<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________
Commission File Number 0-6516
DATASCOPE CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2529596
- --------------------------------------------------------------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 Philips Parkway, Montvale, New Jersey 07645-9998
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 391-8100
------------------------------
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report:
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 the past 90
days. YES X NO
--- ---
Number of Shares of Company's Common Stock outstanding as of April 30, 1999:
15,217,353.
<PAGE>
Datascope Corp. and Subsidiaries
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations
Third quarter and first nine months of fiscal 1999 compared to the
corresponding periods last year.
Net Sales
Net sales of $70.5 million in the third quarter and $192.9 million in
the first nine months of fiscal 1999 increased 17% and 9%,
respectively.
VasoSeal sales of $11.5 million in the third quarter were at a record
level and increased 51% above last year's sales of $7.6 million and
20% over the sequential quarter sales of $9.6 million. For the first
nine months of fiscal 1999, sales of VasoSeal increased 43% compared
to the same period last year. The increases reflect continued strong
growth of the arterial puncture sealing market, market share gain for
the company's original VasoSeal(R) VHD (Vascular Hemostasis Device)
product, a higher average selling price and increasing productivity of
the expanded direct sales organization in the U.S. The company's
second generation product, VasoSeal(R) ES, which recently received FDA
approval is expected to complement the VasoSeal VHD product line after
its planned market launch in the first quarter of fiscal 2000. In
April 1999, Datascope commenced U.S. clinical trials of its third
generation VasoSeal product.
Patient Monitoring product sales were $24.0 million in the third
quarter, an increase of 6% over last year's sales of $22.7 million.
Higher domestic sales of the Visa Central Station Monitors and
increased sales of new patient monitoring products, including the
Expert,(TM) Accutorr(R) Plus, MR Monitor and Gas Module II were
partially offset by a decline in sales of Passports, and as a result,
U.S. sales increased by 3%. International sales increased 18%,
benefitting from strengthened sales management in Europe, and
increased sales of Passport and Accutorr Plus monitors in European and
Latin American markets. In the first nine months of fiscal 1999, sales
of patient monitoring products increased 2% because the Company's
supplier could not produce enough new anesthetic gas modules (AGM) to
support the market launch of the new Expert in the first quarter. The
outside supplier of the AGM corrected its production problem and the
supply of AGMs caught up to market demand in the second quarter.
Sales of Cardiac Assist products were $29.0 million and $79.8 million,
in the third quarter and first nine months of fiscal 1999,
respectively, representing increases of 15% and 6% above the
respective prior year periods. The sales growth reflects excellent
customer response worldwide, to Datascope's two new cardiac assist
products: the System 98 balloon pump and the Profile 8 Fr.
intra-aortic balloon. For
<PAGE>
the second consecutive quarter the Cardiac Assist division continued
to strengthen its leading U.S. market share position. International
sales also increased due to new product sales to European direct
selling markets and international distributors.
Sales of InterVascular, Inc. increased 22% to $5.6 million in the
third quarter and 4% to $14.1 million for the first nine months of
fiscal 1999 reflecting higher sales of new products including the
Heparin coated graft which received the CE mark in July 1998, and an
improved woven graft which received FDA approval in February 1999.
On April 13, 1999, Datascope announced receipt of the CE mark for the
world's first antimicrobial vascular graft, the InterGard(R) Silver.
The InterGard Silver graft is designed to prevent infection by using
the broad spectrum, anti-infective properties of silver which is
released from the surface of the graft to surrounding tissues
following implantation. The InterGard Silver was launched at the
European Vascular Congress meeting in Marseille, France in late March
and is expected to begin shipping in April 1999.
The weaker U.S. dollar compared to major European currencies increased
total sales by approximately $200 thousand and $600 thousand in the
third quarter and first nine months of fiscal 1999, respectively.
Gross Profit (Net Sales Less Cost of Sales)
The gross profit percentage was 64.9% for the third quarter of fiscal
1999 compared to 66.1% last year, with the reduction primarily
attributable to a less favorable sales mix and lower selling prices
for older patient monitoring products and the 9.5 Fr. balloon
catheter. The gross profit percentage was 65.2% for the first nine
months of fiscal 1999 compared to 64.9% with the slight improvement
primarily attributable to higher selling prices for the VasoSeal VHD
product and cost reductions in Patient Monitoring, Collagen Products
and InterVascular, Inc.
Research and Development (R&D)
R&D expenses, as a percentage of sales, were 10.4% and 11.7% in the
third quarter and first nine months of fiscal 1999, respectively,
compared to 12.3% and 12.8% last year.
R&D expenses of $7.4 million and $22.6 million in the third quarter
and first nine months of fiscal 1999, respectively, declined slightly
as lower development expenses in the Cardiac Assist and Patient
Monitoring product lines were partially offset by increased
development expenses in Collagen Products.
Selling, General & Administrative Expenses (SG&A)
SG&A expenses, as a percentage of sales, were 41.8% and 43.3% in the
third quarter and first nine months of fiscal 1999, respectively,
compared to 41.2% and 42.4% in the corresponding periods last year.
<PAGE>
SG&A expenses increased $4.6 million or 19% in the third quarter and
$8.4 million or 11% in the first nine months as a result of the
expansion of the U.S. VasoSeal direct selling organization, higher
selling and marketing expenses in the Patient Monitoring and Cardiac
Assist product lines to support new product introductions and
headcount additions to fill open sales positions.
The weaker U.S. dollar compared to major European currencies increased
SG&A expenses by approximately $200 thousand and $500 thousand in the
third quarter and first nine months of fiscal 1999, respectively.
Restructuring Charges
During the third quarter, Datascope recorded pre-tax restructuring
charges of $864,000, or $0.04 per diluted share, related to
company-wide cost reduction initiatives. The cost reductions announced
during the third quarter represent employee severance and related
termination expenses for approximately 40 employees or 4% of the
company's domestic work force. The restructuring charges are expected
to provide annual savings of approximately $2.5 million.
Interest Income and Expense
The lower interest income in the third quarter and first nine months
of fiscal 1999 was attributable to a lower investment portfolio yield,
a reduction in the investment portfolio resulting from the Company's
common stock repurchase program ($11.5 million), increased inventory
purchases to support new product introductions and increased capital
additions, primarily for the purchase of land and construction in
progress for a new Patient Monitoring facility in Mahwah, New Jersey.
Other Income and Expense
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 currencies.
The net foreign exchange transaction gain or loss is reported in other
income and expense. Foreign exchange forward contracts outstanding at
March 31, 1999 totaled $3.0 million, all of which were in European
currencies, with maturities that do not exceed 12 months.
Genisphere
In the third quarter, Datascope management redefined the business
objectives and market entry strategy of the Genisphere business and
its proprietary 3DNA(TM) technology. As a result, the funding in
Genisphere will be reduced to approximately $1.0 million in fiscal
2000.
Net Earnings
Net earnings in the third quarter of fiscal 1999 were $6.0 million or
$0.38 per diluted share after the $864 thousand pre-tax restructuring
charge, compared to $6.2
<PAGE>
million, or $0.38 per diluted share. Net earnings for the first nine
months of fiscal 1999 were $14.5 million or $0.93 per diluted share
after the $864 thousand pre-tax restructuring charge compared to $14.5
million or $0.88 per diluted share for the first nine months last
year. The increase in earnings, excluding the restructuring charge,
for the three and nine month periods resulted primarily from sales
growth in all product lines partially offset by lower interest income
and higher other expense.
Liquidity and Capital Resources
Although working capital declined during the first nine months of fiscal
1999, the Company maintained its strong financial position. Working capital
was $113.5 million at March 31, 1999 compared to $117.9 million at June 30,
1998 and the current ratio was 4.0:1 compared to 4.2:1. The decline in
working capital and the current ratio was primarily attributable to using
$11.5 million for the Company's common stock repurchase program and capital
expenditures for the purchase of land and construction in progress for a
new Patient Monitoring facility in Mahwah, New Jersey.
In the first nine months cash was used to purchase $10.6 million of plant
and equipment, including $5.2 million for the Mahwah facility.
In May 1996 the Company announced a stock repurchase program of up to $20
million to buy shares of its common stock from time to time subject to
market conditions and other relevant factors affecting the Company. During
the first quarter of fiscal 1999, the Company completed the May 1996
repurchase program by purchasing $1.9 million of common stock remaining
under this program. A second stock repurchase program for up to $20 million
was approved by the board of directors on August 5, 1998 and through March
31, 1999 the Company purchased $9.6 million of stock under this second
repurchase program.
Management believes that the Company's financial resources are sufficient
to meet its projected cash requirements including the expenditures expected
under the stock repurchase program.
The moderate rate of current U.S. inflation has not significantly affected
the Company.
Year 2000
Many currently installed computer systems, software products and
manufactured products that utilize microprocessors are coded to accept only
two-digit entries in the date code field. These date code fields will need
to accept four-digit entries to distinguish twenty-first century dates from
twentieth century dates. This is commonly referred to as the "Year 2000
issue." The Company is aware of the Year 2000 issue and during fiscal 1998
commenced a program to identify, remediate, test and develop contingency
plans for the Year 2000 issue (the "Y2K Program"), to be substantially
completed by the fall of 1999. As of March 31, 1999, the results of the
assessment being conducted under the Y2K Program were as follows:
<PAGE>
Computer Information Systems (Company CIS). Most of the Company CIS was
found to be Year 2000 compliant. Several minor software programs that were
not compliant were modified by December 31, 1998 by the software vendor or
third party support vendor. Testing will continue throughout fiscal 1999 to
verify that software programs are year 2000 compliant.
Products. It was determined that all currently marketed patient monitor and
intra-aortic balloon pump products are Year 2000 compliant or are not
affected because the product does not contain a date field in the software.
A small number of patient monitor products that are no longer manufactured
are not Year 2000 compliant. In these cases, the Company will offer an
upgrade to any customer requiring Year 2000 compliance for their monitor,
to be paid for by the customer.
Third Parties. The Company solicited statements of compliance from its key
outside vendors, manufacturers and suppliers with respect to their CIS and
products. Approximately 63% of these parties responded and informed the
Company that they are currently compliant or plan to be compliant by
December 31, 1999. In the event that any of these parties are unable to
certify that they will be Year 2000 compliant by early 1999, the Company
will be reviewing its alternatives with respect to other vendors,
manufacturers or suppliers (as applicable). At the end of October 1998, the
Company solicited statements of compliance, from its key customers with
respect to their CIS. As of April 30, 1999, approximately 31% have
responded and informed the Company that they are currently compliant or
have plans to be compliant by December 31, 1999. In the event that its key
customers are unable to certify that they will be Year 2000 compliant by
mid 1999, the Company will be assessing the accounts receivable collection
risk of such key customers. Throughout the remainder of 1999 the Company
will continue its efforts to monitor the progress and obtain and evaluate
responses of its key vendors, suppliers, manufacturers and customers.
Costs. The cost to modify the computer software programs used in the
Company CIS is covered by existing service agreements with the software
vendors. The assessments, testing and verification of all Company CIS and
the Company's software and manufactured products was performed by existing
staff. No significant outside resources were required. Despite the use of
internal resources for the Y2K Program, there was no significant deferral
of other Company CIS projects. The Company does not currently anticipate
that the cost of the Y2K Program will be material to its financial
condition or results of operations.
The Year 2000 issue presents far-reaching implications, some of which
cannot be anticipated with any degree of certainty. Satisfactorily
addressing the Year 2000 issue is dependent on many factors, some of which
are not completely within the Company's control, such as the availability
of certain resources, third-party remediation plans and other factors.
Based on the assessment that has been made under the Y2K Program, and other
than as stated above, the Company has no other contingency plans in the
event of any Year 2000 noncompliance and does not currently believe that
any other contingency plans are necessary. In addition, management is not
able to determine the effect of any Year 2000 noncompliance (including with
respect to a "worst-case
<PAGE>
scenario") on the Company, and there can be no guarantee that any such
noncompliance would not have an adverse effect on the Company's CIS,
products, results of operations or financial condition.
Information Concerning Forward Looking Statements
This Management's Discussion includes forward-looking statements that
involve risks and uncertainties because of the possibility that market
conditions may change, particularly as the result of competitive activity
in the cardiac assist, vascular sealing device and other markets served by
the Company, and because of the Company's dependence on its suppliers for
certain patient monitoring and Collagen Products division products.
Additional risks are the ability of the Company to successfully introduce
and gain market acceptance for new products, continued demand for the
Company's products generally, the rapid and significant changes that
characterize the medical device and life science research industries and
the ability to continue to respond to such technological changes,
information provided to the Company by third parties concerning their year
2000 readiness and because the timing of regulatory approvals is uncertain,
as well as other risks detailed from time to time in documents filed by
Datascope with the Securities and Exchange Commission.
Quantitative and Qualitative Disclosures About Market 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 (which are primarily related to certain receivables
denominated in foreign currencies) 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. A portion of the net foreign exchange
transaction gain or loss is reported in cost of sales and the balance in
other income and expense.
As of March 31, 1999, the Company had $3.0 million of foreign exchange
forward contracts outstanding, all of which were in European currencies.
The foreign exchange forward 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.
<PAGE>
Datascope Corp. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
Mar 31, June 30,
1999 1998
--------- ---------
<S> <C> <C>
Assets (unaudited) (a)
Current Assets:
Cash and cash equivalents $ 3,975 $ 3,364
Short-term investments 23,601 46,314
Accounts receivable, less allowance for doubtful
accounts of $1,110 and $1,078 65,110 55,248
Inventories (Note 2) 49,782 40,246
Prepaid expenses and other current assets 9,154 10,036
--------- ---------
Total Current Assets 151,622 155,208
Property, Plant and Equipment, net of accumulated
depreciation of $51,536 and $46,780 59,921 50,946
Non-Current Marketable Securities 29,065 34,371
Other Assets 18,290 12,523
--------- ---------
$ 258,898 $ 253,048
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 11,890 $ 14,378
Accrued expenses 15,536 12,743
Accrued compensation 9,357 10,190
Taxes on income 1,302 --
--------- ---------
Total Current Liabilities 38,085 37,311
Other Liabilities 13,621 14,255
Stockholders' Equity (Notes 3, 4 and 5):
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, 16,623,617 and 16,394,387 shares 166 164
Additional paid-in capital 51,265 47,041
Treasury stock at cost, 1,414,128 and 793,400 shares (31,015) (18,122)
Retained earnings 192,042 177,509
Accumulated other comprehensive income (5,266) (5,110)
--------- ---------
207,192 201,482
--------- ---------
$ 258,898 $ 253,048
========= =========
</TABLE>
(a) Derived from audited financial statements
See notes to consolidated financial statements
<PAGE>
Datascope Corp. and Subsidiaries
Statements of Consolidated Earnings
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
March 31, March 31,
---------------------------------------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 192,900 $ 177,300 $ 70,500 $ 60,300
--------- --------- --------- ---------
Costs and Expenses:
Cost of sales 67,138 62,272 24,736 20,458
Research and development
expenses 22,618 22,775 7,355 7,399
Selling, general and
administrative expenses 83,501 75,120 29,491 24,851
Restructuring charges (Note 7) 864 -- 864 --
--------- --------- --------- ---------
174,121 160,167 62,446 52,708
--------- --------- --------- ---------
Operating Earnings 18,779 17,133 8,054 7,592
Other (Income) Expense:
Interest income (2,602) (3,796) (733) (1,235)
Interest expense 27 18 7 5
Other, net 535 120 377 83
--------- --------- --------- ---------
(2,040) (3,658) (349) (1,147)
--------- --------- --------- ---------
Earnings Before Taxes on Income 20,819 20,791 8,403 8,739
Taxes on Income 6,286 6,270 2,437 2,534
--------- --------- --------- ---------
Net Earnings $ 14,533 $ 14,521 $ 5,966 $ 6,205
========= ========= ========= =========
Earnings Per Share, Basic (Note 4) $ 0.95 $ 0.91 $ 0.39 $ 0.39
========= ========= ========= =========
Weighted Average Number of
Common and Common Equivalent
Shares Outstanding, Basic 15,254 15,924 15,181 15,762
========= ========= ========= =========
Earnings Per Share, Diluted (Note 4) $ 0.93 $ 0.88 $ 0.38 $ 0.38
========= ========= ========= =========
Weighted Average Number of
Common and Common Equivalent
Shares Outstanding, Diluted 15,684 16,445 15,662 16,323
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements
<PAGE>
Datascope Corp. and Subsidiaries
Statements of Consolidated Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-----------------------
1999 1998
-------- --------
<S> <C> <C>
Operating Activities:
Net cash (used in) provided by operating activities $ (5,156) $ 17,789
-------- --------
Investing Activities:
Capital expenditures (10,580) (5,322)
Purchases of marketable securities (23,856) (61,416)
Maturities of marketable securities 51,875 63,640
Acquisition of Polyprobe, Inc. and Alpha Probe Inc. (450) --
-------- --------
Net cash provided by (used in) investing activities 16,989 (3,098)
-------- --------
Financing Activities:
Treasury shares acquired under repurchase programs (11,531) (13,971)
Exercise of stock options and other 164 1,433
-------- --------
Net cash used in financing activities (11,367) (12,538)
-------- --------
Effect of exchange rates on cash 145 (899)
-------- --------
Increase (decrease) in cash and cash equivalents 611 1,254
Cash and cash equivalents, beginning of period 3,364 2,597
-------- --------
Cash and cash equivalents, end of period $ 3,975 $ 3,851
======== ========
Supplemental Cash Flow Information
Cash paid during the period for:
Income taxes $ 4,899 $ 3,263
-------- --------
Non-cash transactions:
Net transfers of inventory to fixed assets
for use as demonstration equipment $ 6,131 $ 4,974
-------- --------
Issuance of common stock for acquisition
of Polyprobe, Inc. and Alpha Probe, Inc. 2,700 $ --
-------- --------
</TABLE>
See notes to consolidated financial statements
<PAGE>
Datascope Corp. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The consolidated balance sheet as of March 31, 1999, the statements of
consolidated earnings for the three and nine month periods ended March 31, 1999
and 1998 and the statements of cash flows for the nine month periods ended March
31, 1999 and 1998 have been prepared by the Company, without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) have been made that are necessary to present fairly the financial
position, results of operations and cash flows for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that the condensed consolidated
financial statements included herein be read in conjunction with the financial
statements and notes included in the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1998. The results of operations for the period
ended March 31, 1999 are not necessarily indicative of a full year's operations.
The presentation of certain prior year information has been reclassified to
conform with the current year presentation.
2. Inventories
Inventories are stated at the lower of cost, determined on a first-in, first-out
basis, or market.
(In thousands)
-----------------------------------------
Mar 31, June 30,
1999 1998
---------------- ----------------
Materials $ 17,930 $ 13,323
Work in Process 6,693 6,620
Finished Goods 25,159 20,303
---------------- ----------------
$ 49,782 $ 40,246
================ ================
3. Stockholders' Equity
Changes in the components of stockholders' equity for the nine months ended
March 31, 1999 were as follows:
(In thousands)
---------------
Net income $ 14,533
Foreign currency translation adjustments (156)
Common stock and additional paid-in
capital effects of stock option activity 2,864
Purchases under stock repurchase plans (11,531)
---------------
Total increase in stockholders' equity $ 5,710
===============
<PAGE>
Datascope Corp. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
4. Earnings Per Share
In accordance with Financial Accounting Standard No. 128, "Earnings Per Share",
the Company discloses both Basic and Diluted Earnings Per Share. The
reconciliation of Basic Earnings Per Share to Diluted Earnings Per Share is as
follows:
<TABLE>
<CAPTION>
- --------------------------- ------------------------------- --------------------------------
For Three Months Ended March 31, 1999 March 31, 1998
- --------------------------- ------------------------------- --------------------------------
Net Per Share Net Per Share
Basic EPS Earnings Shares Amount Earnings Shares Amount
- --------- ------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Earnings available to
common shareholders $5,966 15,181 $ 0.39 $6,205 15,762 $ 0.39
Diluted EPS
- -----------
Options issued to employees -- 481 -- -- 561 --
------ ------ -------- ------ ------ --------
Earnings available to
common shareholders
plus assumed conversions $5,966 15,662 $ 0.38 $6,205 16,323 $ 0.38
====== ====== ======== ====== ====== ========
<CAPTION>
- --------------------------- ------------------------------- --------------------------------
For Nine Months Ended March 31, 1999 March 31, 1998
- --------------------------- ------------------------------- --------------------------------
Net Per Share Net Per Share
Basic EPS Earnings Shares Amount Earnings Shares Amount
- --------- ------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Earnings available to
common shareholders $14,533 15,254 $ 0.95 $14,521 15,924 $ 0.91
Diluted EPS
- -----------
Options issued to employees -- 430 -- -- 521 --
------ ------ -------- ------ ------ --------
Earnings available to
common shareholders
plus assumed conversions $14,533 15,684 $ 0.93 $14,521 16,445 $ 0.88
====== ====== ======== ====== ====== ========
</TABLE>
5. Comprehensive Income
Effective July 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS No. 130). This
statement requires the disclosure of comprehensive income and its components,
including net income, minimum pension liability adjustments, unrealized gains
and losses on available-for-sale securities and foreign currency translation
adjustments, in an annual financial statement displayed with the same prominence
as other annual financial statements. Interim reporting is required beginning
with the first quarter after adoption of the new standard and prior periods must
be restated.
<PAGE>
Datascope Corp. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
5. Comprehensive Income (continued)
The Company's comprehensive income for the three and nine months ended March 31,
1999 and 1998 was as follows:
(In thousands)
-----------------------------------------
Nine Months Ended Three Months Ended
3/31/99 3/31/98 3/31/99 3/31/98
------- ------- ------- -------
Net earnings $14,533 $14,521 $ 5,966 $ 6,205
Foreign currency translation (156) (1,656) (1,536) (620)
------- ------- ------- -------
Total comprehensive income $14,377 $12,865 $ 4,430 $ 5,585
======= ======= ======= =======
The adoption of SFAS No. 130 had no effect on the Company's reported results of
operations or financial position.
6. Acquisition of Polyprobe, Inc. and Alpha Probe, Inc.
On October 2, 1998, pursuant to merger agreements, the Company acquired 100% of
the outstanding common stock of Polyprobe, Inc. and Alpha Probe, Inc. The
purchase price for the acquisition of these companies was $3.2 million, paid
through the issuance of 125,141 shares of the Company's common stock and cash of
$450 thousand. Both acquisitions will be accounted for using the purchase method
of accounting. The excess of the purchase price over the fair value of the net
assets acquired, $3.1 million, has been allocated to goodwill and will be
amortized over a period of 10 years.
7. Restructuring Charges
During the third quarter of fiscal 1999, the Company recorded pre-tax
restructuring charges of $864 thousand, or $0.04 per diluted share, related to
company-wide cost reduction initiatives. The cost reductions announced during
the third quarter represent employee severance and related termination expenses
for approximately 40 employees or 4% of the Company's domestic work force.
<PAGE>
Part II:
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
none
b. Reports on Form 8-K. No reports on Form 8-K have been filed
during the quarter for which this report is filed.
<PAGE>
Form 10-Q
SIGNATURES
Pursuant to the requirements 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.
Registrant
By: /s/ Lawrence Saper
--------------------------------
Lawrence Saper
Chairman of the Board and
Chief Executive Officer
By: /s/ Leonard S. Goodman
--------------------------------
Leonard S. Goodman
Vice President and
Chief Financial Officer
Dated: May 14,1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CONSOLIDATED EARNINGS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B)
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 3,975
<SECURITIES> 23,601
<RECEIVABLES> 66,220
<ALLOWANCES> (1,110)
<INVENTORY> 49,782
<CURRENT-ASSETS> 151,622
<PP&E> 111,457
<DEPRECIATION> (51,536)
<TOTAL-ASSETS> 258,898
<CURRENT-LIABILITIES> 38,085
<BONDS> 0
0
0
<COMMON> 166
<OTHER-SE> 207,026
<TOTAL-LIABILITY-AND-EQUITY> 258,898
<SALES> 192,900
<TOTAL-REVENUES> 192,900
<CGS> 67,138
<TOTAL-COSTS> 67,138
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 229
<INTEREST-EXPENSE> 27
<INCOME-PRETAX> 20,819
<INCOME-TAX> 6,286
<INCOME-CONTINUING> 14,533
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,533
<EPS-PRIMARY> 0.95
<EPS-DILUTED> 0.93
</TABLE>
