-----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, Oo54p2hEg7yDoZqv9Qx9WzxPKwM6rS16Tc9kZXekRB/w5Cn/qT5KbUlmouzpmurg qSReNti/plxt00bbQgky0g== 0001125282-01-502611.txt : 20020410 0001125282-01-502611.hdr.sgml : 20020410 ACCESSION NUMBER: 0001125282-01-502611 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATASCOPE CORP CENTRAL INDEX KEY: 0000027096 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [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: 1786163 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 b314675_10q.txt FORM 10-Q 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, 2001 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, 2001: 14,766,835. Datascope Corp. and Subsidiaries Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations First quarter of fiscal 2002 compared to the corresponding period last year. Net Sales Net sales of $70.9 million in the first quarter of fiscal 2002 increased $2.6 million or 4% from $68.3 million last year. Sales of the Cardiac Assist / Monitoring Products segment increased $2.1 million or 4% to $52.3 million from $50.2 million. Sales of Cardiac Assist products decreased 1% to $26.3 million. Sales of balloon catheters increased 3% as a result of continued growth and market penetration of the Profile 8 Fr. catheter which accounted for 62% of worldwide balloon catheter unit sales compared to 57% last year. Sales of intra-aortic balloon pumps declined 12% due to competitive evaluations and the continued consequence of unfilled sales territories in the U.S. Patient Monitoring sales grew 9% to $26.0 million driven by higher sales of: (a) the company's new central station monitoring system, which utilizes telemetry that operates in protected medical bands, recently allocated by the FCC, (b) Accutorr(R) Plus noninvasive blood pressure monitors, and (c) Masimo pulse oximetry sensors. Customer demand for the Passport 2 portable bedside monitor continued strong. Sales of the Collagen Products / Vascular Grafts segment increased $0.5 million or 3% to $18.3 million from $17.8 million. Sales of VasoSeal(R) arterial puncture sealing devices declined 4% to $12.7 million compared to $13.2 million last year, reflecting the continued intense competitive environment and slower than anticipated growth in productivity from the field sales organization. As previously announced, Datascope has developed a new, proprietary collagen hemostat which it plans to incorporate into the company's approved delivery platforms: VasoSeal VHD and VasoSeal ES. In addition, Datascope has developed VasoSeal VHD in a 6 Fr. size, which will accommodate the shift in diagnostic procedures to 6 Fr. and below. The company believes the availability of a downsized product will increase VasoSeal penetration of the diagnostic catheterization market, which accounts for 80% of sales. The company is currently conducting laboratory testing to support Pre-Market Approval (PMA) Supplements for these new products, and would expect to file applications early in the third quarter of the current fiscal year, subject to FDA acceptance of test results. InterVascular sales increased 15% to $5.2 million, compared to $4.5 million last year, reflecting continued growth in international demand for InterGard(R) Silver, the world's first anti-microbial vascular graft. During the quarter, the company notified the U.S. distributor for InterVascular that it will terminate their distribution agreement effective December 31, 2001. In January 2002, Datascope plans to begin selling InterVascular products through its own dedicated direct sales organization in the United States, currently being formed. By making this important investment to expand the InterVascular business, the company will also have unrestricted access to market its peripheral graft products in the U.S. for the first time. Peripheral grafts account for 60% of an estimated $90 million U.S. market for vascular grafts. In addition, Datascope will augment its direct selling entry to the U.S. market with the launch of its new heparin-coated line of InterGard grafts. InterVascular's InterGard Heparin products received FDA clearance in January 2001. The stronger U.S. dollar compared to major European currencies decreased total sales by approximately $0.4 million in the first quarter of fiscal 2002. Gross Profit (Net Sales Less Cost of Sales) The gross profit percentage was 60.6% for the first quarter of fiscal 2002 compared to 59.5% for the corresponding period last year. The improvement in the gross profit margin was primarily attributable to manufacturing efficiencies and comparison to the depressed first quarter last year which included one-time costs related to a supply disruption. Research and Development (R&D) R&D expenses, as a percentage of sales, were 8.3% for the first quarter of fiscal 2002, compared to 9.2% for the corresponding period last year. R&D expenses were $5.9 million in the first quarter of fiscal 2002 compared to $6.3 million for the corresponding period last year. The reduced level of R&D expenses was primarily attributable to a more selective assessment of R&D projects, primarily in the Collagen Products and Patient Monitoring businesses, effective cost management in material procurement and outsourcing projects and staffing more productively. Selling, General & Administrative Expenses (SG&A) SG&A expenses, as a percentage of sales in the first quarter of fiscal 2002 remained unchanged from last year at 39.4%. SG&A expenses of $27.9 million in the first quarter of fiscal 2002 increased $1.0 million, or 4% primarily as a result of expenses associated with the VasoSeal field organization expansion, partially offset by lower corporate expenses. The stronger U.S. dollar compared to major European currencies decreased SG&A expenses by approximately $0.3 million in the first quarter of fiscal 2002. Restructuring Charges In the first quarter fiscal 2002, Datascope recorded a restructuring charge of $5.1 million pretax, equivalent to $3.2 million after tax or $0.21 per diluted share. The restructuring charge relates to cost reduction initiatives primarily associated with the VasoSeal and Cardiac Assist businesses which have experienced pressure on revenue growth due to competition. The restructuring charge included: o severance expenses, asset writedowns, and exit costs related to the closure of the VasoSeal manufacturing and R&D facility in Vaals, the Netherlands o severance expenses for employee terminations in New Jersey facilities. The manufacture of VasoSeal products will be centralized in the Mahwah, New Jersey VasoSeal facility by the end of the third quarter, after which the Vaals facility will be closed and sold. The company recently received FDA clearance for manufacturing at the Mahwah facility, which also houses VasoSeal R&D, warehousing and administration. Headcount reductions, primarily in the Netherlands, totaled 110 people, or 8% of the company's worldwide employment. All of the New Jersey based employees left the Company effective September 30, 2001. The Vaals employees will leave the Company over the next six months. The workforce reductions will not have any significant impact on our operations. Cost savings from the restructuring program are expected to approximate $2.5 million in fiscal 2002 and $5.0 million annually. Other Income and Expense Interest income in the first quarter of $0.7 million, was $0.4 million or 40% lower compared to the first quarter last year. The decline in interest income in the first quarter was the result of a $25.1 million lower average portfolio balance and a decrease in the average yield from 6.1% to 5.4%. In the first quarter of fiscal 2001 we 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. Goodwill Amortization - Adoption of Recent Accounting Standard In the first quarter of fiscal 2002, the Company adopted Financial Accounting Standards Board Statement No. 142, "Accounting for Goodwill and Other Intangible Assets." The company discontinued amortizing goodwill, which amounted to $179 thousand pre tax, equivalent to $0.01 per share after tax, in the first quarter of fiscal 2002. There was no impairment of goodwill based on appropriate testing and analysis. Income Taxes The consolidated effective tax rate was 25.3% for the first quarter of fiscal 2002 compared to 32.0% for the corresponding period last year. The lower tax rate in the first quarter of fiscal 2002 was primarily attributable to a higher proportion of expenses recorded in jurisdictions subject to a higher statutory tax rate. Excluding special items in both years, the effective tax rate in the first quarter fiscal 2002 was 31.5% compared to 31.4% for the comparable period last year. Net Earnings Net earnings were $3.3 million or $0.22 per diluted share in the first quarter of fiscal 2002 compared to $6.1 million, or $0.39 per diluted share last year. Excluding special items in both years, net earnings were $6.6 million or $0.43 per diluted share in the first quarter of fiscal 2002, compared to $5.7 million or $0.37 per diluted share for the corresponding period last year. The increased earnings primarily reflect higher gross margin from increased sales and greater expense control. Liquidity and Capital Resources Working capital was $127.8 million at September 30, 2001, compared to $129.7 million at June 30, 2001. The current ratio was unchanged at 3.5:1. The decrease in working capital was primarily the result of a decrease in accounts receivable ($8.7 million) and an increase in accrued expenses ($1.7 million), primarily related to the restructuring charge. In the first quarter of fiscal 2002, cash provided by operations was $8.7 million compared to $10.7 million last year. The decline is primarily attributable to an increase in inventories. Net cash used in investing activities was $0.3 million, attributable to maturities of investments of $35.2 million, offset by $33.2 million purchases of investments and the purchase of $2.2 million of property, plant and equipment. Net cash used in financing activities was $8.0 million, due to stock repurchases of $6.3 million, stock option activity of $0.9 million and $0.7 million dividends paid. 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 contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements as a result of many important factors. Many of these important factors cannot be predicted or quantified and are outside of our control, including the possibility that market conditions may change, particularly as the result of competitive activity in the Cardiac Assist, Vascular Sealing and other markets served by the company, the company's dependence on certain suppliers for Patient Monitoring, Cardiac Assist and VasoSeal products and the company's ability to gain market acceptance for new products. Additional risks are that the company will not realize the expected savings from the restructuring program, the possibility that the company will not increase penetration of the diagnostic catheterization market with a downsized VasoSeal product, the possibility that the FDA will not accept current tests results of the new VasoSeal products, the possibility that the company will not achieve success through direct selling of InterVascular products in the U.S., the ability of the company to successfully introduce new products, continued demand for the company's products generally, rapid and significant changes that characterize the medical device industry and the ability to continue to respond to such changes, the uncertain timing of regulatory approvals, as well as other risks detailed 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, 2001, we had a notional amount of $6.5 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. Recent Accounting Pronouncements In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations," ("SFAS No. 143"). This Statement provides guidance on how to account and report for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. We do not expect this statement to have a material impact on our financial statements. In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," ("SFAS No. 144"). This statement provides guidance on accounting and reporting for long-lived assets to be held and used, disposed of by sale and disposed of other than by sale. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. We do not expect this statement to have a material impact on our financial statements. Datascope Corp. and Subsidiaries Consolidated Balance Sheets (In thousands)
Sept 30, June 30, 2001 2001 -------------- -------------- Assets (unaudited) (a) Current Assets: Cash and cash equivalents $ 5,872 $ 5,545 Short-term investments 32,684 32,669 Accounts receivable less allowance for doubtful accounts of $1,216 and $1,350 67,044 75,712 Inventories 61,652 55,261 Prepaid expenses and other current assets 12,086 12,472 -------------- -------------- Total Current Assets 179,338 181,659 Property, Plant and Equipment, net of accumulated depreciation of $54,686 and $52,422 91,017 90,634 Long-Term Investments 12,194 14,134 Other Assets 25,560 23,908 -------------- -------------- $ 308,109 $ 310,335 ============== ============== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 16,998 $ 18,987 Accrued expenses 15,935 14,211 Accrued compensation 14,077 14,248 Deferred revenue 4,539 4,498 -------------- -------------- Total Current Liabilities 51,549 51,944 Other Liabilities 14,733 14,913 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, 17,625 and 17,508 shares 176 175 Additional paid-in capital 69,883 69,148 Treasury stock at cost, 2,861 and 2,713 shares (83,383) (77,038) Retained earnings 264,221 261,625 Accumulated other comprehensive loss (9,070) (10,432) -------------- -------------- 241,827 243,478 -------------- -------------- $ 308,109 $ 310,335 ============== ==============
(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, -------------------------------- 2001 2000 ------------- ------------ Net Sales $ 70,900 $ 68,300 ------------- ------------ Costs and Expenses: Cost of sales 27,906 27,662 Research and development expenses 5,904 6,256 Selling, general and administrative expenses 27,947 26,940 Restructuring charge 5,132 -- ------------- ------------ 66,889 60,858 ------------- ------------ Operating Earnings 4,011 7,442 Other (Income) Expense: Interest income (657) (1,098) Interest expense 25 2 Other, net 180 (408) ------------- ------------ (452) (1,504) ------------- ------------ Earnings Before Taxes on Income 4,463 8,946 Taxes on Income 1,129 2,863 ------------- ------------ Net Earnings $ 3,334 $ 6,083 ============= ============ Earnings Per Share, Basic $ 0.23 $ 0.41 ============= ============ Weighted average common shares outstanding, Basic 14,783 14,858 ============= ============ Earnings Per Share, Diluted $ 0.22 $ 0.39 ============= ============ Weighted average common shares outstanding, Diluted 15,287 15,595 ============= ============
See notes to consolidated financial statements Datascope Corp. and Subsidiaries Statements of Consolidated Cash Flows (Dollars in thousands) (Unaudited)
Three Months Ended September 30 ------------------------------- 2001 2000 ------------- ------------- Operating Activities: Net cash provided by operating activities $ 8,670 $ 10,680 ------------- ------------- Investing Activities: Capital expenditure (2,238) (3,562) Proceeds from sale of Oakland facility -- 1,112 Purchases of investments (33,236) (7,961) Maturities of investments 35,160 8,036 ------------- ------------- Net cash used in investing activities (314) (2,375) ------------- ------------- Financing Activities: Treasury shares acquired under repurchase programs (6,345) (5,466) Exercise of stock options and other (909) (288) Cash dividends paid (739) (596) ------------- ------------- Net cash used in financing activities (7,993) (6,350) ------------- ------------- Effect of exchange rates on cash (36) 127 ------------- ------------- Increase in cash and cash equivalents 327 2,082 Cash and cash equivalents, beginning of period 5,545 3,138 ------------- ------------- Cash and cash equivalents, end of period $ 5,872 $ 5,220 ============= ============= Supplemental Cash Flow Information Cash (refunded) paid during the period for: Income taxes $ (1,438) $ 1,223 ------------- ------------- Non-cash transactions: Net transfers of inventory to fixed assets for use as demonstration equipment $ 2,858 $ 1,333 ------------- -------------
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, 2001 and the statements of consolidated earnings and cash flows for the three month periods ended September 30, 2001 and 2000 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, 2001. The results of operations for the period ended September 30, 2001 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, 2001 2001 ---------- ---------- Materials $ 28,437 $ 24,550 Work in Process 11,197 10,185 Finished Goods 22,018 20,526 ---------- ---------- $ 61,652 $ 55,261 ========== ==========
3. Stockholders' Equity Changes in the components of stockholders' equity for the three months ended September 30, 2001 were as follows:
Net earnings $ 3,334 Foreign currency translation adjustments 1,362 Common stock and additional paid-in capital effects of stock option activity 736 Cash dividends on common stock (738) Purchases under stock repurchase plans (6,345) ---------- Total decrease in stockholders' equity ($ 1,651) ==========
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, 2001 September 30, 2000 - ---------------------------------- --------------------------------------- --------------------------------------- Net Per Share Net Per Share Basic EPS Earnings Shares Amount Earnings Shares Amount - --------- ----------- ----------- ----------- ----------- ----------- ----------- Earnings available to common shareholders $ 3,334 14,783 $ 0.23 $ 6,083 14,858 $ 0.41 Diluted EPS Options issued to employees -- 504 (0.01) -- 737 (0.02) ----------- ----------- ----------- ----------- ----------- ----------- Earnings available to common shareholders plus assumed conversions $ 3,334 15,287 $ 0.22 $ 6,083 15,595 $ 0.39 =========== =========== =========== =========== =========== ===========
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, 2001 and 2000 our comprehensive income was as follows:
----------- ----------- 2001 2000 ----------- ----------- Net earnings $ 3,334 $ 6,083 Foreign currency translation gain or (loss) 1,362 (1,642) ----------- ----------- Total comprehensive income $ 4,696 $ 4,441 =========== ===========
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 (a) Consolidated -------------- --------------- --------------- ---------------- - -------------------------------------------------- Three months ended September 30, 2001 - -------------------------------------------------- Net sales to external customers $ 52,310 $ 18,314 $ 276 $ 70,900 -------------- --------------- --------------- ---------------- Operating earnings $ 6,058 $ 2,855 $ 230 $ 9,143 -------------- --------------- --------------- ---------------- - -------------------------------------------------- Three months ended September 30, 2000 - -------------------------------------------------- Net sales to external customers $ 50,189 $ 17,849 $ 262 $ 68,300 -------------- --------------- --------------- ---------------- Operating earnings $ 3,201 $ 3,419 $ 822 $ 7,442 -------------- --------------- --------------- ---------------- Reconciliation to consolidated earnings before income taxes : 2001 2000 - -------------------------------------------------- -------------- --------------- Consolidated operating earnings $ 9,143 $ 7,442 Interest income, net 632 1,096 Other (expense) income (180) 408 Restructuring charges (5,132) -- -------------- --------------- Consolidated earnings before taxes $ 4,463 $ 8,946 ============== ===============
(a) Net sales of life science products by Genisphere are included within Corporate and Other. Datascope Corp. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited, in thousands except per share data) 7. Goodwill and Other Intangible Assets Early Adoption of Financial Accounting Standard No. 142 The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, "Accounting for Goodwill and Other Intangible Assets" (SFAS No. 142), in June 2001. This statement provides guidance on how to account for existing goodwill and intangible assets from completed acquisitions. In accordance with the early adoption provision of this statement, we adopted SFAS No. 142 in the first quarter fiscal 2002. We discontinued the amortization of goodwill, amounting to $179 thousand pre-tax, or $0.01 per share after tax, and determined there is no impairment in the carrying value of our existing goodwill ($6.0 million). The following table presents our earnings and earnings per share on a proforma basis (including special items in both years) as though goodwill amortization had not been recorded in the prior year.
Three Months Ended September 30, --------------------------------- 2001 2000 --------------- -------------- Net earnings: Reported net earnings $ 3,334 $ 6,083 Add back goodwill amortization -- 123 --------------- -------------- Adjusted net earnings $ 3,334 $ 6,206 =============== ============== Basic earnings per share: Reported earnings per share $ 0.23 $ 0.41 Goodwill amortization -- $ 0.01 --------------- -------------- Adjusted earnings per share $ 0.23 $ 0.42 =============== ============== Diluted earnings per share: Reported earnings per share $ 0.22 $ 0.39 Goodwill amortization -- $ 0.01 --------------- -------------- Adjusted earnings per share $ 0.22 $ 0.40 =============== ==============
Datascope Corp. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited, in thousands except per share data) 8. Restructuring Charges In the first quarter fiscal 2002, we recorded a restructuring charge of $5.1 million pre-tax, equivalent to $3.2 million after tax or $0.21 per diluted share. The restructuring charge relates to cost reduction initiatives primarily associated with the VasoSeal and Cardiac Assist businesses which have experienced pressure on revenue growth due to competition. The restructuring charge included: o severance expenses, asset writedowns and exit costs related to the closure of the VasoSeal manufacturing and R&D facility in Vaals, The Netherlands, which will be closed and sold after the third quarter fiscal 2002. The Vaals employees will leave the Company over the next six months. o severance expenses for employee terminations in New Jersey facilities. All the New Jersey based employees left the Company effective September 30, 2001. The workforce reductions of 110 people will not have any significant impact on our operations. A summary of the restructuring charges and remaining liability at September 30, 2001 is shown below.
Vaals Asset Writedowns Vaals U.S. and Employee Employee Exit Costs Severance Severance Total -------------- --------------- --------------- -------------- Q1 Fiscal 2002 restructuring charges $ 2,462 $ 1,108 $ 1,562 $ 5,132 Utilized through September 30, 2001 2,107 -- -- 2,107 -------------- --------------- --------------- -------------- Remaining liability at September 30, 2001 $ 355 $ 1,108 $ 1,562 $ 3,025 ============== =============== =============== ==============
9. Recent Accounting Pronouncements In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations," ("SFAS No. 143"). This statement provides guidance on how to account and report for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. We do not expect this statement to have a material impact on our financial statements. In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," ("SFAS No. 144"). This statement provides guidance on accounting and reporting for long-lived assets to be held and used, disposed of by sale and disposed of other than by sale. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. We do not expect this statement to have a material impact on our financial statements. Part II: Item 1. Legal Proceedings In the matter of Datascope Corp. v. Arrow International Inc., the suit was concluded when the United States District Court for the District of New Jersey granted Datascope Corp.'s June 2001 Motion for Summary Judgment on August 17, 2001. 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, 2001 -----END PRIVACY-ENHANCED MESSAGE-----