-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Smnhpn7oSP+tEM7nOnGddE1DgXQoaXHXWwlNLBPVSj1e69vObKkNiPdANZvRWYn3 RPOHfRPGMpKcwceH2LbnDg== 0000950123-96-000552.txt : 19960603 0000950123-96-000552.hdr.sgml : 19960603 ACCESSION NUMBER: 0000950123-96-000552 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960213 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATASCOPE CORP CENTRAL INDEX KEY: 0000027096 STANDARD INDUSTRIAL CLASSIFICATION: 3845 IRS NUMBER: 132529596 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06516 FILM NUMBER: 96516567 BUSINESS ADDRESS: STREET 1: 14 PHILLIPS PKWY CITY: MONTVALE STATE: NJ ZIP: 07645-9998 BUSINESS PHONE: 2013918100 MAIL ADDRESS: STREET 1: 14 PHILIPS PARKWAY CITY: MONTVALE STATE: NJ ZIP: 07645 10-Q 1 DATASCOPE CORP. 1 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, 1995 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, 1996: 16,118,641. 2 DATASCOPE CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Net Sales Sales increased 8% and 9% in the second quarter and first six months of fiscal 1996, respectively, as compared to the corresponding periods last year, reflecting increases in all of the Company's businesses. The Cardiac Assist division made the principal contribution to increased sales as a result of continued strong worldwide sales of intra-aortic balloon catheters. Worldwide sales of Patient Monitoring products increased for the second consecutive quarter, despite slightly lower domestic sales, as a result of continued strong international sales growth. The slight decline in domestic Patient Monitoring sales was primarily due to the continued U.S. shipment hold on the Point of View(R) monitor. As previously reported, the Company voluntarily put U.S. shipments of the Point of View monitor on hold in October 1994 after an audit conducted by the Company disclosed a regulatory issue concerning data submitted to the Food and Drug Administration (FDA). The Company continues to hold U.S. shipments pending its submission, and satisfactory review by FDA, of a new 510(k) pre-market notification. InterVascular, Inc., the Company's wholly owned producer of Vascular grafts, continued its strong growth pattern with sales primarily in the international market. The Company was pleased with the progress of the VasoSeal(R) U.S. market launch initiated during the second quarter of fiscal 1996. The VasoSeal vascular hemostasis device is currently the only device of its kind approved by the Food and Drug Administration and sold in the U.S., for use in both coronary angiography and coronary angioplasty procedures, key tools in the battle against heart disease. The weakening of the U.S. dollar compared to major European currencies favorably impacted sales by approximately $400 thousand and $1.1 million in the second quarter and first six months of fiscal 1996, respectively, compared to the corresponding periods last year. Gross Profit (Net Sales Less Cost of Sales) The gross profit percentage improved to 65.9% and 65.7% for the second quarter and first six months of fiscal 1996, respectively, compared to 65.2% and 64.9% for the corresponding periods last year because of a more favorable sales mix. 2 3 Research and Development (R&D) R&D expenses, as a percentage of sales, amounted to 11% and 12% in the second quarter and first six months of fiscal 1996, as compared to 10% for the same periods last year. Total R&D expenses increased 25% and 26% in the second quarter and first six months of fiscal 1996, respectively, compared to the same periods last year as R&D activity increased in all businesses. Selling, General & Administrative Expenses (SG&A) SG&A expenses, as a percentage of sales, were 42.5% and 43.7% in the second quarter and first six months of fiscal 1996, respectively, compared to 43.2% and 44.1% for the corresponding periods last year. SG&A expenses increased $1.3 million or 6% in the second quarter and $3.2 million or 8% in the first six months of fiscal 1996, compared to the corresponding periods last year. The increases were primarily attributable to sales and marketing expenses relating to higher sales volume and start-up costs associated with the U.S. market launch of VasoSeal. The weakening of the U.S. dollar compared to major European currencies increased SG&A expenses by approximately $300 thousand and $700 thousand in the second quarter and first six months of fiscal 1996, respectively, compared to the corresponding periods last year. Income from Settlement of Litigation In the second quarter of fiscal 1996 the Company settled all litigation brought by its wholly owned subsidiaries, InterVascular, Inc. and InterVascular, SA (France), against several former employees and certain other defendants. Income from the settlement of litigation, net of related expenses, was $10.7 million, or $7.9 million after tax, equivalent to $0.47 per share. Interest Income and Expense The higher interest income in the second quarter and first six months of fiscal 1996 compared to the same periods last year was attributable to an increase in the investment portfolio and an increase in interest rates. 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 December 31, 1995 totaled $700 thousand, all of which were in European currencies, with maturities that do not exceed 12 months. 3 4 Liquidity and Capital Resources The Company maintained its strong financial position during the first six months of fiscal 1996. Working capital was $126.0 million at December 31, 1995, compared to $110.7 million at June 30, 1995. The current ratio at December 31, 1995 was 4.5:1 compared to 4.3:1 at June 30, 1995. Cash provided by operating activities was $16.8 million in the first six months of fiscal 1996 compared to $15.3 million in the corresponding period last year. In the first six months of fiscal 1996 cash provided by operating activities included litigation settlement income of $7.9 million, partially offset by an increase in inventory to support the higher sales level and an increase in accounts receivable attributable to extended terms given to certain customers in September 1995 and lower December collections. In the first six months of fiscal 1995 cash from operating activities was favorably impacted by significantly lower accounts receivable due to strong collections. In the first six months of fiscal 1996 cash was used to purchase $10.4 million of marketable securities and $5.7 million of plant and equipment which included sales demonstration units for new products. Management believes that the Company's financial resources are sufficient to meet its projected cash requirements. The moderate rate of current U.S. inflation has not significantly affected the Company. 4 5 DATASCOPE CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
DEC 31, JUNE 30, 1995 1995 ------- ------- ASSETS (unaudited) (a) Current Assets: Cash and cash equivalents 4,404 3,096 Marketable securities 63,600 53,165 Accounts receivable, less allowance for doubtful accounts of $1,317 and $1,273 47,063 45,590 Inventories (Note 2) 40,933 36,499 Prepaid expenses and other current assets 6,095 5,880 ------- ------- Total Current Assets 162,095 144,230 Property, Plant and Equipment, net of accumulated depreciation of $35,307 and $32,681 44,884 44,278 Marketable Securities, non-current 9,328 9,354 Other Assets 9,789 9,001 ------- ------- 226,096 206,863 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable 7,577 7,644 Accrued expenses 16,188 14,149 Accrued compensation 7,554 9,384 Taxes on income 4,728 2,309 ------- ------- Total Current Liabilities 36,047 33,486 Other Liabilities 10,588 10,058 Stockholders' Equity (Note 3) Preferred stock, par value $1.00 per share: Authorized 5,000,000 shares; Issued and outstanding, none -- -- Common stock, par value $.01 per share: Authorized, 45,000,000 shares; Issued and outstanding, 16,117,441 and 16,070,689 shares 161 161 Additional paid-in capital 42,477 41,837 Retained earnings 137,160 121,347 Cumulative translation adjustments (337) (26) ------- ------- 179,461 163,319 ------- ------- 226,096 206,863 ======= =======
(a) Derived from audited financial statements See notes to consolidated financial statements 5 6 DATASCOPE CORP. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited)
SIX MONTHS ENDED THREE MONTHS ENDED DECEMBER 31, DECEMBER 31, ---------------------- ---------------------- 1995 1994 1995 1994 ------- ------- ------- ------- NET SALES 98,200 90,000 52,300 48,400 ------- ------- ------- ------- Costs and Expenses: Cost of sales 33,720 31,565 17,859 16,834 Research and development expenses 11,450 9,116 5,839 4,665 Selling, general and administrative expenses 42,938 39,723 22,244 20,915 Income from settlement of litigation (Note 4) (10,691) -- (10,691) -- ------- ------- ------- ------- 77,417 80,404 35,251 42,414 ------- ------- ------- ------- OPERATING EARNINGS 20,783 9,596 17,049 5,986 Other (Income) Expense: Interest income (2,056) (1,132) (1,041) (605) Interest expense 38 7 20 4 Other, net 346 97 211 84 ------- ------- ------- ------- (1,672) (1,028) (810) (517) ------- ------- ------- ------- EARNINGS BEFORE TAXES ON INCOME 22,455 10,624 17,859 6,503 Taxes on Income 6,642 3,506 5,148 2,146 ------- ------- ------- ------- Net Earnings 15,813 7,118 12,711 4,357 ======= ======= ======= ======= Earnings Per Share (Note 3) 0.95 0.44 0.76 0.27 ======= ======= ======= ======= Weighted Average Number of Common and Common Equivalent Shares Outstanding (Note 3) 16,564 16,185 16,647 16,188 ======= ======= ======= =======
See notes to consolidated financial statements 6 7 DATASCOPE CORP. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS (DOLLARS IN THOUSANDS) (Unaudited)
SIX MONTHS ENDED DECEMBER 31, ---------------------- 1995 1994 ------- ------- OPERATING ACTIVITIES: Net cash provided by operating activities 16,811 15,255 ------- ------- INVESTING ACTIVITIES: Capital expenditures (5,733) (6,933) Purchases of short-term marketable securities (67,498) (41,081) Maturities of short-term marketable securities 57,089 41,481 Purchases of long-term marketable securities -- (8,110) ------- ------- Net cash used in investing activities (16,142) (14,643) ------- ------- FINANCING ACTIVITIES: Net cash provided by financing activities 473 93 ------- ------- Effect of exchange rates on cash 166 (111) ------- ------- Increase in cash and cash equivalents 1,308 594 Cash and cash equivalents, beginning of period 3,096 2,082 ------- ------- Cash and cash equivalents, end of period 4,404 2,676 ======= ======= SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for: Income taxes 4,221 3,085 ------- -------
See notes to consolidated financial statements 7 8 DATASCOPE CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The consolidated balance sheet as of December 31, 1995 and the statements of consolidated earnings and cash flows for the three and six month periods ended December 31, 1995 and 1994 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 June 30, 1995 annual report to shareholders. The results of operations for the period ended December 31, 1995 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) DEC 31, JUNE 30, 1995 1995 ------- ------- Materials $16,636 $15,452 Work in Process 7,664 6,592 Finished Goods 16,633 14,455 ------- ------- $40,933 $36,499 ======= =======
3. STOCKHOLDERS' EQUITY Changes in the components of stockholders' equity for the six months ended December 31, 1995 are as follows:
(In thousands) Net income $15,813 Translation adjustments (311) Proceeds on the exercise of options to purchase 46,752 shares of common stock 640 ------- Total increase in stockholders' equity $16,142 =======
8 9 4. INCOME FROM SETTLEMENT OF LITIGATION In the second quarter of fiscal 1996 the Company settled all litigation brought by its wholly owned subsidiaries, InterVascular, Inc. and InterVascular, SA (France), against several former employees and certain other defendants. Income from the settlement of litigation, net of related expenses, was $10.7 million, or $7.9 million after tax, equivalent to $0.47 per share. 9 10 Part II: Item 6 Exhibits and Reports on Form 8-K (b) Reports on Form 8-K. No reports on Form 8-K have been filed during the quarter for which this report is filed. 10 11 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/ Murray Pitkowsky ---------------------------- Murray Pitkowsky Senior Vice President and Secretary Dated: February 13, 1996 11 12 EXHIBIT INDEX ------------- Exhibit No. Description - - ----------- ----------- Ex-27 Financial Data Schedule. EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CONSOLIDATED EARNINGS. 1000 6-MOS JUN-30-1996 JUL-01-1995 DEC-31-1995 4404 63600 48380 (1317) 40933 162095 80191 (35307) 226096 36047 0 0 0 161 179300 226096 98200 98200 33720 33720 0 0 38 22455 6642 15813 0 0 0 15813 0.95 0.95
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