-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, kLfGnmstAl4v3gaOEWYQnY4vaGEf4RU9Cc8y8fKfdWmIhlvydgC4LVlcAq6mhuGU QRjT10r9SaYGNNqpxmANbw== 0000950123-95-001353.txt : 19950605 0000950123-95-001353.hdr.sgml : 19950605 ACCESSION NUMBER: 0000950123-95-001353 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 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: 95537359 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 March 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 pre- ceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------- ------- Number of Shares of Company's Common Stock outstanding as of April 28, 1995: 16,069,399. 2 DATASCOPE CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS NET SALES Sales increased 7% and 8% in the third quarter and first nine months of fiscal 1995, respectively, as compared to the corresponding periods last year, primarily due to worldwide growth of the Cardiac Assist division and InterVascular, the Company's subsidiary that produces vascular grafts. The Cardiac Assist division made the principal contribution to increased sales with continued strong demand for intra-aortic balloon catheters. The System 97 intra-aortic balloon pump, manufactured by the Company's Patient Monitoring division and marketed by its Cardiac Assist division also contributed to increased sales and earnings. Sales of the Patient Monitoring division declined in the third quarter and first nine months of fiscal 1995 compared to the same periods last year primarily as a result of the U.S. shipment hold and sales reserves taken on the Point of View(R) (POV) monitors. As previously reported, the Company voluntarily informed the Food and Drug Administration (FDA) of the results of certain regulatory audits. In particular, in October 1994 the Company notified the FDA of questions relating to the POV monitor manufactured by the Patient Monitoring division, and in December 1993 the Company notified the FDA of questions relating to the Pre-Market Approval (PMA) application for the Hemaguard(TM) graft submitted by InterVascular, Inc. The Company voluntarily placed a hold on domestic shipments of the POV monitor and instituted additional independent regulatory audits intended to assure that all Company filings are in compliance with applicable FDA regulations. Subsequently, on April 26th, the Company advised its customers that the POV monitor is being recalled from the domestic market. The Company offered its customers other Datascope patient monitoring products pending the completion of engineering corrections and regulatory review, and is also offering credits or refunds to customers. The FDA has determined to apply the provisions of the Application Integrity Policy (AIP) to products manufactured by the Company's Patient Monitoring division and InterVascular, Inc. The AIP generally provides that substantive review of marketing applications are suspended pending an assessment by the FDA of the validity of the data contained in such applications. While the Company believes that the independent auditing process previously initiated by it will facilitate the assessment by the FDA of the validity of data, the AIP will probably result in longer time frames for product approvals for the affected business units. The Company intends to continue to cooperate with the FDA. 3 Other product sales increases in the third quarter and first nine months of fiscal 1995 were attributable to higher international sales of coated grafts and higher worldwide collagen product sales. The PMA application for VasoSeal, the percutaneous device for achieving hemostasis in catheterization procedures involving puncture of the femoral artery, was referred by the FDA to its Circulatory System Devices Panel. The Panel met on May 8, 1995 to review the VasoSeal PMA and recommended approval of VasoSeal for use in both coronary angiography and coronary angioplasty procedures. The Panel's recommendation is an important step in the regulatory approval process leading to final FDA approval. The Company cannot estimate the timing of final FDA action on the VasoSeal PMA. The weakening of the U.S. dollar compared to major European currencies favorably impacted sales by approximately $900 thousand and $2.0 million in the third quarter and first nine months of fiscal 1995, respectively, compared to the corresponding periods last year. GROSS PROFIT (NET SALES LESS COST OF SALES) The gross profit increase of 7% and 8% in the third quarter and first nine months of fiscal 1995, respectively, was consistent with the sales increase. RESEARCH AND DEVELOPMENT (R&D) Total R&D expenses of $5.0 million declined 2% in the third quarter of fiscal 1995 compared to the same period last year primarily attributable to a slight decline in R&D expenditures in the Patient Monitoring and Cardiac Assist divisions, as both divisions introduced major new products last year. Partially offsetting the above decline was increased R&D expenditures for collagen products and vascular grafts. R&D expenses of $14.2 million in the first nine months of fiscal 1995 were 1% higher than the corresponding period last year due to higher R&D expenditures for collagen products and vascular grafts. As a percentage of sales, R&D expenses amounted to 10% in both the third quarter and first nine months of fiscal 1995 as compared to 11% for the same periods last year. SELLING, GENERAL & ADMINISTRATIVE EXPENSES (SG&A) SG&A expenses of $21.7 million increased $2.1 million or 11% in the third quarter of fiscal 1995 compared to the third quarter last year. SG&A expenses of $61.8 million were $5.5 million or 10% greater in the first nine months of fiscal 1995 compared to the corresponding period last year. The increases were primarily attributable to increased sales and marketing expenses to support the higher sales, expenses associated with installation of new computer systems, and higher legal and regulatory expenses. 4 The weakening of the U.S. dollar compared to major European currencies increased SG&A expenses by approximately $464 thousand and $1.1 million in the third quarter and first nine months of fiscal 1995, respectively, compared to the corresponding periods last year. As a percentage of sales, SG&A expenses were 43.1% and 44.0% in the third quarter and first nine months of fiscal 1995, respectively, compared to 41.6% and 43.1% for the corresponding periods last year. INTEREST INCOME AND EXPENSE The higher interest income in the third quarter and first nine months of fiscal 1995 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. Forward foreign exchange contracts outstanding at March 31, 1995 totaled $2.3 million, all of which were in European currencies, with maturities that do not exceed 12 months. LIQUIDITY AND CAPITAL RESOURCES The Company maintained its strong financial position during the first nine months of fiscal 1995. Working capital was $107.5 million at March 31, 1995 compared to $105.0 million at June 30, 1994. Working capital was reduced in the first nine months of fiscal 1995 by a $9.5 million investment in non-current marketable securities with maturities up to 4 years. The current ratio at March 31, 1995 was 4.5:1 compared to 4.2:1 at June 30, 1994. Cash provided by operating activities was $25.4 million in the first nine months of fiscal 1995 compared to $11.5 million in the corresponding period last year, with the increase primarily attributable to higher accounts receivable collections. In the first nine months of fiscal 1995 cash was used to purchase $10.8 million of plant and equipment which included sales demonstration units for new products. After deducting $2.5 million book value of sales demonstration units returned to inventory, the net additions to plant and equipment were $8.3 million. 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. 5 DATASCOPE CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
MAR. 31, JUNE 30, 1995 1994 ----------- -------- (unaudited) (a) ASSETS Current Assets: Cash and cash equivalents $ 1,981 $ 2,082 Marketable securities, at cost (Note 4) 48,361 43,339 Accounts receivable, less allowance for doubtful accounts of $1,355 and $1,188 42,800 51,278 Inventories (Note 2) 35,587 33,474 Prepaid expenses and other current assets 9,699 8,081 -------- -------- Total Current Assets 138,428 138,254 Property, Plant and Equipment, net of accumulated depreciation of $32,210 and $28,358 44,196 40,864 Marketable Securities, non-current at cost (Note 4) 9,509 - Other Assets 6,185 6,303 -------- -------- $198,318 $185,421 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 6,962 $ 9,515 Accrued expenses 13,383 11,485 Accrued compensation 8,009 9,813 Income taxes payable 2,542 2,462 -------- -------- Total Current Liabilities 30,896 33,275 Other Liabilities 9,849 8,084 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, 16,066,159 and 16,043,411 shares 161 160 Additional paid-in capital 41,780 41,605 Retained earnings 115,645 104,008 Cumulative translation adjustments (13) (1,711) -------- -------- 157,573 144,062 -------- -------- $198,318 $185,421 ======== ========
(a) Derived from audited financial statements See notes to consolidated financial statements 6 DATASCOPE CORP. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited)
NINE MONTHS ENDED THREE MONTHS ENDED MARCH 31, MARCH 31, ------------------- ------------------ 1995 1994 1995 1994 -------- -------- -------- ------- NET SALES $140,500 $130,600 $50,500 $47,300 -------- -------- -------- ------- Costs and Expenses: Cost of sales 49,053 45,751 17,775 16,650 Research and development expenses 14,152 13,975 5,036 5,125 Selling, general and administrative expenses 61,754 56,230 21,744 19,660 -------- -------- -------- ------- 124,959 115,956 44,555 41,435 -------- -------- -------- ------- OPERATING EARNINGS 15,541 14,644 5,945 5,865 Other (Income) Expense: Interest income (1,859) (1,193) (727) (377) Interest expense 18 17 11 8 Other, net 209 320 112 157 -------- -------- -------- ------- (1,632) (856) (604) (212) -------- -------- -------- ------- EARNINGS BEFORE TAXES ON INCOME 17,173 15,500 6,549 6,077 Taxes on Income 5,536 4,993 2,030 1,884 -------- -------- -------- ------- NET EARNINGS $ 11,637 $ 10,507 $ 4,519 $ 4,193 ======== ======== ======== ======= Earnings Per Share (Note 3) $ 0.72 $ 0.65 $ 0.28 $ 0.26 ======== ======== ======== ======= Weighted Average Number of Common and Common Equivalent Shares Outstanding (Note 3) 16,206 16,152 16,211 16,163 ======== ======== ======== =======
See notes to consolidated financial statements 7 DATASCOPE CORP. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS (DOLLARS IN THOUSANDS) (Unaudited)
NINE MONTHS ENDED MARCH 31, ---------------------- 1995 1994 -------- -------- OPERATING ACTIVITIES: Net Earnings $ 11,637 $ 10,507 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 5,937 4,476 Provision for supplemental pension 646 850 Provision for losses on accounts receivable 253 117 Deferred income tax (benefit) - (31) Tax benefit of stock options exercised 7 7 Changes in operating assets and liabilities: Accounts receivable 9,047 (5,988) Inventories 1,331 (1,059) Other assets (1,532) (3,448) Accounts payable (2,703) 2,300 Income taxes payable 80 2,159 Accrued and other liabilities 722 1,639 -------- -------- Net cash provided by operating activities 25,425 11,529 -------- -------- INVESTING ACTIVITIES: Capital expenditures (10,772) (11,757) Purchases of short-term marketable securities (57,077) (54,858) Sales of short-term marketable securities 52,055 56,174 Purchases of long-term marketable securities (9,509) - -------- -------- Net cash used in investing activities (25,303) (10,441) -------- -------- FINANCING ACTIVITIES: Exercise of stock options 292 97 Treasury shares acquired upon exercise of stock options (124) (9) -------- -------- Net cash provided by financing activities 168 88 -------- -------- Effect of exchange rates on cash (391) (66) -------- -------- Increase (decrease) in cash and cash equivalents (101) 1,110 Cash and cash equivalents, beginning of period 2,082 856 -------- -------- Cash and cash equivalents, end of period $ 1,981 $ 1,966 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for: Interest $ 18 $ 17 -------- -------- Income taxes $ 4,480 $ 4,146 -------- --------
See notes to consolidated financial statements 8 DATASCOPE CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The consolidated balance sheet as of March 31, 1995, the statements of consolidated earnings for the three and nine month periods ended March 31, 1995 and 1994 and the consolidated statements of cash flows for the nine month periods ended March 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, 1994 annual report to shareholders. The results of operations for the period ended March 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) March 31, June 30, 1995 1994 --------- -------- Materials $18,752 $15,785 Work in Process 4,377 3,582 Finished Goods 12,458 14,107 ------- ------- $35,587 $33,474 ======= =======
3. STOCKHOLDERS' EQUITY Changes in the components of stockholders' equity for the nine months ended March 31, 1995 are as follows:
(In thousands) Net income $11,637 Translation adjustments 1,698 Proceeds on the exercise of options to purchase 22,748 shares of common stock 176 ------- Total increase in stockholders' equity $13,511 =======
9 4. NEW FINANCIAL ACCOUNTING STANDARDS IN FISCAL 1995 As required by the Financial Accounting Standards Board, the Company has adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits", which requires accrual accounting for postemployment benefits rather than the cash method, and Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (Statement 115), which establishes the accounting and reporting for such investments. The Company has determined that these statements do not have a material impact on the Company's consolidated financial statements. For purposes of Statement 115, the Company has determined that its investment portfolio, both current and non-current, will be classified as held-to-maturity and therefore carried at amortized cost. 10 Part II: Item 6 Exhibits and Reports on Form 8-K (b) Reports on Form 8-K. A Report on Form Form 8-K was filed on April 27, 1995. 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 /s/ Lawrence Saper By:______________________________ Lawrence Saper Chairman of the Board and President /s/ Murray Pitkowsky By:______________________________ Murray Pitkowsky Senior Vice President and Secretary Dated: May 12, 1995 12 EXHIBIT INDEX Exhibit No. Description Page No. - - ---------- ------------- ------- Ex-27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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 FINANCIAL STATEMENT. 1,000 9-MOS JUN-30-1995 JUL-01-1994 MAR-31-1995 1 1,981 48,361 44,155 (1,355) 35,587 138,428 76,406 (32,210) 198,318 30,896 0 161 0 0 157,412 198,318 140,500 140,500 49,053 49,053 0 0 18 17,173 5,536 11,637 0 0 0 11,637 0.72 0.72
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