<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 31,2000
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
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 Philips Parkway, Montvale, New Jersey 07645-9998
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(Address of principal executive offices)
(201) 391-8100
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(Registrant's telephone number, including area code)
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 28, 2000:
14,848,767.
<PAGE>
Datascope Corp. and Subsidiaries
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations
The following is a comparison of the third quarter and first nine months of
fiscal 2000 with the third quarter and first nine months of fiscal 1999.
Net Sales
Net sales of $77.6 million in the third quarter and $215.9 million in
the first nine months of fiscal 2000 increased 10% and 12%,
respectively.
Sales of the Cardiac Assist / Monitoring Products segment increased 8%
to $57.0 million in the third quarter and 8% to $160.1 million in the
first nine months of fiscal 2000.
Sales of cardiac assist products increased 4% to $30.0 million in
the third quarter despite a comparison to record third quarter
sales last year which resulted from the contribution of newly
introduced products: the Profile 8 Fr. intra-aortic balloon
catheter and the System 98 balloon pump. Worldwide market
acceptance of both of these products continued strong. Sales in
the first nine months of fiscal 2000 increased 6% to $84.5 million
due to increased sales of the new products.
Sales of patient monitoring products increased 12% to $27.0
million in the third quarter and 9% to $75.6 million in the first
nine months of fiscal 2000. The increased sales resulted primarily
from higher shipments of the Passport portable monitor, the new
Accutorr(R) Plus blood pressure monitor as well as strong
international shipments of the Company's new Passport 2(TM)
portable bedside monitor, which was introduced in international
markets last quarter. During the third quarter, we received FDA
510(k) clearance to market the new Passport 2. The new monitor
line began shipping in the U.S. in late March and is generating
strong demand.
Sales of the Collagen Products / Vascular Grafts segment increased 18%
to $20.6 million in the third quarter and 27% to $55.8 million in the
first nine months of fiscal 2000.
Sales of VasoSeal(R) arterial puncture sealing devices increased
30% to a record $15.0 million in the third quarter and 37% to
$40.3 million in the first nine months of fiscal 2000. VasoSeal's
strong sales growth reflects continued market growth, higher
average selling prices and increased sales force productivity.
VasoSeal ES, the Company's second generation product,
<PAGE>
which was introduced worldwide in the first quarter continued to
grow strongly. During the third quarter, VasoSeal ES sales
exceeded 20% of worldwide VasoSeal arterial puncture sealing
device sales.
International sales of InterVascular Inc., which account for close
to 90% of its total sales, increased 19% to $4.8 million in the
third quarter of fiscal 2000 due to continued strong demand for
new products, particularly the InterGard(R) Silver, the world's
first anti-microbial vascular graft. Domestic sales declined
sharply reflecting an inventory reduction by the Company's U.S.
distributor. As a result, worldwide sales of InterVascular in the
third quarter were 4% less than last year at $5.4 million. For the
first nine months of fiscal 2000 sales increased 6% to $14.9
million, attributable primarily to increased international
shipments of new products.
The stronger U.S. dollar compared to major European currencies
decreased total sales by approximately $1.1 million in the third
quarter and $2.5 million in the first nine months of fiscal 2000.
Gross Profit (Net Sales Less Cost of Sales)
The gross profit percentage was 61.4% for the third quarter and 61.6%
for the first nine months of fiscal 2000, compared to 61.4% for both
the third quarter and first nine months last year. The gross profit
percentage in the third quarter and first nine months of fiscal 2000
benefitted from increased sales of higher margin products, offset by
lower average selling prices for certain patient monitoring products.
Research and Development (R&D)
R&D expenses, as a percentage of sales, were 8.9% for the third quarter
and 9.1% for the first nine months of fiscal 2000, compared to 10.4%
and 11.7% for the corresponding periods last year.
R&D expenses were $6.9 million in the third quarter and $19.7 million
for the first nine months of fiscal 2000 compared to $7.4 million and
$22.6 million for the corresponding periods last year. The decrease was
primarily due to cost savings from the restructuring program
implemented in the second half of last year and reduced development
expenses in the Patient Monitoring product line.
Selling, General & Administrative Expenses (SG&A)
SG&A expenses, as a percentage of sales, were 38.7% in the third
quarter and 40.1% in the first nine months of fiscal 2000, compared to
38.6% and 39.7% in the corresponding periods last year.
<PAGE>
SG&A expenses increased $2.8 million or 10% in the third quarter and
$10.0 million or 13% in the first nine months of fiscal 2000 primarily
as a result of increased corporate expenses and higher selling expenses
in the VasoSeal product line, resulting from the sales force expansion.
The stronger U.S. dollar compared to major European currencies
decreased SG&A expenses by approximately $0.7 million in the third
quarter and $1.6 million in the first nine months of fiscal 2000.
Restructuring Charge - Third Quarter Fiscal 1999
During the third quarter of fiscal 1999 we recorded a pretax
restructuring charge of $864 thousand, equivalent to $605 thousand
after tax or $0.04 per diluted share. Based on a review by senior
management of all company operations in the first half of fiscal 1999,
a restructuring plan was approved to reduce our cost structure and
streamline certain operations. The restructuring plan resulted in a
workforce reduction of approximately 40 employees in certain
administrative, R&D and manufacturing functions. The annual cost
savings for the workforce reduction is approximately $2.5 million. The
workforce reduction did not have any significant impact on our
operations.
Interest Income and Expense
Interest income in the third quarter of $0.9 million increased $0.2
million or 29% compared to the third quarter last year. The increased
interest income in the third quarter of fiscal 2000 was attributable to
a 17% increase in the average investment portfolio from $56.9 million
to $66.7 million and an increase in the average yield to 5.6% from
5.1%. Interest income of $2.6 million for the first nine months of
fiscal 2000 increased 3% compared to the same period last year, in line
with a 3% increase in the average investment portfolio.
Income Taxes
The consolidated effective tax rate was 32.0% for the third quarter and
31.5% for the first nine months of fiscal 2000 compared to 29.0% and
30.2% for the corresponding periods last year. The higher tax rate in
the fiscal 2000 periods was due mainly to the expiration of a tax
exemption in an industrial development zone in Europe on December 31,
1999.
<PAGE>
Net Earnings
Net earnings were $10.5 million or $0.66 per diluted share in the third
quarter and $22.7 million or $1.42 per diluted share in the first nine
months of fiscal 2000 compared to $6.0 million, or $0.38 per diluted
share and $14.5 million or $0.93 per diluted share for the
corresponding periods last year.
Net earnings in the third quarter and first nine month periods of
fiscal 2000 and 1999 included the following special items:
Third Quarter Fiscal 2000
o gain on sale of technology of $2.5 million after tax or $0.16 per
diluted share.
Third Quarter Fiscal 1999
o restructuring charge of $605 thousand after tax or $.04 per
diluted share related to a workforce reduction program.
Excluding special items, net earnings were $8.0 million or $0.50 per
diluted share in the third quarter and $20.2 million or $1.26 per
diluted share in the first nine months of fiscal 2000, compared to $6.6
million or $0.42 per diluted share and $15.1 million or $0.97 per
diluted share for the corresponding periods last year. The increased
earnings reflect:
o sales growth
o a more profitable product mix
o cost savings from the restructuring program implemented in the
second half of fiscal 1999
Liquidity and Capital Resources
Working capital was $115.9 million at March 31, 2000, compared to
$125.4 million at June 30, 1999 and the current ratio was 3.5:1
compared to 4.0:1. The lower working capital and current ratio were
impacted primarily by a decline in cash and short term investments
attributable to the stock repurchase programs and construction of the
Mahwah, New Jersey facility, and an increase in accrued expenses
related to higher sales.
In the first nine months of fiscal 2000 cash provided by operations was
$29.8 million, compared to a cash use of $5.2 million last year. The
$35.0 million improvement is primarily attributable to higher net
earnings, depreciation and amortization, and lower accounts receivable,
partially offset by increased inventories to support new product
introductions. Net cash used in investing activities was $12.3 million,
primarily attributable to the purchase of $13.4 million of property,
plant and equipment and a $2.5 million equity investment in AMG, and an
allied company (see "Equity Investment" section below). Net cash used
in financing activities was $19.7 million, attributable to stock
repurchases of $21.7 million and $1.2 million dividends paid, partially
offset by $3.2 million cash received from exercise of stock options.
On September 14, 1999 we announced a program to buy $30 million of our
common stock. Through March 31, 2000 we expended $12.7 million to
purchase about 386
<PAGE>
thousand shares of our common stock under this program. In September
1999, we completed our second stock repurchase program to buy $20
million of our common stock.
On February 17, 2000, the Board of Directors declared a quarterly cash
dividend of $0.04 per share payable on March 30, 2000 to stockholders
of record at March 2, 2000.
We believe our financial resources are sufficient to meet our projected
cash requirements.
The moderate rate of current U.S. inflation has not significantly
affected the Company.
Year 2000
Starting in fiscal 1998 we commenced a program to identify, remediate,
test and develop contingency plans for the Year 2000 issue in our
computer information systems, products, vendors, suppliers and
customers.
As of May 12, 2000, we had not experienced any Year 2000 problems
regarding our computer information systems (CIS), products, vendors,
suppliers or customers that caused disruptions in any of our business
operations.
The cost to modify the computer software programs used in our CIS was
covered by existing service agreements with the software vendors. The
assessments, testing and verification of our CIS products was performed
by existing staff and no significant outside resources were required.
Despite the use of internal resources for the Year 2000 Program, there
was no significant deferral of other CIS projects. We do not anticipate
that any remaining cost for the Year 2000 Program will be material to
our financial condition or results of operations.
Equity Investment
During the third quarter fiscal 2000 we purchased a 30% equity interest
in AMG GmbH, a private German distributor of proprietary stent
products, and in an allied development and manufacturing company. The
cost of the purchase was $2.5 million, including $0.3 million of
related expenses. The purchase agreement for AMG and the allied company
includes an option to acquire the remaining 70% of the companies at an
established price within two years. The investment was modestly
accretive in the third quarter.
Euro Conversion
As part of the European Economic and Monetary Union (EMU), a single
currency (Euro) will replace the national currencies of most of the
European countries in which we conduct our business. The conversion
rates between the Euro and the participating nations' currencies have
been fixed irrevocably as of January 1, 1999. During a transition
period from January 1, 1999 to December 31, 2001 parties may settle
transactions using either Euro or the participating country's national
currency. The participating national currencies will be removed from
circulation between January 1, 2002 and June 30, 2002 and replaced by
Euro notes and coinage. Full conversion of all affected country
operations to
<PAGE>
the Euro currency is expected to be completed by the time national
currencies are removed from circulation.
We are currently involved in the phased conversion to the Euro and the
effects on revenues, costs and various business strategies are being
assessed. We are able to conduct business in both the Euro and national
currencies on an as needed basis, as required by the European Union.
The cost of software and business process conversion is not expected to
be material to our financial condition or results of operations.
Information Concerning Forward Looking Statements
This Management's Discussion and Analysis of Results of Operations and
Financial Condition 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 and other markets served by the Company,
the Company's ability to gain market acceptance for new products and
the Company's dependence on certain suppliers for patient monitoring
and VasoSeal products. Additional risks are the ability of the Company
to successfully introduce new products, continued demand for the
Company's products generally, the rapid and significant changes that
characterize the medical device industry and the ability to continue to
respond to such technological changes, the uncertain timing of
regulatory approvals, 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
Due to the global nature of our operations, we are subject to the
exposures that arise from foreign exchange rate fluctuations. Our
objective in managing the exposure to foreign currency fluctuations is
to minimize net earnings volatility associated with foreign exchange
rate changes. We enter into foreign currency forward exchange contracts
to hedge a substantial portion of the foreign currency transactions
which are primarily related to certain intercompany receivables
denominated in foreign currencies. Our hedging activities do not
subject us to exchange rate risk because gains and losses on these
contracts offset losses and gains on the assets, liabilities and
transactions being hedged.
We do not use derivative financial instruments for trading purposes.
None of our foreign currency forward exchange contracts are designated
as economic hedges of our net investment in foreign subsidiaries.
As of March 31, 2000, we had $4.8 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 us to exchange foreign currencies for
U.S. dollars at maturity, at rates agreed to when the contract is
signed.
<PAGE>
Datascope Corp. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
--------------- ---------------
<S> <C> <C>
Assets (unaudited) (a)
Current Assets:
Cash and cash equivalents $ 2,851 $ 4,572
Short-term investments 43,600 45,539
Accounts receivable less allowance for
doubtful accounts of $1,315 and $1,192 63,136 64,289
Inventories 43,888 42,747
Prepaid expenses and other current assets 9,790 9,439
--------------- ---------------
Total Current Assets 163,265 166,586
Property, Plant and Equipment, net of accumulated
depreciation of $58,390 and $53,353 72,739 63,321
Non-Current Marketable Securities 18,914 20,496
Other Assets 23,347 19,091
--------------- ---------------
$ 278,265 $ 269,494
=============== ===============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 9,782 $ 10,565
Accrued expenses 14,433 10,721
Accrued compensation 15,455 13,804
Deferred revenue 4,364 4,380
Taxes on income 3,286 1,695
--------------- ---------------
Total Current Liabilities 47,320 41,165
Other Liabilities 14,089 13,874
Stockholders' Equity
Preferred stock, par value $1.00 per share:
Authorized 5 million shares; Issued, none -- --
Common stock, par value $.01 per share:
Authorized, 45 million shares; Issued and
outstanding, 16,921 and 16,663 shares 169 167
Additional paid-in capital 56,528 52,570
Treasury stock at cost, 2,083 and 1,416 shares (52,740) (31,079)
Retained earnings 220,413 198,921
Accumulated other comprehensive income (7,514) (6,124)
--------------- ---------------
216,856 214,455
--------------- ---------------
$ 278,265 $ 269,494
=============== ===============
</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,
---------------------------------- --------------------------------
2000 1999 2000 1999
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Net Sales $ 215,900 $ 192,900 $ 77,600 $ 70,500
---------------- ---------------- -------------- --------------
Costs and Expenses:
Cost of sales 82,885 74,443 29,978 27,197
Research and development
expenses 19,650 22,618 6,870 7,355
Selling, general and
administrative expenses 86,601 76,555 30,008 27,248
Gain on sale of technology (3,825) -- (3,825) --
Restructuring charges -- 864 -- 864
---------------- ---------------- -------------- --------------
185,311 174,480 63,031 62,664
---------------- ---------------- -------------- --------------
Operating Earnings 30,589 18,420 14,569 7,836
Other (Income) Expense:
Interest income (2,661) (2,602) (939) (733)
Interest expense 15 27 5 7
Other, net 110 176 60 159
---------------- ---------------- -------------- --------------
(2,536) (2,399) (874) (567)
---------------- ---------------- -------------- --------------
Earnings Before Taxes on Income 33,125 20,819 15,443 8,403
Taxes on Income 10,429 6,286 4,948 2,437
---------------- ---------------- -------------- --------------
Net Earnings $ 22,696 $ 14,533 $ 10,495 $ 5,966
================ ================ ============== ==============
Earnings Per Share, Basic $ 1.50 $ 0.95 $ 0.70 $ 0.39
================ ================ ============== ==============
Weighted Average Number of
Common and Common Equivalent
Shares Outstanding, Basic 15,084 15,254 15,050 15,181
================ ================ ============== ==============
Earnings Per Share, Diluted $ 1.42 $ 0.93 $ 0.66 $ 0.38
================ ================ ============== ==============
Weighted Average Number of
Common and Common Equivalent
Shares Outstanding, Diluted 16,022 15,684 15,989 15,662
================ ================ ============== ==============
</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,
-----------------------------------
2000 1999
---------------- -------------
<S> <C> <C>
Operating Activities:
Net cash provided by (used in) operating activities $ 29,940 $ (5,156)
---------------- -------------
Investing Activities:
Capital expenditures (13,373) (10,580)
Purchases of marketable securities (66,970) (23,856)
Maturities of marketable securities 70,490 51,875
AMG equity investment (2,525) --
Acquisition of Polyprobe, Inc. and Alpha Probe, Inc. -- (450)
---------------- -------------
Net cash (used in) provided by investing activities (12,378) 16,989
---------------- -------------
Financing Activities:
Treasury shares acquired under repurchase programs (21,661) (12,893)
Exercise of stock options and other 3,197 1,526
Cash dividends paid (1,204) --
---------------- -------------
Net cash used in financing activities (19,668) (11,367)
---------------- -------------
Effect of exchange rates on cash 385 145
---------------- -------------
(Decrease) increase in cash and cash equivalents (1,721) 611
Cash and cash equivalents, beginning of period 4,572 3,364
---------------- -------------
Cash and cash equivalents, end of period $ 2,851 $ 3,975
================ =============
Supplemental Cash Flow Information
Cash Paid during the period for:
Income taxes $ 7,803 $ 4,899
---------------- -------------
Non-cash transactions:
Net transfers of inventory to fixed assets
for use as demonstration equipment $ 5,794 $ 6,131
---------------- -------------
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, in thousands except per share data)
1. Basis of Presentation
The consolidated financial statements include the accounts of Datascope Corp.
and its subsidiaries (the "Company" - which may be referred to as "our", "us" or
"we").
The consolidated balance sheet as of March 31, 2000, the statements of
consolidated earnings for the three and nine month periods ended March 31, 2000
and 1999 and the statements of cash flows for the nine month periods ended March
31, 2000 and 1999 have been prepared by the Company, without audit. In our
opinion, 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. We recommend that you read these condensed
consolidated financial statements in conjunction with the financial statements
and notes included in our Annual Report on Form 10-K for the fiscal year ended
June 30, 1999. The results of operations for the period ended March 31, 2000 are
not necessarily indicative of a full year's operations.
We have reclassified certain prior year information to conform with the current
year presentation.
2. Inventories
Inventories are stated at the lower of cost or market, with cost determined on a
first-in, first-out basis.
------------ ------------
March 31, June 30,
2000 1999
------------ ------------
Materials $15,182 $15,788
Work in Process 5,550 6,229
Finished Goods 23,156 20,730
------------ ------------
$43,888 $42,747
============ ============
3. Stockholders' Equity
Changes in the components of stockholders' equity for the nine months ended
March 31, 2000 were as follows:
Net income $22,696
Foreign currency translation adjustments (1,390)
Common stock and additional paid-in
capital effects of stock option activity 3,960
Cash dividends on common stock (1,204)
Purchases under stock repurchase plans (21,661)
------------
Total increase in stockholders' equity $2,401
============
<PAGE>
Datascope Corp. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited, in thousands except per share data)
4. Earnings Per Share
In accordance with Financial Accounting Standard No. 128, "Earnings Per Share",
we disclose 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, 2000 March 31, 1999
- --------------------------------- ----------------------------------------- -------------------------------------
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 $10,495 15,050 $0.70 $5,966 15,181 $0.39
Diluted EPS
- -----------
Options issued to employees -- 939 (0.04) -- 481 (0.01)
------------ ------------ ------------ ------------ ----------- -----------
Earnings available to
common shareholders
plus assumed conversions $10,495 15,989 $0.66 $5,966 15,662 $0.38
============ ============ ============ ============ =========== ===========
<CAPTION>
- --------------------------------- ---------------------------------------- -------------------------------------
For Nine Months Ended March 31, 2000 March 31, 1999
- --------------------------------- ----------------------------------------- -------------------------------------
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 $22,696 15,084 $1.50 $14,533 15,254 $0.95
Diluted EPS
- -----------
Options issued to employees -- 938 (0.08) -- 430 (0.02)
------------ ------------ ------------ ------------ ----------- -----------
Earnings available to
common shareholders
plus assumed conversions $22,696 16,022 $1.42 $14,533 15,684 $0.93
============ ============ ============ ============ =========== ===========
</TABLE>
5. Comprehensive Income
In accordance with Financial Accounting Standard No. 130, "Reporting
Comprehensive Income", we disclose comprehensive income and its components. For
the three and nine month periods ended March 31, 2000 and 1999 our comprehensive
income was as follows:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
-------------------------- -------------------------
3/31/00 3/31/99 3/31/00 3/31/99
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net earnings $22,696 $14,533 $10,495 $5,966
Foreign currency translation
gain or (loss) (1,390) (156) (974) (1,536)
------------ ------------ ------------ -----------
Total comprehensive income $21,306 $14,377 $9,521 $4,430
============ ============ ============ ===========
</TABLE>
<PAGE>
Datascope Corp. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited, in thousands except per share data)
6. Segment Information
Our business is the development, manufacture and sale of medical devices. We
have two reportable segments, Cardiac Assist/Monitoring Products and Collagen
Products/Vascular Grafts.
The Cardiac Assist/Monitoring Products segment includes electronic intra-aortic
balloon pumps and catheters that are used in the treatment of vascular disease
and electronic physiological monitors that provide for patient safety and
management of patient care.
The Collagen Products/Vascular Grafts segment includes extravascular
hemostasis devices which are used to seal arterial puncture wounds to stop
bleeding after cardiovascular catheterization procedures and a proprietary line
of knitted and woven vascular grafts and patches for reconstructive vascular and
cardiovascular surgery.
We have aggregated our product lines into two segments based on similar
manufacturing processes, distribution channels, regulatory environments and
customers. Management evaluates the revenue and profitability performance of
each of our product lines to make operating and strategic decisions. We have no
intersegment revenue. Net sales and operating margin are shown below.
<TABLE>
<CAPTION>
Cardiac Collagen
Assist / Products / Corporate
Monitoring Vascular and
Products Grafts Other Consolidated
-------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Three months ended March 31, 2000
- -----------------------------------------
Net sales to external customers $56,976 $20,624 -- $77,600
-----------------------------------------------------------------
Operating margin $7,483 $5,538 ($2,277) $10,744
-----------------------------------------------------------------
Three months ended March 31, 1999
- -----------------------------------------
Net sales to external customers $52,961 $17,539 -- $70,500
-----------------------------------------------------------------
Operating margin $7,135 $2,542 ($977) $8,700
-----------------------------------------------------------------
Nine months ended March 31, 2000
- -----------------------------------------
Net sales to external customers $160,137 $55,763 -- $215,900
-----------------------------------------------------------------
Operating margin $18,350 $11,704 ($3,290) $26,764
-----------------------------------------------------------------
Nine months ended March 31, 1999
- -----------------------------------------
Net sales to external customers $148,958 $43,942 -- $192,900
-----------------------------------------------------------------
Operating margin $18,153 $3,680 ($2,549) $19,284
-----------------------------------------------------------------
<CAPTION>
Nine Months Ended Three Months Ended
Reconciliation to consolidated earnings ------------------------------ ---------------------------------
before income taxes : 3/31/00 3/31/99 3/31/00 3/31/99
- ----------------------------------------- -------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Consolidated operating margin $26,764 $19,284 $10,744 $8,700
Interest income, net 2,646 2,575 934 726
Other (expense) income (110) (176) (60) (159)
Special items ( a ) 3,825 (864) 3,825 (864)
-------------- -------------- ---------------- ----------------
Consolidated earnings before taxes $33,125 $20,819 $15,443 $8,403
============== ============== ================ ================
</TABLE>
( a ) Gain on sale of technology in FY 2000 and restructuring costs in FY 1999.
<PAGE>
Datascope Corp. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited, in thousands except per share data)
7. Restructuring Program
Based upon a review by senior management of all company operations, a
restructuring plan was approved in fiscal year 1999 to reduce the company's cost
structure and streamline certain operations. We recorded pre-tax restructuring
charges totaling $3.43 million, or $0.14 per share, during the second half of
fiscal 1999 related to the following cost reduction initiatives:
o Closure of InterVascular's Clearwater, Florida leased manufacturing
facility in order to reduce costs and centralize operations in our
expanded manufacturing facility in LaCiotat, France.
o Workforce reductions in certain administrative, R&D and manufacturing
positions throughout the company.
o Writedown of certain Genisphere fixed assets based on the revised
market entry strategy for the proprietary 3DNA technology. Under the
revised market entry stategy we will focus product development on
improving the performance of newly-developing technologies for drug
discovery used by the pharmaceutical and biotech industries.
A summary of the restructuring charges and remaining liability at March 31, 2000
is shown below.
<TABLE>
<CAPTION>
Clearwater Genisphere
Plant Employee Asset
Closure Severance Writedown Total
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Fiscal 1999 restructuring charges $880 $1,674 $875 $3,429
Utilized through March 31, 2000 633 1,220 875 2,728
-------------- -------------- -------------- ---------------
Remaining liability at March 31, 2000 $247 $454 -- $701
============== ============== ============== ===============
</TABLE>
The remaining liability is for severance payments for employees who will be
leaving over the next six months. No significant additional expenditures are
anticipated to complete the restructuring program.
<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
------------------------------
Chairman of the Board and
Chief Executive Officer
By: \s\ Leonard S. Goodman
------------------------------
Vice President, CFO and Treasurer
Dated: May 5, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Consolidated Balance Sheets and Statements of Consolidated Earnings and is
qualified in its entirety by reference to such.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 2,851
<SECURITIES> 43,600
<RECEIVABLES> 64,451
<ALLOWANCES> (1,315)
<INVENTORY> 43,888
<CURRENT-ASSETS> 163,265
<PP&E> 131,129
<DEPRECIATION> (58,390)
<TOTAL-ASSETS> 278,265
<CURRENT-LIABILITIES> 47,320
<BONDS> 0
0
0
<COMMON> 169
<OTHER-SE> 216,687
<TOTAL-LIABILITY-AND-EQUITY> 278,265
<SALES> 215,900
<TOTAL-REVENUES> 215,900
<CGS> 82,885
<TOTAL-COSTS> 82,885
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15
<INCOME-PRETAX> 33,125
<INCOME-TAX> 10,429
<INCOME-CONTINUING> 22,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,696
<EPS-BASIC> 1.50
<EPS-DILUTED> 1.42
</TABLE>
