss with management and the registered public accounting firm all material correcting adjustments identified by the registered public accounting firm in accordance with generally accepted accounting principles and SEC rules and regulations which are reflected in each annual and quarterly report that contains financial statements, and that are required to be prepared in accordance with (or reconciled to) generally accepted accounting principles under Section 13(a) of the Exchange Act and filed with the SEC. 
     
  4. Review and discuss with management and the registered public accounting firm all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Company with unconsolidated entities or other persons, that have or are reasonably likely to have a current or future effect on financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, which are required to be disclosed in response to Item 303, Management’s Discussion and Analysis of Financial Condition and Results of Operation, of Regulation S-K.
     
  5. Review and discuss with management and the registered public accounting firm significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any judgments about the quality, appropriateness and acceptability of the Company’s accounting principles, clarity of financial statement disclosures, significant changes in the Company’s selection or application of accounting principles and any other significant changes to the Company's accounting principles and financial disclosure practices which are suggested by the registered public accounting firm or management.
     
  6. Review and discuss with management, the registered public accounting firm, and the Company's counsel, as appropriate, any legal, regulatory or compliance matters that could have a significant impact on the Company's financial statements, including significant changes in accounting standards or rules as promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities with relevant jurisdiction.
     
  7. The review and discussions hereunder with respect to audits performed by the registered public accounting firm shall include the matters required to be discussed by generally accepted auditing standards then in effect. These matters would include the auditor’s responsibility under generally accepted auditing standards, the Company’s significant accounting policies, management’s judgments and accounting estimates, significant audit adjustments, the auditor’s responsibility for information in documents containing audited financial statements (e.g., MD&A), disagreements with management, consultation by management with other accountants, major issues discussed with management prior to retention of the auditor and any difficulties encountered in the course of the audit work.
     
  8. Receive and review all other information required under the Exchange Act to be provided to the Committee by the registered public accounting firm including, without limitation, reports on (i) all critical accounting policies and practices used by the Company, (ii) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the registered public accounting firm, and (iii) all other material written communications between the registered public accounting firm and management, such as any management letter or schedule of unadjusted differences.
     
  9. Prepare the Audit Committee report required by the SEC to be included in the Company’s annual proxy statement and any other Committee reports required by applicable laws, rules and regulations.

D. Internal Audit Function, Disclosure Controls and Internal Controls

With respect to the Company’s internal audit function, disclosure controls and internal controls and procedures for financial reporting, the Committee shall:

  1. In consultation with management, the Company’s internal audit department and the registered public accounting firm, review the adequacy of the Company’s internal controls and procedures for financial reporting.
     
  2. Review management’s report on internal controls and procedures for financial reporting purposes required to be included in the Company’s Annual Report of Form 10-K.
     
  3. Review the registered public accounting firm’s report included in the Annual Report on Form 10-K evaluating the Company’s internal controls and procedures for financial reporting.
     
  4. Review any disclosures made by the Company’s CEO and CFO to the Committee (as a result of their evaluation as of the end of each fiscal quarter of the Company’s effectiveness of the disclosure controls and procedures and its internal controls and procedures for financial reporting) or the Company’s internal audit department related to (i) any significant deficiencies in the design or operation of internal controls and any material weaknesses in the Company’s internal controls, and (ii) any fraud, whether or not material, involving management or other employees who have a significant role in the Company’s internal controls and procedures for financial reporting.
     
  5. Review the responsibilities, resources, functions, and performance of the Company’s internal audit department, which shall be managed by an Internal Auditor who shall report directly to the Committee. The Internal Auditor shall otherwise report for administrative purposes to the Chief Financial Officer.
     
  6. Have the authority to request the internal audit department to perform special tasks, projects and investigations and to meet with the Company’s internal audit department, the Company’s registered public accounting firm and management in separate executive sessions to discuss any matters that the Committee or these groups believe should be discussed privately with the Committee.
     
  7. Review and discuss (i) the annual internal audit plan, (ii) periodic reports and (iii) disclosures made by the Company’s internal audit department.
     
  8. Establish and review procedures within the time period required by applicable law, rules and regulations for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls or auditing matters, and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

E. Financial Oversight

  1. Review the Company’s financing policies and practices and capital structure, including the Company’s use of derivatives and swaps as part of a strategy to hedge or mitigate risks to the Company’s business, including, without limitation, those arising or related to fluctuations in interest rates and foreign currencies.
     
  2. Review and approve financing transactions or such other transactions as may be determined by the Board, in each case valued at an amount or subject to other parameters not to exceed, for any particular transaction, the amount or other parameters authorized by the Company’s Delegation of Authority from the Board, or by resolution of the Board from time to time.
     
  3. Review and approve decisions by the Company and its subsidiaries to enter into swaps and other derivatives transactions that are exempt from exchange-execution and clearing under “end-user exception” regulations established by the Commodity Futures Trading Commission; and review and approve the Company’s policies governing the Company’s use of swaps and other derivatives transactions subject to the end-user exception.
  4. Review and discuss with management the Company’s tax structure and strategies and, as appropriate, recommend that the Board approve significant changes to the Company’s tax structure.
     
  5. Review periodically with management, and any outside professionals as the Committee considers appropriate, important tax and tax law trends and developments and their effect on the Company’s financial and tax strategies.


F. Other Miscellaneous Matters

 The Committee shall also have responsibility to:

  1. Review and discuss with management earnings press releases and related financial disclosures.
     
  2. Review and approve all related-party transactions, unless otherwise delegated to another committee of the Board of Directors consisting solely of independent directors.
     
  3. If required by applicable law, rules or regulations, review and approve (i) the adoption of and any change or waiver in the Company’s code of business conduct and ethics for directors, senior financial officers (including the principal executive officer, the principal financial officer, principal accounting officer, controller, or persons performing similar functions) or employees, and (ii) any disclosure made in the manner permitted by SEC rules which is required to be made regarding such change or waiver, unless these duties are otherwise delegated to another committee of the Board of Directors consisting solely of independent directors.
     
  4. Review and discuss with management, internal audit and the registered public accounting firm the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures (including management’s risk assessment and risk management policies).
     
  5. Review and discuss with management reports on the security of and risks related to the Company’s information technology systems and procedures and report to the Board any material risks or concerns identified.  The Board shall retain overall responsibility for cybersecurity matters.
     
  6. Review with management periodically the sufficiency of the Company’s financial and accounting personnel.
     
  7. Review and reassess the adequacy of this Charter annually and recommend to the Board any changes or amendments the Committee deems appropriate.
     
  8. Perform any other activities consistent with this Charter, the Company's Bylaws and governing law as the Committee or the Board deems necessary or appropriate.

V. REPORTING

The chairperson shall report on the Committee’s activities at Board meetings and periodically update the Board on material developments in the areas for which the Audit Committee is responsible.

Date Last Revised: March 2, 2016