-----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, J947fJ1jMg7bV3LfhFCuHwEI076++RPeMULW088DhxRlIVapmoBvIjomvpKLMlWP DPlvWdCRZzFT9rQYzAWGvA== /in/edgar/work/0001125282-00-000548/0001125282-00-000548.txt : 20001115 0001125282-00-000548.hdr.sgml : 20001115 ACCESSION NUMBER: 0001125282-00-000548 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 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: SEC FILE NUMBER: 000-06516 FILM NUMBER: 763372 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 0001.txt QUARTERLY REPORT 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 September 30, 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 - ------------------------------------------------------------------------------- (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) (201) 391-8100 - ------------------------------------------------------------------------------- (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 October 31, 2000: 14,811,646. Datascope Corp. and Subsidiaries Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations First quarter of fiscal 2001 compared to the corresponding period last year. Net Sales Net sales of $67.8 million in the first quarter of fiscal 2001 increased $4.3 million or 7% from $63.5 million last year. Sales of the Cardiac Assist / Monitoring Products segment increased $3.0 million or 6% to $49.8 million from $46.8 million. Sales of Cardiac Assist products increased 4% to $26.3 million, due to increased balloon pump sales, generated by the continued market penetration of the System 98. The Profile 8 Fr. catheter continues to be a significant factor in IAB sales and now represents approximately 60% of total balloon catheter sales. Patient Monitoring sales increased 9% to $23.6 million. Sales of Passport(R) products increased substantially due to the strong customer demand for the new Passport 2, the company's next generation portable, battery powered bedside monitor. The Passport 2 was introduced in international markets in the second quarter of fiscal 2000 and in the U.S. market in the third quarter of fiscal 2000. Additionally, the Accutorr(R) Plus blood pressure monitor and Masimo SpO2 sensors continued to experience strong customer demand. Sales of the Collagen Products / Vascular Grafts segment increased $1.3 million or 8% to $18.0 million from $16.7 million. Sales of VasoSeal(R) arterial puncture sealing devices increased 9% to $13 million. Sales growth compared to last fiscal year was lower as competitive sales resources and competitive product evaluations increased. At the same time, VasoSeal's sales resources were significantly below normal strength because of open sales territories. During the quarter, the company recruited new sales representatives and clinical specialists needed to fill all open territories. In addition, the company is currently completing a 20% expansion of its field sales organization, in order to meet the challenge of increased competition. The company anticipates that its replenished and expanded complement of field resources will begin to become effective when training is completed in the third quarter. InterVascular's sales rose 6%, excluding the impact of foreign exchange rates, due to continued strong demand for the InterGard(R) Silver, the world's first anti-microbial vascular graft, primarily in European markets. Sales to the U.S. market increased 38%, reversing the decline experienced in the previous three quarters, when our U.S. distributor reduced inventory. After foreign exchange adjustment, InterVascular sales declined modestly to $4.5 million. The stronger U.S. dollar compared to major European currencies decreased total sales by approximately $1.1 million in the first quarter of fiscal 2001. Gross Profit (Net Sales Less Cost of Sales) The gross profit percentage was 60.1% for the first quarter compared to 61.9% for the same period last year. The gross profit percentage in the first quarter of fiscal 2001 was impacted by lower average selling prices for certain patient monitoring products and a less favorable sales mix. Research and Development (R&D) R&D expenses, as a percentage of sales, were 9.2% for the first quarter of fiscal 2001, compared to 10.2% for the corresponding period last year. R&D expenses were $6.3 million in the first quarter of fiscal 2001 compared to $6.5 million last year. The 4% decrease was primarily due to reduced development expenses in the Patient Monitoring product line. Selling, General & Administrative Expenses (SG&A) SG&A expenses, as a percentage of sales, were 39.9% in the first quarter of fiscal 2001, compared to 41.9% last year. SG&A expenses of $27.0 million in the first quarter of fiscal 2001 increased $0.4 million or 2% primarily as a result of higher selling and marketing expenses in the VasoSeal and Cardiac Assist product lines related to new marketing programs and the higher sales. The stronger U.S. dollar compared to major European currencies decreased SG&A expenses by approximately $0.7 million in the first quarter of fiscal 2001. Interest Income and Expense Interest income in the fiscal 2001 first quarter of $1.1 million, increased $0.2 million or 27% compared to the first quarter last year. The higher interest income was attributable to a 6% increase in the average investment portfolio from $67.8 million to $71.9 million and an increase in the average yield to 6.1% from 5.1%. During the first quarter, the company recorded a pretax gain of $593 thousand, or $0.02 per share after tax, from the sale of an underutilized facility in Oakland, New Jersey. Income Taxes The consolidated effective tax rate was 32.0% for the first quarter of fiscal 2001 compared to 31.0% last year. The higher tax rate was due mainly to the impact of higher earnings taxed at a higher statutory tax rate and expiration of a tax exemption for a manufacturing subsidiary in Europe. Net Earnings Net earnings were $6.1 million or $0.39 per diluted share in the first quarter of fiscal 2001 compared to $4.8 million, or $0.30 per diluted share last year. The increased earnings reflect: o higher gross margin from increased sales o greater expense control o non-recurring gain of $593 thousand or $0.02 per diluted share after tax related to the sale of an underutilized facility o increased interest income of $231 thousand described above. Liquidity and Capital Resources Working capital was $121.4 million at September 30, 2000, compared to $120.8 million at June 30, 2000 and the current ratio was 3.4:1 compared to 3.3:1. The modest increase in working capital and current ratio were primarily due to a decline in accrued compensation expenses. In the first three months of fiscal 2001 cash provided by operations was $9.7 million, compared to $8.1 million last year. The $1.6 million increase primarily reflects higher net earnings and lower inventories. Net cash used in investing activities was $3.0 million, attributable to the purchase of $3.0 million of property, plant and equipment. Net cash used in financing activities was $6.4 million, primarily due to stock repurchases of $5.5 million and $0.6 million dividends paid. Through September 30, 2000 we expended $5.5 million to purchase about 160,000 shares of our common stock under the current $30 million stock repurchase program. On August 18, 2000, the Board of Directors declared a quarterly cash dividend of $0.04 per share payable on September 29, 2000 to stockholders of record at September 1, 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. 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, arterial sealing 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 September 30, 2000, we had a notional amount of $4.3 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. Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities"(SFAS No. 133), establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires companies to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. We have adopted SFAS No. 133 in the first quarter of fiscal 2001, in accordance with the deferral provision in SFAS No. 137. The adoption of SFAS No. 133 did not have a material effect on our financial statements. Datascope Corp. and Subsidiaries Consolidated Balance Sheets (In thousands)
Sept 30, June 30, 2000 2000 --------------- --------------- Assets (unaudited) (a) Current Assets: Cash and cash equivalents $ 2,643 $ 2,102 Short-term investments 57,118 53,096 Accounts receivable less allowance for doubtful accounts of $1,635 and $1,644 61,945 69,081 Inventories 39,610 38,986 Prepaid expenses and other current assets 11,236 10,014 --------------- --------------- Total Current Assets 172,552 173,279 Property, Plant and Equipment, net of accumulated depreciation of $59,483 and $58,234 86,855 86,243 Non-Current Marketable Securities 8,138 12,235 Other Assets 23,941 23,034 --------------- --------------- $ 291,486 $ 294,791 =============== =============== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 14,668 $ 14,250 Accrued expenses 13,262 11,165 Accrued compensation 14,727 19,662 Deferred revenue 4,216 4,773 Taxes on income 4,273 2,630 --------------- --------------- Total Current Liabilities 51,146 52,480 Other Liabilities 14,462 14,524 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, 17,098 and 17,028 shares 171 170 Additional paid-in capital 60,357 60,646 Treasury stock at cost, 2,309 and 2,149 shares (60,714) (55,247) Retained earnings 235,675 230,187 Accumulated other comprehensive loss (9,611) (7,969) --------------- --------------- 225,878 227,787 --------------- --------------- $ 291,486 $ 294,791 =============== ===============
(a) Derived from audited financial statements See notes to consolidated financial statements Datascope Corp. and Subsidiaries Statements of Consolidated Earnings (In thousands, except per share amounts) (Unaudited)
Three Months Ended September 30, ----------------------------------- 2000 1999 -------------- -------------- Net Sales $ 67,800 $ 63,500 -------------- -------------- Costs and Expenses: Cost of sales 27,072 24,214 Research and development expenses 6,256 6,497 Selling, general and administrative expenses 27,030 26,606 -------------- -------------- 60,358 57,317 -------------- -------------- Operating Earnings 7,442 6,183 Other (Income) Expense: Interest income (1,098) (867) Interest expense 2 2 Other, net (408) 48 -------------- -------------- (1,504) (817) -------------- -------------- Earnings Before Taxes on Income 8,946 7,000 Taxes on Income 2,863 2,170 -------------- -------------- Net Earnings $ 6,083 $ 4,830 ============== ============== Earnings Per Share, Basic $ 0.41 $ 0.32 ============== ============== Weighted average common shares outstanding, Basic 14,858 15,206 ============== ============== Earnings Per Share, Diluted $ 0.39 $ 0.30 ============== ============== Weighted average common shares outstanding, Diluted 15,595 16,093 ============== ==============
See notes to consolidated financial statements Datascope Corp. and Subsidiaries Statements of Consolidated Cash Flows (Dollars in thousands) (Unaudited)
Three Months Ended September 30, --------------------------------- 2000 1999 -------------- -------------- Operating Activities: Net cash provided by operating activities $ 9,732 $ 8,103 -------------- -------------- Investing Activities: Capital expenditures (3,043) (3,282) Purchases of marketable securities (7,961) (14,499) Maturities of marketable securities 8,036 17,003 -------------- -------------- Net cash used in investing activities (2,968) (778) -------------- -------------- Financing Activities: Treasury shares acquired under repurchase programs (5,467) (10,348) Exercise of stock options (288) 1,028 Cash dividends paid (595) 0 -------------- -------------- Net cash used in financing activities (6,350) (9,320) -------------- -------------- Effect of exchange rates on cash 127 (95) -------------- -------------- Increase (decrease) in cash and cash equivalents 541 (2,090) Cash and cash equivalents, beginning of period 2,102 4,572 -------------- -------------- Cash and cash equivalents, end of period $ 2,643 $ 2,482 ============== ============== Supplemental Cash Flow Information Cash Paid during the period for: Income taxes $ 1,223 $ 726 -------------- -------------- Non-cash transactions: Net transfers of inventory to fixed assets for use as demonstration equipment $ 1,333 $ 2,171 -------------- --------------
See notes to consolidated financial statements 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 September 30, 2000 and the statements of consolidated earnings and cash flows for the three month periods ended September 30, 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 suggest 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, 2000. The results of operations for the period ended September 30, 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. --------------------------------- Sept 30, June 30, 2000 2000 ------------ ------------ Materials $18,232 $17,462 Work in Process 8,591 7,888 Finished Goods 12,787 13,636 ------------ ------------ $39,610 $38,986 ============ ============ 3. Stockholders' Equity Changes in the components of stockholders' equity for the three months ended September 30, 2000 were as follows: Net earnings $6,083 Foreign currency translation adjustments (1,642) Common stock and additional paid-in capital effects of stock option activity (288) Cash dividends on common stock (595) Purchases under stock repurchase plans (5,467) --------- Total decrease in stockholders' equity ($1,909) ========= 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:
- ---------------------------- ---------------------------------- ----------------------------------- For Three Months Ended September 30, 2000 September 30, 1999 - ---------------------------- ---------------------------------- ----------------------------------- Net Per Share Net Per Share Basic EPS Earnings Shares Amount Earnings Shares Amount - --------- ---------- ----------- ----------- ----------- ----------- ---------- Earnings available to common shareholders $6,083 14,858 $0.41 $4,830 15,206 $0.32 Diluted EPS Options issued to employees -- 737 (0.02) -- 887 (0.02) ---------- ----------- ----------- ----------- ----------- ---------- Earnings available to common shareholders plus assumed conversions $6,083 15,595 $0.39 $4,830 16,093 $0.30 ========== =========== =========== =========== =========== ==========
5. Comprehensive Income In accordance with Financial Accounting Standard No. 130, "Reporting Comprehensive Income", we disclose comprehensive income and its components. For the three month periods ended September 30, 2000 and 1999 our comprehensive income was as follows: ----------- ----------- 2000 1999 ----------- ----------- Net earnings $6,083 $4,830 Foreign currency translation gain or (loss) (1,642) 692 ----------- ----------- Total comprehensive income $4,441 $5,522 =========== =========== 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 earnings are shown below.
Cardiac Collagen Assist / Products / Corporate Monitoring Vascular and Products Grafts Other Consolidated - ----------------------------------------------------- ---------------- ---------------- -------------- ---------------- Three months ended September 30, 2000 - ----------------------------------------------------- Net sales to external customers $49,819 $17,981 -- $67,800 ------------------------------------------------------------------- Operating earnings $3,190 $3,430 $822 $7,442 ------------------------------------------------------------------- - ----------------------------------------------------- Three months ended September 30, 1999 - ----------------------------------------------------- Net sales to external customers $46,818 $16,682 -- $63,500 ------------------------------------------------------------------- Operating earnings $3,250 $3,391 ($458) $6,183 ------------------------------------------------------------------- Reconciliation to consolidated earnings before income taxes: 2000 1999 - ------------------------------- ---------------- ---------------- Consolidated operating earnings $7,442 $6,183 Interest income, net 1,096 865 Other (expense) income 408 (48) ---------------- ---------------- Consolidated earnings before taxes $8,946 $7,000 ================ ================
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 pretax 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 September 30, 2000 is shown below.
Clearwater Genisphere Plant Employee Asset Closure Severance Writedown Total -------------- -------------- -------------- --------------- Fiscal 1999 restructuring charges $880 $1,674 $875 $3,429 Utilized through fiscal 2000 722 1,363 875 2,960 Utilized in Q1 fiscal 2001 49 25 -- 74 -------------- -------------- -------------- --------------- Remaining liability at September 30, 2000 $109 $286 -- $395 ============== ============== ============== ===============
No additional expenditures are expected to complete the restructuring program. 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. 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: November 14, 2000 EX-27 2 0002.txt FDS
5 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 3-MOS JUN-30-2001 JUL-01-2000 SEP-30-2000 2,643 57,118 63,580 (1,635) 39,610 172,552 146,338 (59,483) 291,486 51,146 0 0 0 171 225,707 291,486 67,800 67,800 27,072 27,072 0 0 2 8,946 2,863 6,083 0 0 0 6,083 0.41 0.39
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