<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 December 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 January 31, 2000:
15,060,120.
<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 second quarter and first six months of
fiscal 2000 with the second quarter and first six months of fiscal 1999.
Net Sales
---------
Net sales were $74.8 million in the second quarter and $138.3 million
in the first six months of fiscal 2000 representing an increase of 12%
and 13% compared to the second quarter and first six months of fiscal
1999.
Sales of the Cardiac Assist / Monitoring Products segment increased 7%
to $56.3 million in the second quarter and 7% to $103.2 million in the
first six months of fiscal 2000.
Sales of cardiac assist products increased 8% to $29.3 million in
the second quarter and 7% to $54.5 million in the first six months
of fiscal 2000. The higher sales were attributable to continued
excellent worldwide market acceptance of the Profile 8 Fr.
intra-aortic balloon catheter and the System 98 balloon pump. Both
of these products, introduced to the market last year, continue to
contribute to the Company's substantial market share. During the
second quarter, Profile 8 Fr. sales exceeded 50% of worldwide
balloon catheter sales.
Sales of patient monitoring products increased 7% to $27.1 million
in the second quarter and 8% to $48.7 million in the first six
months of fiscal 2000. The increased sales resulted primarily from
higher shipments of the Passport portable monitor and the newer
Accutorr(R) Plus blood pressure monitor. During the second
quarter, the Company introduced Passport 2, a new generation of
portable bedside monitors, to the international markets. Shipments
began in late December and production is ramping up to satisfy
backlog and a strong incoming order rate.
Sales of the Collagen Products / Vascular Grafts segment increased 29%
to $18.5 million in the second quarter and 33% to $35.1 million in the
first six months of fiscal 2000.
Sales of VasoSeal(R) arterial puncture sealing devices climbed 39%
to a record $13.3 million in the second quarter and 42% to $25.3
million in the first six months of fiscal 2000. VasoSeal's strong
sales growth reflects continued market growth, higher average
selling prices and greater productivity from the expanded
<PAGE>
field sales organization. The VasoSeal product line consists of
the VasoSeal VHD, the original VasoSeal, and VasoSeal ES which was
introduced worldwide in the first quarter of fiscal 2000. In
January 2000, VasoSeal VHD was cleared for reimbursement for
certain procedures by the Ministry of Health in Japan. We expect
that this clearance will provide a competitive advantage and
stimulate sales growth in Japan over time.
Sales of InterVascular, Inc. increased 7% to $4.9 million in the second
quarter and 12% to $9.6 million in the first six months of fiscal 2000.
The sales increase was attributable to continued strong demand for new
products, particularly the InterGard(R) Silver, the world's first
anti-microbial vascular graft which was launched in Europe during the
fourth quarter last year. International sales, which account for a
substantial portion of total sales, increased 22% in the second quarter
and 19% in the first six months of fiscal 2000. Domestic sales declined
sharply in the second quarter and first six months of fiscal 2000 as
the Company's U.S. distributor reduced its inventory.
The stronger U.S. dollar compared to major European currencies
decreased total sales by approximately $1 million in the second quarter
and $1.3 million in the first six months of fiscal 2000.
Gross Profit (Net Sales Less Cost of Sales)
-------------------------------------------
The gross profit percentage was 61.5% for the second quarter and 61.7%
for the first six months of fiscal 2000, compared to 61.5% and 61.4%
for the corresponding periods last year. The gross profit percentage in
the second quarter and first six months of fiscal 2000 benefitted from
increased sales of higher margin products, which was offset by lower
average selling prices for patient monitoring products.
Research and Development (R&D)
------------------------------
R&D expenses, as a percentage of sales, were 8.3% for the second
quarter and 9.2% for the first six months of fiscal 2000, compared to
11.1% and 12.5% for the corresponding periods last year.
R&D expenses were $6.2 million in the second quarter and $12.8 million
for the first six months of fiscal 2000 compared to $7.4 million and
$15.3 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 40.1% in the second
quarter and 40.9% in the first six months of fiscal 2000, compared to
38.7% and 40.3% in the corresponding periods last year.
<PAGE>
SG&A expenses increased $4.2 million or 16% in the second quarter and
$7.3 million or 15% in the first six months of fiscal 2000 as a result
of increased corporate expenses and higher selling expenses in the
VasoSeal and Patient Monitoring product lines, resulting from the sales
force expansions.
The stronger U.S. dollar compared to major European currencies
decreased SG&A expenses by approximately $600 thousand in the second
quarter and $900 thousand in the first six months of fiscal 2000.
Interest Income and Expense
---------------------------
Interest income in the second quarter of $0.8 million was unchanged
compared to the second quarter last year. Interest income was $1.7
million for the first six months of fiscal 2000 compared to $1.8
million last year, with the 7% decline attributable to a 4% reduction
in the average investment portfolio from $67.6 million to $65.2 million
and a decline in the average yield to 5.3% from 5.5% . The decline in
the average investment portfolio of $2.4 million reflected cash
utilization for (a) the stock repurchase program, (b) inventory to
support new product introductions, and (c) capital expenditures related
to the new Patient Monitoring facility in Mahwah, New Jersey.
Income Taxes
------------
The consolidated effective tax rate was 31.0% for the second quarter
and first six months of fiscal 2000 and fiscal 1999.
Net Earnings
------------
Net earnings increased 25% to $7.4 million or $0.46 per diluted share
in the second quarter of fiscal 2000 compared to $5.9 million, or
$0.38 per diluted share. Net earnings for the first six months of
fiscal 2000 were $12.2 million or $0.76 per diluted share compared to
$8.6 million or $0.55 per diluted share for the first six months last
year. The increase in earnings primarily reflects:
o sales growth in all product lines
o a more profitable product mix, and
o the cost savings from the restructuring program implemented in
the second half of fiscal 1999.
Liquidity and Capital Resources
Working capital was $128.6 million at December 31, 1999 compared to $125.4
million at June 30, 1999. The current ratio was unchanged at 4.0:1.
In the first six months of fiscal 2000 cash provided by operations was
$12.4 million, compared to a cash use of $4.9 million last year. The
improvement is primarily attributable to higher net earnings, depreciation
and amortization, and lower accounts
<PAGE>
receivable, partially offset by increased inventories to support new
product introductions. Net cash used in investing activities was $5.9
million, primarily attributable to the purchase of $8.2 million of
property, plant and equipment and a significant increase in the purchases
of marketable securities, partially offset by maturities of marketable
securities. Net cash used in financing activities was $8.1 million,
attributable to the stock repurchase program completed in September 1999
($10.3 million), partially offset by cash received from exercise of stock
options.
On September 14, 1999 we announced a program to buy $30 million of our
common stock. In September 1999, we completed our second stock repurchase
program to buy $20 million of our common stock.
On December 7, 1999, the Board of Directors inaugurated a quarterly cash
dividend of $0.04 per share payable on January 14, 2000 to stockholders of
record at December 18, 1999.
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
The Year 2000 issue is a term used to describe problems that could have
occurred when computer systems were unable to accurately interpret dates
after December 31, 1999. These problems result from the fact that many
software programs use the two digits "00" to represent the 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 February 11, 2000, we had not experienced any Year 2000 problems
regarding our computer information systems, 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.
<PAGE>
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 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, vascular sealing device and other markets served by us, because of
our dependence on our suppliers for certain patient monitoring and collagen
products, the possibility that we will not gain market acceptance in Japan
for VasoSeal VHD because the clinical practice of physicians and hospitals
may not change to allow for reimbursement under the guidelines set by the
Ministry of Health and the risk that we may not gain a competitive
advantage because competitors may obtain Ministry of Health reimbursement
approval for their vascular sealing devices. Additional risks are our
ability to successfully introduce and gain market acceptance for new
products, continued demand for our 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 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
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 our 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
<PAGE>
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 December 31, 1999, we had $4.1 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>
Dec 31, June 30,
1999 1999
------- --------
Assets (unaudited) (a)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,067 $ 4,572
Short-term investments 50,383 45,539
Accounts receivable less allowance for
doubtful accounts of $1,318 and $1,192 58,458 64,289
Inventories 49,369 42,747
Prepaid expenses and other current assets 10,232 9,439
--------- ---------
Total Current Assets 171,509 166,586
Property, Plant and Equipment, net of accumulated
depreciation of $57,254 and $53,353 69,723 63,321
Non-Current Marketable Securities 13,368 20,496
Other Assets 20,740 19,091
--------- ---------
$ 275,340 $ 269,494
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 11,029 $ 10,565
Accrued expenses 16,113 10,721
Accrued compensation 10,916 13,804
Deferred revenue 3,977 4,380
Taxes on income 924 1,695
--------- ---------
Total Current Liabilities 42,959 41,165
Other Liabilities 14,121 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, 16,788 and 16,663 shares 168 167
Additional paid-in capital 55,612 52,570
Treasury stock at cost, 1,758 and 1,416 shares (41,501) (31,079)
Retained earnings 210,521 198,921
Accumulated other comprehensive income (6,540) (6,124)
--------- ---------
218,260 214,455
--------- ---------
$ 275,340 $ 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>
Six Months Ended Three Months Ended
December 31, December 31,
---------------------------------------------------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 138,300 $ 122,400 $ 74,800 $ 66,700
--------- --------- --------- ---------
Costs and Expenses:
Cost of sales 52,907 47,246 28,783 25,652
Research and development
expenses 12,780 15,263 6,193 7,429
Selling, general and
administrative expenses 56,593 49,307 29,987 25,798
--------- --------- --------- ---------
122,280 111,816 64,963 58,879
--------- --------- --------- ---------
Operating Earnings 16,020 10,584 9,837 7,821
Other (Income) Expense:
Interest income (1,722) (1,869) (855) (797)
Interest expense 10 20 8 14
Other, net 50 17 2 73
--------- --------- --------- ---------
(1,662) (1,832) (845) (710)
--------- --------- --------- ---------
Earnings Before Taxes on Income 17,682 12,416 10,682 8,531
Taxes on Income 5,481 3,849 3,311 2,645
--------- --------- --------- ---------
Net Earnings $ 12,201 $ 8,567 $ 7,371 $ 5,886
========= ========= ========= =========
Earnings Per Share, Basic $ 0.81 $ 0.56 $ 0.49 $ 0.39
========= ========= ========= =========
Weighted Average Number of
Common and Common Equivalent
Shares Outstanding, Basic 15,101 15,296 14,995 15,174
========= ========= ========= =========
Earnings Per Share, Diluted $ 0.76 $ 0.55 $ 0.46 $ 0.38
========= ========= ========= =========
Weighted Average Number of
Common and Common Equivalent
Shares Outstanding, Diluted 16,053 15,688 16,002 15,550
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements
<PAGE>
Datascope Corp. and Subsidiaries
Statements of Consolidated Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
--------------------------------
1999 1998
-------- --------
<S> <C> <C>
Operating Activities:
Net cash provided by (used in) operating activities $ 12,402 $ (4,859)
-------- --------
Investing Activities:
Capital expenditures (8,173) (5,105)
Purchases of marketable securities (40,253) (13,624)
Maturities of marketable securities 42,536 38,367
Acquisition of Polyprobe, Inc. and Alpha Probe, Inc. -- (450)
-------- --------
Net cash (used in) provided by investing activities (5,890) 19,188
-------- --------
Financing Activities:
Treasury shares acquired under repurchase programs (10,347) (11,531)
Exercise of stock options and other 2,205 138
-------- --------
Net cash used in financing activities (8,142) (11,393)
-------- --------
Effect of exchange rates on cash 125 100
-------- --------
(Decrease) increase in cash and cash equivalents (1,505) 3,036
Cash and cash equivalents, beginning of period 4,572 3,364
-------- --------
Cash and cash equivalents, end of period $ 3,067 $ 6,400
======== ========
Supplemental Cash Flow Information
Cash Paid during the period for:
Income taxes $ 5,426 $ 1,331
-------- --------
Non-cash transactions:
Net transfers of inventory to fixed assets
for use as demonstration equipment $ 4,312 $ 4,183
-------- --------
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 December 31, 1999, the statements of
consolidated earnings for the three and six month periods ended December 31,
1999 and 1998 and the statements of cash flows for the six month periods ended
December 31, 1999 and 1998 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 December 31, 1999
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.
------- --------
Dec 31, June 30,
1999 1999
------- -------
Materials $19,117 $15,788
Work in Process 6,782 6,229
Finished Goods 23,470 20,730
------- -------
$49,369 $42,747
======= =======
3. Stockholders' Equity
Changes in the components of stockholders' equity for the six months ended
December 31, 1999 were as follows:
Net income $12,201
Foreign currency translation adjustments (416)
Common stock and additional paid-in
capital effects of stock option activity 2,968
Cash dividends on common stock (601)
Purchases under stock repurchase plans (10,347)
-----------
Total increase in stockholders' equity $3,805
===========
<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 December 31, 1999 December 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 $7,371 14,995 $0.49 $5,886 15,174 $0.39
Diluted EPS
- -----------
Options issued to employees -- 1,007 (0.03) -- 376 (0.01)
------------ ------------ ---------- ----------- ---------- -----------
Earnings available to
common shareholders
plus assumed conversions $7,371 16,002 $0.46 $5,886 15,550 $0.38
============ ============ ========== =========== ========== ===========
<CAPTION>
- --------------------------------- --------------------------------------- ------------------------------------
For Six Months Ended December 31, 1999 December 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 $12,201 15,101 $0.81 $8,567 15,296 $0.56
Diluted EPS
- -----------
Options issued to employees -- 952 (0.05) -- 392 (0.01)
------------ ------------ ---------- ----------- ---------- -----------
Earnings available to
common shareholders
plus assumed conversions $12,201 16,053 $0.76 $8,567 15,688 $0.55
============ ============ ========== =========== ========== ===========
</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 six month periods ended December 31, 1999 and 1998 our
comprehensive income was as follows:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
------------------------ -----------------------
12/31/99 12/31/98 12/31/99 12/31/98
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings $12,201 $8,567 $7,371 $5,886
Foreign currency translation
gain or (loss) (416) 1,380 (1,108) 3
------------ ---------- ----------- ----------
Total comprehensive income $11,785 $9,947 $6,263 $5,889
============ ========== =========== ==========
</TABLE>
SFAS No. 130 has had no effect on our reported results of operations or
financial position.
<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
-------------- -------------- ---------------- ----------------
Three months ended December 31, 1999
- -----------------------------------------------------
<S> <C> <C> <C> <C>
Net sales to external customers $56,343 $18,457 -- $74,800
-----------------------------------------------------------------
Operating margin $7,717 $2,675 ($555) $9,837
-----------------------------------------------------------------
Three months ended December 31, 1998
- -----------------------------------------------------
Net sales to external customers $52,439 $14,261 -- $66,700
-----------------------------------------------------------------
Operating margin $7,791 $869 ($839) $7,821
-----------------------------------------------------------------
Six months ended December 31, 1999
- -----------------------------------------------------
Net sales to external customers $103,161 $35,139 -- $138,300
-----------------------------------------------------------------
Operating margin $10,867 $6,166 ($1,013) $16,020
-----------------------------------------------------------------
Six months ended December 31, 1998
- -----------------------------------------------------
Net sales to external customers $95,997 $26,403 -- $122,400
-----------------------------------------------------------------
Operating margin $11,018 $1,138 ($1,572) $10,584
-----------------------------------------------------------------
<CAPTION>
Reconciliation to consolidated earnings Six Months Ended Three Months Ended
-----------------------------------------------------------------
before income taxes : 12/31/99 12/31/98 12/31/99 12/31/98
- ----------------------------------------------------- -------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Consolidated operating margin $16,020 $10,584 $9,837 $7,821
Interest income, net 1,712 1,849 847 783
Other (expense) income (50) (17) (2) (73)
-------------- -------------- ---------------- ----------------
Consolidated earnings before taxes $17,682 $12,416 $10,682 $8,531
============== ============== ================ ================
</TABLE>
<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, management
approved a restructuring plan 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, 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 our proprietary 3DNA technology in which we
will focus our 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 December 31,
1999 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 December 31, 1999 584 1,123 875 2,582
-------------- -------------- -------------- ---------------
Remaining liability at December 31, 1999 $296 $551 -- $847
============== ============== ============== ===============
</TABLE>
The remaining liability is for severance payments for employees who will be
leaving over the next nine 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: February 11, 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> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,067
<SECURITIES> 50,383
<RECEIVABLES> 59,776
<ALLOWANCES> (1,318)
<INVENTORY> 49,369
<CURRENT-ASSETS> 171,509
<PP&E> 126,977
<DEPRECIATION> (57,254)
<TOTAL-ASSETS> 275,340
<CURRENT-LIABILITIES> 42,959
<BONDS> 0
0
0
<COMMON> 168
<OTHER-SE> 218,092
<TOTAL-LIABILITY-AND-EQUITY> 275,340
<SALES> 138,300
<TOTAL-REVENUES> 138,300
<CGS> 52,907
<TOTAL-COSTS> 52,907
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> 17,682
<INCOME-TAX> 5,481
<INCOME-CONTINUING> 12,201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,201
<EPS-BASIC> 0.81
<EPS-DILUTED> 0.76
</TABLE>
