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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
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Commission File Number 0-6516
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DATASCOPE CORP.
(EXACT NAME OF REGISTRANT AS
SPECIFIED IN ITS CHARTER)
DELAWARE 13-2529596
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 Philips Parkway 07645
Montvale, New Jersey (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code (201) 391-8100
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.01 per share
(TITLE OF CLASS)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K /X/.
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The aggregate market value of the common stock held by persons other
than affiliates of the registrant, as of August 31, 1995, is approximately
$278,000,000.
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The number of shares outstanding of each of the registrant's classes of
common stock, as of August 31, 1995, is as follows:
Class Number of Shares
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Common Stock, par value $.01 per share 16,078,097
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DOCUMENTS INCORPORATED BY REFERENCE
The registrant's proxy statement in connection with its 1995 annual
meeting of shareholders (the "Proxy Statement") is incorporated by reference
into Part III.
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PART I
ITEM 1. BUSINESS.
Datascope Corp. (the "Company") manufactures proprietary products for
clinical health care markets in interventional cardiology, anesthesiology,
cardiovascular and vascular surgery and for use in emergency rooms and intensive
care units. The Company's products are distributed worldwide by direct sales
personnel and independent distributors. The Company was organized as a New York
corporation in 1964 and was reincorporated in Delaware in 1989.
The Company's business is primarily conducted through its four operating
divisions, Cardiac Assist, Patient Monitoring, Collagen Products and
InterVascular. The Company's core businesses are cardiac assist systems
(intra-aortic balloon pump, or "IABP", systems) and multi-function patient
monitoring devices. The Company's Collagen Products Division manufactures and
sells the VasoSeal(R) device and other hemostatic products utilized during
surgery. The VasoSeal device, announced by the Company in April 1991, is the
first device that can rapidly seal arterial punctures after procedures requiring
femoral arterial catheterization, including coronary angiography and coronary
angioplasty. On July 18, 1995 the Company received a letter from the Food and
Drug Administration (the "FDA") informing the Company that the Pre-Market
Approval ("PMA") application for the VasoSeal device was approvable for both
coronary angiography and coronary angioplasty procedures. See " - Collagen
Products". InterVascular manufactures and sells a proprietary line of knitted
and woven dacron vascular grafts and patches for reconstructive vascular and
cardiovascular surgery.
The following table sets forth the relative contribution of the Company's
principal classes of products to total sales for the periods indicated:
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
--------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cardiac Assist 50% 45% 45%
Patient Monitoring 40% 47% 46%
Other 10% 8% 9%
</TABLE>
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Cardiac Assist. The Company is widely recognized as the leading manufacturer
and distributor of IABP systems. IABP therapy increases the heart's output and
the supply of oxygen-rich blood to the heart while reducing the heart muscle's
workload and its oxygen demand. IABP therapy is used to stabilize heart function
in instances of cardiac shock, before and after open heart surgery and in the
management of heart failure. IABP also plays an important role in supporting
acute angioplasty intervention, especially in the high risk patient. It is also
used to relieve unstable angina and to correct certain instances of medically
resistant cardiac arrhythmias.
The Company, a pioneer in IABP technology, introduced the first balloon
catheter capable of percutaneous insertion (by arterial puncture through the
skin), an innovation which eliminated the need for surgical insertion and
expanded the market for IABP products from cardiac surgery to the interventional
cardiology market. The Company has continued to refine its IABP technology and
to introduce new designs.
The Company manufactures a broad line of disposable intra-aortic balloon
("IAB") catheters for use with balloon pumps. The Company offers an IAB catheter
that permits sheathless insertion. By taking up one third less space in the
artery, the sheathless IAB catheter allows substantially greater blood flow
around the catheter, an attribute that the Company believes reduces
complications of IABP therapy which are mainly associated with the obstruction
of blood flow in the femoral artery.
In the second quarter of fiscal 1994, the Company began shipping the System
97 "Small Wonder"(TM), a new compact IABP designed for use either at bedside or
in transport. The System 97 has the most advanced features and performance of
any console balloon pump now being sold, including a built-in computer modem
that provides telephone transmission of data for remote diagnosis. In addition,
the System 97 has been designed in a compact form to utilize less floor space
than competing systems. The Company believes that the market for small IABPs
accounts for two thirds of the total IABP market.
The System 97 improves upon the Company's System 95 balloon pump, which was
marketed by the Company in fiscal years 1993 and 1994. The Company continues to
offer the System 95 in markets outside the United States. The Company also
markets the System 90T, which is a lighter, transportable balloon pump.
Patient Monitoring. The Company manufactures and markets a broad line of
physiological monitors designed to provide for patient safety and management of
patient care. The Company's monitors are capable of continuous and simultaneous
measurement of multiple parameters, and are used in operating rooms, emergency
rooms, critical care units, post-anesthesia care units and recovery rooms,
intensive care units, and labor and delivery rooms.
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The Company manufactures the PASSPORT(R) monitor, a portable,
battery-powered, multi-parameter patient monitor that offers the features of a
traditional bedside monitor, including measurement of ECG, blood pressure,
temperature, respiration and pulse oximetry (SpO(2)), in a transportable unit
that can move with the patient to different settings in the hospital. The
Company also offers the PASSPORT EL(TM) monitor, with a large
electroluminescent display panel providing a wide viewing angle.
The PASSPORT monitor is available with a carbon dioxide (CO(2)) option,
which allows the clinician to measure the adequacy of ventilation in intubated
patients in the operating room, post-anesthesia care unit, emergency room and
intensive care unit areas of the hospital. The Company also offers the PASSPORT
D(fib)(TM) Transport defibrillator. Weighing less than 9 pounds, the PASSPORT
D(fib) defibrillator is ideal for in-hospital transport use and quickly and
easily attaches to any PASSPORT vital signs monitor. The Company believes that
the PASSPORT D(fib) defibrillator is the lightest and most compact
multi-parameter monitor/defibrillator combination available.
In addition, the Company offers the VISA central station monitor which can
be connected to up to eight PASSPORT monitors. The Company believes that the
VISA central station is the only system that can monitor both ambulatory
patients (with information transmitted by a miniature monitor worn by the
patient) and non-ambulatory patients (with information transmitted from the
PASSPORT monitor attached to the patient) using one central station. This mixed
system allows patients to receive more individualized care.
In the third quarter of fiscal 1994, the Company began shipping the Point of
View(R) critical care patient monitoring system. The Point of View(R) monitor is
modular and features a light-weight flat display panel. The flat panel along
with the monitor forms a transport unit enabling the monitor to be used
continuously before, during and after surgical procedures. In the second quarter
of fiscal 1995, the Company put a U.S. shipment hold on the Point of View
monitor after an audit conducted by the Company disclosed a regulatory issue
concerning data submitted to the FDA. In the fourth quarter of fiscal 1995, the
Company commenced a voluntary recall of the Point of View monitor. In June 1995,
international shipments of the Point of View monitor were resumed after issues
relating to the product's performance were resolved. See "Business -
Regulation."
During fiscal 1993 the Company extended its MULTINEX(R) product line (an
advanced integrated respiratory gas monitor which combines the measurement of
carbon dioxide, oxygen and nitrous oxide with pulse oximetry) by introducing the
MULTINEX Plus Respiratory Gas Monitor. This product is capable of measuring
Suprane(R) and Sevoflurane, new anesthetic
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agents. In fiscal 1993, the Company also introduced the Genius(R) FirstTemp(R) *
predictive temperature probe option for the ACCUTORR(R) non-invasive blood
pressure ("NIBP") monitor. The addition of temperature monitoring to the
ACCUTORR monitor allows the clinician to make rounds with one monitor providing
convenient measurement of vital signs including NIBP, SpO(2), heart rate and
temperature.
All of the monitoring product lines offered by the Company include versions
which can monitor blood oxygen saturation. This feature uses the proprietary
FLEXISENSOR(TM) sensor and SENSOR GUARD(R) sensor, which offer a low cost
disposable sensor system for pulse oximetry.
Collagen Products. The Company's Collagen Products Division manufactures and
sells two principal product lines, the VasoSeal device and other hemostatic
products which are utilized during surgery. The VasoSeal device, announced by
the Company in April 1991, is the first device that can rapidly seal femoral
arterial punctures after catheterization procedures, including coronary
angioplasty and coronary angiography. The Company believes that VasoSeal devices
will create an entirely new market for improved management of arterial puncture
wounds made for catheterization procedures.
Clinical studies with the VasoSeal device have shown valuable medical
benefits with the potential for substantial economic benefits. At present, upon
removal of the catheterization sheath, the patient typically requires prolonged
manual compression at the arterial puncture site followed by the application of
a pressure dressing, sand bag or other device. In addition, the patient is
required to remain in bed for several hours or even overnight. Clinical studies
have shown that the VasoSeal device can cause rapid sealing at the arterial
puncture site, eliminating the need for prolonged compression and allowing the
patient to get out of bed more quickly. This results in improved patient comfort
and the potential for reducing hospital stays, thereby reducing costs
significantly.
The Company began limited marketing of VasoSeal devices in markets in Europe
in fiscal 1992. The Company received regulatory approvals to market VasoSeal
devices in Canada, Australia, Italy and the Netherlands in fiscal 1994. In
September 1994, the Company received regulatory approval to market VasoSeal
devices in Japan. However, the Company is awaiting approval for insurance
reimbursement in Japan. Until that time market penetration may be limited. In
addition, registration activity is proceeding in the major international markets
of Germany, France and the United Kingdom.
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* Genius and FirstTemp are registered trademarks of Intelligent Medical
Systems and Suprane is a registered trademark of British Oxygen Corporation.
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In the United States, the Circulatory System Devices Panel of the FDA
recommended approval of the VasoSeal device PMA for use in both coronary
angiography and coronary angioplasty procedures in May 1995. In July 1995 the
Company received a letter from the FDA informing the Company that the PMA
application for the VasoSeal device was approvable for both coronary angiography
and coronary angioplasty procedures. The letter represents the next stage of the
approval process, indicating the concurrence of the Center for Devices and
Radiological Health of the FDA with the recommendation of the Circulatory System
Devices Panel. Final approval is subject to receipt by the FDA of satisfactory
information concerning the product's labeling and packaging validation. The
Company cannot predict the timing of final FDA action. See "Business -
Regulation."
The Collagen Products Division also manufactures a collagen hemostatic pad
and a fibrillar collagen hemostat which are sold in the United States and
abroad. These products are used to control bleeding during surgery.
InterVascular. The Company's InterVascular subsidiary manufactures and
distributes a proprietary line of knitted and woven dacron vascular grafts and
patches for reconstructive vascular and cardiovascular surgery. InterVascular
markets its FDA approved uncoated grafts, including the ULP, in the U.S. and
Japan. The ULP is the first graft of its kind to be approved with the claim that
preclotting is not necessary. In Europe, InterVascular also produces a small
caliber, collagen coated graft, Intergard(TM) Ultra Thin, specifically for the
peripheral market, which together with the rest of the Intergard coated products
is gaining acceptance as an effective alternative to the market leader, PTFE
(Teflon(R)), in this clinical application.
In May 1993, the Company submitted a PMA to the FDA to market HEMAGUARD
collagen-coated grafts, now known as Intergard. The PMA was accepted for filing
in August 1993, at which time the FDA also asked for additional information
regarding the PMA. The Company submitted an amended PMA which included responses
to the FDA's questions in February 1995. Review of the PMA has been suspended
pursuant to the Application Integrity Policy. See "Business - Regulation."
Research and Development
For the three years ended June 30, 1995, 1994 and 1993 the Company spent
approximately $19,400,000, $18,765,000 and $16,704,000, respectively, on
research and development relating to the development of new products and the
improvement of existing products. The increase in research and development
expenditures reflects the Company's continuing efforts to develop new products
such as the VasoSeal device and to expand existing product lines. The Company
has established relationships with several teaching hospitals for the purpose of
clinically evaluating new products, and also has consulting arrangements with
physicians and scientists in the areas of research, product development and
clinical evaluation.
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Markets and Sales
The Company's products are sold throughout the world through its own sales
force and through independent distributors. The Company's worldwide sales
organization employs over 250 people consisting of sales representatives, sales
managers, clinical education specialists and sales support personnel. The
Company's worldwide clinical education staff, most of whom are critical care
nurses, conducts seminars and provides in-service training to nurses and
physicians on a continuing basis. The Company provides support services,
including warranty service, invoicing and inventory support, to its worldwide
sales organization.
The Company's cardiac assist products are sold primarily to major hospitals
with open-heart surgery and angioplasty facilities and to community hospitals
with cardiac catheterization laboratories. More recently sales have been made,
to a growing degree, to a broader range of hospitals, where IABP is used for
temporary support to the patient's heart prior to transport to a major hospital
center where definitive procedures, such as angioplasty or open heart surgery,
can be conducted.
The Company's monitors are used in hospital operating rooms, emergency
rooms, critical care units, post-anesthesia care units and recovery rooms,
intensive care units, and labor and delivery rooms. The Company's collagen
hemostat is sold primarily to hospitals for use during surgery.
The Company provides service and maintenance to purchasers of its products
under warranty, and thereafter on a contract basis. The Company employs service
representatives in the United States and Europe and maintains service facilities
in the United States, the Netherlands, France, Germany and the United Kingdom.
Service revenues accounted for approximately 7% of the Company's revenues in
fiscal 1995. The Company conducts regional service seminars throughout the
United States for its customers and their biomedical engineers and service
technicians.
During the three fiscal years ended June 30, 1995, 1994 and 1993, foreign
sales represented approximately 34%, 31% and 28%, respectively, of the Company's
total sales. The Company is continuing to actively expand its international
presence. The Company has subsidiaries in the United Kingdom, France, Germany
and the Netherlands, and InterVascular has subsidiaries in France, Italy and
Germany. Because a portion of the Company's foreign sales are made in foreign
currencies, the Company bears the risk of adverse changes in exchange rates for
such sales. Reference is made to Notes 2 and 8 to the Financial Statements for
additional information with respect to the Company's foreign operations. The
Company's sales are broadly based and no customer accounts for more than 10% of
its total sales.
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Competition
The Company believes that the choice among competing products is generally
made on the basis of product performance, features, price and service. In
general, price has become an important factor in hospital purchasing patterns as
a result of cost containment pressures on the health care industry, including
Federal and State regulations limiting reimbursement for services provided to
Medicare and Medicaid patients. Many companies, some of which are substantially
larger than the Company, are engaged in manufacturing competing products.
Suppliers
The Company's products are made of components which it fabricates or which
are usually available from existing and alternate sources of supply. Certain
components are purchased from single or preferred sources of supply. The use of
single or preferred sources of supply by the Company increases its exposure to
price increases and production delays. In addition, certain suppliers have been
contemplating, and in a few cases have begun, reducing or eliminating sales of
their products to medical device manufacturers. The Company is unable to predict
whether or not additional suppliers will withhold their products from medical
device manufacturers. The Company has not thus far experienced any material
disruption or delay in processing its components. A small number of the
Company's monitoring products are manufactured by unaffiliated companies.
Patents
The Company holds a number of United States and foreign patents. In
addition, various patent applications have been filed and are pending. The
Company does not believe the expiration or invalidity of any of its patents
would have a material adverse effect on its business as currently conducted.
Employees
The Company currently employs approximately 1,100 persons. The Company
believes its relationship with its employees is satisfactory.
Regulation
The medical devices manufactured and marketed by the Company are subject to
regulation by the FDA and, in some instances, by state and foreign governmental
authorities. The Medical Device Amendment of 1976 and the Safe Medical Device
Act of 1990, amendments to the Federal Food, Drug and Cosmetics Act of 1938 (the
"Act"), require manufacturers of medical devices to comply with certain controls
that regulate the composition,
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labeling, testing, manufacturing and distribution of medical devices. FDA
regulations known as "Good Manufacturing Practices for Medical Devices" provide
standards for medical device manufacturers with respect to manufacturing
processes, facilities and record-keeping. Facilities used by the Company to
manufacture or assemble the Company's products are subject to routine FDA
inspections. The FDA may also conduct investigations and evaluations of the
Company's products at its own initiative or in response to customer complaints
or reports of malfunctions. The FDA also has the authority to require
manufacturers to recall or correct marketed products which it believes do not
comply with the requirements of the Act.
Under the Act, all medical devices are classified as Class I, Class II, or
Class III devices. In addition to the above requirements, Class II devices must
comply with pre-market notification (510(k)) regulations and with performance
standards or special controls established by the FDA. Subject to certain
exceptions, a Class III device must receive pre-market approval from the FDA
before it can be commercially distributed in the United States. The Company's
principal products are designated as Class II and Class III devices.
The Company believes that the trend is toward increasing regulation of
device manufacturers. The process of obtaining requisite FDA approvals for new
products and improvements to existing products is taking longer. The FDA has
also intensified its surveillance and enforcement activities related to medical
device manufacturers.
In the normal course of business, the Company conducts regulatory audits of
its operations. In December 1993 the Company informed the FDA that in the course
of a regulatory audit conducted by the Company, certain irregularities were
found in the HEMAGUARD PMA. Following that disclosure, the FDA inspected certain
clinical facilities which were involved in developing the data used in the
HEMAGUARD PMA and, in connection therewith, issued warning letters to two of
those facilities. See "Business - InterVascular."
In April 1995, the FDA determined to apply the provisions of the Application
Integrity Policy ("AIP") to products manufactured by the Company's Patient
Monitoring Division and InterVascular, Inc. The AIP generally provides that
substantive review of marketing applications are suspended pending an assessment
by the FDA of the validity of the data contained in such applications. While the
Company believes that the independent auditing process previously initiated by
it will facilitate the assessment by the FDA of the validity of data, the AIP
will likely result in longer time frames for product approvals for the affected
business units.
In October 1994, the Company put a U.S. shipment hold on the Point of View
monitor after an internal audit disclosed a regulatory issue concerning data
submitted to the FDA and, in the fourth quarter of fiscal 1995, the Company
commenced a voluntary recall of the Point of View monitor. The Company has met
with the FDA to discuss the issues and to present
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additional relevant data. The Company is taking all necessary steps to achieve
its objective of reintroducing the Point of View monitor into the United States,
including the preparation of a new 510(k) pre-market notification submission for
the product. The Company expects to be ready to submit the new 510(k)
application in late 1995; however, the FDA is likely to defer substantive review
of the submission pending the conclusion of a satisfactory FDA inspection of
Patient Monitoring's manufacturing facility and pending receipt by the FDA of a
satisfactory report from an independent regulatory auditor concerning products
manufactured by the Patient Monitoring Division.
The FDA has also requested verification by an independent auditor of certain
data relating to the PMA for the VasoSeal device.
The Company also receives inquiries from the FDA and other agencies and from
time to time it may disagree with positions of members of the staffs of those
agencies. To date the resolutions of such disagreements with the staffs of the
FDA and other agencies have not resulted in material expenditures by the
Company.
The Company is also subject to certain federal, state and local
environmental regulations. The cost of complying with these regulations has not
been, and the Company does not expect them to be, material to the Company's
operations.
Health Care Reform
The U.S. Congress is currently considering a number of different proposals
for health care reform. The Company believes that concerns about potential
health care reform legislation have slowed the domestic sales of medical devices
generally. Management of the Company cannot predict at this time what impact, if
any, the adoption by the United States Congress of healthcare reform would have
on the business of the Company.
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ITEM 2. PROPERTIES.
The following table sets forth information with respect to the real property
owned or leased by the Company and its subsidiaries which the Company considers
material to its business.
<TABLE>
<CAPTION>
General Character Ownership or
and Use of Expiration
Location Property Date of Lease
-------- -------- -------------
<S> <C> <C>
Montvale, New Jersey 38,000 sq. feet, used as the Company's corporate headquarters Owned
and as offices for the Collagen Products Division
Paramus, New Jersey 35,600 sq. feet, used for offices by the Patient Monitoring December 31, 1998
Division and for the corporate service facility
Paramus, New Jersey 72,700 sq. feet, used for research and development and the December 31, 1998
manufacture of instrumentation systems
Oakland, New Jersey 42,000 sq. feet, used for warehousing and the manufacture of Owned
disposable products
Fairfield, New Jersey 75,000 sq. feet, used for offices by the Cardiac Assist Division Owned
and in the manufacture of disposable products
Clearwater, Florida 25,000 sq. feet, used by InterVascular for offices and in the Leased until October 31,
manufacture of vascular grafts 2000 with an option to
purchase
La Ciotat, France 18,000 sq. feet, used by InterVascular for the production of Owned
vascular grafts
Vaals, The Netherlands 17,500 sq. feet, used in the manufacture of, and for research Owned
and development relating to, collagen products
Hoevelaken, The Netherlands 12,700 sq. feet, used for sales and service offices Owned
</TABLE>
The Company also leases space in various locations in the United States and
for its offices in England, France and Germany. The Company believes that its
facilities and the equipment located therein are in good working condition and
are adequate for its needs.
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ITEM 3. LEGAL PROCEEDINGS.
On December 22, 1981, the Company instituted patent infringement litigation
relating to an intra-aortic balloon catheter against SMEC, Inc. ("SMEC") in the
United States District Court for the District of New Jersey (the "Court"). SMEC
raised defenses of patent invalidity and non-infringement and filed an amended
counterclaim against the Company, asserting causes of action grounded in unfair
competition under the common law, unfair competition within the meaning of 15
U.S.C. Section 1125(a) and antitrust violations under the Robinson-Patman Act.
SMEC sought damages in excess of $1,000,000 for each such claim and, while the
pleading is not clear, it is arguable that treble damages were being sought
under all three causes of action in the amended counterclaim.
The Court rendered a decision on September 24, 1984 that one of the
Company's patents for the percutaneous intra-aortic balloon catheter is valid
and was infringed by SMEC. Certain claims of a second patent for the
intra-aortic balloon catheter system were held to be invalid. After the United
States Court of Appeals for the Federal Circuit upheld the lower court's
decision, a separate trial was held on the amount to which the Company was
entitled as damages from SMEC, and damages were awarded to the Company.
In August 1990, SMEC filed for protection under Chapter 11 of the Federal
Bankruptcy Code. In that bankruptcy proceeding, at the request of the Company, a
trustee was appointed for SMEC so that the debtor, SMEC, would no longer be in
possession of its assets. The trustee then filed an action in the Tennessee
Bankruptcy Court against Peter Schiff, principal stockholder and officer of
SMEC, to recover from him assets belonging to SMEC. The bankruptcy proceeding
was thereafter converted to a case under Chapter 7. In July 1991, the Company
and the SMEC trustee initiated litigation in State Court in Massachusetts
against Boston Scientific Corporation and IABP Corp. for the wrongful
acquisition of SMEC assets.
Datascope settled the Massachusetts action in the fourth quarter of fiscal
1993. In addition, in the fourth quarter of fiscal 1993, the trustee settled the
Massachusetts action and the trustee's settlement was approved by the Bankruptcy
Court in Tennessee. In connection with the settlement by the trustee, Boston
Scientific Corporation and IABP Corp. made a payment to the trustee for the
benefit of the bankruptcy estate of SMEC.
A complaint was filed on June 7, 1995 by the Trustee in Bankruptcy for SMEC
in the United States Bankruptcy Court for the Middle District of Tennessee
seeking a judgment against the Company, Boston Scientific Corporation and IABP
Corp. for actual damages in the amount of $6 million. The suit also seeks
recovery of treble damages, punitive damages, pre and post judgment interest and
attorney fees. The suit accuses the Company and Boston Scientific Corporation of
entering into an elaborate scheme to defraud the trustee in the SMEC bankruptcy
case and seeks recovery under theories of breach of fiduciary duty, fraud,
conversion, RICO, and
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an impermissible postpetition transfer of property by the bankruptcy estate. In
effect, the suit is a collateral attack on the order of dismissal entered in the
Massachusetts case. The Company denies the Trustee's charges and intends to
vigorously defend the lawsuit.
On November 5, 1993, plaintiff Merrill Rotter commenced an action in the
United States District Court for the District of New Jersey against the Company
and Lawrence Saper, its Chief Executive Officer. That action was consolidated
with subsequent related litigation, and culminated in the filing of a First
Consolidated and Amended Class Action Complaint on March 31, 1994 (hereinafter
referred to as the "First Consolidated Complaint"). The Company and Mr. Saper
moved to dismiss the First Consolidated Complaint on May 16, 1994. While the
motion to dismiss was pending, a related class action lawsuit was filed and
consolidated on June 13, 1994 in the United States District Court for the
District of New Jersey. Plaintiffs filed a Second Consolidated and Amended Class
Action Complaint, superseding the First Consolidated Complaint, on August 30,
1994 (hereinafter referred to as the "Second Consolidated Complaint"). The
Company and Mr. Saper intend to vigorously contest the allegations in the Second
Consolidated Complaint.
The plaintiffs have alleged, in substance, that Datascope and Lawrence Saper
made material misrepresentations and omissions concerning VasoSeal's safety,
efficacy, potential profitability and likelihood of FDA approval, in violation
of Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule
10b-5 promulgated thereunder. Plaintiffs also have alleged securities laws
violations relating to alleged insider trading by Mr. Saper. The plaintiffs seek
unspecified damages plus interest and costs and expenses incurred in the
litigation, including reasonable attorneys' fees and experts' fees and other
costs and disbursements. The Company believes that the allegations are without
merit and is in the process of vigorously defending the lawsuit. The Company and
Saper moved to dismiss the Second Consolidated Complaint on October 11, 1994.
The motion was granted in part, and denied in part on April 10, 1995, and
discovery is continuing at this time.
The Company is subject, in the ordinary course of its business, to product
liability litigation. The Company believes it has meritorious defenses in all
material pending lawsuits and that it maintains adequate insurance against any
potential liability. The Company receives comments and recommendations with
respect to its products from the staff of the FDA and from other agencies on an
on-going basis. The Company may or may not agree with such comments and
recommendations; however, the Company is not a party to any formal regulatory
administrative proceedings. See "Business - Regulation."
In November 1994, Datascope subsidiaries InterVascular, Inc. and
InterVascular S.A. filed suit in Florida state court, Pinellas County, against
George de Goicoechea, John Hudson, Dean McCartney (all former employees of
InterVascular), Andrew Cragg, M.D. (a physician owning a patent for certain
endoprosthesis-related technology), Endotech, Ltd. (Guernsey),
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Endotech Ltd. (Bahamas) and Minimally Invasive Technologies SARL. Subsequently,
Mintec, Inc., a selling arm of the other defendant companies, was added as a
defendant. The suit alleges, among other causes of action, a conspiracy to
divert InterVascular's technology and corporate opportunity in that de
Goicoechea, while president of InterVascular, collaborated with Cragg in
planning for the manufacturing and marketing of an endoprosthesis device
incorporating technologies developed by both InterVascular and Cragg. The suit
further alleges that before he left his employment as president of
InterVascular, de Goicoechea established the defendant companies to manufacture,
market and sell medical devices under the trade name of "Mintec." Subsequent to
filing the suit, InterVascular obtained injunctions in both Florida and Bahamas
to prevent the defendants from removing assets, including the technology, from
those jurisdictions.
Defendants de Goicoechea, Hudson and McCartney later filed a counterclaim in
the Florida action against InterVascular, Inc. and InterVascular S.A. alleging
tortious interference with a business relationship and a third party complaint
against Datascope Corp. and Lawrence Saper alleging a violation of Florida's
antitrust act. Cragg has filed a separate suit in the United States District
Court, District of Minnesota, Fourth Division, against InterVascular, Inc. and
InterVascular, S.A. seeking a judgment declaring his rights in the technology.
Mintec, Inc. has also filed suit in Florida state court, Pinellas County,
alleging a violation of Florida's antitrust act by defendants Datascope Corp.,
InterVascular, Inc., InterVascular S.A. and Lawrence Saper. The suit by Mintec,
Inc. has been stayed by order of the Court dated September 5, 1995, and the
Court has dismissed the third party complaint against Datascope Corp.,
InterVascular, Inc., InterVascular S.A. and Lawrence Saper.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of Security Holders in the fourth
quarter of fiscal 1995.
- 13 -
<PAGE> 15
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY.
The following table sets forth the names, ages and positions and offices
with the Company held by the Company's present officers:
<TABLE>
<CAPTION>
Positions and Offices
Name Age Presently Held
---- --- --------------
<S> <C> <C>
Lawrence Saper . . . . . . . . . . . . . . . 67 Chairman of the Board and
President
Ernst Janzen . . . . . . . . . . . . . . . . 59 Senior Vice President
Murray Pitkowsky . . . . . . . . . . . . . . 64 Senior Vice President and
Secretary
Barry Cheskin . . . . . . . . . . . . . . . . 35 Vice President; President,
Collagen Products
Division
Richard Monastersky . . . . . . . . . . . . . 40 Vice President,
Human Resources
Stephen E. Wasserman . . . . . . . . . . . . 49 Vice President, Chief Financial Officer,
Treasurer; President, Patient
Monitoring Division
Russell D. Van Zandt . . . . . . . . . . . . 54 Vice President; President,
Cardiac Assist Division
S. Arieh Zak, Esq . . . . . . . . . . . . . . 34 Vice President of Regulatory Affairs
and Corporate Counsel.
</TABLE>
- 14 -
<PAGE> 16
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock is traded over-the-counter and is listed on the
NASDAQ National Market System. (NASDAQ symbol: DSCP). The following table sets
forth, for each quarter period during the last two fiscal years, the high and
low bid prices as reported by NASDAQ.
<TABLE>
<CAPTION>
Fiscal Year High Low
----------- ---- ---
<S> <C> <C>
1995
----
First Quarter 16-1/4 14
Second Quarter 19-3/4 14-1/2
Third Quarter 23 16-1/2
Fourth Quarter 21-1/8 15-1/2
1994
----
First Quarter 15-1/4 12-1/2
Second Quarter 17 13-1/2
Third Quarter 16-1/2 12
Fourth Quarter 17 12
</TABLE>
As of August 31, 1995, there were approximately 1,032 holders of record of
the Company's common stock.
- 15 -
<PAGE> 17
The Company has never paid any cash dividends to its shareholders and
presently intends to continue its policy of retaining its earnings for facility
expansion, acquisitions and working capital purposes.
ITEM 6. SELECTED FINANCIAL DATA.
The following selected consolidated financial information for the fiscal
years 1991 through 1995 has been derived from the consolidated financial
statements of the Company for those years, which have been audited by Deloitte &
Touche LLP, independent certified public accountants, whose report for fiscal
years 1993, 1994, and 1995 is included elsewhere herein. All such information
is qualified by reference to the financial statements included elsewhere herein.
- 16 -
<PAGE> 18
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
EARNINGS STATEMENT DATA:
(in thousands, except per share data)
YEAR ENDED JUNE 30,
--------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Sales.................................. $195,700 $182,800 $166,000 $156,500 $135,450
-------- -------- -------- -------- --------
Cost of sales.............................. 68,853 64,551 58,862 57,239 52,615
Research and development................... 19,400 18,765 16,704 14,176 11,749
Selling, general and administrative........ 84,902 78,610 72,366 68,946 61,733
(Gain on sale of assets) suspension of
operations of Angioplasty Division....... - - (3,152) 3,992 -
Settlements of litigation.................. - - - 2,842 (500)
-------- -------- -------- -------- --------
173,155 161,926 144,780 147,195 125,597
-------- -------- -------- -------- --------
Operating earnings......................... 22,545 20,874 21,220 9,305 9,853
Other (income) expense:
Interest income.......................... (2,855) (1,608) (1,376) (1,668) (1,867)
Interest expense......................... 55 24 19 184 182
Other, net............................... 366 353 500 168 (936)
-------- -------- -------- -------- --------
(2,434) (1,231) (857) (1,316) (2,621)
-------- -------- -------- -------- --------
Earnings before taxes on income............ 24,979 22,105 22,077 10,621 12,474
Taxes on income............................ 7,640 6,437 6,337 2,936 3,867
-------- -------- -------- -------- --------
Net earnings............................... $17,339 $15,668 $15,740 $7,685 $8,607
======== ======== ======== ======== ========
Earnings per share:
Primary and fully diluted............ $1.07 $0.97 $0.97 $0.47 $0.55
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
(in thousands)
JUNE 30,
--------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total assets............................... $206,863 $185,421 $158,001 $141,479 $128,428
Long-term debt............................. - - - - -
Working capital............................ 110,744 102,943 96,475 82,835 72,721
Stockholders' equity....................... 163,319 144,062 127,777 109,777 99,969
Cash dividends............................. - - - - -
</TABLE>
- 17 -
<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS.
DATASCOPE CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net earnings for fiscal 1995 amounted to $17.3 million or $1.07 per
share, compared to $15.7 million or $0.97 per share in fiscal 1994. Fiscal 1993
net earnings were also $15.7 million or $0.97 per share and included a gain of
$2.3 million or $0.14 per share resulting from the sale of assets of the
Angioplasty Division. The improved earnings performance in 1995 resulted
primarily from continued worldwide growth of the Cardiac Assist Division.
COMPARISON OF RESULTS--FISCAL 1995 VS. FISCAL 1994
In 1995, net sales were $195.7 million, an increase of 7% compared to
sales of $182.8 million in 1994.
The following table shows the comparison of sales by product line over
the past three fiscal years.
<TABLE>
<CAPTION>
SALES BY PRODUCT LINE
(DOLLARS IN MILLIONS)
YEAR ENDED JUNE 30,
---------------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cardiac Assist $ 97.7 $ 82.7 $ 74.3
% change from prior year . . . . . . . . . . . 18% 11% 0%
% of total sales . . . . . . . . . . . . . . . 50% 45% 45%
Patient Monitoring . . . . . . . . . . . . . . . . $ 78.3 $ 85.7 $ 76.3
% change from prior year . . . . . . . . . . . (9)% 12% 14%
% of total sales . . . . . . . . . . . . . . . 40% 47% 46%
Other . . . . . . . . . . . . . . . . . . . . . . . $ 19.7 $ 14.4 $ 15.4
% change from prior year . . . . . . . . . . . 37% (7)% 0%
% of total sales 10% 8% 9%
Total Sales . . . . . . . . . . . . . . . . . . . . $195.7 $182.8 $166.0
% change from prior year 7% 10% 6%
</TABLE>
Cardiac Assist product sales increased in fiscal 1995 due to continued
strong worldwide demand for intra-aortic balloon catheters and balloon pumps
including the System 97 intra-aortic balloon pump which began shipments in the
second quarter of fiscal 1994.
Sales of the Patient Monitoring Division were adversely impacted in
fiscal 1995 by events related to the Point of View(R) (POV) monitor, including
a voluntary hold on U.S. shipments in October 1994 and subsequently a voluntary
U.S. recall of the POV monitor in April 1995. Aside from causing a sharp
decrease in sales of this product compared to the previous year, these actions
also created a significant diversion of selling effort and likely adversely
affected sales of other monitors.
The Company is taking all necessary steps to achieve its objective of
reintroducing the POV monitor in the U.S. including the preparation of a new
510(k) pre-market notification submission for the product. While the Company
expects to be ready to submit the new 510(k) in late 1995, the Food and Drug
Administration's (FDA) substantive review of the submission is likely to be
deferred pending the conclusion of a satisfactory FDA inspection of Patient
Monitoring's manufacturing facility and pending receipt by FDA of a
satisfactory
18
<PAGE> 20
report from an independent regulatory auditor concerning products manufactured
by the Patient Monitoring Division. International shipments of the POV monitor
were held in April and resumed in June 1995 after issues related to the
product's performance were resolved.
Sales of Other Products increased in fiscal 1995 due to strong
international sales growth of vascular grafts, produced by Datascope's
wholly-owned subsidiary, InterVascular. Sales of Collagen Products also grew
due to international shipments of VasoSeal devices and improved sales of
surgical hemostats to distributors in Japan and the U.S.
On July 18, 1995 the Company received a letter from the FDA informing
it that the Pre-Market Approval (PMA) application for the VasoSeal device was
approvable for both coronary angiography and coronary angioplasty procedures.
The letter represents the next stage of the approval process, indicating the
concurrence of the Center for Devices and Radiological Health of the FDA with
the recommendation of the Circulatory System Devices Panel. Final approval is
subject to receipt by the FDA of satisfactory information concerning the
product's labeling and packaging validation. The FDA has also requested
verification of certain data by an independent auditor. The Company cannot
predict the timing of final FDA action.
The foreign exchange rate effect of the weaker U.S. dollar compared to
major European currencies increased total sales by approximately $3.3 million
in fiscal 1995 compared to fiscal 1994.
Cost of Sales was 35.2% of sales in fiscal 1995 compared to 35.3% of
sales in fiscal 1994 with the slight improvement attributable to an improved
mix of sales of higher margin products.
Research and development expenses increased 3% primarily attributable
to development expenses for collagen products and vascular grafts, partially
offset by lower expenditures for both Patient Monitoring and Cardiac Assist
products, which were higher last year due to the introduction of the POV
monitor and the System 97 intra-aortic balloon pump in 1994.
Selling, general and administrative expenses increased 8% with the
increase primarily due to increased international marketing and sales
expenditures to support the higher sales volume and expenses related to the
implementation of a new computer system.
The higher interest income earned in fiscal 1995 compared to 1994 was
attributable to a higher average investment portfolio and an increase in
interest rates.
Other expense in fiscal 1995 approximated last year. The Company
enters into foreign exchange forward contracts to hedge a major portion of its
foreign currency exposures, primarily related to certain receivables
denominated in foreign currencies. The hedging has reduced the Company's
exposure to fluctuations in foreign currency rates. The net foreign exchange
transaction gain or loss is reported in other income and expense on the
Statements of Consolidated Earnings. Forward foreign exchange contracts
outstanding at June 30, 1995 totaled $1.8 million, all of which were
denominated in European currencies, with maturities that do not exceed 12
months.
The consolidated effective tax rates of 30.6% for fiscal 1995 and
29.1% for fiscal 1994, were favorably impacted by tax benefits from operations
in an international tax exempt industrial development zone, lower tax rates on
foreign income, tax benefits from the Company's Foreign Sales Corp. and
benefits from the research and development tax credit which was reinstated
during fiscal 1994. The higher effective tax rate in fiscal 1995 was primarily
attributable to lower research and development tax credits and lower foreign
net operating loss carryforwards utilized in 1995.
As required by the Financial Accounting Standards Board, the Company
has adopted Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" which requires accrual accounting for
postemployment benefits rather than the cash method, and Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," which establishes the accounting and reporting for such
investments. The adoption of these statements did not
19
<PAGE> 21
have a material impact on the Company's consolidated financial statements. For
purposes of Statement 115, the Company has determined that its investment
portfolio will be classified as held-to-maturity and therefore carried at
amortized cost.
COMPARISON OF RESULTS--FISCAL 1994 VS. FISCAL 1993
Net earnings for 1994, amounted to $15.7 million which represented a
17% increase compared to $13.4 million in 1993, excluding the 1993 gain of $2.3
million on the sale of assets of the Angioplasty Division. The improved
earnings performance in 1994 reflected continued worldwide growth of the
Company's core business consisting of the Patient Monitoring and Cardiac Assist
Divisions.
Sales growth of the core business in international markets in 1994 was
a strong contributing factor to the improved performance. The domestic core
business continued to grow in 1994 despite the impact of potential health care
reform programs that the Company believes has slowed domestic sales of medical
devices generally.
In 1994, net sales were $182.8 million, an increase of 10% compared to
sales of $166.0 million in 1993.
Cardiac Assist product sales increased in fiscal 1994 due to increased
shipments of intra-aortic balloon catheters and shipments of the System 97
Small Wonder(TM) balloon pump, a new product that began shipping in the second
quarter. Higher sales of cardiac assist products to the Company's distributor
in Japan also contributed to increased sales growth. In the second half of
fiscal 1993, the distributor had reduced its purchases to lower inventory.
Patient Monitoring sales continued to grow worldwide in 1994 as
shipments for new model monitors more than offset the decline of older
monitors. Shipments of the POV critical care monitoring system, designed to
give the Company entry into the market segment for advanced monitoring in
operating rooms and post-anesthesia care units, began in the third quarter and
contributed to sales growth for Patient Monitoring in the second half of fiscal
1994.
Sales of other products declined in 1994 primarily due to lower
vascular graft sales to the Japanese distributor and the impact from the
unfavorable foreign exchange rate.
The foreign exchange rate effect of the stronger U.S. dollar compared
to major European currencies reduced total sales by approximately $2.3 million
in 1994 compared to 1993.
Cost of Sales was 35.3% of sales in fiscal 1994 compared to 35.5% in
fiscal 1993 with the slight improvement attributable to improved manufacturing
efficiencies, partially offset by slightly lower average selling prices for
mature patient monitor and cardiac assist products due to increasing
competition.
Research and development expenses increased 12% primarily attributable
to development expenses for the POV monitor and the System 97 Small Wonder
balloon pump, which were introduced in fiscal 1994.
Selling, general and administrative expenses increased 9% with the
increase due to marketing and selling expenditures related to the introduction
of new products and selling expenses associated with higher sales volume.
Interest income in fiscal 1994 and 1993 was earned on short-term
investments as cash generated from operations was invested. The higher
interest income earned in fiscal 1994 compared to 1993 was attributable to a
higher average portfolio balance.
Other expense was lower in fiscal 1994 compared to fiscal 1993
primarily due to foreign exchange gains realized in fiscal 1994 compared to
foreign exchange losses in fiscal 1993. Forward foreign exchange contracts
outstanding at June 30, 1994 totaled $1.8 million, all of which were
denominated in European currencies, with maturities that did not exceed 12
months.
20
<PAGE> 22
The consolidated effective tax rates of 29.1% for fiscal 1994 and
28.7% for fiscal 1993, were favorably impacted by tax benefits from operations
in an international tax exempt industrial development zone, lower tax rates on
foreign income, tax benefits from the Company's Foreign Sales Corp. and in
fiscal 1994, benefits from the research and development tax credit, which was
reinstated during fiscal 1994.
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement 109).
Under Statement 109, the asset and liability method is used in accounting for
income taxes. The Company has elected not to restate the financial statements
of any prior years. The effect of the change on pretax income from continuing
operations for 1994, as well as the cumulative effect of the change, was not
material to the Company's consolidated financial statements. Reference is made
to Note 1 in the accompanying consolidated financial statements for further
information on the adoption of Statement 109.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position strengthened further in fiscal 1995.
Working capital at June 30, 1995 was $110.7 million or $7.8 million higher than
at June 30, 1994. At June 30, 1995 the current ratio was 4.3:1 compared to
4.1:1 last year, with the increase attributable to higher short-term
investments, partially offset by a slight increase in current liabilities.
Cash provided by operations was $35.6 million in fiscal 1995, aided by
a decrease in accounts receivable resulting from strong collections. Cash was
used to purchase $15.4 million of property, plant and equipment, including $9.2
million for sales demonstration equipment for new products, with the balance
invested in short- and long-term investments.
Cash provided by operations was $19.2 million in fiscal 1994. The
amount of cash provided by operations was reduced by the increase in accounts
receivable resulting from higher sales and a slower rate of collections
attributable to leases and higher international sales which generally have
longer payment terms. Cash was used to purchase $19.0 million of property,
plant and equipment, including $9.9 million for demonstration equipment
primarily for new products and $5.6 million for the Fairfield, New Jersey
Cardiac Assist headquarters building.
Cash provided by operations was $28.2 million in fiscal 1993 and was
used to purchase $12.6 million of property, plant and equipment, with the
balance invested in short-term investments.
Management believes that the Company's financial resources are
sufficient to meet its projected cash requirements.
The moderate rate of U.S. inflation during the past three fiscal years
has not significantly affected the Company.
21
<PAGE> 23
PART III
ITEMS 10, 11, 12 AND 13.
Except for the information included in Item 4a of this report, the
information called for by Items 10, 11, 12 and 13 of this Form 10-K is
incorporated by reference to those portions of the Company's 1995 Proxy
Statement which contain such information.
- 22 -
<PAGE> 24
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements
The following consolidated financial statements of the Company and its
subsidiaries are filed on the pages listed below, as part of Part II, Item 8 of
this report:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated balance sheets -- June 30,
1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Statements of consolidated earnings -- Years
ended June 30, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of consolidated stockholders'
equity -- Years ended June 30, 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of consolidated cash flows --
Years ended June 30, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . F-5
Notes to consolidated financial statements . . . . . . . . . . . . . . . . . . . . F-6 - F-18
2. Financial Statement Schedules
II -- Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . S-1
</TABLE>
All other schedules have been omitted because they are inapplicable, or not
required, or the information is included in the financial statements or notes
thereto.
3. Exhibits
2. Agreement and Plan of Merger, dated as of October 25, 1989, by and
between the registrant and Datascope New York (incorporated by
reference to Exhibit 2 to the registrant's Registration Statement on
Form 8-B, filed with the Commission on January 4, 1990 (the "Form 8-
B")).
3.1 Restated Certificate of Incorporation as filed with the Secretary of
State of the State of Delaware on October 30, 1989 (incorporated by
reference as Exhibit 3.1 to the Form 8-B).
- 23 -
<PAGE> 25
3.2 By-Laws, as currently in effect (incorporated by reference to Exhibit
3.2 to Annual Report on Form 10-K for fiscal year ended June 30, 1993
(the "1993 10-K").
4.1 Specimen of certificate of Common Stock (incorporated by reference to
Exhibit 4.2 to the Form 8-B).
4.2 Form of Certificate of Designations of the Registrant's Series A
Preferred Stock (incorporated by reference to Exhibit 2.2 to the
Company's Registration Statement on Form 8-A, filed with the Commission
on May 31, 1991 (the "May 31, 1991 Form 8-A")).
4.3 Form of Rights Agreement, dated as of May 22, 1991, between the Company
and Continental Stock Transfer & Trust Company (incorporated by
reference to Exhibit 2.1 to the May 31, 1991 Form 8-A).
10.1 1978 Employee Stock Option Plan (incorporated by reference to Exhibit
10.1 to Annual Report on Form 10-K for the fiscal year ended June 30,
1989 (the "1989 10-K")).
10.2 1981 Incentive Stock Option Plan (incorporated by reference to Exhibit
10.2.1 to the Form 8-B).
10.3 Stock Redemption Agreement, dated February 26, 1991, between Lawrence
Saper and the registrant (incorporated by reference to Exhibit 10.3 to
Annual Report on Form 10-K for the fiscal year ended June 30, 1991 (the
"1991 10-K")).
10.4 Stock Option Agreements, dated November 30, 1982, between David
Altschiller, William Asmundson, Alan Patricof and Norman Schneider,
respectively, and the registrant (incorporated by reference to Exhibit
10.5 to the 1989 10-K).
10.5 Stock Option Agreement, dated December 7, 1988 between Joseph Grayzel,
M.D. and the registrant (incorporated by reference to Exhibit 10.6 to
the 1989 10-K).
10.6 Amendment No.1 to Stock Option Agreement dated as of September 3, 1986,
which Agreement is Exhibit C to the Stock Purchase Agreement among
Datascope Corp., InterVascular, Inc., and certain shareholders of
InterVascular, Inc., dated June 26, 1986 (incorporated by reference to
Exhibit 10.12 to Annual Report on Form 10-K for the fiscal year ended
June 30, 1988).
- 24 -
<PAGE> 26
10.7 Stock Option Agreements, dated as of March 1, 1990, between David
Altschiller, William Asmundson, Joseph Grayzel, Alan Patricof and
Norman Schneider, respectively, and the registrant (incorporated by
reference to Exhibit 10.9 to Annual Report on Form 10-K for the fiscal
year ended June 30, 1990).
10.8 Stock Option Agreement, dated as of September 28, 1990, between David
Altschiller and the registrant (incorporated by reference to Exhibit
10.8 to the 1991 10-K).
10.9 Letter Agreements, dated December 17, 1990 between Lawrence Saper,
Ernst Janzen, Bruce Hanson and Murray Pitkowsky, respectively, and the
registrant with respect to the termination of such officers' investment
in certain subsidiaries of the registrant (incorporated by reference to
Exhibit 10.9 to the 1991 10-K).
10.10 Employment Agreement, dated as of June 30, 1991, by and between
Lawrence Saper and the registrant (incorporated by reference to Exhibit
10.10 to Annual Report on Form 10-K for the fiscal year ended June 30,
1992).
10.11 Asset Purchase Agreement, by and between Boston Scientific Corporation
and the registrant, Datascope Trademark Corp., Datascope Investment
Corp., Datascope S.A.R.L., Datascope GmbH, Datascope B.V., and
Datascope Medical Company, Ltd., dated as of June 8, 1993 (incorporated
by reference to Exhibit 10.11 to the 1993 10-K).
21. Subsidiaries (incorporated by reference to Exhibit 22 to Annual Report
on Form 10-K for the fiscal year ended June 30, 1994).
23. Consent of Deloitte & Touche LLP.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K with the Commission on May 4,
1995.
- 25 -
<PAGE> 27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DATASCOPE CORP.
Date: September 28, 1995 By: /s/ Lawrence Saper
---------------------
Lawrence Saper
Chairman of the Board and
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Lawrence Saper Chairman of the Board, President and September 28, 1995
- - --------------------- Director (Principal Executive Officer)
Lawrence Saper
/s/ Murray Pitkowsky Senior Vice President and Secretary September 28, 1995
- - ---------------------
Murray Pitkowsky
/s/ Stephen E. Wasserman Vice President, Chief Financial Officer, September 28, 1995
- - ------------------------- Treasurer; President, Patient Monitoring
Stephen E. Wasserman Division
</TABLE>
- 26 -
<PAGE> 28
<TABLE>
<S> <C> <C>
/s/ David Altschiller Director September 28, 1995
________________________
David Altschiller
/s/ William Asmundson Director September 28, 1995
________________________
William Asmundson
/s/ Joseph Grayzel, M.D. Director September 28, 1995
________________________
Joseph Grayzel, M.D.
/s/ George Heller Director September 28, 1995
________________________
George Heller
/s/ Norman M. Schneider Director Sepbember 28, 1995
________________________
Norman M. Schneider
</TABLE>
- 27 -
<PAGE> 29
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Datascope Corp.
Montvale, New Jersey
We have audited the accompanying consolidated balance sheets of Datascope Corp.
and its subsidiaries (the "Company") as of June 30, 1995 and 1994, and the
related consolidated statements of earnings, stockholders' equity and cash
flows for each of the three years in the period ended June 30, 1995. Our audits
also included the financial statement schedule listed in the index at Item
14(a)(2). These financial statements and the financial statement schedule are
the responsibility of the Company's management. Our responsibility is to
express an opinion on the consolidated financial statements and the financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Datascope Corp. and its
subsidiaries as of June 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1995 in conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly, in
all material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
- - ----------------------------
New York, New York
July 26, 1995
F-1
<PAGE> 30
DATASCOPE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
JUNE 30,
------------------------
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,096 $ 2,082
Short-term investments (Note 2) 53,165 43,339
Accounts receivable, less allowance for doubtful
accounts of $1,273 and $1,188 45,590 51,278
Inventories (Note 3) 36,499 33,474
Prepaid expenses and other current assets 5,880 6,045
--------- ---------
Total Current Assets 144,230 136,218
Property, Plant and Equipment, net (Note 4) 44,278 40,864
Non-Current Marketable Securities (Note 2) 9,354 --
Other Assets 9,001 8,339
--------- ---------
$ 206,863 $ 185,421
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,644 $ 9,515
Accrued expenses 14,149 11,485
Accrued compensation 9,384 9,813
Taxes on income (Note 5) 2,309 2,462
--------- ---------
Total Current Liabilities 33,486 33,275
Other Liabilities (Note 9) 10,058 8,084
Commitments and Contingencies (Notes 2,6,7,9 and 10)
Stockholders' Equity (Note 7):
Preferred stock, par value $1.00 per share:
Authorized 5,000,000 shares; Issued, none -- --
Common stock, par value $.01 per share:
Authorized, 45,000,000 shares; Issued and
outstanding, 16,070,689 and 16,043,411 shares 161 160
Additional paid-in capital 41,837 41,605
Retained earnings 121,347 104,008
Cumulative translation adjustments (26) (1,711)
--------- ---------
163,319 144,062
--------- ---------
$ 206,863 $ 185,421
========= =========
</TABLE>
See notes to consolidated financial statements
F-2
<PAGE> 31
DATASCOPE CORP. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Net Sales $ 195,700 $ 182,800 $ 166,000
--------- --------- ---------
Costs and Expenses:
Cost of sales 68,853 64,551 58,862
Research and development expenses 19,400 18,765 16,704
Selling, general and administrative expenses 84,902 78,610 72,366
Gain on sale of assets of the Angioplasty Division,
net of related expenses -- -- (3,152)
--------- --------- ---------
173,155 161,926 144,780
--------- --------- ---------
Operating Earnings 22,545 20,874 21,220
Other (Income) Expense:
Interest income (2,855) (1,608) (1,376)
Interest expense 55 24 19
Other, net 366 353 500
--------- --------- ---------
(2,434) (1,231) (857)
--------- --------- ---------
Earnings Before Taxes on Income 24,979 22,105 22,077
Taxes on Income (Note 5) 7,640 6,437 6,337
--------- --------- ---------
Net Earnings $ 17,339 $ 15,668 $ 15,740
--------- --------- ---------
Earnings Per Share $ 1.07 $ 0.97 $ 0.97
========= ========= =========
Weighted Average Number of Common and
Common Equivalent Shares Outstanding 16,233 16,155 16,230
========= ========= =========
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE> 32
DATASCOPE CORP. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY CUMULATIVE
----------------------
SHARES PAR PAID-IN RETAINED STOCK TRANSLATION
OUTSTANDING VALUE CAPITAL EARNINGS AT COST ADJUSTMENTS TOTAL
----------- ------ ---------- -------- ------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1992 15,654,395 $ 157 $ 38,238 $ 72,600 $ - $(1,218) $ 109,777
Exercise of stock options 693,581 6 6,265 6,271
Tax benefit relating to exercise
of stock options 6,637 6,637
Acquisition of treasury stock (317,285) (9,276) (9,276)
Cancellation of treasury stock (3) (9,273) 9,276 --
Currency translation (1,372) (1,372)
Net earnings 15,740 15,740
----------- -------- -------- -------- ------- ------- ---------
Balance, June 30, 1993 16,030,691 160 41,867 88,340 -- (2,590) 127,777
Exercise of stock options 13,327 99 99
Adjustment relating to exercise
of stock options (352) (352)
Acquisition of treasury stock (607) (9) (9)
Cancellation of treasury stock (9) 9 --
Currency translation 879 879
Net earnings 15,668 15,668
----------- -------- -------- -------- ------- ------- ---------
Balance, June 30, 1994 16,043,411 160 41,605 104,008 -- (1,711) 144,062
Exercise of stock options 32,445 1 305 306
Tax benefit relating to exercise
of stock options 22 22
Acquisition of treasury stock (5,167) (95) (95)
Cancellation of treasury stock (95) 95 --
Currency translation 1,685 1,685
Net earnings 17,339 17,339
=========== ======== ======== ======== ======= ======= =========
Balance, June 30, 1995 16,070,689 $ 161 $ 41,837 $121,347 $ - $ (26) $ 163,319
=========== ======== ======== ======== ======= ======= =========
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE> 33
DATASCOPE CORP. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Earnings $ 17,339 $ 15,668 $ 15,740
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 8,246 6,260 5,531
Provision for supplemental pension 835 1,020 1,186
Provision for losses on accounts receivable 494 575 224
Deferred income tax benefit (809) (173) (277)
Tax benefit (adjustment) relating to stock options
exercised 22 (352) 6,637
Changes in operating assets and liabilities:
Accounts receivable 6,079 (11,521) 45
Inventories 2,548 392 1,303
Other assets 225 (2,495) (199)
Accounts payable (2,085) 1,877 (1,782)
Income taxes payable (153) 2,462 --
Accrued and other liabilities 2,861 5,531 (162)
-------- -------- ---------
Net cash provided by operating activities 35,602 19,244 28,246
-------- -------- ---------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (15,367) (19,018) (12,591)
Purchases of short-term investments (77,295) (76,672) (122,231)
Maturities of short-term investments 67,469 77,650 108,506
Purchases of long-term investments (9,354) -- --
-------- -------- ---------
Net cash used in investing activities (34,547) (18,040) (26,316)
-------- -------- ---------
FINANCING ACTIVITIES:
Exercise of stock options 306 99 6,272
Treasury shares acquired upon exercise of stock options (95) (9) (9,277)
-------- -------- ---------
Net cash provided by (used in) financing activities 211 90 (3,005)
-------- -------- ---------
Effect of exchange rates on cash (252) (68) 473
-------- -------- ---------
Increase (decrease) in cash and cash equivalents 1,014 1,226 (602)
Cash and cash equivalents, beginning of period 2,082 856 1,458
-------- -------- ---------
Cash and cash equivalents, end of period $ 3,096 $ 2,082 $ 856
======== ======== =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid (refunded) during the period for:
Interest $ 55 $ 24 $ 19
-------- -------- ---------
Income taxes $ 7,698 $ 6,487 $ (1,125)
-------- -------- ---------
</TABLE>
See notes to consolidated financial statements
F-5
<PAGE> 34
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of
Datascope Corp. and its subsidiaries (the "Company"). All material
intercompany balances and transactions have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents consist primarily of highly liquid
investments which have original maturities less than 90 days.
Inventories
Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Additions and improvements are capitalized,
while maintenance and repairs are expensed as incurred. Asset and accumulated
depreciation accounts are relieved for dispositions, with resulting gains or
losses reflected in earnings. Depreciation of plant and equipment is provided
using the straight-line method over the estimated useful lives of the various
assets, or for leasehold improvements, over the term of the lease, if shorter.
Foreign Currency Translation
Assets and liabilities of foreign subsidiaries have been translated at
year-end exchange rates, while revenues and expenses have been translated at
average exchange rates in effect during the year. Resulting cumulative
translation adjustments have been recorded as a separate component of
stockholders' equity.
Taxes on Income
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which requires the
use of the liability method of accounting for deferred income taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates in effect for the years in which
the differences are expected to reverse. Prior to the adoption of Statement
No. 109, income tax expense was determined using the deferred method. Deferred
tax expense was based on items of income and expense that were reported in
different years in the financial statements and tax returns and were measured
at the tax rate in effect in the year the difference originated. As permitted
by Statement No. 109 the Company has elected not to restate the financial
statements of any prior years.
F-6
<PAGE> 35
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Revenue Recognition
The Company recognizes revenue and all related costs, including
warranty, upon shipment of its products to customers. Revenue for service
contracts is recognized ratably over the term of the contract.
Earnings Per Share
Earnings per share is computed based on the weighted average number of
common shares outstanding during each year after adjustment for the dilutive
effect of stock options.
Other Assets
Goodwill resulting from the purchase of InterVascular, Inc., and
representing the excess of cost over net assets acquired, is being amortized by
the straight-line method over 20 years and is included in other assets.
Unamortized goodwill as of June 30, 1995 and 1994 amounted to $3,012,000 and
$3,246,000, respectively.
Reclassifications
The presentation of certain prior year information has been
reclassified to conform with the current year presentation.
2. FINANCIAL INSTRUMENTS
In fiscal 1993, the Company adopted Statement of Financial Accounting
Standards No. 107, which requires disclosure of information about fair value of
financial instruments. The carrying amounts and estimated fair values of the
Company's significant financial instruments at June 30, 1995 were as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
-------- -------
<S> <C> <C>
Cash and short-term investments. . . . . . . . $56,261 $56,369
------- -------
Non-current marketable securities. . . . . . . $ 9,354 $ 9,636
------- -------
</TABLE>
Fair values of short-term investments are based upon quoted market
prices, including accrued interest, and approximate their carrying values due
to their short maturities. Fair values of non-current marketable securities
are also based upon quoted market prices and include accrued interest.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" in May 1993, which the Company adopted in fiscal 1995. The
Company has determined that its investment portfolio will be classified as
held-to-maturity and therefore carried at amortized cost.
F-7
<PAGE> 36
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As of June 30, 1995, the Company's marketable securities were
classified as follows:
<TABLE>
<CAPTION>
Unrealized
Amortized ---------------------
Short Term Cost Gains Losses Fair Value
- - ----------------------------------------- --------- ----- ------ ----------
<S> <C> <C> <C> <C>
U.S. Treasury Securities . . . . . . . . $33,277 $ 82 $0 $33,359
Tax-Exempt Securities . . . . . . . . . . 19,888 26 0 19,914
------- ---- -- -------
Short-term total . . . . . . . . . . $53,165 $108 $0 $53,273
======= ==== == =======
Long Term
- - -----------------------------------------
U.S. Treasury Securities . . . . . . . . $ 5,022 $204 $0 $ 5,226
Tax-Exempt Securities . . . . . . . . . . 4,332 78 0 4,410
------- ---- -- -------
Long-term total . . . . . . . . . . $ 9,354 $282 $0 $ 9,636
======= ==== == =======
------- ---- -- -------
Totals . . . . . . . . . . . . . . . $62,519 $390 $0 $62,909
======= ==== == =======
</TABLE>
Off-Balance-Sheet Risk
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company enters
into foreign currency forward exchange contracts to hedge foreign currency
transactions on a continuing basis for periods consistent with its committed
foreign currency exposures. The effect of this practice is to minimize the
impact of foreign exchange rate movements on the Company's operating results.
The Company's hedging activities do not subject the Company to exchange rate
risk because gains and losses on these contracts offset losses and gains on the
assets, liabilities and transactions being hedged.
As of June 30, 1995, the Company had $1.8 million of forward exchange
contracts outstanding, all of which were in European currencies. The forward
exchange contracts generally have maturities that do not exceed 12 months and
require the Company to exchange foreign currencies for U.S. dollars at
maturity, at rates agreed to at inception of the contracts.
Concentration of Credit Risk
The Company invests its excess cash primarily in U.S. Treasury and tax
exempt securities. Since the Company holds all short and long-term securities
until maturity, such investments are subject to little market risk. The
Company has not incurred losses related to these investments.
Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Company's customer
base. Ongoing credit evaluations of customers' financial condition are
performed. The Company maintains reserves for potential credit losses and such
losses, in the aggregate, have not exceeded management's expectations.
F-8
<PAGE> 37
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. INVENTORIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
JUNE 30,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Materials . . . . . . . . . . . . . . . . . . . . . . . . . $15,452 $15,785
Work in process . . . . . . . . . . . . . . . . . . . . . . 6,592 3,582
Finished goods . . . . . . . . . . . . . . . . . . . . . . . 14,455 14,107
------- -------
$36,499 $33,474
======= =======
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
JUNE 30,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,059 $ 3,753
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . 21,976 19,732
Machinery, furniture and equipment . . . . . . . . . . . . . 46,717 41,849
Leasehold improvements . . . . . . . . . . . . . . . . . . . 4,207 3,888
------- -------
76,959 69,222
Less accumulated depreciation and amortization . . . . . . . 32,681 28,358
------- -------
$44,278 $40,864
======= =======
</TABLE>
The Company estimates the useful life of its machinery and equipment
at 5 years, furniture at 8 years and buildings at 40 years.
5. TAXES ON INCOME
<TABLE>
<CAPTION>
(IN THOUSANDS)
YEAR ENDED JUNE 30,
----------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . $6,316 $4,940 $5,336
State . . . . . . . . . . . . . . . . . . . . . . . 1,324 1,242 1,143
Foreign . . . . . . . . . . . . . . . . . . . . . . 809 428 135
------ ------ ------
Total current. . . . . . . . . . . . . . . . . 8,449 6,610 6,614
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . (695) (177) (106)
State . . . . . . . . . . . . . . . . . . . . . (114) 4 (61)
Foreign . . . . . . . . . . . . . . . . . . . . -- -- (110)
------ ------ ------
Total deferred . . . . . . . . . . . . (809) (173) (277)
------ ------ ------
Total taxes on income . . . . . . . . . . . . . . . . . $7,640 $6,437 $6,337
====== ====== ======
</TABLE>
F-9
<PAGE> 38
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The reconciliation of the statutory federal income tax rate to the
Company's effective tax rate is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------
1995 1994 1993
---------------------- --------------------- ----------------------
Effective Effective Effective
Amount Rate Amount Rate Amount Rate
<S> <C> <C> <C> <C> <C> <C>
Tax computed at federal statutory rate $ 8,743 35.0% $ 7,737 35.0% $ 7,506 34.0%
(Decrease) increase resulting from:
Benefit attributable to foreign sales
corp ............................ (871) (3.5) (757) (3.4) (661) (3.0)
State taxes on income, net of federal
income tax benefit .............. 673 2.7 812 3.7 714 3.2
Research and development credit, net .... (221) (0.9) (506) (2.3) -- 0.0
Income exempt from foreign corporate
taxes ........................... (790) (3.1) (437) (2.0) (724) (3.3)
Rate differential on foreign income ..... 99 0.4 (228) (1.0) (389) (1.7)
Interest income exempt from federal
income tax ...................... (267) (1.1) (217) (1.0) (118) (0.5)
Other ................................... 274 1.1 33 0.1 9 0.0
------- ----- ------- ----- ------- -----
Total taxes on income ................... $ 7,640 30.6% $ 6,437 29.1% $ 6,337 28.7%
======= ===== ======= ===== ======= =====
</TABLE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities as
of June 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
YEAR ENDED JUNE 30,
------------------------------------------------------------------------------
1995 1994
------------------------------------ -----------------------------------
DEFERRED DEFFERED DEFERRED DEFFERED
TAX TAX TAX TAX
ASSETS LIABILITIES NET ASSETS LIABILITIES NET
-------- ----------- ------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Inventories .............. $ 2,287 $ -- $ 2,287 $ 1,970 $ -- $ 1,970
Warranty ................. 438 -- 438 240 -- 240
Accrued expenses ......... -- 553 (553) -- 641 (641)
------- ------- ------- ------- ------- -------
Current .......... 2,725 553 2,172 2,210 641 1,569
------- ------- ------- ------- ------- -------
Supplemental pension ..... 3,397 -- 3,397 3,075 -- 3,075
Tax loss carryforwards ... 1,382 -- 1,382 1,236 -- 1,236
Accelerated depreciation . -- 1,506 (1,506) -- 1,154 (1,154)
Accrued pension expense .. -- 482 (482) -- 747 (747)
Other, net ............... 91 -- 91 120 -- 120
Less: Valuation allowance (1,382) -- (1,382) (1,236) -- (1,236)
------- ------- ------- ------- ------- -------
Non-current ...... 3,488 1,988 1,500 3,195 1,901 1,294
------- ------- ------- ------- ------- -------
Total ....................... $ 6,213 $ 2,541 $ 3,672 $ 5,405 $ 2,542 $ 2,863
======= ======= ======= ======= ======= =======
</TABLE>
The net current deferred tax assets have been included in prepaid
expenses and other current assets and the net non-current deferred tax assets
have been included in other assets on the accompanying consolidated balance
sheet.
F-10
<PAGE> 39
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The valuation allowance increased by $146,000 during fiscal 1995 due to
the net increase of tax loss carryforwards. The balance of the valuation
allowance of $1,382,000 at June 30, 1995 was comprised of tax benefits of
$317,000 of foreign tax loss carryforwards and $1,065,000 of state tax loss
carryforwards. $194,000 in benefits from foreign tax loss carryforwards expire
during the period 1996 through 2000 and $123,000 may be carried forward
indefinitely. The benefits of state tax loss carryforwards expire during the
period 1996 through 2002.
For fiscal year 1993 deferred income taxes resulted from timing
differences in the recognition of income and expense for tax and financial
accounting purposes. The source of these differences and the tax effect of
each were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
YEAR ENDED JUNE 30, 1993
------------------------
<S> <C>
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (75)
Supplemental pension expense . . . . . . . . . . . . . . . . . . . . . (460)
Pension expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (277)
=========
</TABLE>
Since it is the Company's intention to reinvest the earnings of its
international subsidiaries, a provision for additional United States taxes on
income which would become payable upon the remission of these undistributed
earnings has not been made. Upon remission, the tax consequences of such
earnings would be substantially offset by available foreign tax credits.
The Company has a subsidiary in an industrial development zone in Europe.
Profits from manufacturing activities in this zone are exempt from corporation
taxes until August 1999.
6. LINES OF CREDIT
The Company has lines of credit totaling $40,900,000, borrowings under
which bear interest principally at the lenders' respective prime rates. There
were no short-term borrowings under lines of credit at June 30, 1995 and 1994.
The lines expire as follows: $15,000,000 in February 1996, $10,000,000 in
March 1996, $15,000,000 in June 1996 and $400,000 in October 1996. These lines
are renewable annually at the option of the banks. The Company has $500,000 in
lines of credit with no expiration date.
7. STOCK OPTIONS AND SHAREHOLDER RIGHTS PLAN
Stock Option Plans
The Company has two stock option plans which cover 3,525,000 shares of
common stock. The 1978 Employee Stock Option Plan, which was terminated in
September 1988, provided that options could be granted at a price per share of
at least 85% of fair market value on date of grant. The 1981 Employee Stock
Option Plan provides that options may be granted at a price of 100% of fair
market value on date of grant. Options may be exercised in full or in
installments, at the discretion of the Board of Directors, and must be
exercised within five or ten years from date of grant, depending on the plan.
F-11
<PAGE> 40
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1978 Employee Stock 1981 Employee Stock
Option Plan Option Plan
----------------------------- -------------------------------
Shares Price Per Share Shares Price Per Share
------- ---------------- --------- ---------------
<S> <C> <C> <C> <C>
Balance, June 30, 1992 . . . . . . . . . 5,445 $ 9.67 - $14.75 1,087,827 $ 3.58 - $38.56
Granted . . . . . . . . . . . . . . . . . -- 167,800 15.00 - 27.25
Exercised . . . . . . . . . . . . . . . . (3,375) 11.50 - 14.75 (662,626) 4.81 - 14.75
Cancelled . . . . . . . . . . . . . . . . (750) 9.67 (84,448) 5.22 - 36.88
------ ---------
Balance, June 30, 1993 . . . . . . . . . 1,320 14.75 508,553 3.58 - 38.56
Granted . . . . . . . . . . . . . . . . . -- 685,700 13.88 - 14.25
Exercised . . . . . . . . . . . . . . . . -- (12,747) 3.75 - 7.83
Cancelled . . . . . . . . . . . . . . . . (1,320) 14.75 (46,567) 7.38 - 38.56
------ ---------
Balance, June 30, 1994 . . . . . . . . . -- 1,134,939 3.58 - 31.13
======
Granted . . . . . . . . . . . . . . . . . 241,150 15.00 - 18.25
Exercised . . . . . . . . . . . . . . . . (22,940) 7.38 - 13.88
Cancelled . . . . . . . . . . . . . . . . (106,581) 3.58 - 29.00
---------
Balance, June 30, 1995 . . . . . . . . . 1,246,568 $4.81 - $31.13
=========
Exercisable portion . . . . . . . . . . . 848,944 $4.81 - $31.13
=========
Available for future grant . . . . . . . 44,800
=========
</TABLE>
Option Agreements
The Company also has option agreements with certain consultants and
members of the Board of Directors. Options to purchase 188,300 shares were
outstanding at June 30, 1995 at prices ranging from $7.38 to $22.38 per share.
During the year ended June 30, 1995, 113,600 options were granted at a price of
$18.25 per share, 9,000 options were exercised at a price of $7.83 per share
and 3,000 options were cancelled. During the year ended June 30, 1994, 5,000
options were granted at a price of $14.25 per share and none were exercised or
cancelled.
At June 30, 1995 there were 1,479,668 shares of common stock reserved for
the exercise of stock options.
F-12
<PAGE> 41
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Shareholder Rights Plan
On May 22, 1991, the Company adopted a Shareholder Rights Plan and
declared a dividend distribution of one right for each outstanding share of
common stock. Under the terms of the plan, all shareholders of common stock
received for each share owned a preferred stock purchase right entitling them
to purchase from the Company one one-thousandth of a share of Series A
Preferred Stock, par value $1.00 per share, at an exercise price of $300.00.
The rights are not exercisable until after the date on which the Company's
right to redeem has expired. The Company may redeem rights for $.01 per right
at any time until the 10th business day after the date of a public announcement
(the "Stock Acquisition Date") that a person (the "Acquiring Person") has
acquired ownership of stock having 15 percent or more of the Company's general
voting power.
The plan provides that, after a Stock Acquisition Date, generally each
holder of a right will be entitled to purchase, at the exercise price, a number
of the Company's shares having a market value of twice the exercise price. The
plan also provides that in the event of certain other business combinations,
generally each holder of a right will be entitled to purchase, at the exercise
price, a number of shares of the acquiring company's common stock having a
market value of twice the exercise price. Prior to the acquisition by the
Acquiring Person of 50% or more of the Common Stock outstanding, the Company
may exchange the Rights (other than Rights owned by the Acquiring Person and
its affiliates and associates, which will be null and void), in whole or in
part, for Common Stock on the basis of an exchange ratio of one share of Common
Stock for each Right (subject to adjustment). The rights will expire on June
2, 2001.
F-13
<PAGE> 42
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. OPERATIONS IN GEOGRAPHIC AREAS, FOREIGN OPERATIONS AND EXPORT SALES
The Company develops, manufactures and markets medical systems and
devices which constitute a single business segment. The following information
sets forth geographic information on the Company's sales, profits and assets:
<TABLE>
<CAPTION>
(In thousands)
UNITED EUROPEAN
STATES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Year ended June 30, 1995:
Sales to unaffiliated customers . . . . $ 161,534 $ 34,166 $ -- $ 195,700
Transfers between geographic areas . . 12,714 6,177 (18,891) --
------------ ---------------- --------------- --------------
Total sales . . . . . . . . . . . $ 174,248 $ 40,343 $ (18,891) $ 195,700
============ ================ =============== ==============
Operating earnings . . . . . . . . . . . . . $ 18,235 $ 4,653 $ (343) $ 22,545
============ ================ ===============
Other income, net . . . . . . . . . . . . . . 2,434
--------------
Earnings before taxes on income . . . . . . . $ 24,979
==============
Assets at June 30, 1995 . . . . . . . . . . . $ 181,954 $ 28,265 $ (3,356) $ 206,863
============ ================ =============== ==============
Year ended June 30, 1994:
Sales to unaffiliated customers . . . . $ 153,530 $ 29,270 $ -- $ 182,800
Transfers between geographic areas . . 11,764 5,359 (17,123) --
------------ ---------------- --------------- --------------
Total sales . . . . . . . . . . . $ 165,294 $ 34,629 $ (17,123) $ 182,800
============ ================ =============== ==============
Operating earnings . . . . . . . . . . . . . $ 18,066 $ 2,852 $ (44) $ 20,874
============ ================ =============== ==============
Other income, net . . . . . . . . . . . . . . 1,231
--------------
Earnings before taxes on income . . . . . . . $ 22,105
==============
Assets at June 30, 1994 . . . . . . . . . . . $ 164,317 $ 23,643 $ (2,539) $ 185,421
============ ================ =============== ==============
Year ended June 30, 1993:
Sales to unaffiliated customers . . . . $ 141,804 $ 24,196 $ -- $ 166,000
Transfers between geographic areas . . 8,883 4,798 (13,681) --
------------ ---------------- --------------- --------------
Total sales . . . . . . . . . . . $ 150,687 $ 28,994 $ (13,681) $ 166,000
============ ================ =============== ==============
Operating earnings . . . . . . . . . . . . . $ 19,817 $ 1,201 $ 202 $ 21,220
============ ================ ===============
Other income, net . . . . . . . . . . . . . . 857
--------------
Earnings before taxes on income . . . . . . . $ 22,077
==============
Assets at June 30, 1993 . . . . . . . . . . . $ 140,332 $ 19,981 $ (2,312) $ 158,001
============ ================ =============== ==============
</TABLE>
In determining operating earnings, interest income and expense, other
income and expense, and income taxes were excluded.
The Company had export sales, principally to Europe, Canada and the Far
East, of $31,951,000, $27,023,000 and $22,982,000 in the years ended June 30,
1995, 1994 and 1993, respectively.
F-14
<PAGE> 43
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. PENSION AND RETIREMENT PLANS
Defined Benefit Plan
The Company has both domestic and foreign defined benefit pension plans
which cover substantially all employees. Pension benefits are based on years
of service, compensation and the primary social security benefits. Funding for
the domestic plan is within the range prescribed under the Employee Retirement
Income Security Act of 1974. Funding for the foreign plan is accomplished
through the purchase of guaranteed insurance contracts. Total pension expense
for the domestic and foreign pension plans was $1,646,000 in 1995, $1,541,000
in 1994, and $1,381,000 in 1993.
The components of net pension expense and the funded status of the
domestic defined benefit pension plan are set forth below:
Pension Expense (Domestic)
<TABLE>
<CAPTION>
(IN THOUSANDS)
YEAR ENDED JUNE 30,
----------------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Service cost for benefits earned during the year . . . $ 1,444 $ 1,177 $ 970
Interest cost on projected benefit obligation . . . . . 1,339 1,245 1,084
Actual return on plan assets . . . . . . . . . . . . . (1,440) (346) (192)
Net amortization and deferral . . . . . . . . . . . . . 16 (857) (833)
------- ------- -------
Net pension cost--domestic $ 1,359 $ 1,219 $ 1,029
======= ======= =======
</TABLE>
The Plan's Funded Status was as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
JUNE 30,
------------------------
1995 1994
------- -------
<S> <C> <C>
Actuarial present value of accumulated benefit obligation
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,675 $ 9,024
Nonvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,760 980
------- -------
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . 11,435 10,004
Effects of anticipated future compensation increases . . . . . . . 7,354 6,937
------- -------
Projected benefit obligation . . . . . . . . . . . . . . . . . . . 18,789 16,941
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . 16,981 15,179
------- -------
Projected benefit obligation in excess of plan assets . . . . . . . (1,808) (1,762)
Unrecognized net obligation . . . . . . . . . . . . . . . . . . . . 608 679
Unrecognized prior service cost . . . . . . . . . . . . . . . . . . (108) 160
Unrecognized net actuarial loss . . . . . . . . . . . . . . . . . . 2,541 2,994
------- -------
Net prepaid pension cost . . . . . . . . . . . . . . . . . . . $ 1,233 $ 2,071
======= =======
</TABLE>
F-15
<PAGE> 44
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The assumptions used to develop the actuarial present value of the
projected benefit obligation are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Weighted average discount rate . . . . . . . . . . . . . . . . . . . . . . 8.25% 8.25%
Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . 6.55% 6.45%
Expected long-term rate of return on plan assets . . . . . . . . . . . . . 9.00% 9.00%
</TABLE>
Plan assets are invested in U.S. Government and corporate securities and
include investments in the Company's common stock of $966,000 or 56,000 shares
at June 30, 1995. No dividends are paid on the Company's common stock.
Retirement coverage for the foreign employees of the Company is provided,
to the extent deemed appropriate, through separate plans. Funding policies are
based on local statutes. Retirement benefits are based on years of service,
final average earnings and social security benefits.
The components of net pension expense and the funded status of the
foreign defined benefit pension plans are set forth below:
Pension Expense (Foreign)
<TABLE>
<CAPTION>
(IN THOUSANDS)
YEAR ENDED JUNE 30,
-----------------------------------------
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Service cost for benefits earned during the year . . . . $ 97 $ 91 $ 79
Interest cost on projected benefit obligation . . . . . . 65 58 54
Estimated return on plan assets . . . . . . . . . . . . . (24) (18) (16)
Net amortization and deferral . . . . . . . . . . . . . . 27 26 20
----- ----- -----
Net pension cost--foreign . . . . . . . . . . . . . $ 165 $ 157 $ 137
===== ===== =====
</TABLE>
The Plan's Funded Status was as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
JUNE 30,
------------------------
1995 1994
------ ------
<S> <C> <C>
Actuarial present value of accumulated benefit obligation (100% Vested) . . $ 405 $ 267
------ ------
Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . 1,246 810
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . 405 267
------ ------
Projected benefit obligation in excess of plan assets . . . . . . . . . . . (841) (543)
Unamortized transition obligation . . . . . . . . . . . . . . . . . . . . . 186 175
Unrecognized net actuarial loss . . . . . . . . . . . . . . . . . . . . . . 767 413
------ ------
Net prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . $ 112 $ 45
====== ======
</TABLE>
The assumptions used to develop foreign net pension cost and the
actuarial present value of projected benefit obligations are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Weighted average discount rate . . . . . . . . . . . . . . . . . . . . . . 7.5% 8.0%
Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . 6.0% 6.0%
Expected long-term rate of return on plan assets . . . . . . . . . . . . . 9.0% 9.0%
</TABLE>
F-16
<PAGE> 45
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The assets of the foreign defined benefit pension plan are invested in
guaranteed insurance contracts.
Supplemental Retirement Plan
The Company has noncontributory, unfunded supplemental retirement plans
for Mr. Saper and certain other key officers. Life insurance has been
purchased by the Company to recover a substantial portion of the net after tax
cost for these supplemental retirement plans.
Under the retirement provision of the five-year employment agreement
between the Company and Mr. Saper, Mr. Saper could retire after age 65 and
receive a pension of up to 60% of his average earnings for the three-year
period prior to retirement. The supplemental pension expense for Mr. Saper
recognized in the consolidated financial statements was $635,000, $794,000 and
$917,000 for 1995, 1994 and 1993, respectively.
The supplemental retirement plan covering certain other key officers
provides that at age 65, these employees may receive, for a period of up to 15
years, a pension of up to 60% of a predetermined earnings level for the
five-year period prior to retirement. The supplemental pension expense for
these executives recognized in the consolidated financial statements was
$200,000, $226,000 and $269,000 for 1995, 1994 and 1993, respectively.
The actuarial present value of both the accumulated benefit obligation
and projected benefit obligation for the supplemental retirement plans was
$7,095,000 and $6,285,000 for 1995 and 1994, respectively.
The components of the total supplemental pension expense are set forth
below:
<TABLE>
<CAPTION>
(IN THOUSANDS)
YEAR ENDED JUNE 30,
-----------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost for benefits earned during the year . . $ 298 $ 300 $ 289
Interest cost on projected benefit obligation . . . . 554 528 468
Amortization of prior service cost . . . . . . . . . 511 546 626
Amortization of gain . . . . . . . . . . . . . . . . (528) (354) (197)
----- ------ ------
Total supplemental pension expense . . . . . . $ 835 $1,020 $1,186
===== ====== ======
</TABLE>
Savings and Supplemental Retirement Plan
The Company maintains a 401(k) savings and supplemental retirement plan
for eligible domestic employees. This 401(k) plan was established to enhance
the existing retirement plan and to provide an incentive to employees to save
and invest regularly for their retirement. The Company contributions, which
were based on matching 50% of participating employees' contributions up to a
maximum of 6% of compensation, were $880,000 for 1995, $844,000 for 1994 and
$761,000 for 1993.
F-17
<PAGE> 46
DATASCOPE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. COMMITMENTS AND CONTINGENCIES
Future minimum rental commitments under noncancellable operating leases
are as follows:
<TABLE>
<CAPTION>
YEAR (IN THOUSANDS)
- - ---- --------------
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,417
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,089
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,321
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,001
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . 147
--------
Total future minimum rental payments . . . . . . . . $ 10,317
========
</TABLE>
Total rent expense for the years ended June 30, 1995, 1994 and 1993
amounted to approximately $4,241,000, $4,505,000 and $4,889,000, respectively.
The Company is subject, in the ordinary course of its business, to
product liability litigation. The Company believes it has meritorious defenses
in all material pending lawsuits and that it maintains adequate insurance
against any potential liability.
11. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED JUNE 30, 1995
-----------------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . $ 41,600 $ 48,400 $ 50,500 $ 55,200 $ 195,700
---------- ----------- ----------- ----------- -----------
Gross margin . . . . . . . . . . . . . . . . $ 27,003 $ 31,719 $ 32,725 $ 35,400 $ 126,847
---------- ----------- ----------- ----------- -----------
Net earnings . . . . . . . . . . . . . . . . $ 2,761 $ 4,357 $ 4,519 $ 5,702 $ 17,339
---------- ----------- ----------- ----------- -----------
Earnings per share . . . . . . . . . . . . . $ 0.17 $ 0.27 $ 0.28 $ 0.35 $ 1.07
---------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1994
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . $ 38,100 $ 45,200 $ 47,300 $ 52,200 $ 182,800
---------- ----------- ----------- ----------- -----------
Gross margin . . . . . . . . . . . . . . . . $ 24,803 $ 29,396 $ 30,650 $ 33,400 $ 118,249
---------- ----------- ----------- ----------- -----------
Net earnings . . . . . . . . . . . . . . . . $ 2,440 $ 3,874 $ 4,193 $ 5,161 $ 15,668
---------- ----------- ----------- ----------- -----------
Earnings per share . . . . . . . . . . . . . $ 0.15 $ 0.24 $ 0.26 $ 0.32 $ 0.97
---------- ----------- ----------- ----------- -----------
</TABLE>
Quarterly and total year earnings per share are calculated independently
based on the weighted average number of shares outstanding during each period.
F-18
<PAGE> 47
DATASCOPE CORP. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- - ---------------------------------- ------------- -------------------------- ------------ -------------
ADDITIONS
--------------------------
(1) (2)
Charged to Deductions
Balance at Charged to other from Balance at
beginning costs and accounts- reserves- close of
Description of period expenses describe describe period
- - ---------------------------------- ------------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1995:
Allowance for
doubtful accounts . . . . . . . $ 1,188 $ 494 $ -- $ 409(A) $ 1,273
============= =========== ============ ============ =============
Reserve for warranty costs 450 300 -- -- 750
============= =========== ============ ============ =============
YEAR ENDED JUNE 30, 1994:
Allowance for
doubtful accounts . . . . . . . $ 695 $ 575 $ -- $ 82(A) $ 1,188
============= =========== ============ ============ =============
Reserve for warranty costs 350 100 -- -- 450
============= =========== ============ ============ =============
YEAR ENDED JUNE 30, 1993:
Allowance for
doubtful accounts . . . . . . . $ 575 $ 224 $ -- $ 104(A) $ 695
============= =========== ============ ============ =============
Reserve for warranty costs 550 -- -- 200(A) 350
============= =========== ============ ============ =============
</TABLE>
(A) Write-offs
S-1
<PAGE> 48
EXHIBIT INDEX
Exhibit No. Description
2. Agreement and Plan of Merger, dated as of October 25, 1989, by and
between the registrant and Datascope New York (incorporated by
reference to Exhibit 2 to the registrant's Registration Statement on
Form 8-B, filed with the Commission on January 4, 1990 (the "Form 8-
B")).
3.1 Restated Certificate of Incorporation as filed with the Secretary of
State of the State of Delaware on October 30, 1989 (incorporated by
reference as Exhibit 3.1 to the Form 8-B).
3.2 By-Laws, as currently in effect (incorporated by reference to Exhibit
3.2 to Annual Report on Form 10-K for fiscal year ended June 30, 1993
(the "1993 10-K").
4.1 Specimen of certificate of Common Stock (incorporated by reference to
Exhibit 4.2 to the Form 8-B).
4.2 Form of Certificate of Designations of the Registrant's Series A
Preferred Stock (incorporated by reference to Exhibit 2.2 to the
Company's Registration Statement on Form 8-A, filed with the Commission
on May 31, 1991 (the "May 31, 1991 Form 8-A")).
4.3 Form of Rights Agreement, dated as of May 22, 1991, between the Company
and Continental Stock Transfer & Trust Company (incorporated by
reference to Exhibit 2.1 to the May 31, 1991 Form 8-A).
10.1 1978 Employee Stock Option Plan (incorporated by reference to Exhibit
10.1 to Annual Report on Form 10-K for the fiscal year ended June 30,
1989 (the "1989 10-K")).
10.2 1981 Incentive Stock Option Plan (incorporated by reference to Exhibit
10.2.1 to the Form 8-B).
10.3 Stock Redemption Agreement, dated February 26, 1991, between Lawrence
Saper and the registrant (incorporated by reference to Exhibit 10.3 to
Annual Report on Form 10-K for the fiscal year ended June 30, 1991 (the
"1991 10-K")).
10.4 Stock Option Agreements, dated November 30, 1982, between David
Altschiller, William Asmundson, Alan Patricof and Norman Schneider,
respectively, and the registrant (incorporated by reference to Exhibit
10.5 to the 1989 10-K).
10.5 Stock Option Agreement, dated December 7, 1988 between Joseph Grayzel,
M.D. and the registrant (incorporated by reference to Exhibit 10.6 to
the 1989 10-K).
10.6 Amendment No.1 to Stock Option Agreement dated as of September 3, 1986,
which Agreement is Exhibit C to the Stock Purchase Agreement among
Datascope Corp., InterVascular, Inc., and certain shareholders of
InterVascular, Inc., dated June 26, 1986 (incorporated by reference to
Exhibit 10.12 to Annual Report on Form 10-K for the fiscal year ended
June 30, 1988).
10.7 Stock Option Agreements, dated as of March 1, 1990, between David
Altschiller, William Asmundson, Joseph Grayzel, Alan Patricof and
Norman Schneider, respectively, and the registrant (incorporated by
reference to Exhibit 10.9 to Annual Report on Form 10-K for the fiscal
year ended June 30, 1990).
10.8 Stock Option Agreement, dated as of September 28, 1990, between David
Altschiller and the registrant (incorporated by reference to Exhibit
10.8 to the 1991 10-K).
10.9 Letter Agreements, dated December 17, 1990 between Lawrence Saper,
Ernst Janzen, Bruce Hanson and Murray Pitkowsky, respectively, and the
registrant with respect to the termination of such officers' investment
in certain subsidiaries of the registrant (incorporated by reference to
Exhibit 10.9 to the 1991 10-K).
10.10 Employment Agreement, dated as of June 30, 1991, by and between
Lawrence Saper and the registrant (incorporated by reference to Exhibit
10.10 to Annual Report on Form 10-K for the fiscal year ended June 30,
1992).
10.11 Asset Purchase Agreement, by and between Boston Scientific Corporation
and the registrant, Datascope Trademark Corp., Datascope Investment
Corp., Datascope S.A.R.L., Datascope GmbH, Datascope B.V., and
Datascope Medical Company, Ltd., dated as of June 8, 1993 (incorporated
by reference to Exhibit 10.11 to the 1993 10-K).
21. Subsidiaries (incorporated by reference to Exhibit 22 to Annual Report
on Form 10-K for the fiscal year ended June 30, 1994).
23. Consent of Deloitte & Touche LLP.
27. Financial Data Schedule.
<PAGE> 1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-60169 of Datascope Corp. on Form S-8 of our report dated July 26, 1995,
appearing in this Annual Report on Form 10-K of Datascope Corp. for the year
ended June 30, 1995.
/s/ DELOITTE & TOUCHE LLP
- - ----------------------------
New York, New York
September 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CONSOLIDATED EARNINGS
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 3,096
<SECURITIES> 53,165
<RECEIVABLES> 46,863
<ALLOWANCES> (1,273)
<INVENTORY> 36,499
<CURRENT-ASSETS> 144,230
<PP&E> 76,959
<DEPRECIATION> (32,681)
<TOTAL-ASSETS> 206,863
<CURRENT-LIABILITIES> 33,486
<BONDS> 0
<COMMON> 161
0
0
<OTHER-SE> 163,158
<TOTAL-LIABILITY-AND-EQUITY> 206,863
<SALES> 195,700
<TOTAL-REVENUES> 195,700
<CGS> 68,853
<TOTAL-COSTS> 68,853
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55
<INCOME-PRETAX> 24,979
<INCOME-TAX> 7,640
<INCOME-CONTINUING> 17,339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,339
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
