-----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, McHlBmaCZHBxQKkQ82zxbrVwutKt/XWQ8dTFm2bM5tT4dDytrgqJGxq39HJmKRru tDklt5QomFQoGxy3ovQ5+w== 0000950135-02-000738.txt : 20020414 0000950135-02-000738.hdr.sgml : 20020414 ACCESSION NUMBER: 0000950135-02-000738 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011230 FILED AS OF DATE: 20020213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZOLL MEDICAL CORPORATION CENTRAL INDEX KEY: 0000887568 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 042711626 STATE OF INCORPORATION: MA FISCAL YEAR END: 0928 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20225 FILM NUMBER: 02540767 BUSINESS ADDRESS: STREET 1: 32 SECOND AVENUE CITY: BURLINGTON STATE: MA ZIP: 01803-4420 BUSINESS PHONE: 7812290020 MAIL ADDRESS: STREET 1: 32 SECOND AVENUE CITY: BURLINGTON STATE: MA ZIP: 01803-4420 10-Q 1 b41945zme10-q.txt ZOLL MEDICAL CORPORATION UNITED STATES 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 THE THREE MONTH PERIOD FROM OCTOBER 1, 2001 TO DECEMBER 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 0-20225 ZOLL MEDICAL CORPORATION ----------------------------------------------------- (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2711626 - ------------------------------------------------ ------------------------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification number) 32 SECOND AVENUE, BURLINGTON, MA 01803-4420 - ------------------------------------------------ ------------------------------------- (Address of principal executive offices) (Zip Code)
(781) 229-0020 -------------- (Registrant's telephone number, including area code) NOT APPLICABLE -------------- (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 ----- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock:
Class Outstanding at February 8, 2002 Common Stock, $.02 par value 8,913,084
This document consists of 21 pages. 1 ZOLL MEDICAL CORPORATION INDEX
PAGE NO. PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements: Consolidated Balance Sheets (unaudited) 3 December 30, 2001 and September 30, 2001 Consolidated Income Statements (unaudited) 4 Three Months Ended December 30, 2001 and December 31, 2000 Consolidated Statements of Cash Flows (unaudited) 5 Three Months Ended December 30, 2001 and December 31, 2000 Notes to Consolidated Financial Statements (unaudited) 6 ITEM 2. Management's Discussion and Analysis of Results of 7 Operations and Financial Condition ITEM 3. Quantitative and Qualitative Disclosure About Market Risk 19 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 20 ITEM 2. Changes in Securities 20 ITEM 3. Defaults Upon Senior Securities 20 ITEM 4. Submission of Matters to a Vote of Security-Holders 20 ITEM 5. Other Information 20 ITEM 6. Exhibits and Reports on Form 8-K 20 Signatures 21
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ZOLL MEDICAL CORPORATION CONSOLIDATED BALANCE SHEETS (000's omitted) (Unaudited)
DECEMBER 30, SEPTEMBER 30, 2001 2001 ASSETS Current assets: Cash and cash equivalents $ 55,259 $ 45,303 Marketable securities 15,472 16,170 Accounts receivable, less allowance of $3,209 at December 30, 2001 and $2,780 at September 30, 2001 32,878 37,155 Inventories: Raw materials 8,966 7,561 Work-in-process 3,062 2,334 Finished goods 12,368 10,799 --------------- -------------- 24,396 20,694 Prepaid expenses and other current assets 2,934 2,992 --------------- -------------- Total current assets 130,939 122,314 Property and equipment, at cost: Land and building 3,478 3,478 Machinery and equipment 23,714 23,649 Construction in progress 1,457 1,666 Tooling 6,442 5,779 Furniture and fixtures 1,505 1,472 Leasehold improvements 1,286 1,278 --------------- -------------- 37,882 37,322 Less accumulated depreciation 20,597 19,662 --------------- -------------- Net property and equipment 17,285 17,660 Other assets, net 4,800 4,414 --------------- -------------- $153,024 $ 144,388 =============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 8,605 $ 5,224 Accrued expenses and other liabilities 10,614 7,430 --------------- -------------- Total current liabilities 19,219 12,654 Deferred income taxes 297 297 Commitments and contingencies Stockholders' equity Preferred stock, $.01 par value, authorized 1,000 shares, none issued and outstanding Common stock, $.02 par value, authorized 19,000 at shares, 8,908 and 8,884 issued and outstanding December 30, 2001 and September 30, 2001, respectively 178 178 Capital in excess of par value 96,888 96,414 Accumulated other comprehensive income (278) 19 Retained earnings 36,720 34,826 --------------- -------------- Total stockholders' equity 133,508 131,437 --------------- -------------- $ 153,024 $ 144,388 =============== ==============
See notes to unaudited consolidated financial statements. 3 ZOLL MEDICAL CORPORATION CONSOLIDATED INCOME STATEMENTS (000's omitted, except per share data) (Unaudited)
THREE MONTHS ENDED December 30, December 31, 2001 2000 Net sales $ 33,345 $ 28,596 Cost of goods sold 14,486 12,069 -------------- ------------- Gross profit 18,859 16,527 Expenses: Selling and marketing 11,112 9,135 General and administrative 2,506 2,465 Research and development 2,692 2,292 -------------- ------------- Total expenses 16,310 13,892 -------------- ------------- Income from operations 2,549 2,635 Investment and other income 320 1,006 Interest expense -- 1 -------------- ------------- Income before income taxes 2,869 3,640 Provision for income taxes 975 1,274 -------------- ------------- Net income $ 1,894 $ 2,366 ============== ============= Basic earnings per common share $ 0.21 $ 0.27 ============== ============= Weighted average common shares outstanding 8,894 8,801 Diluted earnings per common and common equivalent share $ 0.21 $ 0.26 ============== ============= Weighted average number of common and common equivalent shares outstanding 9,153 9,110
See notes to unaudited consolidated financial statements. 4 ZOLL MEDICAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (000's omitted) (Unaudited)
THREE MONTHS ENDED DECEMBER 30, DECEMBER 31, 2001 2000 OPERATING ACTIVITIES: Net income $ 1,894 $ 2,366 Charges not affecting cash: Depreciation and amortization 1,606 1,503 Tax benefit from the exercise of stock options 245 60 Changes in current assets and liabilities: Accounts receivable 4,267 2,604 Inventories (3,702) (522) Prepaid expenses and other current assets 697 176 Accounts payable and accrued expenses 5,746 (1,704) --------------- -------------- Cash provided by operating activities 10,753 4,483 INVESTING ACTIVITIES: Sale of marketable securities 614 6,651 Additions to property and equipment (1,165) (2,478) Other assets (453) (115) --------------- -------------- Cash provided by (used for) investing activities (1,004) 4,058 FINANCING ACTIVITIES: Exercise of stock options 229 63 Repayment of long-term debt -- (20) --------------- -------------- Cash provided by financing activities 229 43 Effect of exchange rates on cash and cash equivalents (22) -- --------------- -------------- Net increase in cash 9,956 8,584 Cash and cash equivalents at beginning of period 45,303 4,025 --------------- -------------- Cash and cash equivalents at end of period $ 55,259 $12,609 =============== =============== ------------------ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period: Income taxes $ 58 $ 237 Interest -- 1
See notes to unaudited consolidated financial statements. 5 ZOLL MEDICAL CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. The Consolidated Balance Sheet as of December 30, 2001, the Consolidated Income Statements for the three months ended December 30, 2001 and December 31, 2000, and the Consolidated Statements of Cash Flows for the three months ended December 30, 2001 and December 31, 2000 are unaudited, but in the opinion of management include all adjustments, consisting of normal recurring items, necessary for a fair presentation of results for these interim periods. The results for the interim periods are not necessarily indicative of results to be expected for the entire year. The information contained in the interim financial statements should be read in conjunction with the Company's audited financial statements as of and for the year ended September 30, 2001 included in its Form 10-K filed with the Securities and Exchange Commission on December 31, 2001. Certain reclassifications have been made to the prior years' unaudited consolidated financial statements to conform to the current period presentation with no impact on net income. 2. Segment and Geographic Information Segment information: The Company reports information to the chief operating decision maker for four operating segments, determined by the type of customer or product. These segments include the sale of cardiac resuscitation devices and accessories and data collection management software to the North America hospital market and to the North America pre-hospital market, the sale of disposables, accessories, and other products to the North American market, and the sale of cardiac resuscitation devices and accessories to the international market. Each of these segments has similar characteristics, manufacturing processes, distribution and marketing strategies, as well as a similar regulatory environment. In order to make operating and strategic decisions, ZOLL's chief operating decision maker evaluates revenue performance based on the worldwide revenues of each segment and, due to shared infrastructures, profitability based on an enterprise-wide basis. Net sales by segment were as follows: (000's omitted)
THREE MONTHS ENDED ------------------ DECEMBER 30, DECEMBER 31, 2001 2000 Hospital Market - North America $ 12,220 $9,838 Pre-hospital Market - North America 9,206 7,602 Other - North America 4,559 4,454 International Market 7,360 6,702 ----------------------------- $33,345 $28,596 =============================
The Company reports assets on a consolidated basis to the chief operating decision maker. Geographic information: Net sales by major geographical area, determined on the basis of destination of the goods, are as follow: (000's omitted)
THREE MONTHS ENDED ------------------ DECEMBER 30, DECEMBER 31, 2001 2000 United States $25,037 $21,527 Foreign 8,308 7,069 ----------------------------- $33,345 $28,596 =============================
3. The Company computes comprehensive income in accordance with Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" (SFAS 130). SFAS 130 establishes standards for the reporting and display of comprehensive income and its components in the financial statements. Other comprehensive income, as defined, includes all changes in equity during a period from non-owner sources, such as unrealized gains and losses on available-for-sale securities and foreign currency translation. Total comprehensive income amounted to $1,597,000 for the quarter ended December 30, 6 2001, and $2,358,000 for the quarter ended December 31, 2000. Accumulated balances for each element of other comprehensive income were as follows: (000's omitted)
DECEMBER 30, DECEMBER 31, 2001 2000 Unrealized gain (loss) on available-for-sales securities (84) (8) Cumulative foreign currency translation adjustment (213) - ------------------------ Accumulated other comprehensive income (297) (8) ========================
4. The shares used for calculating basic earnings per common share were the average shares outstanding and the shares used for calculating diluted earnings per share were the average shares outstanding and the dilutive effect of stock options. 5. Recent Accounting Pronouncements: In July, 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141), and No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141 is effective for business combinations completed after June 30, 2001, and SFAS 142 is effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statement. Other intangible assets will continue to be amortized over their useful lives. The Company is not required to adopt the new rules on accounting for goodwill and other intangible assets until fiscal 2003. Application of the nonamortization provisions of the Statement is expected to result in an insignificant increase in net income in fiscal 2003. The Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets during fiscal 2003 and does not believe that the effect of these tests will have a significant impact on the Company's consolidated financial position of results of operations. 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 144), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations" for a disposal of a segment of a business. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The Company expects to adopt SFAS 144 in fiscal 2003 and does not expect that the adoption of the statement will have a significant impact on the Company's consolidated financial position or results of operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION THREE MONTHS ENDED DECEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED DECEMBER 30, 2000 Our net sales increased 17% to $33.3 million for the three months ended December 30, 2001 in comparison to $28.6 million for the same period a year earlier. Sales to the North American hospital market amounted to $12.2 million, a 24% increase in comparison to $9.8 million for the same period a year prior. Our sales to the North American pre-hospital market increased 21% to $9.2 million, up from $7.6 million in the previous year. Total North American sales increased 19% to $26.0 million in comparison to $21.9 million for the same period a year earlier. North American sales reflected increased recognition of the importance of early defibrillation, the continued trend toward the adoption of biphasic technology, and increased sales of monitoring parameters. During the first quarter, we initiated shipment of our M Series CCT defibrillator for patient transport, which includes two invasive monitoring parameter options. International sales increased 10% to $7.4 million in comparison to $6.7 million for the same period a year earlier. International sales reflected strength in Latin America and increased sales to France, through our new direct sales force, and sales to the German Army. Gross margin for the first quarter of 2002 was 56.6% compared to 57.8% for the comparable prior year quarter. Gross margin reflected that our overall capital equipment growth exceeded the growth of our higher margin disposable electrode products. In 7 addition, our first quarter 2002 revenue included more shipments to the German Army, which reflect volume pricing and lower average margins, than the same quarter a year earlier. Selling and marketing expenses as a percentage of net sales increased to 33.3% from 31.9% in the same quarter a year earlier. This increased expense reflects increased sales and marketing resources in anticipation of our new AED Plus product launch as well as the hiring of staff in our new subsidiaries in France and Australia. General and administrative expenses decreased as a percentage of net sales to 7.5% from 8.6%, reflecting strong emphasis on expense controls as we have grown our business. Research and development expenses increased slightly as a percentage of net sales to 8.1% from 8.0%. This increase reflects continued investment in our new public access product, the ZOLL AED Plus. We anticipate receipt of 510(k) clearance from the U.S. Food and Drug Administration (FDA) for the ZOLL AED Plus and expect to initiate shipments during the second quarter of fiscal 2002. Our effective tax rate decreased from 35% to 34% for the three months ended December 30, 2001 as compared to the same period in fiscal 2000, reflecting continued emphasis on tax planning. LIQUIDITY AND CAPITAL RESOURCES Our total cash, cash equivalents and marketable securities increased $9.3 million during the first quarter of fiscal 2002. Our cash and cash equivalents at December 30, 2001 totaled $55.3 million compared with $45.3 million at September 30, 2001. In addition, we had marketable securities amounting to $15.5 million at December 30, 2001 in comparison to $16.2 million at September 30, 2001. Cash provided by operating activities for the three months ended December 30, 2001 increased $6.3 million as compared to the same period in fiscal year 2001. This increase is attributable to improved cash collections of accounts receivable and an increase in accounts payable and accrued expenses. Accounts payable and accrued expenses increased due to the timing of our fiscal quarter end, as our final payroll and accounts payable check runs were not generated until December 31, 2001. Also impacting accounts payable and accrued expenses was our receipt of an advanced payment of approximately $1.7 million to cover services that will be provided by one of our vendors. We expect to pay this vendor upon completion of these services during the second quarter of 2002. These were offset by an increase in inventory relating to our two newest products, the M Series CCT and our new public access product, the ZOLL AED Plus, which is currently awaiting 510(k) clearance from the FDA. The increase in inventory also includes the replenishment of finished goods stock and additional purchases to level load our factory production for our expected revenue growth over the course of the year. Cash used for investing activities amounted to $1.0 million during the three months ended December 30, 2001 compared to net cash provided of $4.1 million during the three months ended December 31, 2000. This reduction reflects fewer sales of marketable securities than in the same quarter a year ago. Cash provided by financing activities was $229,000 for the three months ended December 30, 2001 compared to $43,000 for the same period in fiscal year 2001. We maintain a working capital line of credit with our bank. Under this working capital line, we may borrow on a demand basis. Currently, we may borrow up to $12.0 million at an interest rate equal to the bank's base rate. No borrowings were outstanding on this line at the end of the first quarter of fiscal 2002. LEGAL AND REGULATORY AFFAIRS We are involved in the normal course of our business in various litigation matters and regulatory issues, including product recalls. Although we are unable to determine at the present time the exact amount of any impact in any pending matters, we believe that none of the pending matters will have an outcome material to our financial condition or business. SAFE HARBOR STATEMENTS Except for the historical information contained herein, the matters set forth herein are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that 8 are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward looking statements. Such risks and uncertainties include, but are not limited to: product demand and market acceptance risks, the effect of economic conditions, results of pending or future litigation, the impact of competitive products and pricing, product development and commercialization, technological difficulties, the government regulatory environment and actions, trade environment, capacity and supply constraints or difficulties, the results of financing efforts, actual purchases under agreements, potential warranty issues, the effect of the Company's accounting policies, and those items set forth in the following section entitled "Risk Factors." RISK FACTORS IF WE FAIL TO COMPETE SUCCESSFULLY IN THE FUTURE AGAINST EXISTING OR POTENTIAL COMPETITORS, OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED Our principal global competitors with respect to our entire cardiac resuscitation equipment product line are Physio-Control Corporation and Royal Phillips Electronics. Physio-Control is a subsidiary of Medtronic, Inc., a leading medical technology company, and Royal Phillips Electronics recently completed their purchase of Agilent Technologies' Healthcare Solutions Group, which was one of our major competitors. Physio-Control has been the market leader in the defibrillator industry for over twenty years. As a result of Physio-Control's dominant position in this industry, many potential customers have relationships with Physio-Control that could make it difficult for us to continue to penetrate the markets for our products. In addition, Physio-Control, its parent and Royal Phillips Electronics and other competitors each have significantly greater resources than we do. Accordingly, Physio-Control, Royal Phillips Electronics and other competitors could substantially increase the resources they devote to the development and marketing of products that are competitive with ours. Moreover, these and other competitors may develop and successfully commercialize medical devices that directly or indirectly accomplish what our products are designed to accomplish in a superior and/or less expensive manner. For example, we expect our competitors to develop and sell devices in the future that will compete directly with our M Series product line. In addition, although our biphasic waveform technology is unique, our competitors have devised alternative biphasic waveform technology and we have licensed our biphasic waveform technology to GE Medical Systems Information Technologies. In addition, there are a number of smaller competitors. In the United States, these competitors include MRL, and Cardiac Sciences, Inc. It is possible the market may embrace these competitor's products which could negatively impact our market share. In addition to external defibrillation and external pacing with cardiac resuscitation equipment, it is possible that other alternative therapeutic approaches to the treatment of sudden cardiac arrest may be developed. These alternative therapies or approaches, including pharmaceutical or other alternatives, could prove to be superior to our products. Moreover, there is significant competition in the business of developing and marketing software for data collection, billing and data management in the emergency medical system market. Our principal competitors in this business include PAD Systems, Healthware Technologies, Inc., Tritech Software Systems, Inc., Sweet Computer Services, Inc., RAM Software Systems, Inc., Intergraph Corporation and AmbPac, Inc., some of which have greater financial, technical, research and development and marketing resources than we do. In addition, because the barriers to entry in this business are relatively low, additional competitors may easily enter this market in the future. It is possible that systems developed by competitors could be superior to our data management system. Consequently, our ability to sell our data management system could be materially impacted and our financial results could be materially and adversely affected. OUR OPERATING RESULTS ARE LIKELY TO FLUCTUATE WHICH COULD CAUSE OUR STOCK PRICE TO BE VOLATILE, AND THE ANTICIPATION OF A VOLATILE STOCK PRICE CAN CAUSE GREATER VOLATILITY 9 Our quarterly and annual operating results have fluctuated and may continue to fluctuate. Various factors have and may continue to affect our operating results, including: - high demand for our products which could disrupt our normal factory utilization and cause shipments to occur in uneven patterns; - variations in product orders; - timing of new product introductions; - temporary disruptions on buying behavior due to changes in technology (e.g. shift to biphasic technology) - changes in distribution channels; - actions taken by our competitors such as the introduction of new products or the offering of sales incentives; - the ability of our sales force to effectively market our products; - supply interruptions from our single source vendors; - regulatory actions, including actions taken by the U.S. Food and Drug Administration; and - delays in obtaining domestic or foreign regulatory approvals. In addition, a large percentage of our sales are made toward the end of each quarter. As a consequence, our quarterly financial results are often dependent on the receipt of large customer orders in the last weeks of a quarter. We may not receive these large orders each quarter. The absence of these large orders could cause us to fall short of our quarterly sales targets, which in turn could cause our stock price to decline sharply. Based on these factors, period-to-period comparisons should not be relied upon as indications of future performance. In addition, in anticipation of less successful quarterly results, parties may take short positions in our stock. The actions of parties shorting our stock might cause even more volatility in our stock price. The volatility of our stock may cause the value of a stockholder's investment to decline rapidly. WE MAY BE REQUIRED TO IMPLEMENT A COSTLY PRODUCT RECALL In the event that any of our products proves to be defective, we can voluntarily recall, or the U.S. Food and Drug Administration, the FDA, could require us to redesign or implement a recall of, any of our products. We and our competitors have voluntarily recalled products in the past, and based on this experience, we believe that future recalls could result in significant costs to us and significant adverse publicity which could harm our ability to market our products in the future. Though it is not possible to quantify the economic impact of a recall, it could have a material adverse effect on our business, financial condition and results of operations. Recalls can occur on all of our products, and most do not have a material impact. For example, in December 2001, we implemented a voluntary product corrective action to apply a software fix to a problem on approximately 16,000 of our M-Series defibrillators. This action is expected to cost approximately $100,000 and is not expected to have a material impact to our financial results or our consolidated financial position. CHANGES IN THE HEALTH CARE INDUSTRY MAY REQUIRE US TO DECREASE THE SELLING PRICE FOR OUR PRODUCTS OR COULD RESULT IN A REDUCTION IN THE SIZE OF THE MARKET FOR OUR PRODUCTS, EACH OF WHICH COULD HAVE A NEGATIVE IMPACT ON OUR FINANCIAL PERFORMANCE 10 Trends toward managed care, health care cost containment, and other changes in government and private sector initiatives in the United States and other countries in which we do business are placing increased emphasis on the delivery of more cost-effective medical therapies which could adversely affect the sale and/or the prices of our products. For example: - major third-party payers of hospital and pre-hospital services, including Medicare, Medicaid and private health care insurers, have substantially revised their payment methodologies during the last few years which has resulted in stricter standards for reimbursement of hospital and pre-hospital charges for certain medical procedures; - Medicare, Medicaid and private health care insurer cutbacks could create downward price pressure in the cardiac resuscitation pre- hospital market; - proposals were adopted recently that will change the reimbursement procedures for the capital expenditure portion of the cost of providing care to Medicare patients; - numerous legislative proposals have been considered that would result in major reforms in the U.S. health care system that could have an adverse effect on our business; - there has been a consolidation among health care facilities and purchasers of medical devices in the United States who prefer to limit the number of suppliers from whom they purchase medical products, and these entities may decide to stop purchasing our products or demand discounts on our prices; - there is economic pressure to contain health care costs in international markets; - there are proposed and existing laws and regulations in domestic and international markets regulating pricing and profitability of companies in the health care industry; and - there have been recent initiatives by third party payers to challenge the prices charged for medical products which could affect our ability to sell products on a competitive basis. Both the pressure to reduce prices for our products in response to these trends and the decrease in the size of the market as a result of these trends could adversely affect our levels of revenues and profitability of sales, which could have a material adverse effect on our business. WE MAY EXPERIENCE SHORT TERM OPERATING FLUCTUATIONS AS WE CONTINUE TO INTRODUCE OUR NEW BIPHASIC TECHNOLOGY While we believe our biphasic technology offers substantial opportunity for future growth, there can be no guarantee that this will occur. In addition, in the short term, an industry shift towards biphasic technology could cause a lengthening of buying cycles, take additional sales time, and reduce the salability of existing inventory and trade-in products. As more customers convert to biphasic technology, it may become more difficult for us to sell the older monophasic technology products resulting in inventory obsolescence. This risk related to a shift towards biphasic technology could also be affected by uncertainty of the governing bodies' recommendations concerning biphasic technology. WE CAN BE SUED FOR PRODUCING DEFECTIVE PRODUCTS AND WE MAY BE REQUIRED TO PAY SIGNIFICANT AMOUNTS TO THOSE HARMED IF WE ARE FOUND LIABLE, AND OUR BUSINESS COULD SUFFER FROM ADVERSE PUBLICITY 11 The manufacture and sale of medical products such as ours entail significant risk of product liability claims. Our quality control standards comply with FDA requirements and we believe that the amount of product liability insurance we maintain is adequate based on past product liability claims in our industry. We cannot assure you, however, that the amount of such insurance will be sufficient to satisfy claims made against us in the future or that we will be able to maintain insurance in the future at satisfactory rates or in adequate amounts. Product liability claims could result in significant costs or litigation. In addition, a successful claim brought against us in excess of our available insurance coverage or any claim that results in significant adverse publicity against us could have a material adverse effect on our business, financial condition and results of operations. OUR DEPENDENCE ON SOLE AND SINGLE SOURCE SUPPLIERS EXPOSES US TO SUPPLY INTERRUPTIONS THAT COULD RESULT IN PRODUCT DELIVERY DELAYS AND SUBSTANTIAL COSTS TO REDESIGN OUR PRODUCTS Although we use many standard parts and components for our products, some key components are purchased from sole or single source vendors for which alternative sources are not currently readily available. For example, we currently purchase proprietary components, including capacitors, screens, gate arrays and integrated circuits, for which there are no direct substitutes. Our inability to obtain sufficient quantities of these components may result in future delays or reductions in product shipments which could cause a fluctuation in our results of operations. These components could be replaced with alternatives from other suppliers, which could involve a redesign of our products. Such redesign could involve considerable time and expense. For example, in 1999, one of our vendors was unable to provide sufficient quantities of screens that were used in our M Series products. To keep up with the demand for our products, we sought alternative screens from another supplier and redesigned our product accordingly. Redesigning our products resulted in additional costs and delays in the shipment of some of our products. Although we believe we have solved this supply problem, we cannot assure you that we will not have similar supply problems in the future. OUR RELIANCE ON INDEPENDENT MANUFACTURERS CREATES SEVERAL RISKS THAT COULD RESULT IN PRODUCT DELIVERY DELAYS, INCREASED COSTS AND OTHER ADVERSE EFFECTS ON OUR BUSINESS We currently engage a small number of independent manufacturers to manufacture several components for our products, including circuit boards, molded plastic components, cables and high voltage assemblies. Our reliance on these independent manufacturers involves a number of risks, including the potential for inadequate capacity, unavailability of, or interruptions in access to, process technologies, and reduced control over delivery schedules, manufacturing yields and costs. If our manufacturers are unable or unwilling to continue manufacturing our components in required volumes, we will have to transfer manufacturing to acceptable alternative manufacturers whom we have identified, which could result in significant interruptions of supply. Moreover, the manufacture of these components is complex, and our reliance on the suppliers of these components exposes us to potential production difficulties and quality variations, which could negatively impact the cost and timely delivery of our products. Accordingly, any significant interruption in the supply, or degradation in the quality, of any component would have a material adverse effect on our business, financial condition and results of operations. FAILURE TO PRODUCE NEW PRODUCTS OR OBTAIN MARKET ACCEPTANCE FOR OUR NEW PRODUCTS IN A TIMELY MANNER COULD HARM OUR BUSINESS 12 Because substantially all of our revenue comes from the sale of cardiac resuscitation devices and related products, our financial performance will depend upon market acceptance of, and our ability to deliver and support, new products such as a product for the public access defibrillation market and an integrated product for the emergency medical system data management market. We cannot assure you that we will be able to produce viable products in the time frames we currently estimate. Factors which could cause delay in these schedules or even cancellation of our projects to produce and market these new products include research and development delays, the actions of our competitors producing competing products and the actions of other parties who may provide alternative therapies or solutions which could reduce or eliminate the markets for pending products. The degree of market acceptance of any of our products will depend on a number of factors, including: - our ability to develop and introduce new products in the time frames we currently estimate; - our ability to successfully implement new product technologies; - the market's readiness to accept new products such as our M Series defibrillators and data management products; - the standardization of an automated platform for data management systems; - our ability to obtain adequate financial and technical resources for future product development and promotion; - the efficacy of our products; - the ability to obtain timely regulatory approval for new products; and - the prices of our products compared to the prices of our competitors' products. If our new products do not achieve market acceptance, our financial performance will be adversely affected. WE MAY NOT BE ABLE TO OBTAIN APPROPRIATE REGULATORY APPROVALS FOR OUR NEW PRODUCTS The manufacture and sale of our products are subject to regulation by numerous governmental authorities, principally the FDA and corresponding state and foreign agencies. The FDA administers the Federal Food, Drug and Cosmetic Act, as amended, and the rules and regulations promulgated thereunder. Some of our products have been classified by the FDA as Class II devices and others, such as our automated external defibrillators, have been classified as Class III devices. All of these devices must secure a 510(k) pre-market notification clearance before they can be introduced into the U.S. market. The process of obtaining 510(k) clearance typically takes several months and may involve the submission of limited clinical data supporting assertions that the product is substantially equivalent to another medical device on the market prior to 1976. Delays in obtaining 510(k) clearance could have an adverse effect on the introduction of future products. As an example, we are currently in the process of obtaining 510(k) clearance of our AED Plus. Delays in obtaining this clearance may slow our penetration into this market. Moreover, approvals, if granted, may limit the uses for which a product may be marketed, which could reduce or eliminate the commercial benefit of manufacturing any such product. We are also subject to regulation in each of the foreign countries in which we sell products. Many of the regulations applicable to our products in such countries are similar to those of the FDA. However, the national health or social security organizations of certain countries require our products to be qualified before they can be marketed in those countries. We cannot assure you that such clearances will be obtained. IF WE FAIL TO COMPLY WITH APPLICABLE REGULATORY LAWS AND REGULATIONS, THE FDA COULD EXERCISE ANY OF ITS REGULATORY POWERS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS Every company that manufactures or assembles medical devices is required to register with the FDA and to adhere to certain good manufacturing practices, which regulate the manufacture of medical devices and prescribe record keeping procedures and provide for the routine inspection of facilities for compliance with such regulations. The FDA also has broad regulatory powers in the areas of clinical testing, marketing and advertising of medical devices. To ensure that manufacturers adhere to good manufacturing 13 practices, medical device manufacturers are routinely subject to periodic inspections by the FDA. If the FDA believes that a company may not be operating in compliance with applicable laws and regulations, it could take any of the following actions: - place the company under observation and re-inspect the facilities; - issue a warning letter apprising of violating conduct; - detain or seize products; - mandate a recall; - enjoin future violations; and - assess civil and criminal penalties against the company, its officers or its employees. We, like most of our U.S. competitors, have received warning letters from the FDA in the past, and may receive warning letters in the future. We have always complied with the warning letters we have received. However, our failure to comply with FDA regulations could result in sanctions being imposed on us, including restrictions on the marketing or recall of our products. These sanctions could have a material adverse effect on our business. WE ARE DEPENDENT UPON LICENSED AND PURCHASED TECHNOLOGY FOR UPGRADEABLE FEATURES IN OUR PRODUCTS, AND WE MAY NOT BE ABLE TO RENEW THESE LICENSES OR PURCHASE AGREEMENTS IN THE FUTURE We license and purchase technology from third parties for upgradeable features in our products, including 12 lead analysis program, pulse oximetry, EtCO2, and NIBP technologies. We anticipate that we will need to license and purchase additional technology to remain competitive. We may not be able to renew our existing licenses and purchase agreements or to license and purchase other technologies on commercially reasonable terms or at all. If we are unable to renew our existing licenses and purchase agreements or we are unable to license or purchase new technologies, we may not be able to offer competitive products. WE HAVE LICENSED OUR BIPHASIC TECHNOLOGY TO GE MEDICAL SYSTEMS INFORMATION TECHNOLOGIES In 2001, we entered into a five-year license agreement with GE Medical Systems Information Technologies that permits GE to incorporate our patented biphasic waveform technology into their defibrillator and monitoring systems. We believe that GE's global marketing and distribution channels will help increase the growing acceptance of our biphasic technology. GE has significantly greater resources than we do and has a competing product in the global market. This could impact our ability to market and sell our products, potentially lowering our revenues. FUTURE CHANGES IN APPLICABLE LAWS AND REGULATIONS COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS Although we are not aware of any pending changes in applicable laws and regulations, we cannot assure you that federal, state or foreign governments will not change existing laws or regulations or adopt new laws or regulations that regulate our industry. Changes in or adoption of new laws or regulations could result in the following consequences that would have an adverse effect on our business: - regulatory clearance previously received for our products could be revoked; - costs of compliance could increase; or - we may be unable to comply with such laws and regulations so that we would be unable to sell our products. GENERAL ECONOMIC CONDITIONS MAY CAUSE OUR CUSTOMERS TO DELAY BUYING OUR PRODUCTS RESULTING IN LOWER REVENUES The national economy of the United States and the global economy are both subject to economic downturns. An economic downturn in any market in which we sell our products may have a significant impact on the ability of our customers, in both the hospital and pre-hospital markets, to secure adequate funding to buy our products or might cause purchasing decisions to be 14 delayed. Any delay in purchasing our products may result in decreased revenues and also allow our competitors additional time to develop products which may have a competitive edge over our M Series products, making future sales of our products more difficult. THE WAR ON TERRORISM AND THE IMPACT OF A BIO-TERROR THREAT MAY CAUSE OUR CUSTOMERS TO STOP OR DELAY BUYING OUR PRODUCTS, RESULTING IN LOWER REVENUES The current war on terrorism and a threat of a bio-terror attack may have a significant impact on our customers' ability or willingness to buy our products. Our customers may have to divert their funding, earmarked for capital equipment purchase to the purchase of other medical equipment and supplies to fight any potential bio-terror attack. The war on terrorism may cause the diversion of any government funding of hospitals and EMS services for capital equipment purchases to the war effort. Such diversion of money may result in decreased revenues. THE POTENTIAL DISRUPTION IN THE TRANSPORTATION INDUSTRY ON THE COMPANY'S SUPPLY CHAIN AND PRODUCT DISTRIBUTION CHANNELS MAY CAUSE DELAYS IN THE DELIVERY OF OUR PRODUCTS, RESULTING IN LOWER REVENUES Any future disruption in the transportation industry, as the country experienced during September 2001, could impact our ability to deliver our products to our customers in time to be able to recognize revenues in a period, resulting in lower revenues. UNCERTAIN CUSTOMER DECISION PROCESSES MAY RESULT IN LONG SALES CYCLES WHICH COULD RESULT IN UNPREDICTABLE FLUCTUATIONS IN REVENUES AND DELAY THE REPLACEMENT OF CARDIAC RESUSCITATION DEVICES Many of the customers in the pre-hospital market consist of municipal fire and emergency medical systems departments. As a result, there are numerous decision-makers and governmental procedures in the decision-making process. In addition, decisions at hospitals concerning the purchase of new medical devices are sometimes made on a department-by-department basis. Accordingly, we believe the purchasing decisions of many of our customers may be characterized by long decision-making processes, which have resulted in and may continue to result in long sales cycles for our products. For example, the sales cycles for cardiac resuscitation products typically have been between six to nine months, although some sales efforts have taken as long as two years. OUR INTERNATIONAL SALES EXPOSE OUR BUSINESS TO A VARIETY OF RISKS THAT COULD RESULT IN SIGNIFICANT FLUCTUATIONS IN OUR RESULTS OF OPERATIONS Approximately 25% of our sales in fiscal Q1 2002 were made to foreign purchasers and we plan to increase the sale of our products to foreign purchasers in the future. As a result, a significant portion of our sales is and will continue to be subject to the risks of international business, including: - fluctuations in foreign currencies; - trade disputes; - changes in regulatory requirements, tariffs and other barriers; - the possibility of quotas, duties, taxes or other changes or restrictions upon the importation or exportation of the products being implemented by the United States or these foreign countries; 15 - timing and availability of import/export licenses; - political and economic instability; - difficulties in accounts receivable collections; - difficulties in managing laws; - increased tax exposure if our revenues in foreign countries are subject to taxation by more than one jurisdiction; - accepting customer purchase orders governed by foreign laws which may differ significantly from U.S. laws and limit our ability to enforce our rights under such agreements and to collect damages, if awarded; and - the general economies of these countries in which we transact business. As international sales become a larger portion of our total sales, these risks could create significant fluctuations in our results of operations. In addition, these risks could affect our ability to resell trade-in products to domestic distributors, who in turn often resell the trade-in products in international markets. Our inability to sell trade-in products might require us to offer lower trade-in values, which might impact our ability to sell new products to customers desiring to trade in older models and then purchase newer products. FLUCTUATIONS IN CURRENCY EXCHANGE RATES MAY ADVERSELY AFFECT OUR INTERNATIONAL SALES Our revenue from international operations can be denominated in or significantly influenced by the currency and general economic climate of the country in which we make sales. A decrease in the value of such foreign currencies relative to the U.S. dollar could result in downward price pressure for our products or losses from currency exchange rate fluctuations. As we continue to expand our international operations, downward price pressure and exposure to gains and losses on foreign currency transactions may increase. We may choose to limit such exposure by entering into forward-foreign exchange contracts or engaging in similar hedging strategies. We cannot assure you that any currency exchange strategy would be successful in avoiding losses due to exchange rate fluctuations, or that the failure to manage currency risks effectively would not have a material adverse effect on our business, financial condition, cash flows, and results of operations. WE MAY FAIL TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS OR SECURE RIGHTS TO THIRD PARTY INTELLECTUAL PROPERTY, AND OUR COMPETITORS CAN USE SOME OF OUR PREVIOUSLY PROPRIETARY TECHNOLOGY 16 Our success will depend in part on our ability to obtain and maintain patent protection for our products, methods, processes and other technologies, to preserve our trade secrets and to operate without infringing the proprietary rights of third parties. To date, we have been issued 22 U.S. patents for our various inventions and technologies. Additional patent applications have been filed with the U.S. Patent and Trademark Office and are currently pending. The patents that have been granted to us are for a definitive period of time and will expire. We have filed certain corresponding foreign patent applications and intend to file additional foreign and U.S. patent applications as appropriate. We cannot assure you as to: - the degree and range of protection any patents will afford against competitors with similar products; - if and when patents will be issued; - whether or not others will obtain patents claiming aspects similar to those covered by our patent applications; - whether or not competitors will use information contained in our expired patents; - whether or not others will design around our patents or obtain access to our know-how; or - the extent to which we will be successful in avoiding any patents granted to others. For example, we have patents and pending patent applications for our proprietary biphasic technology. Our competitors could develop biphasic technology that has comparable or superior clinical efficacy to our biphasic technology if our patents do not adequately protect our technology, our competitors are able to obtain patents claiming aspects similar to our biphasic technology or our competitors can design around our patents. If certain patents issued to others are upheld or if certain patent applications filed by others issue and are upheld, we may be: - required to obtain licenses or redesign our products or processes to avoid infringement; - prevented from practicing the subject matter claimed in those patents; or - required to pay damages. Litigation or administrative proceedings, including interference proceedings before the U.S. Patent and Trademark Office, related to intellectual property rights could be brought against us or be initiated by us. Any judgment adverse to us in any litigation or other proceeding arising in connection with a patent or patent application could materially and adversely affect our business, financial condition and results of operations. In addition, the costs of any such proceeding may be substantial whether or not we are successful. Our success is also dependent upon the skills, knowledge and experience, none of which is patentable, of our scientific and technical personnel. To help protect our rights, we require all U.S. employees, consultants and advisors to enter into confidentiality agreements, which prohibit the disclosure of confidential information to anyone outside of our company and require disclosure and assignment to us of their ideas, developments, discoveries and inventions. We cannot assure you, however, that these agreements will provide adequate protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure of the lawful development by others of such information. RELIANCE ON OVERSEAS VENDORS FOR SOME OF THE COMPONENTS FOR OUR PRODUCTS EXPOSES US TO INTERNATIONAL BUSINESS RISKS, WHICH COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS 17 Some of the components we use in our products are acquired from foreign manufacturers, particularly countries located in Europe and Asia. As a result, a significant portion of our purchases of components is subject to the risks of international business. The failure to obtain these components as a result of any of these risks can result in significant delivery delays of our products, which could have an adverse effect on our business. WE RELY HEAVILY ON SEVERAL EMPLOYEES WHO MAY LEAVE, AND TIGHT LABOR MARKETS MAY MAKE IT DIFFICULT TO RECRUIT EMPLOYEES Our future operating results will depend in part upon the contributions of the persons who will serve in senior management positions and the continued contributions of key technical personnel, some of who would be difficult to replace. In addition, our future success will depend in part upon our ability to attract and retain highly qualified personnel, particularly product design engineers. Although the tightness of the labor markets has recently begun to ease, it could still be difficult and/or expensive to recruit and retain employees in a cost effective manner. There can be no assurance that such key personnel will remain in our employment or that we will be successful in hiring qualified personnel. Any loss of key personnel or the inability to hire or retain qualified personnel could have a material adverse effect on our business, financial condition and results of operations. WE MAY ACQUIRE OTHER BUSINESSES, AND WE MAY HAVE DIFFICULTY INTEGRATING THESE BUSINESSES OR GENERATING AN ACCEPTABLE RETURN FROM ACQUISITIONS We may attempt to acquire or make strategic investments in businesses and other assets. Such acquisitions will involve risks, including: - the inability to achieve the strategic and operating goals of the acquisition; - the inability to raise the required capital to fund the acquisition; - difficulty in assimilating the acquired operations and personnel; - disruption of our ongoing business; and - inability to successfully incorporate acquired technology into our existing product lines and maintain uniform standards, controls, procedures and policies. PROVISIONS IN OUR CHARTER DOCUMENTS, OUR SHAREHOLDER RIGHTS AGREEMENT AND STATE LAW MAY MAKE IT HARDER FOR OTHERS TO OBTAIN CONTROL OF ZOLL EVEN THOUGH SOME STOCKHOLDERS MIGHT CONSIDER SUCH A DEVELOPMENT TO BE FAVORABLE 18 Our board of directors has the authority to issue up to 1,000,000 shares of undesignated preferred stock and to determine the rights, preferences, privileges and restrictions of such shares without further vote or action by our stockholders. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock could have the effect of making it more difficult for third parties to acquire a majority of our outstanding voting stock. In addition, our restated articles of organization provide for staggered terms for the members of the board of directors which could delay or impede the removal of incumbent directors and could make a merger, tender offer or proxy contest involving the Company more difficult. Our restated articles of organization, restated by-laws and applicable Massachusetts law also impose various procedural and other requirements that could delay or make a merger, tender offer or proxy contest involving us more difficult. In addition, we have implemented a so-called poison pill by adopting our shareholders rights agreement. This poison pill significantly increases the costs that would be incurred by an unwanted third party acquirer if such party owns or announces its intent to commence a tender offer for more than 15% of our outstanding common stock. The existence of this poison pill could delay, deter or prevent a takeover of ZOLL. All of these provisions could limit the price that investors might be willing to pay in the future for shares of our common stock which could preclude our shareholders from recognizing a premium over the prevailing market price of our stock. WE HAVE ONLY ONE MANUFACTURING FACILITY FOR EACH OF OUR MAJOR PRODUCTS AND ANY DAMAGE OR INCAPACITATION OF EITHER OF THE FACILITIES COULD IMPEDE OUR ABILITY TO PRODUCE THESE PRODUCTS We have only one manufacturing facility, which produces defibrillators and one separate manufacturing facility which produces electrodes. Damage to either facility could render us unable to manufacture the relevant product or require us to reduce the output of products at the damaged facility. This could materially and adversely impact our business, financial condition and results of operations. OUR CURRENT AND FUTURE INVESTMENTS MAY LOSE VALUE IN THE FUTURE We have made a $2.0 million investment in LifeCor, Inc., a development stage company, and may in the future invest in the securities of other companies and participate in joint venture agreements. This investment and future investments are subject to the risks that the entities in which we invest will become bankrupt or lose money. Investing in securities involves risks and no assurance can be made as to the profitability of any investment. Our inability to identify profitable investments could adversely affect our financial condition and results of operations. Unless we hold a majority position in an investment or joint venture, we will not be able to control all of the activities of the companies in which we invest or the joint ventures in which we are participating. Because of this, such entities may take actions against our wishes and not in furtherance of, and even opposed to, our business plans and objectives. These investments are also subject to the risk of impasse if no one party exercises ultimate control over the business decisions. RECURRING SALES OF ELECTRODES TO OUR CUSTOMERS MAY DECLINE We typically have recurring sales of electrodes to our customers. If other vendors develop electrode adaptors which allow generic electrodes to be compatible with our defibrillators, our future revenue from the sale of electrodes could be reduced. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have cash equivalents and marketable securities that primarily consist of money market accounts and asset-backed corporate securities. The majority of these investments have maturities within one to five years. We believe that our exposure to interest rate risk is minimal due to the short-term nature of our investments and that fluctuations in interest rates would not have a material adverse effect on our results of operations. 19 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. In the course of normal operations the Company is involved in litigation arising from commercial disputes and claims of former employees which management believes will not have a material impact on the Company's financial position or its results of operations. ITEM 2. CHANGES IN SECURITIES. Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. Not Applicable. ITEM 5. OTHER INFORMATION. Not Applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Not Applicable. (b) Reports on Form 8-K. Not Applicable. 20 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 on February 13, 2002.
ZOLL MEDICAL CORPORATION (Registrant) Date: February 13, 2002 By: /s/ Richard A. Packer ---------------------------------------------- Richard A. Packer, Chairman and Chief Executive Officer (Principal Executive Officer) Date: February 13, 2002 By: /s/ A. Ernest Whiton ---------------------------------------- A. Ernest Whiton, Vice President of Administration and Chief Financial Officer (Principal Financial and Accounting Officer)
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