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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 29, 1997. Commission file number 1-10730
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Haemonetics Corporation
(Exact name of registrant as specified in its charter)
Massachusetts 04-2882273
(State of Incorporation) (I.R.S. Employer Identification No.)
400 Wood Road,
Braintree, Massachusetts 02184-9114
(617) 848-7100
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the registrant based on the closing sale price of May 22, 1997, was
approximately $392,000,000.
The number of shares of the registrant's common stock, $ .01 par value,
outstanding as of May 22, 1997 was 26,798,219.
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DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the definitive Proxy
Statement for the Registrant's Annual Meeting to be held July 18, 1997.
TABLE OF CONTENTS
Page Number
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Item 1. Business.............................................................................. 3
(a) New Developments in the Business.................................................. 3
(b) General Development of the Business............................................... 4
(c) Financial Information about Industry Segments..................................... 4
(d) Narrative Description of Business................................................. 4
(e) Financial Information about Foreign and Domestic Operations and Export Sales...... 11
Item 2. Properties............................................................................ 11
Item 3. Legal Proceedings..................................................................... 11
Item 4. Submission of Matters to a Vote of Security Holders................................... 12
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters............. 12
Item 6. Selected Consolidated Financial Data.................................................. 13
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations........................................................................... 14
Item 8. Financial Statements and Supplementary Data........................................... 17
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure........................................................................... 33
Item 10. Directors and Executive Officers of the Registrant.................................... 33
(a) Identification of Directors....................................................... 33
(b) Identification of Executive Officers.............................................. 33
Item 11. Executive Compensation................................................................ 34
Item 12. Security Ownership of Certain Beneficial Owners and Management........................ 34
Item 13. Certain Relationships and Related Transactions........................................ 34
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K....................... 34
(a) Financial Statements.............................................................. 34
(b) Reports on Form 8-K............................................................... 34
(c) Exhibits.......................................................................... 34
ITEM 1. BUSINESS
(a) New Developments in the Business.
FDA Developments
In April 1997, Haemonetics ("the Company") received marketing clearance
from the FDA to market its proprietary two-unit red blood cell collection
protocol for homologous (typically volunteer) donors. This follows the
clearance given in April 1996 to market the two-unit red cell collection
protocol for patients donating blood for their own surgical use and the
clearance given in October 1995 to market the one-unit red cell and two-unit
plasma protocol for the entire donor population. These protocols allow blood
centers to replace labor-intensive manual collection methods for red blood
cells with highly efficient automated apheresis systems while producing a more
consistent red blood cell transfusion unit. In addition, Haemonetics is the
first to provide its customers with the ability to collect two transfusable
units of red blood cells from a single donor. Two unit red cell collection
saves blood banks precious dollars and labor in testing, labeling, handling and
distribution requirements.
In June 1996, Haemonetics received marketing clearance from the FDA to
market its MCS(R) and MCS(R)+ apheresis systems for use in Therapeutic Plasma
Exchange. Therapeutic Plasma Exchange is the replacement of a patient's plasma
with either fresh frozen plasma or albumin. This medical procedure is
prescribed for an increasing number of indications, including autoimmune
diseases such as Thromobotic Thrombocytopenic Purpura (TTP), Myasthenia Gravis
and Guillian-Barre. The typical patient receives multiple treatments over weeks
or months and, in some cases, years.
New Business Developments
In April 1997, Haemonetics announced the acquisition of the assets of the
Tri-Counties Blood Bank, headquartered in Santa Barbara, California. The
acquisition is subject to review and approval by the attorney general of the
state of California. If approved, Tri-Counties will be operated as a wholly
owned subsidiary of Haemonetics. All regulatory licensees owned by Tri-Counties
will be included among the assets transferred, so through Tri-Counties Blood
Bank, Haemonetics will be fully licensed to collect and distribute blood
components. This acquisition is another significant step in the expansion of
Haemonetics' blood products and service business in the U.S.
In October 1996, Haemonetics announced the formation of three key
relationships with blood bank customers as part of the Company's blood bank
service strategy. Two relationships took the form of management service
agreements. The agreements were between the Company and the Oklahoma Blood
Institute, a leading blood center in Oklahoma City, Oklahoma and between the
Company and the New England Medical Center, a major tertiary care hospital in
Boston, Massachusetts. Under these management service agreements, the Company
is responsible to provide donor recruitment, component collection and
distribution services to blood bank customers. For these services, the Company
receives a fee for each blood component collected. The Company records this fee
as revenue. The cost of the disposable kit and all other costs, direct and
indirect, of producing the product are deducted from the fee revenue to arrive
at the operating margin of the blood component. The centers operate under the
responsible head and license of the partner. The third relationship took the
form of a 50/50 joint venture between the Company and the San Diego Blood Bank
to form Pacific Blood Services in Orange County, California.
The vertical integration of the Company into blood component collection
through the development of the service business allows the Company to provide
its partner with the Company's state of the art apheresis technology and
financial and management resources. This in turn will allow these partners the
ability to provide their communities, higher quality blood products at lower
cost. This is critical given the pressures inflicted by managed care. Further,
Haemonetics' involvement will help drive acceptance of its revolutionary red
cell technology which is critical to the success of total apheresis, the
automated collection of transfusable units of any of the blood's components;
red cells, platelets or plasma.
In October 1996, Haemonetics announced a distribution agreement for its
CollectFirst(R) system. Under this agreement, DePuy Orthopedics will be the
exclusive distributor of the CollectFirst(R) system in the U.S. and Canadian
orthopedics market. Haemonetics will continue to manufacture these products and
distribute them outside of the U.S. into the orthopedics market. The
CollectFirst(R) autologous blood collection system allows continual collection,
filtration and reinfusion of salvaged blood. This system offers versatility to
the physician through its ability to be used either for direct reinfusion or
with the Cell Saver(R) system for washing of the collected red blood cells.
(b) General Development of the Business.
Haemonetics Corporation was incorporated in Massachusetts in 1985. The
terms "Haemonetics" and the "Company" as used herein include its subsidiaries
and its predecessor where the context so requires.
Haemonetics was founded in 1971 and became a publicly owned company for
the first time in 1979. In August 1983, Haemonetics was acquired by American
Hospital Supply Corporation ("AHS"). In connection with the acquisition of AHS
by Baxter Travenol Laboratories, Inc. in 1985, Baxter Travenol divested
Haemonetics to address antitrust concerns related to the acquisition.
Haemonetics was purchased in December 1985 by investors that included two of
the Company's present executive officers (John F. White and James L. Peterson),
E. I. du Pont de Nemours and Company ("Du Pont"), and other present and former
employees of the Company. In May 1991, the Company completed an Initial Public
Offering, at which time Du Pont divested its entire interest in the Company.
Haemonetics is engaged in the manufacture of both automated systems for
the collection, processing and surgical salvage of blood and in the manufacture
of blood components through its service business. Since the development of its
first proprietary cell washing system in 1971, the Company has pioneered a
family of innovative systems and technologies for blood processing. The
Company's business is focused on surgical blood salvage, blood component
therapy, automated red cell and plasma collection. Haemonetics' blood
processing systems consist of proprietary disposable sets driven by specialized
equipment. The Company's equipment employs over 100 different sterile,
single-use disposable products. The Company markets its products to hospitals,
independent blood banks, commercial plasma fractionators and national health
organizations in over 50 countries.
(c) Financial Information about Industry Segments.
The Company reports the results of its operations for only one industry
segment.
(d) Narrative Description of Business.
Background
All of the Company's products involve the extracorporeal processing of
human blood. Each person has approximately 10 units of blood (1 unit = one
pint), which consists of both cellular and liquid portions. The cellular
portion, which constitutes approximately 45% of the body's blood by volume, is
composed of red blood cells, white blood cells and platelets. All of these are
derived from stem cells which originate in the bone marrow. The liquid portion,
which constitutes the remaining 55% of blood volume, is composed of plasma and
soluble blood proteins.
The practice of modern medicine relies on the availability of a safe and
adequate blood supply and the ability to treat a deficiency in one or more of
the above components. These deficiencies can be related to hereditary disorders
(e.g., hemophilia), serious injury or major surgery (e.g., open heart surgery).
Traditionally, a deficiency in any one of the components of blood has
been addressed by the transfusion of whole blood or blood components from one
or more third-party donors ("homologous blood transfusion"). These transfusions
have major drawbacks. First, homologous blood transfusions carry the risk of
transfusion reactions ranging from mild allergic responses to life-threatening
red cell incompatibility. Second, while the vast majority of units of blood in
the United States and other developed countries are tested for
transfusion-related diseases such as AIDS, hepatitis and cytomegalovirus, such
screening tests are not completely comprehensive and the evidence of disease
contamination in the blood supply is well documented. This risk is multiplied
when using blood collected from multiple donors.
As a result of the above risks and limitations of traditional transfusion
treatment, three important trends have emerged in blood transfusion therapy and
practice: increasing acceptance of autologous blood transfusion which involves
the reinfusion of a patient's own blood; increasing use of techniques and
systems that reduce the number of donors to which patients are exposed in the
course of therapies involving donor blood or blood components; and increasing
prevalence of blood component therapy which involves the administration of only
those blood components needed by the patient.
Markets and Products
Haemonetics' products address four important therapeutic markets for
blood and blood components: surgical blood salvage, blood component therapy,
automated red cell and plasma collection.
Surgical Blood Salvage
Surgical blood salvage, also known as autologous blood transfusion,
involves the rapid and safe collection of a patient's own blood before, during
and after surgery for reinfusion to the same patient. This process normally
includes an additional washing procedure whereby unwanted substances are
removed from the blood prior to reinfusion.
Autologous blood transfusion reduces or eliminates a patient's dependence
on blood donated from others, which carries the risk of transmission of
diseases, such as AIDS and hepatitis, as well as potentially severe transfusion
reactions. The decision to transfuse a unit of homologous blood involves
weighing the potential therapeutic benefits of such transfusion against the
risks of the transfusion itself. The Company believes there is increasing
recognition within the medical community that blood transfusions should be
autologous wherever possible to avoid the risks associated with homologous
blood transfusion. Moreover, patients are becoming increasingly aware of the
availability and advantages of autologous blood transfusions. Ongoing shortages
of blood and blood components reinforce the benefits of this approach.
The need for a blood transfusion during surgery is common with open
heart, trauma, transplant, vascular and orthopedic operations.
Haemonetics, which pioneered the first autologous blood transfusion
system, has developed a full line of products to address the needs of the
surgical blood salvage market. The core product line, the Cell Saver(R)
autologous blood recovery system, reduces the patient's dependence on
homologous red cell transfusions and leads to more rapid delivery of higher
quality, compatible blood to the surgical patient intra- and post-operatively.
An extension of this product line is the HaemoLite(R) autologous blood recovery
system, an automated portable system which requires limited operator monitoring
and is designed for lower blood loss procedures. The CollectFirst(R) autologous
blood collection system allows continual collection, filtration and reinfusion
of salvaged blood. This system offers versatility to the physician through its
ability to be used either for direct reinfusion or with the Cell Saver(R)
system for washing of the collected red blood cells.
The Company markets its surgical blood salvage products to hospital-based
medical specialists, primarily cardiovascular, orthopedic and trauma surgeons.
Blood Component Therapy
Blood component therapy involves the treatment of patients using specific
blood components, such as platelets, red blood cells, peripheral blood stem
cells or white blood cells, as opposed to whole blood. Blood component therapy
applications are increasing and have become integral to the treatment of a wide
variety of cancers, blood disorders and conditions involving hemorrhaging.
Platelet therapy is most often used to alleviate the side effects of bone
marrow suppression, a condition in which bone marrow is unable to produce a
sufficient quantity of platelets. Bone marrow suppression arises from a number
of causes, including infection, but most typically as a side effect of
chemotherapy. The demand for platelets is growing in conjunction with
increasingly aggressive cancer therapies.
Traditionally, platelets for therapeutic use have been derived from the
manual separation of platelets from blood obtained through whole blood
donations. However, platelets constitute a very small portion of an
individual's total blood volume. Hence, a single unit of whole blood contains
only one-sixth to one-eighth the quantity of platelets required for a
therapeutically useful dosage. As a result, the medical community has had to
rely on platelet pooling (the merging of platelets from multiple donors) to
obtain a volume of platelets sufficient for therapeutic treatment, thus
amplifying the risk of transmission of blood-borne disease or adverse reaction.
The Company addresses these drawbacks of platelet therapy with its
apheresis systems such as the Haemonetics MCS(R)+ mobile collection system. The
apheresis process permits the collection of therapeutically useful quantities
of components such as platelets from a single donor. The end product of
platelet apheresis is referred to as single donor platelets (as opposed to
pooled or random donor platelets traditionally available from blood banks or
hospital centers). Apheresis technology conserves the donor pool since donors
can donate non-red cell blood components more often than whole blood. Whole
blood donors are restricted in their ability to donate by regulatory agencies
to eight week intervals, whereas apheresis donors may donate as often as twice
a week. In addition, apheresis systems offer a purer and safer product to the
recipient because of the significant reduction in the number of donors to which
the recipient is exposed.
The Company markets its automated apheresis systems to hematologists,
oncologists and blood bankers.
Plasma Collection
Many important therapeutic and diagnostic products are derived from the
collection and subsequent processing of plasma. Therapeutic products derived
from plasma include albumin and plasma protein fractions, which are used
primarily as volume expanders for burn and shock victims; gamma globulins,
which are used for the prevention of diseases such as tetanus, rabies, measles,
etc.; coagulation specific concentrate products such as Factor VIII and other
derivatives such as hepatitis vaccine. Several companies have developed and
applied for U.S. Food and Drug Administration ("FDA") approval to market
non-plasma derived recombinant Factor VIII products. While such products may
reduce demand for plasma derived Factor VIII, the Company believes they should
have minimal effect on the demand for other plasma products such as albumin and
gamma globulin. Diagnostic products derived from source plasma include blood
grouping sera, test kit controls and quality control reagents.
Traditionally, plasma has been collected by manual techniques as part of
whole blood collection. As in the case of manual blood component collection,
manual techniques for collection of plasma have had poor product yields and are
very time consuming.
In the United States, commercial operators account for approximately 95%
of plasma collection, with the remainder collected from volunteer donors of
other blood bank organizations. Outside of the United States, plasma is
collected primarily from volunteer donors.
Commercial plasma collection firms in the United States pay donors for
their plasma and then fractionate the collected plasma themselves and sell the
resultant protein products or sell the collected plasma worldwide for
fractionation purposes. Outside the United States, virtually every
industrialized nation has expressed the desire to increase their access to the
plasma market worldwide due to the ever growing need for the plasma-based
therapeutic products and their desire to improve the quality of their country's
blood products. The increased appeal of more efficient, user-friendly automated
systems are leading to conversion from manual to automated plasma collection
techniques.
The Haemonetics automated plasma collection systems, PCS(R) and PCS(R)2,
shorten the collection procedure to approximately forty minutes from ninety
minutes required for manual collection. Donor safety is also increased as the
donor is never separated from his or her own blood, eliminating the risk that
exists in manual collection of having the wrong red cells returned to the
donor. The PCS(R) and PCS(R)2 systems also yield a higher quality plasma than
manual methods, since a smaller amount of anticoagulant is needed and the donor
is not given any intravenous fluids to dilute his or her native plasma.
Haemonetics has aggressively pursued the conversion of commercial plasma
collection firms from manual methods to the Company's automated PCS(R) systems.
Under contracts with Alpha Therapeutics, Bayer and Centeon, the Company has
agreed to install and service its PCS(R) and PCS(R)2 systems free of charge to
certain plasma collection centers operated by these parties. These
fractionators, in turn, have agreed to purchase certain minimum numbers of
processing chambers from Haemonetics.
Plasma collection from volunteer donors is undergoing dramatic changes
due to greater focus on the quality, safety and cost of plasma-based
therapeutic products. The Company has been the primary supplier of automated
plasma collection systems to the national blood collection programs of Japan,
France, Sweden, Canada and the United Kingdom. During fiscal year ended March
29, 1997, the Company began shipping plasma collection machines to China.
Automated Red Cell Collection
Red blood cell transfusions are performed to restore the oxygen-carrying
capacity of the blood, in situations involving hemorrhaging, such as surgery
and trauma and other blood disorders.
Traditionally, red blood cells have been derived from the manual
separation of red blood cells obtained through whole blood donations. However,
this process involves time consuming secondary handling and processing. It also
produces a red cell transfusion product of variable therapeutic content due to
variations found in donor characteristics and the whole blood donation process.
Haemonetics has extended its MCS(R)+ system product line to offer systems
for the apheresis collection of red blood cells. The Company's red blood cell
apheresis systems automate the manual red blood cell collection process,
producing a more consistent red cell transfusion unit and eliminating the
lengthy secondary handling and processing steps. In addition, by collecting red
blood cells in multiple units or together with other apheresis products such as
plasma, the blood center can meet its collection requirements more efficiently
and make better use of a shrinking donor base.
Revenue Detail
In the year ended March 29, 1997, sales of disposable products accounted
for approximately 87% of net revenues. Sales of disposable products by the
Company were 10% higher in 1997 than in 1996 and grew at a compound average
annual growth rate of 8% for the three years ended March 29, 1997. There can be
no assurance that sales of disposable products will continue to grow at this
rate. Growth in sales of disposables is related to increases in installed
equipment in use, as well as increased utilization rates of the Company's
equipment. Service revenues, which are included as part of disposables
revenues, accounted for approximately 2.7% of the Company's net revenues during
the year ended March 29, 1997. Approximately 75% of service revenues for the
year ended March 29, 1997 were generated from fees earned for the collection of
blood products through the Company's service business. The remaining 25% of
service revenues for the year ended March 29, 1997 were generated from
equipment repairs performed under preventive maintenance contracts or emergency
service billings.
Sales of equipment accounted for approximately 13% of net revenues in
fiscal 1997 and approximately 12% in fiscal 1996. Variations in the level of
the Company's sales of equipment are likely to occur from year to year and
quarter to quarter. These variations reflect the buying cycles of the Company's
customers and, in particular, the level of equipment purchases by the national
blood organizations in Europe, Japan and other countries that are implementing
programs for national self-sufficiency in blood products with the use of the
Company's products.
Marketing/Sales/Distribution
Haemonetics markets and sells its products to hospitals, independent
blood banks, commercial plasma collection centers and national health
organizations through its own direct sales force in North America, Western
Europe and Japan. This sales force is composed of full-time sales
representatives and clinical specialists based in the United States, United
Kingdom, Germany, France, Sweden, The Netherlands, Denmark, Italy, Australia,
Austria, Hong Kong, Canada, Japan, Switzerland and Belgium. These sales
representatives and clinical specialists interact with physicians, surgeons and
nurses to promote and sell Haemonetics' products and services, approximately
40% focusing on the surgical blood salvage market and the remainder on the
combination of the Company's other markets. The clinical specialists assist the
Company's sales force and customers through demonstrations and training.
Haemonetics distributes its disposable Cell Saver(R) products in North
American cardiovascular hospitals primarily through the Bentley Laboratories
division of Baxter International, Inc. ("Bentley"). In addition, Haemonetics
distributes its CollectFirst(R) autologous blood collection system in the
United States and Canada through DePuy Orthopedics. These relationships give
Haemonetics valuable additional exposure to the important North American
cardiovascular and orthopedic markets. In addition, Haemonetics uses numerous
distributors to market its products in South America, Eastern Europe, the
Middle East and the Far East.
Haemonetics' field service engineers support its equipment sales through
ongoing professional equipment service worldwide. The functional and safety
features of the equipment are checked to ensure correct and reliable operation.
All new equipment is covered by a 12-month warranty, during which all service
needs are covered at no charge and all equipment receives a preventive
maintenance check. After the initial warranty period, the Company provides
service compensated under preventive maintenance contracts or through emergency
service fees.
The field service engineer group is supported by a headquarters-based
technical support engineering staff which also provides 24-hour phone support
365 days a year. Many hospital customers have their own staffs of biomedical
engineers who rely on the Company's technical training and spare parts logistic
systems.
The Company endeavors to minimize the time between the receipt of
purchase orders and the date of delivery of products. Accordingly, the
Company's backlog as of the end of any period represents only a portion of
actual sales for the succeeding period.
Research and Development
The development of extracorporeal blood processing systems has required
that Haemonetics develop technical expertise in mechanical engineering,
electrical engineering, software engineering and materials engineering. The
Company's mechanical engineers design pumps, valves, equipment packaging,
centrifuge rotors and disposable plastic components (i.e., harness sets and
processing chambers). The Company's electrical engineers design sensors
(optical, ultrasonic, pressure, weight, speed), motors, control circuits,
driver circuits, computers and display systems. The Company's software
electrical engineers create programs that use input data from sensors to
control the actuation of mechanical components used to collect or manipulate
the blood components. The materials engineers monitor products'
biocompatibility and clinical performance and work with major raw materials and
tooling vendors. Innovations resulting from these efforts will allow the
Company to develop systems that are faster, smaller and more user-friendly or
that incorporate additional features important to its customer base.
Haemonetics operates research and development centers in Switzerland,
Japan and the United States, so that protocol variations are incorporated that
closely match local customer requirements. For the past three fiscal years, the
Company's expenditures for research and development were $19.0 million, $18.5
million and $16.7 million, respectively. All research and development costs are
expensed as incurred. The Company expects to continue to invest substantial
resources in research and development.
Customer collaboration is an important part of Haemonetics' technical
strength and competitive advantage. Since its inception, Haemonetics has built
close working relationships with a significant number of blood processing
professionals around the world. This network of experts provides Haemonetics
with ideas for new products, ways to improve existing products, new
applications and enhanced protocols. They also provide Haemonetics with test
sites, objective evaluations and expert opinions regarding technical and
performance issues.
Manufacturing
Disposables
Each individual blood collection procedure requires a disposable plastic
set, which contains a medical-grade tubing harness, bags, filters and a
processing chamber. Haemonetics molds many of its own components which it then
assembles with manufactured and purchased tubing and sheeting to form the final
products. The Company tests the materials for purity to determine that they are
biocompatible and free of contamination. Assembly is accomplished in a clean
room environment.
Production begins with injection, molding or extrusion of plastic parts.
Molding tools qualified to ensure specified tolerances and reproducibility.
Each step of the subsequent manufacturing and assembly processes is qualified
and validated. Critical process steps and materials are documented to ensure
that every unit produced consistently meets performance requirements.
All processing chamber and most set assembly is done in the Company's
Braintree, Pittsburgh, or Scotland facilities. All disposable blood processing
products are sterilized for patient and donor protection and are tested in
laboratories to confirm sterility. Some manufacturing of less proprietary
components is performed for the Company by outside contractors. The Company
also maintains two important relationships with Japanese manufacturers who
provide finished sets in Singapore and Thailand. These sets are primarily used
by our customers in Japan.
Equipment
Each Haemonetics blood processing machine is designed in-house and
assembled from components that are either manufactured by the Company or
manufactured by others to Company specifications. Many critical mechanical
assemblies are machined and fabricated utilizing the Company's own process
control procedures. The completed instruments are programmed, calibrated and
tested to ensure compliance with the Company's engineering and quality
assurance specifications. Throughout the manufacturing process, inspection
checks are made to verify proper assembly and functionality. When mechanical
and electronic components are sourced from outside vendors, detailed vendor
qualification requirements are met and verified through focused incoming
inspection programs. Approximately 99% of the Company's equipment, including
all new systems, is manufactured by Haemonetics. The remainder, consisting
entirely of established products, is manufactured for the Company by an outside
contractor.
Certain parts and components used in the Company's equipment and
disposables are purchased from various single sources. If it became necessary
to do so, the Company believes that, in most cases, alternative sources of
supply could be developed over a relatively short period of time. Nevertheless,
an interruption in supply could temporarily interfere with production schedules
and affect the Company's results of operations.
All of the Company's equipment and disposable manufacturing sites are
certified to the ISO 9000 standard and to the medical device directive allowing
placement of the CE mark of conformity.
Competition
The markets for the Company's products are developing and are highly
competitive. Although the Company competes directly with others, no one company
competes with the Company across its full line of products. Haemonetics has
established a record of innovation and leadership in each of the areas in which
it competes.
Competition in the surgical blood salvage market, where the underlying
technology among the major competitors is similar, is based upon reliability,
ease of use, service, support and price. Haemonetics competes with Medtronics,
Inc.; COBE Laboratories, Inc. ("COBE"), a subsidiary of Gambro AB; and Sorin
Biomedica.
In the blood component therapy market, competition is based upon the
ability of systems to achieve higher levels of performance as measured by the
time and efficiency of component collection and the quality of the components
collected. The Company's major competitors in this market are COBE and Baxter
International, Inc. Each of these companies has taken a different technological
approach than the Company in the design of systems for the component therapy
market.
In the red cell market, the Company has pioneered automated collection.
Currently the sole provider of automated systems for red cell collection, the
Company competes with traditional methods of collecting and separating whole
blood on the basis of total cost, process control, product quality, and
inventory management.
In the area of plasma collection, the Company competes with Baxter
International, Inc. on the basis of overall cost-effectiveness of equipment and
disposables over the long term and on the quality, ease of use and technical
features of their systems. The Company's automated systems also compete with
manual collection systems, which are less expensive, but also slower, less
efficient and clinically riskier.
The Company believes its technical staff is highly skilled, but many of
its competitors have substantially greater financial resources and larger
technical staffs at their disposal. There can be no assurance that such
competitors will not direct substantial efforts and resources toward the
development and marketing of products competitive with those of the Company.
The Company believes its ability to maintain its competitive advantage
will continue to depend on a combination of market leadership, its reputation,
its patents, its unpatented proprietary know-how in several technological
areas, the quality, safety and cost effectiveness of its products and the need
to rigorously document clinical performance.
Seasonality
Net revenues have historically been higher in the Company's third and
fourth quarters, reflecting principally the seasonal buying patterns of the
Company's customers.
Patents
Haemonetics holds patents in the United States and abroad on certain of
its machines and disposables. These patents cover certain elements of its
systems, including protocols employed in its equipment and certain aspects of
its processing chambers and other disposables. The Company considers its
patents to be important but not indispensable to its business. To maintain its
competitive position, the Company relies to a greater degree on the technical
expertise and know-how of its personnel than on its patents. The Company
pursues an active and formal program of invention disclosure and patent
application both in the United States and abroad. The Company also owns various
trademarks which have been registered in the United States and certain other
countries.
Regulation
The products manufactured and marketed by the Company are subject to
regulation by the Center for Biologics ("CBER") and the Center of Devices
("CDRH") of the U.S. Food and Drug Administration ("FDA") and in many
instances, by state and non-U.S. government agencies.
All medical devices introduced to the market since 1976 are required by
the FDA, as a condition of marketing, to secure either a 510(k) premarket
notification clearance or an approved Premarket Approval Application ("PMA"). A
510(k) premarket notification clearance indicates FDA agreement with an
applicant's determination that the product for which clearance has been sought
is substantially equivalent to another legally marketed medical device. An
approved PMA application indicates that the FDA has determined that the device
has been proven, through the submission of clinical data and manufacturing
information, to be safe and effective for its labeled indications. The process
of obtaining a 510(k) clearance typically takes six to nine months and involves
the submission of limited clinical data and supporting information, while the
PMA process typically will last more than a year and requires the submission of
significant quantities of clinical data and supporting information.
The Company maintains customer complaint files, records all lot numbers
of disposable products and conducts periodic audits to assure compliance with
FDA regulations. The Company places special emphasis on customer training and
advises all customers that blood processing procedures should be undertaken
only by qualified personnel.
The Company is also subject to regulation in the countries in which it
markets its products. Many of the regulations applicable to the Company's
products in such countries are similar to those of the FDA. However, the
national health or social security organizations of certain countries require
the Company's products to be qualified before they can be marketed in those
countries. Haemonetics has complied with these regulations and has obtained
such qualifications.
Federal, state and foreign regulations regarding the manufacture and sale
of products such as the Company's systems are subject to change. The Company
cannot predict what impact, if any, such changes might have on its business.
Environmental Matters
The Company does not anticipate that compliance with federal, state and
local environmental protection laws presently in effect will have a material
adverse impact upon the Company or require any material capital expenditures.
Employees
As of March 29, 1997, Haemonetics employed 1,526 persons assigned to the
following functional areas: manufacturing, 819; sales and marketing, 235;
general and administrative, 135; research and development, 86; quality control
and field service, 121; and blood bank services, 130. The Company considers its
employee relations to be satisfactory.
(e) Financial Information about Foreign and Domestic Operations and Export
Sales.
The information required by this item is included in Part II of this
report in footnote 10 of the financial statements, page 31.
ITEM 2. PROPERTIES
The Company owns its main facility, which is located on 14 acres in
Braintree, Massachusetts. This facility is located in a light industrial park
and was constructed in the 1970s. The building is approximately 180,000 square
feet, of which 72,000 square feet are devoted to manufacturing and quality
control operations, 35,000 square feet to warehousing, 63,000 square feet for
administrative and research and development activities and 10,000 square feet
available for expansion.
The Company leases an 81,850 square foot facility in Pittsburgh,
Pennsylvania. This facility is used for warehousing, distribution of the
products and, as of November of 1991, manufacturing operations. Annual lease
expense is $280,056 for this facility.
In April 1994, the Company purchased a facility in Bothwell, Scotland.
The facility manufactures disposable components for its automated plasma
collection and surgical blood salvage systems for its European customers. The
facility and related property were acquired at a cost of approximately
$1,600,000. The facility is approximately 22,200 square feet. Manufacturing
operations began in August, 1994.
In August 1995, the Company purchased a facility in Union, South
Carolina. This facility will be used for the manufacture of solutions to
support the Company's component therapy and plasma businesses once approval to
do so is received from the FDA. The Company is presently engaged in the lengthy
process of seeking such approval. The Company expects approval to take
approximately two years. The facility and land were acquired for a cost of
$2,423,000. The facility is approximately 57,700 square feet.
The Company also leases sales, service and distribution facilities in the
United Kingdom, France, Sweden, Switzerland, The Netherlands, Germany, Japan,
Hong Kong, Italy, Belgium and Austria.
ITEM 3. LEGAL PROCEEDINGS
The Company is presently engaged in various legal actions, and although
ultimate liability cannot be determined at the present time, the Company
believes that any such liability will not materially affect the consolidated
financial position of the Company or its results of operations.
The Company's products are relied upon by medical personnel in connection
with the treatment of patients and the collection of blood from donors. In the
event that patients or donors sustain injury or death in connection with their
condition or treatment, the Company, along with others, may be sued, and
whether or not the Company is ultimately determined to be liable, it may incur
significant legal expenses. In addition, such litigation could damage the
Company's reputation and, therefore, impair its ability to market its products
and impair its ability to obtain product liability insurance or cause the
premiums for such insurance to increase. The Company carries product liability
coverage. While management of the Company believes that the aggregate current
coverage is sufficient, there can be no assurance that such coverage will be
adequate to cover liabilities which may be incurred. Moreover, the Company may
in the future be unable to obtain product liability coverage in amounts and on
terms that it finds acceptable, if at all.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Executive Officers of the Registrant
The information concerning the Company's Executive Officers required by
this item is incorporated by reference to the section in Part III hereof
entitled "Directors and Executive Officers of the Registrant."
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Summary of Quarterly Data
(unaudited)
(in thousands, except share data)
1997 Quarter Ended 1996 Quarter Ended
------------------------------------------- ---------------------------------------------
June 29, Sept. 28, Dec. 28, March 29, July 1, Sept. 30, Dec. 30, March 30,
1996 1996 1996 1997 1995 1995 1995 1996
-------- --------- -------- --------- -------- --------- -------- ---------
Net revenues.............. $ 75,506 $ 74,426 $ 76,550 $ 83,335 $ 68,775 $ 69,133 $ 69,858 $ 70,450
Gross profit.............. 42,316 39,910 38,082 39,453 37,317 38,565 39,120 39,611
Operating income.......... 14,147 12,898 10,341 11,065 13,560 13,724 13,760 13,327
Net income................ 9,422 8,649 7,020 7,879 8,740 9,200 8,886 9,099
Net income per share...... $ 0.34 $ 0.31 $ 0.26 $ 0.29 $ 0.32 $ 0.33 $ 0.32 $ 0.33
Haemonetics' common stock is listed on the New York Stock Exchange. The
following table sets forth for the periods indicated the high and low of the
daily sales prices, which represent actual transactions as reported by the New
York Stock Exchange.
1997 Quarter Ended 1996 Quarter Ended
------------------------------------------- ------------------------------------------
June 29, Sept. 28, Dec. 28, March 29, July 1, Sept. 30, Dec. 30, March 30,
1996 1996 1996 1997 1995 1995 1995 1996
-------- --------- -------- --------- ------- --------- -------- ---------
Market price of
Common Stock
High.................... 21-3/4 21-3/8 21-1/4 19-1/2 19-3/8 23-1/8 23 18
Low..................... 16-5/8 17-1/4 16-5/8 16 12-7/8 18-3/8 16-5/8 16-1/4
There were approximately 639 holders of record of the Company's common
stock as of May 22, 1997.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
HAEMONETICS CORPORATION AND SUBSIDIARIES
TEN-YEAR REVIEW
(in thousands, except share data)
Summary of
Operations 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ---------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net revenues................... $309,817 $278,216 $262,416 $248,449 $216,286 $176,419 $157,332 $124,363 $115,244 $ 91,409
Cost of goods sold............. 150,056 123,603 117,561 104,879 97,296 85,524 82,656 62,322 54,611 42,840
--------------------------------------------------------------------------------------------------
Gross profit................... 159,761 154,613 144,855 143,570 118,990 90,895 74,676 62,041 60,633 48,569
--------------------------------------------------------------------------------------------------
Operating expenses:
Research and development..... 18,974 18,467 16,729 15,786 13,589 10,478 8,386 5,776 5,226 4,799
Selling, general and
administrative.............. 92,336 81,775 75,748 75,940 63,576 50,517 42,452 34,940 34,783 26,724
--------------------------------------------------------------------------------------------------
Total Operating Expenses....... 111,310 100,242 92,477 91,726 77,165 60,995 50,838 40,716 40,009 31,523
--------------------------------------------------------------------------------------------------
Operating income............... 48,451 54,371 52,378 51,844 41,825 29,900 23,838 21,325 20,624 17,046
Other income/(expense), net.... 2,257 883 192 (1,050) (1,839) (2,222) (2,927) (4,491) (2,822) (263)
--------------------------------------------------------------------------------------------------
Income before provision for
income taxes.................. 50,708 55,254 52,570 50,794 39,986 27,678 20,911 16,834 17,802 16,783
Provision for income taxes..... 17,738 19,329 18,925 19,305 15,231 9,687 7,110 5,455 6,272 6,782
--------------------------------------------------------------------------------------------------
Net income..................... $ 32,970 $ 35,925 $ 33,645 $ 31,489 $ 24,755 $ 17,991 $ 13,801 $ 11,379 $ 11,530 $ 10,001
==================================================================================================
Earnings per share:
Net income................... $ 1.20 $ 1.30 $ 1.18 $ 1.09 $ 0.87 $ 0.63 $ 0.50 $ 0.41 $ 0.42 $ 0.36
Weighted average number of
common and common
equivalent shares............. 27,451 27,722 28,443 28,802 28,612 28,342 27,554 27,554 27,554 27,554
==================================================================================================
Financial and
Statistical Data: 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ----------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Working capital................ $ 94,045 $112,440 $108,459 $ 81,504 $ 63,431 $ 40,919 $ 29,471 $ 27,233 $ 30,369 $ 19,668
--------------------------------------------------------------------------------------------------
Current ratio.................. 2.3 3.4 3.2 2.7 2.6 2.1 1.8 1.8 2.4 1.7
Property, plant and equipment,
net........................... $103,610 $ 86,416 $ 82,059 $ 68,342 $ 56,015 $ 46,751 $ 42,300 $ 36,214 $ 23,267 $ 20,403
--------------------------------------------------------------------------------------------------
Capital expenditures........... $ 32,048 $ 19,710 $ 24,907 $ 22,891 $ 17,595 $ 11,373 $ 12,975 $ 17,538 $ 7,314 $ 7,616
Depreciation and amortization.. $ 12,269 $ 13,143 $ 13,711 $ 10,720 $ 8,517 $ 6,954 $ 6,996 $ 4,561 $ 3,494 $ 4,569
--------------------------------------------------------------------------------------------------
Total assets................... $323,546 $287,818 $280,509 $230,684 $187,755 $144,846 $117,754 $110,630 $ 87,752 $ 68,399
Total debt..................... $ 29,526 $ 18,534 $ 33,392 $ 14,278 $ 13,562 $ 24,098 $ 24,805 $ 33,903 $ 28,588 $ 14,792
--------------------------------------------------------------------------------------------------
Stockholders' equity........... $225,274 $216,970 $193,177 $160,776 $126,650 $ 90,581 $ 67,543 $ 54,083 $ 42,415 $ 31,627
Return on average equity....... 14.9% 17.5% 19.0% 21.9% 22.8% 22.8% 22.7% 23.6% 31.1% 37.8%
Debt as a % of stockholders'
equity........................ 13.1% 8.5% 17.3% 8.9% 10.7% 26.6% 36.7% 62.7% 67.4% 46.8%
--------------------------------------------------------------------------------------------------
Number of employees............ 1,526 1,251 1,282 1,109 1,002 965 923 810 742 780
Net revenues per employee...... $ 203 $ 222 $ 205 $ 224 $ 216 $ 183 $ 170 $ 154 $ 155 $ 117
--------------------------------------------------------------------------------------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
The table outlines the components of the consolidated statements of
income as a percentage of net revenues:
Percentage of Net Revenues Percentage Increase
----------------------------------------------- -------------------
Year Ended Year Ended Year Ended
March 29, 1997 March 30, 1996 April 1, 1995 1997/96 1996/95
-------------- -------------- ------------- ------- -------
Net revenues.................................. 100.0% 100.0% 100.0% 11.4% 6.0%
Cost of goods sold............................ 48.4 44.4 44.8 21.4 5.1
---------------------------------------------------------------
Gross profit.................................. 51.6 55.6 55.2 3.3 6.7
Operating expenses:
Research and development.................... 6.2 6.6 6.4 2.7 10.4
Selling, general and administrative......... 29.8 29.5 28.8 12.9 8.0
---------------------------------------------------------------
Total operating expenses................ 36.0 36.1 35.2 11.0 8.4
---------------------------------------------------------------
Operating income.............................. 15.6 19.5 20.0 (10.9) 3.8
---------------------------------------------------------------
Interest expense.............................. (0.6) (0.8) (0.7) (24.6) 26.4
Interest income............................... 1.0 0.8 0.9 40.0 (17.6)
Other income (expense), net................... 0.4 0.4 (0.2) (3.9) 321.9
---------------------------------------------------------------
Income before provision for income taxes...... 16.4 19.9 20.0 (8.2) 5.1
Provision for income taxes.................... 5.8 7.0 7.2 (8.2) 2.1
---------------------------------------------------------------
Net income.................................... 10.6% 12.9% 12.8% (8.2%) 6.8%
===============================================================
1997 compared to 1996
Net revenues in 1997 increased 11.4% to $309.8 million from $278.2
million in 1996. Worldwide disposable sales increased approximately 10.2% due
to growth in both the domestic and international markets. Sales of disposables
products accounted for approximately 87% and 88% of net revenues for 1997 and
1996, respectively. Service revenues, which are included as part of disposables
revenues, accounted for approximately 2.7% and 1.7% of the Company's net
revenues for 1997 and 1996, respectively. Service revenues generated from fees
earned for the collection of blood products through the Company's service
business represented approximately 2.0% and .6% for 1997 and 1996 respectively.
The balance of the service revenues in both years was generated from equipment
repairs performed under preventive maintenance contracts or emergency service
billings . Equipment sales increased approximately 19.5% due to growth in the
domestic surgical market. International sales accounted for approximately 62%
and 61% of net revenues for 1997 and 1996, respectively.
Gross profit in 1997 increased to $159.8 million from $154.6 million in
1996. As a percentage of net revenues, gross profit percent decreased by 4.0%
to 51.6% in 1997 from 55.6% in 1996. Approximately twenty-five percent of the
decrease was due to the start up of the Company's service business. The
majority of the decrease, over fifty percent, was due to the Company's higher
manufacturing costs for more complex products and the pressure on product
prices inflicted by managed care. The remaining decrease, under twenty percent,
was due to the shift in sales from the higher margin surgical disposable
products to the lower margin plasma disposable products. The Company does not
see any change in these trends in the near term.
The Company expended $19.0 million in 1997 on research and development
(6.2% of net revenues) and $18.5 million in 1996 (6.6% of net revenues).
Selling, general and administrative expenses increased to $92.3 million
in 1997 from $81.8 million in 1996 and increased as a percentage of net
revenues to 29.8% from 29.5%. The increase resulted primarily from start up
costs associated with the Company's entry into the service business and
worldwide regulatory costs incurred for red cell apheresis.
Operating income, as a percentage of net revenues, decreased 3.9% to
15.6% in 1997 from 19.5% in 1996. Approximately twenty-five percent of the
decrease was due to the start up of the Company's service business. The
remainder of the decrease was primarily due to the Company's higher
manufacturing costs for more complex products and the pressure on product
prices inflicted by managed care. The Company does not see any change in these
trends in the near term.
Interest expense decreased in 1997 to $1.8 million from $2.3 million in
1996 due to a decrease in both the average borrowings and borrowing rates.
Interest income increased in 1997 to $2.9 million from $2.1 million in 1996
resulting from an increase in the Company's investment in sales-type leases and
higher average cash balances during the year.
The provision for income taxes remained at approximately 35% as a
percentage of pretax income for 1997 and 1996.
1996 compared to 1995
Net revenues in 1996 increased 6.0% to $278.2 million from $262.4 million
in 1995. Worldwide disposable sales increased 7.7% while increased equipment
sales in the domestic markets were offset by decreases in the international
markets. Sales of disposables products accounted for approximately 88% and 87%,
respectively, of net revenues for the twelve months ended March 30, 1996 and
April 1, 1995. During the first half of 1995, the Company discontinued
distribution of the SCD system (Sterile Connection Device) and its disposables
wafers. Without the effects of such sales, net revenues increased 7.4% in 1996
from 1995, and worldwide disposables sales increased 9.3% and worldwide
equipment sales decreased 4.3%.
Gross profit in 1996 increased to $154.6 million from $144.9 million in
1995. As a percentage of net revenues, gross profit increased 0.4% to 55.6% in
1996 from 55.2% in 1995. The favorable manufacturing variance during the year
accounts for 0.7% of the increase in gross profit. This was offset by a 0.3%
decrease attributable to lower margins on domestic sales.
The Company expended $18.5 million in 1996 on research and development
(6.6% of net revenues) and $16.7 million in 1995 (6.4% of net revenues).
Selling, general and administrative expenses were $81.8 million in 1996
and $75.7 million in 1995 due to increased staffing and related personnel costs
in both the domestic and international markets.
Interest expense increased in 1996 to $2.3 million from $1.8 million in
1995 due to increases in both the average level of borrowing during the year
and in interest rates. Interest income decreased in 1996 to $2.1 million from
$2.5 million in 1995 resulting from a decrease in the Company's average
investment in sales-type leases of its equipment during the year. In 1996,
other income, net, was $1.1 million compared to other expenses, net, of $0.5
million in 1995 due to the lower net costs of foreign exchange contracts.
The provision for income taxes decreased as a percentage of pretax income
to approximately 35.0% in 1996 from 36.0% in 1995, due to favorable tax
treatment of certain international operations.
Liquidity and Capital Resources
The Company historically has satisfied its cash requirements principally
from internally generated cash flow and bank borrowings. During the twelve
months ended March 29, 1997, the Company generated $26.7 million in cash flow
from operating activities compared to $54.8 million in cash flow from operating
activities for the twelve months ended March 30, 1996. The Company's need for
funds is derived primarily from capital expenditures, acquisitions, treasury
stock purchases and working capital. During the twelve months ended March 29,
1997, net cash used for capital expenditures was $32.0 million related to
equipment utilized in the U.S. commercial plasma business and manufacturing
operations and investments in the Company's service businesses. The change in
accounts receivable utilized net cash of $17.1 million and the increase in
accounts payable, accrued expenses and deferred revenue provided $14.4 million
in 1997. The increase in sales type leases utilized cash of $13.2 million
attributable to growth in the plasma business worldwide. In 1997 the need for
funds not satisfied by the internally generated cash flow was satisfied by an
increase to the committed bank lines of $14.1 million. Conversely, in 1996, the
Company paid down its revolving credit agreements by $12.8 million. At the
April 1997 board meeting, the board approved the increase in the Company's
committed bank lines to $40.0 million from $20.0 million. The Company intends
to secure the additional financing by the end of the first quarter of 1998.
The Company used $15.8 million to repurchase 902,100 shares of treasury
stock during the twelve months ended March 29, 1997. On January 19, 1996, the
Company's Board of Directors approved an additional 1,000,000 share repurchase
program to be implemented upon the completion of the existing 1,000,000 share
program. Combined under both programs there remains approximately 589,800
shares available to repurchase by the Company at prevailing prices as market
conditions warrant.
At March 29, 1997, the Company had working capital of $94.0 million. This
reflects a decrease of $18.4 million in working capital for the twelve months
ended March 29, 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPLLEMENTARY DATA
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 29, March 30,
1997 1996
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents............................................... $ 8,302 $ 13,434
Accounts receivable, less allowance of $961 in 1997 and $984 in 1996.... 72,199 60,326
Inventories............................................................. 55,090 56,729
Current investment in sales-type leases, net............................ 13,559 11,020
Deferred tax asset...................................................... 14,290 10,911
Other prepaid and current assets........................................ 4,229 6,459
----------------------
Total current assets................................................ 167,669 158,879
Property, plant and equipment:
Land, building, and building improvements............................... 25,676 23,156
Machinery and equipment................................................. 63,484 59,519
Furniture and fixtures.................................................. 6,461 6,599
Commercial plasma and rental equipment.................................. 95,137 71,550
----------------------
Total property, plant and equipment................................. 190,758 160,824
Less: accumulated depreciation.......................................... 87,148 74,408
----------------------
Net property, plant and equipment................................... 103,610 86,416
Other assets:
Investment in sales-type leases, net.................................... 30,954 21,428
Distribution rights, net................................................ 10,266 12,418
Other assets, net....................................................... 11,047 8,677
----------------------
Total other assets.................................................. 52,267 42,523
----------------------
Total assets........................................................ $ 323,546 $ 287,818
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt.................. $ 19,511 $ 3,378
Accounts payable........................................................ 27,885 16,909
Accrued payroll and related costs....................................... 6,814 8,305
Accrued income taxes.................................................... 10,478 8,345
Other accrued liabilities............................................... 8,936 9,502
----------------------
Total current liabilities........................................... 73,624 46,439
Deferred income taxes ................................................... 12,770 9,253
Long-term debt, net of current maturities ................................ 10,015 15,156
Other long-term liabilities .............................................. 1,863 --
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, $.01 par value; Authorized--80,000,000 shares;
Issued--29,238,350 shares in 1997; 28,770,346 shares in 1996........... 292 288
Additional paid-in capital.............................................. 56,547 52,355
Retained earnings....................................................... 215,657 182,707
Cumulative translation adjustment....................................... (6,162) 7,387
----------------------
Stockholders' equity before treasury stock.............................. 266,334 242,737
Less: treasury stock at cost--2,478,888 shares in 1997; 1,607,354 shares
in 1996................................................................ 41,060 25,767
----------------------
Total stockholders' equity........................................... 225,274 216,970
----------------------
Total liabilities and stockholders' equity.......................... $ 323,546 $ 287,818
======================
The accompanying notes are an integral part
of these consolidated financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)
Year Ended
-----------------------------------
March 29, March 30, April 1,
1997 1996 1995
--------- --------- ---------
Net revenues....................................................... $ 309,817 $ 278,216 $ 262,416
Cost of goods sold................................................. 150,056 123,603 117,561
-----------------------------------
Gross profit....................................................... 159,761 154,613 144,855
-----------------------------------
Operating expenses:
Research and development........................................ 18,974 18,467 16,729
Selling, general and administrative............................. 92,336 81,775 75,748
-----------------------------------
Total operating expenses.................................. 111,310 100,242 92,477
-----------------------------------
Operating income................................................... 48,451 54,371 52,378
Interest expense................................................... (1,762) (2,338) (1,849)
Interest income.................................................... 2,940 2,098 2,547
Other income (expense), net........................................ 1,079 1,123 (506)
-----------------------------------
Income before provision for income taxes........................... 50,708 55,254 52,570
Provision for income taxes......................................... 17,738 19,329 18,925
-----------------------------------
Net income......................................................... $ 32,970 $ 35,925 $ 33,645
===================================
Net income per share .............................................. $ 1.20 $ 1.30 $ 1.18
===================================
Weighted average common and common equivalent shares outstanding... 27,451 27,722 28,443
The accompanying notes are an integral part
of these consolidated financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
Common Stock Additional Cumulative Total
-------------- Paid-in Retained Treasury Translation Stockholders'
Shares $'s Capital Earnings Stock Adjustment Equity
------ ----- ---------- --------- --------- ----------- -------------
Balance, April 2, 1994............ 28,215 $ 282 $ 48,674 $ 113,197 $ (2,176) $ 799 $ 160,776
Employee stock purchase plan.... 25 -- 384 (18) 381 -- 747
Exercise of stock options and
related tax benefit............ 163 2 1,028 -- -- -- 1,030
Purchase of treasury stock...... -- -- -- -- (15,724) -- (15,724)
Net income...................... -- -- -- 33,645 -- -- 33,645
Translation adjustment.......... -- -- -- -- -- 12,703 12,703
------------------------------------------------------------------------------
Balance, April 1, 1995............ 28,403 284 50,086 146,824 (17,519) 13,502 193,177
Employee stock purchase plan.... -- -- -- (42) 633 -- 591
Exercise of stock options and
related tax benefit............ 367 4 2,269 -- -- -- 2,273
Purchase of treasury stock...... -- -- -- -- (8,881) -- (8,881)
Net income...................... -- -- -- 35,925 -- -- 35,925
Translation adjustment.......... -- -- -- -- -- (6,115) (6,115)
------------------------------------------------------------------------------
Balance, March 30, 1996........... 28,770 288 52,355 182,707 (25,767) 7,387 216,970
Employee stock purchase plan.... -- -- -- (20) 537 -- 517
Exercise of stock options and
related tax benefit............ 468 4 4,192 -- -- -- 4,196
Purchase of treasury stock...... -- -- -- -- (15,830) -- (15,830)
Net income...................... -- -- -- 32,970 -- -- 32,970
Translation adjustment.......... -- -- -- -- -- (13,549) (13,549)
------------------------------------------------------------------------------
Balance, March 29, 1997........... 29,238 $ 292 $ 56,547 $ 215,657 $ (41,060) $ (6,162) $ 225,274
==============================================================================
The accompanying notes are an integral part
of these consolidated financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended
----------------------------------
March 29, March 30, April 1,
1997 1996 1995
--------- --------- ---------
Cash Flows from Operating Activities:
Net income............................................................ $ 32,970 $ 35,925 $ 33,645
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization....................................... 12,269 13,143 13,711
Increase (decrease) in deferred income taxes........................ 3,588 (3,178) 892
Increase in accounts receivable--net................................ (17,116) (1,931) (9,880)
Increase in inventories............................................. (876) (188) (13,474)
Increase in sales-type leases....................................... (13,150) (3,259) (48)
(Increase) decrease in other assets................................. (5,322) 7,968 (3,166)
Increase (decrease) in accounts payable, accrued expenses and
deferred revenue................................................... 14,382 6,330 (6,052)
----------------------------------
Total adjustments................................................. (6,225) 18,885 (18,017)
----------------------------------
Net cash provided by operating activities......................... 26,745 54,810 15,628
Cash Flows from Investing Activities:
Capital expenditures on property, plant and equipment, net............ (32,048) (19,710) (24,907)
Increase in distribution rights....................................... -- -- (5,195)
DHL asset acquisition................................................. -- (6,189) --
----------------------------------
Net cash used in investing activities............................. (32,048) (25,899) (30,102)
Cash Flows from Financing Activities:
Payments on long-term real estate mortgage............................ (186) (152) (152)
Net increase (decrease) in short-term revolving credit agreements..... 17,545 (4,022) 2,175
Net increase (decrease) in long-term revolving credit agreements...... (3,450) (8,798) 14,132
Employee stock purchase plan.......................................... 517 591 747
Exercise of stock options and related tax benefit..................... 4,161 2,273 1,030
Purchase of treasury stock............................................ (15,830) (8,881) (15,724)
----------------------------------
Net cash provided by (used in) financing activities............... 2,757 (18,989) 2,208
Effect of exchange rates on cash and cash equivalents................... (2,586) (718) 339
----------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents.................... (5,132) 9,204 (11,927)
Cash and Cash Equivalents at Beginning of Year.......................... 13,434 4,230 16,157
----------------------------------
Cash and Cash Equivalents at End of Year................................ $ 8,302 $ 13,434 $ 4,230
==================================
Supplemental disclosures of cash flow information:
Interest paid......................................................... $ 2,834 $ 1,791 $ 1,441
Income taxes paid, net of refunds..................................... $ 15,228 $ 22,058 $ 22,583
==================================
The accompanying notes are an integral part
of these consolidated financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS
Haemonetics Corporation and subsidiaries (the "Company") designs,
manufactures and markets automated systems for the collection, processing and
surgical salvage of blood. Haemonetics also collects blood products for several
of its blood bank customers under various forms of management service
agreements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year
The Company's fiscal year ends on the Saturday closest to the last day of
March. Fiscal 1997, Fiscal 1996 and Fiscal 1995 each included 52 weeks.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash equivalents include money market funds with a maturity of less than
one week. Cash and cash equivalents are recorded at cost, which approximates
market value.
Net Income per Share
Net income per share data are computed using the weighted average number
of shares of common stock outstanding and common equivalent shares from stock
options (using the treasury stock method). Fully diluted net income per share
data have not been presented as the amounts do not differ significantly from
primary net income per share. In March 1997 the FASB issued SFAS No. 128,
"Earnings Per Share." It is effective for the Company in fiscal 1998. The more
significant changes are the replacement of primary earnings per share (EPS)
with basic EPS. Basic EPS is computed by dividing reported earnings available
to common stockholders by weighted average shares outstanding. No dilution for
any potentially dilutive securities is included. If basic EPS were reported for
the year ended March 29, 1997 and March 30, 1996, the Company's basic EPS would
have been $1.21 and $1.32, respectively. Fully diluted EPS, now called diluted
EPS, which reflects common stock equivalents, is still required.
Foreign Currency
Foreign currency transactions and financial statements are translated
into U.S. dollars following the provisions of Statement of Financial Accounting
Standard (SFAS) No. 52, "Foreign Currency Translation." Accordingly, assets and
liabilities of foreign subsidiaries are translated into U.S. dollars at
exchange rates in effect at year-end. Net revenues and costs and expenses are
translated at average rates in effect during the year. Included in other
income/expense in 1997, 1996 and 1995 are $288,000, $710,000 and $583,000,
respectively, in foreign currency transaction gains.
The Company enters into forward exchange contracts to hedge certain firm
sales commitments to customers, which are denominated in foreign currencies.
The purpose of the Company's foreign currency hedging activities is to protect
the Company from the risk that the eventual dollar cash flows resulting from
the sale of products to international customers will be adversely affected by
changes in exchange rates. Gains and losses realized on these contracts are
recorded in operations, offsetting the related foreign currency transactions.
The cash flows related to the gains and losses on these foreign currency hedges
are classified in the statements of cash flows as part of cash flows from
operating activities.
At March 29, 1997 and March 30, 1996, the Company had forward exchange
contracts, all having maturities of less than one year, to exchange foreign
currencies (major European currencies and Japanese yen) primarily for U.S.
dollars totaling $98,200,000 and $144,234,000, respectively. Gross unrealized
gains and losses from hedging firm sales commitments, based on current spot
rates, were a $7,132,000 gain and a $4,000 loss at March 29, 1997 and a
$6,964,000 gain and a $333,000 loss at March 30, 1996. Deferred gains and
losses are recognized in earnings when the future sales are recognized.
Management anticipates that these deferred amounts at March 29, 1997 will be
offset by the foreign exchange effect on sales of products to international
customers in fiscal 1998.
The Company is exposed to credit loss in the event of nonperformance by
counter-parties on these foreign exchange contracts. The Company does not
anticipate nonperformance by any of these parties.
Financial Instruments
SFAS No. 107 "Disclosures About Fair Value of Financial Instruments,"
requires disclosure of an estimate of the fair value of certain financial
instruments. The fair value of certain of the Company's financial instruments,
including cash and cash equivalents, notes payable and long-term debt, pursuant
to SFAS No. 107 approximated their carrying values at March 29, 1997 and March
30, 1996. Fair values have been determined through information obtained from
market sources and management estimates.
Property, Plant and Equipment
The Company provides for depreciation and amortization by charges to
operations using the straight-line method in amounts estimated to recover the
cost of the building and improvements, equipment, and furniture and fixtures
over their estimated useful lives as follows:
Estimated
Asset Classification Useful Lives
-------------------- ------------
Building........................................ 30 Years
Building and leasehold improvements............. 5-25 Years
Machinery and equipment......................... 3-10 Years
Furniture and fixtures.......................... 5-8 Years
Commercial plasma and rental equipment.......... 6-8 Years
Leasehold improvements are amortized over the lesser of their useful
lives or the term of the lease. Maintenance and repairs are charged to
operations as incurred. When equipment and improvements are sold or otherwise
disposed of, the asset cost and accumulated depreciation are removed from the
accounts, and the resulting gain or loss, if any, is included in the results of
operations. Fully depreciated assets are removed from the accounts when they
are no longer in use.
Inventories
Inventories are stated at the lower of cost or market and include the
cost of material, labor and manufacturing overhead. Cost is determined on the
first-in, first-out basis.
Inventories consist of the following:
March 29, March 30,
1997 1996
--------- ---------
(in thousands)
Raw materials....................... $ 12,501 $ 6,727
Work-in-process..................... 5,628 6,699
Finished goods...................... 36,961 43,303
--------------------
$ 55,090 $ 56,729
====================
Revenue Recognition
Revenues from equipment and disposable product sales and sales-type
leases are recognized upon shipment. Service revenues are recognized ratably
over the contractual periods or as the services are provided. The Company
provides for the cost of warranty based on product shipments.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
the temporary differences between the tax and financial reporting bases of
assets and liabilities.
Distribution Rights
Distribution rights represent the cost to acquire the right to directly
distribute certain of the Company's products in foreign markets. These rights
were acquired in several different acquisitions. The historical cost of these
acquisitions was approximately $13,900,000 as of both March 29, 1997 and March
30, 1996. The distribution rights are amortized on the straight-line basis over
20 years. The accumulated amortization was approximately $3,253,000 and
$2,531,000 for the years ended March 29, 1997 and March 30, 1996. The Company
assesses the future useful life of these rights whenever events or changes in
circumstances indicate that the current useful life has diminished. The Company
considers the future undiscounted cash flows of the rights in assessing the
recoverability of the asset. If impairment has occurred, any excess of carrying
value over fair value is recorded as a loss. In the opinion of management, no
impairment in the Company's long-lived assets has occurred.
Accounting for Stock-Based Compensation
In December 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation," which is to become effective for the Company in
fiscal 1998. SFAS No. 123 requires that employee stock-based compensation be
recorded or disclosed at its fair value. The Company has elected to adopt the
disclosure provision for stock-based compensation in SFAS No. 123 but to
continue to account for stock-based compensation under APB No. 25. No
accounting recognition is given to options granted at fair market value until
they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to equity.
Reclassifications
Certain amounts in the prior year financial statements have been
reclassified to conform with the 1997 presentation.
3. INVESTMENT IN SALES-TYPE LEASES
The Company leases equipment to customers under sales-type leases. The
components of the Company's net investment in sales-type leases are as follows:
March 29, March 30,
1997 1996
--------- ---------
(in thousands)
Total minimum lease payments receivable............ $ 55,236 $ 39,537
Less-- Unearned interest........................ 10,723 7,089
---------------------
Net investment in sales-type leases................ 44,513 32,448
Less-- Current portion.......................... 13,559 11,020
---------------------
$ 30,954 $ 21,428
=====================
Future minimum lease payments receivable under noncancelable leases as of
March 29, 1997 are as follows:
Fiscal Year Ending (in thousands)
------------------
1998...................................... $ 17,276
1999...................................... 14,084
2000...................................... 10,692
2001...................................... 6,732
2002 and thereafter....................... 6,452
--------
$ 55,236
========
4. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consist of the following:
March 29, March 30,
1997 1996
--------- ---------
(in thousands)
Real estate mortgage...................... $ 8,754 $ 8,923
U.S. borrowings........................... -- 1,080
Non-U.S. borrowings....................... 20,772 8,531
--------------------
29,526 18,534
Less--Current portion..................... 19,511 3,378
--------------------
$ 10,015 $ 15,156
====================
Credit Facilities
U.S. borrowings are evidenced by a $20,000,000 committed, unsecured
revolving credit facility and a $10,000,000 uncommitted, unsecured credit line.
The committed facility is under a joint financing agreement dated October 1,
1996 (the "Agreement"). This facility is available through September 30, 1999,
on which date all borrowings become due. The uncommitted line is under a
financing agreement dated July 29, 1996. As of March 29, 1997 neither the
credit facility nor the uncommitted line had funds drawn against it.
Interest on all facilities bear interest, at the Company's option, at (a)
the higher of the bank's base rate, the bank's prime rate or the Federal Funds
effective rate plus 1%, (b) the Euro-Rate plus a margin of .35%-1% or (c) the
money market rate. The Agreement provides for a commitment fee of 0.20% on the
unused portion of the revolving credit facility. The Agreement contains several
restrictive covenants principally related to the maintenance of minimum
tangible net worth, debt to net worth ratio, and a minimum debt service
interest ratio.
Non-U.S. borrowings represent the financing arranged by the Company's
subsidiaries with local banks which may be guaranteed by the Company.
The weighted average short-term rates for U.S. and non-U.S. borrowings
were 1.69%, 5.47% and 5.69% as of March 29, 1997, March 30, 1996 and April 1,
1995, respectively.
Real Estate Mortgage Agreement
The Company has a $10,000,000 real estate mortgage agreement (the
"Mortgage Agreement") with an insurance company. The Mortgage Agreement
requires principal and interest payments of $91,500 per month for a period of
120 months, commencing October 1, 1990, with the remaining unpaid principal
balance and interest thereon due and payable on September 1, 2000. The entire
balance of the loan may be repaid, subject to a prepayment premium equal to the
greater of either 1% of the principal balance at prepayment, or an amount
calculated based on the interest rate differential, the principal balance due
and the remaining loan term. The Mortgage Agreement provides for interest to
accrue on the unpaid principal balance at a rate of 10.5% per annum. Borrowings
under the Mortgage Agreement are secured by the land, building and improvements
at the Company's headquarters and manufacturing facility. The Mortgage
Agreement also includes minimum tangible net worth and current ratio
requirements. The terms and conditions of this agreement remain unchanged for
future periods.
As of March 29, 1997, notes payable and long-term debt mature as follows:
Fiscal Years Ending (in thousands)
-------------------
1998......................................... $ 19,511
1999......................................... 1,638
2000......................................... 230
2001......................................... 8,147
2002 and thereafter.......................... --
--------
$ 29,526
========
5. INCOME TAXES
The components of domestic and foreign income before the provision for
income taxes are as follows:
Years Ended
--------------------------------
March 29, March 30, April 1,
1997 1996 1995
--------- --------- --------
(in thousands)
Domestic.................................... $ 39,408 $ 43,020 $ 42,910
Foreign..................................... 11,300 12,234 9,660
--------------------------------
$ 50,708 $ 55,254 $ 52,570
================================
The provision for income taxes consists of the following components:
Years Ended
--------------------------------
March 29, March 30, April 1,
1997 1996 1995
--------- --------- --------
(in thousands)
Current
Federal......................... $ 13,423 $ 15,543 $ 16,229
State........................... 2,286 2,390 2,447
Foreign......................... 2,329 2,303 2,351
--------------------------------
18,038 20,236 21,027
================================
Deferred
Federal......................... (1,998) (980) (1,414)
State........................... (137) (154) (258)
Foreign......................... 1,835 227 (430)
--------------------------------
(300) (907) (2,102)
--------------------------------
$ 17,738 $ 19,329 $ 18,925
================================
Included in the federal and state income tax provisions for fiscal years
1997, 1996 and 1995 are approximately $2,247,000, $3,209,000, and $3,321,000,
respectively, provided on foreign source income of approximately $6,419,000 in
1997, $9,169,000 in 1996 and $9,224,000 in 1995, taxes on which are payable in
the United States.
The tax effect of significant temporary differences composing the net
deferred tax asset (liability) is as follows:
Years Ended
---------------------
March 29, March 30,
1997 1996
--------- ---------
(in thousands)
Depreciation................................. $ (9,691) $ (6,345)
Amortization................................. (3,535) (2,908)
Inventory.................................... 12,221 10,148
Accruals and reserves........................ 2,138 753
Other........................................ 387 10
--------------------
Total net deferred taxes.................. $ 1,520 $ 1,658
====================
The provision for income taxes differs from the amount computed by
applying the statutory U.S. federal income tax rate of 35% in 1997, 1996 and
1995 due to the following:
Years Ended
--------------------------------
March 29, March 30, April 1,
1997 1996 1995
--------- --------- --------
(in thousands)
Tax at federal statutory rate............................... $ 17,748 $ 19,340 $ 18,399
Difference due to:
Foreign sales corporation................................. (1,605) (1,268) (1,462)
Difference between U.S. tax rate and tax rates
used in other tax jurisdictions.......................... 167 147 833
State taxes, net of federal income tax benefit.............. 1,403 1,355 1,422
Research and development credits............................ -- -- (400)
Other, net.................................................. 25 (245) 133
--------------------------------
$ 17,738 $ 19,329 $ 18,925
================================
6. COMMITMENTS AND CONTINGENCIES
The Company leases facilities and certain equipment under operating
leases expiring at various dates through fiscal year 2004. Facility leases
require the Company to pay certain insurance expenses, maintenance costs and
real estate taxes.
Approximate future basic rental commitments under operating leases as of
March 29, 1997 are as follows:
Fiscal Year Ending (in thousands)
------------------
1998...................................... $ 3,465
1999...................................... 2,461
2000...................................... 1,954
2001...................................... 1,498
2002 and thereafter....................... 3,689
--------
$ 13,067
========
Rent expense in 1997, 1996 and 1995 was $2,613,000, $4,219,000 and
$3,713,000, respectively.
The Company is presently engaged in various legal actions, and although
ultimate liability cannot be determined at the present time, the Company
believes, based on consultation with counsel, that any such liability will not
materially affect the consolidated financial position of the Company or its
results of operations.
7. CAPITAL STOCK
Treasury Stock
During 1997 and 1996, the Company repurchased 902,100 shares and 514,141
shares, respectively, of its outstanding common stock at average prevailing
prices of $17.46 and $17.24, respectively. The Company expects any repurchased
shares to be made available for issuance pursuant to its employee benefit and
incentive plans and for other corporate purposes.
Stock Plans
The Company has a long-term incentive stock option plan under which a
maximum of 2,853,464 shares of the Company's common stock may be issued
pursuant to incentive and or non-qualified stock options and stock awards
granted to key employees, consultants and advisers (the "Long-Term Incentive
Plan"). The Long-Term Incentive Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee") consisting of two or more
disinterested members of the Company's Board of Directors. The exercise price
for non-qualified options granted under the Long-Term Incentive Plan is
determined by the Committee, but in no event shall such option price be less
than 50% of the fair market value of the common stock at the time the option is
granted. Incentive options may be granted at a price not less than fair market
value on the date of grant. Options become exercisable in a manner determined
by the Committee, generally over 4 years, and incentive options expire not more
than ten years from the date of the grant. There were 828,378 shares available
for future grant at March 29, 1997.
The Company also has a non-qualified stock option plan for non-employee
directors for the purchase of common stock (the "Non-employee Plan"). Under the
Non-employee Plan, a maximum of 6,000 shares can be granted to each director,
not to exceed 24,000 shares per calendar year, and a maximum of 86,000 shares
in aggregate. Options are granted at not less than fair market value on the
date of grant, vest over 4 years and expire not more than ten years from the
date of grant. There were no shares available for future grant at March 29,
1997 under this plan.
The Company also has a stock option plan which grants options to key
employees and consultants for the purchase of common stock (the "Option Plan").
The Option Plan is administered by the Committee, which is empowered to grant
either non-qualified or incentive stock options. Under the Option Plan, options
to purchase up to 1,468,800 shares may be granted at a price, in the case of
incentive options, not less than fair market value on the date of grant.
Options become exercisable in a manner determined by the Committee, generally
over 4 or 5 years, and incentive options expire not more than ten years from
the date of grant. At the year ended March 29, 1997 there were 70,300 shares
available for future grant.
The Company has an Employee Stock Purchase Plan (the "Purchase Plan")
under which a maximum of 289,200 shares (subject to adjustment for stock splits
and similar changes) of common stock may be purchased by eligible employees.
Substantially all full-time employees of the Company are eligible to
participate in the Purchase Plan.
The Purchase Plan provides for two "purchase periods" within each of the
Company's fiscal years, the first commencing on January 1 of each calendar year
and continuing through June 30 of such calendar year, and the second commencing
on July 1 of each year and continuing through December 31 of such calendar
year. Eligible employees may elect to become participants in the Purchase Plan
for a purchase period by completing a stock purchase agreement prior to the
first day of the purchase period for which the election is made. Shares are
purchased through accumulation of payroll deductions (of not less than 2% nor
more than 8% of compensation, as defined) for the number of whole shares
determined by dividing the balance in the employee's account on the last day of
the purchase period by the purchase price per share for the stock determined
under the Purchase Plan. The purchase price for shares will be the lower of 85%
of the fair market value of the common stock at the beginning of the purchase
period, or 85% of such value at the end of the purchase period.
During 1997, there were 33,181 shares purchased at a range of $15.09 to
$15.51 per share under the Purchase Plan. During 1996, there were 39,835 shares
purchased at a range of $14.66 to $15.09 per share under the Purchase Plan.
The Company accounts for these plans under APB Opinion No. 25, under
which no compensation cost has been recognized for options granted at fair
market value. Had the compensation cost for these plans been determined
consistent with the SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company's net income and earnings per share would have been the following
pro forma amounts:
1997 1996
----------- -----------
Net Income: As Reported $32,970,000 $35,925,000
Pro Forma $31,526,000 $35,197,000
Primary EPS: As Reported 1.20 1.30
Pro Forma 1.15 1.27
For purposes of the pro forma disclosure, the fair value of each option
is estimated on the date of grant using the Black-Scholes option pricing model
with the following weighted average assumptions:
1997 1996
------ ------
Volatility.......................................... 28.3% 28.3%
Risk-Free Interest Rate............................. 6.5% 6.8%
Expected Life of Options............................ 7 yrs. 7 yrs.
The weighted average grant date fair value of options granted during 1997
and 1996 was approximately $8.223 and $7.892, respectively.
The fair values of shares purchased under the Employee Stock Purchase
Plan is estimated using the Black-Scholes option pricing model with the
following weighted average assumptions:
1997 1996
------ ------
Volatility.......................................... 28.3% 28.3%
Risk-Free Interest Rate............................. 5.3% 5.9%
Expected Life of Options............................ 6 mos. 6 mos.
The weighted average grant-date fair value of options granted under the
Purchase Plan was $4.34 in 1997 and $4.20 in 1996.
The effects of applying SFAS No. 123 for the purposes of providing pro
forma disclosures may not be indicative of the effects on reported net income
per share for future years, as the pro forma disclosures include the effects of
only those awards granted after April 2, 1995.
A summary of stock option activity for the combined plans for the three
years ended March 29, 1997 is as follows:
Weighted-
Average
Number of Exercise
Shares Price per Share
--------- ---------------
Outstanding at April 2, 1994................... 2,111,865 $ 13.582
Granted........................................ 466,613 $ 16.270
Exercised...................................... (163,300) $ 6.189
Terminated..................................... (212,566) $ 16.023
------------------------
Outstanding at April 1, 1995................... 2,202,612 $ 14.464
Granted........................................ 652,079 $ 16.989
Exercised...................................... (367,488) $ 6.218
Terminated..................................... (142,992) $ 16.528
------------------------
Outstanding at March 30, 1996.................. 2,344,211 $ 16.333
Granted........................................ 595,425 $ 18.018
Exercised...................................... (468,004) $ 8.775
Terminated..................................... (208,601) $ 17.239
------------------------
Outstanding at March 29, 1997.................. 2,263,031 $ 18.231
The following table summarizes information about stock options
outstanding at March 29, 1997:
Options Outstanding Options Exercisable
------------------------------------- ----------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 3/29/97 Life Price at 3/29/97 Price
-------- ----------- ----------- -------- ----------- --------
$12.500 to $16.500................. 809,518 7.0 years $ 15.518 312,517 $ 15.675
$17.563 to $18.375................. 691,482 8.6 years $ 18.071 87,247 $ 18.356
$18.813 to $23.125................. 566,700 6.4 years $ 20.138 433,950 $ 19.672
$23.875 to $24.563................. 195,331 6.2 years $ 24.500 148,190 $ 24.497
-------------------------------------------------------------
Total........................... 2,263,031 7.3 years $ 18.231 981,904 $ 19.011
=============================================================
8. SAVINGS PLUS PLAN
The Company's Savings Plus Plan (the "Savings Plan") allows employees to
accumulate savings on a pretax basis. In addition, the Company makes matching
contributions to the Savings Plan based on preestablished rates. The Company
can also make additional discretionary contributions if approved by the Board
of Directors. The Company's matching contributions amounted to approximately
$660,000, $616,000 and $565,000 in 1997, 1996 and 1995, respectively. The Board
of Directors declared a discretionary contribution of approximately $1,100,000
for the Savings Plan year ended March 30, 1996. No discretionary contributions
were made for the Savings Plan years ended March 29, 1997 and April 1, 1995.
The Company has no material obligation for postretirement or
postemployment benefits.
9. TRANSACTIONS WITH RELATED PARTIES
The Company advances money to various employees for relocation costs and
incentive purposes. Loans to employees, which are included in other assets,
amounted to approximately $593,000 as of March 29, 1997 and $916,000 as of
March 30, 1996 and are payable within five years. Certain loans are
interest-bearing, and the Company records interest income on these loans when
collected. Certain loans have forgiveness provisions based upon continued
service or compliance with various guidelines. The Company amortizes the
outstanding loan balance as a charge to operating expense as such amounts are
forgiven.
10. GEOGRAPHIC AND CUSTOMER INFORMATION
The Company operates in one industry segment consisting of the design,
manufacture, marketing and service of blood processing systems and related
disposable items for use in the collection and processing of blood components,
collection of plasma and salvage of shed blood that would otherwise be lost
during surgical procedures. Geographic area information for 1997, 1996 and 1995
is as follows:
Geographic Area
------------------------------------------------
Europe & Far East &
Domestic All Other Japan Consolidated
-------- --------- ---------- ------------
(in thousands)
Year ended March 29, 1997:
Net revenues................................... $116,831 $97,026 $ 95,960 $309,817
----------------------------------------------
Income before provision for income taxes....... $ 27,065 $15,206 $ 8,437 $ 50,708
----------------------------------------------
Identifiable assets............................ $215,410 $71,791 $ 36,345 $323,546
----------------------------------------------
Year ended March 30, 1996:
Net revenues................................... $108,152 $78,423 $ 91,641 $278,216
----------------------------------------------
Income before provision for income taxes....... $ 36,258 $11,063 $ 7,933 $ 55,254
----------------------------------------------
Identifiable assets............................ $166,771 $82,598 $ 38,449 $287,818
----------------------------------------------
Year ended April 1, 1995:
Net revenues................................... $106,101 $76,760 $ 79,555 $262,416
----------------------------------------------
Income before provision for income taxes....... $ 48,523 $ 2,102 $ 1,945 $ 52,570
----------------------------------------------
Identifiable assets............................ $155,322 $76,337 $ 48,850 $280,509
----------------------------------------------
Intercompany transfers to foreign subsidiaries are transacted at prices
intended to allow the subsidiaries comparable earnings to those of unaffiliated
distributors. Sales to unaffiliated distributors and customers outside the
United States, including U.S. export sales, were approximately $194,849,000 in
1997, which represented 63% of net revenues; $171,410,000 in 1996, which
represented 62% of net revenues and $158,609,000 in 1995, which represented 60%
of net revenues.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Haemonetics Corporation:
We have audited the accompanying consolidated balance sheets of
Haemonetics Corporation (a Massachusetts corporation) and subsidiaries as of
March 29, 1997 and March 30, 1996, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the three years in the
period ended March 29, 1997. These consolidated financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Haemonetics
Corporation and subsidiaries as of March 29, 1997 and March 30, 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended March 29, 1997, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in item
14 (a) is the responsibility of the Company's management and is presented for
the purpose of complying with the Securities and Exchange Commission's rules
and is not a required part of the basic consolidated financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic consolidated financial statements and, in our opinion, fairly states,
in all material respects, the financial data required to be set forth therein
in relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
April 11, 1997
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) The information concerning the Company's directors and concerning
compliance with Section 16(a) of the Securities Exchange Act of 1934 required
by this Item is incorporated by reference to the Company's Proxy Statement for
the Annual Meeting to be held July 18, 1997.
(b) The information concerning the Executive Officers of the Company, who are
elected by and serve at the discretion of the Board of Directors, is as
follows:
JOHN F. WHITE joined Haemonetics in 1976 as Marketing and Sales Manager
and was promoted to Vice President of Marketing and Sales in 1978. In 1982, he
was elected Senior Vice President of Operations and has served as President
since 1983. Prior to joining Haemonetics, Mr. White worked for the Minnesota
Mining & Manufacturing Co. where he held various managerial positions. Mr.
White has been Chairman of Haemonetics' Board of Directors since 1985.
JAMES L. PETERSON joined Haemonetics in 1980 as Director of European
Operations. In 1982, he was promoted to Vice President with responsibility for
all international activities. He was promoted to Executive Vice President in
1988. In May 1994, he assumed the role of President, International Operations.
Prior to joining Haemonetics, he was employed by Hewlett-Packard Company in
Europe and was responsible for its medical sales and service operation. Mr.
Peterson has been a member of Haemonetics' Board of Directors since 1985 and
was elected to the position of Vice Chairman of Haemonetics' Board of Directors
in April 1994.
BRIGID A. MAKES joined Haemonetics in 1992 as Assistant Treasurer. In
August 1992, Ms. Makes was promoted to Treasurer, responsible for all areas of
corporate treasury. In June 1993, Ms. Makes was promoted to Treasurer, Director
of Human Resources and in September 1995, was promoted to Vice President and
Treasurer responsible for treasury, human resources and tax. In November 1995,
Ms. Makes was named acting Chief Financial Officer, increasing her
responsibilities to include financial planning, operational and financial
accounting, investor relations and facility management. In May 1996, Ms. Makes
was promoted to Chief Financial Officer. Prior to joining Haemonetics, Ms.
Makes was employed as Manager of Treasury Services and Controller of Sales and
Service for Lotus Development Corporation. Prior to joining Lotus, Ms. Makes
held various financial positions with increasing levels of responsibility at
General Electric.
JOHN R. BARR joined Haemonetics in 1990 as Director of Customer Service
responsible for domestic and international customer services, as well as
finished goods warehousing and shipping. In September 1991, Mr. Barr was
promoted to Vice President, Operations, responsible for all manufacturing
operations: purchasing; planning raw material warehousing; and offshore
manufacturing. In April 1992, Mr. Barr was promoted to Senior Vice President
with additional responsibility for the U.S. Commercial Plasma Business. In May
1994, Mr. Barr was promoted to Executive Vice President and in October 1995 was
promoted to President, North American Operations, responsible for all
manufacturing operations, North American sales and service and core research
and development. In 1996, Mr. Barr was elected to serve on the Board of
Directors. Prior to joining Haemonetics, Mr. Barr was employed as a Vice
President of Baxter Systems Division where his responsibilities included
management of R&D, customer support staffs and general operations.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Company's Proxy Statement for the Annual Meeting to be held July 18, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Company's Proxy Statement for the Annual Meeting to be held July 18, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as a part of this report:
(a) Financial Statements are included in Part II of this report
Financial Statements required by Item 8 of this Form
Consolidated Balance Sheets............................ 17
Consolidated Statements of Income...................... 18
Consolidated Statements of Stockholders' Equity........ 19
Consolidated Statements of Cash Flows.................. 20
Notes to Consolidated Financial Statements............. 21
Report of Independent Public Accountants............... 32
Schedules required by Article 12 of Regulation S-X
II Valuation and Qualifying Accounts................... 39
All other schedules have been omitted because they are not applicable or
not required.
(b) Reports on Form 8-K
None.
(c) Exhibits required by Item 601 of Regulation S-K are listed in the
Exhibit Index at page 36, which is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HAEMONETICS CORPORATION
By: /s/ JOHN F. WHITE
-----------------------------------
John F. White, Chairman, President
and Chief Executive Officer
May 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ JOHN F. WHITE Chairman, President and Chief Executive May 27, 1997
- ------------------------------- Officer
John F. White
/s/ JAMES L. PETERSON Vice Chairman and President, International May 27, 1997
- ------------------------------- Operations
James L. Peterson
/s/ BRIGID A. MAKES Vice President of Finance and Chief Financial May 27, 1997
- ------------------------------- Officer, (Principal Financial and Accounting
Brigid A. Makes Officer)
/s/ JOHN R. BARR President, North American Operations, Director May 27, 1997
- -------------------------------
John R. Barr
/s/ SIR STUART BURGESS Director May 27, 1997
- -------------------------------
Sir Stuart Burgess
/s/ YUTAKA SAKURADA Sr. Vice President Haemonetics Corp. and May 27, 1997
- ------------------------------- President, Haemonetics Japan Director
Yutaka Sakurada
/s/ JERRY E. ROBERTSON Director May 27, 1997
- -------------------------------
Jerry E. Robertson
/s/ DONNA C. E. WILLIAMSON Director May 27, 1997
- -------------------------------
Donna C. E. Williamson
EXHIBITS FILED WITH SECURITIES AND EXCHANGE COMMISSION
Number and Description of Exhibit
---------------------------------
3. Articles of Organization
3A* Articles of Organization of the Company effective August 29, 1985,
as amended December 12, 1985 and May 21, 1987 (filed as Exhibit 3A
to the Company's Form S-1 No. 33-39490 and incorporated herein by
reference).
3B* Form of Restated Articles of Organization of the Company (filed as
Exhibit 3B to the Company's Form S-1 No. 33-39490 and incorporated
herein by reference).
3C* By-Laws of the Company presently in effect (filed as Exhibit 3C to
the Company's Form 10-K No. 1-10730 for the year ended April 3,
1993 and incorporated herein by reference).
3D* Articles of Amendment to the Articles of Organization of the
Company filed May 8, 1991 with the Secretary of the Commonwealth of
Massachusetts (filed as Exhibit 3E to the Company's Amendment No. 1
to Form S-1 No. 33-39490 and incorporated herein by reference).
4. Instruments defining the rights of security holders
4A* Specimen certificate for shares of common stock (filed as Exhibit
4B to the Company's Amendment No. 1 to Form S-1 No. 33-39490 and
incorporated herein by reference).
10. Material Contracts
10A* The 1990 Stock Option Plan, as amended (filed as Exhibit 4A to the
Company's Form S-8 No. 33-42006 and incorporated herein by
reference).
10B* Form of Option Agreements for Incentive and Non-qualified Options
(filed as Exhibit 10B to the Company's Form S-1 No. 33-39490 and
incorporated herein by reference).
10C* Distribution Agreement dated April 11, 1990 between Baxter
Healthcare Corporation, acting through its Bentley Laboratories
Division, and the Company (filed as Exhibit 10C to the Company's
Form S-1 No. 33-39490 and incorporated herein by reference).
10D* Agreement dated December 8, 1987 between the Company and Miles,
Inc., Cutter Biological (filed as Exhibit 10D to the Company's Form
S-1 No. 33-39490 and incorporated herein by reference).
10E* Supply Agreement between the Company and Alpha Therapeutic
Corporation dated December, 1988 (filed as Exhibit 10E to the
Company's Form S-1 No. 33-39490 and incorporated herein by
reference).
10F* Sublease dated October 29, 1992 between Clean Harbors of Kingston,
Inc. and the Company (filed as Exhibit 10F to the Company's Form
10-K No. 1-10730 for the year ended April 3, 1993 and incorporated
herein by reference).
10G* Third Amended and Restated Financing Agreement dated as of August
22, 1990 among the Company, Fleet Credit Corporation and Fleet
National Bank (filed as Exhibit 10G to the Company's Form S-1 No.
33-39490 and incorporated herein by reference).
10H* First Supplement to the Third Amended and Restated Financing
Agreement dated as of February 3, 1992, and the related Revolving
Credit Note, among the Company, Fleet Credit Corporation and Fleet
National Bank (filed as Exhibit 10H to the Company's Form 10-K No.
1-10730 for the year ended March 28, 1992 and incorporated herein
by reference).
10I* Second Supplement to the Third Amended and Restated Financing
Agreement dated as of March 27, 1992 among the Company, Fleet
Credit Corporation and Fleet National Bank (filed as Exhibit 10I to
the Company's form 10-K No. 1-10730 for the year ended March 28,
1992 and incorporated herein by reference).
10J* Note and Mortgage dated August 7, 1990 between the Company and John
Hancock Mutual Life Insurance Company relating to the Braintree
facility (filed as Exhibit 10H to the Company's Form S-1 No.
33-39490 and incorporated herein by reference).
10K* Credit Facility with Swiss Bank Corporation (filed as Exhibit 10J
to the Company's Amendment No. 1 to Form S-1 No. 33-39490 and
incorporated herein by reference).
10L* Lease dated July 17, 1990 between the Buncher Company and the
Company of property in Pittsburgh, Pennsylvania (filed as Exhibit
10K to the Company's Form S-1 No. 33-39490 and incorporated herein
by reference).
10M* Lease dated July 3, 1991 between Wood Road Associates II Limited
Partnership and the Company for the property adjacent to the main
facility in Braintree, Massachusetts (filed as Exhibit 10M to the
Company's Form 10-K No. 1-10730 for the year ended March 28, 1992
and incorporated herein by reference).
10N* Amendment No. 1 to Lease dated July 3, 1991 between Wood Road
Associates II Limited Partnership and the Company for the child
care facility (filed as Exhibit 10N to the Company's Form 10-K No.
1-10730 for the year ended March 28, 1992 and incorporated herein
by reference).
10O* Bank Overdraft Facility between The Sumitomo Bank and the Company
with an annual renewal beginning February 28, 1993 (filed as
Exhibit 10O to the Company's Form 10-K No. 1-10730 for the year
ended March 28, 1992 and incorporated herein by reference).
10P* Bank Overdraft Facility between The Mitsubishi Bank and the Company
with an annual renewal beginning June 30, 1993 (filed as Exhibit
10P to the Company's Form 10-K, No. 1-10730 for the year ended
March 28, 1992 and incorporated herein by reference).
10Q* Short-term Loan Agreement between The Mitsubishi Bank and the
Company renewable every three months (filed as Exhibit 10Q to the
Company's Form 10-K No. 1-10730 for the year ended March 28, 1992
and incorporated herein by reference).
10R* 1991 Employee Stock Purchase Plan as amended (filed as Exhibit 10R
to the Company's Form 10-K No. 1-10730 for the year ended April 3,
1993 and incorporated herein by reference).
10S* Amendment No. 2 to Lease dated July 3, 1991 between Wood Road
Associates II Limited Partnership and the Company (filed as Exhibit
10S to the Company's Form 10-K No. 1-10730 for the year ended April
3, 1993 and incorporated herein by reference).
10T* 1992 Stock Option Plan for Non-Employee Directors (filed as Exhibit
10U to the Company's Form 10-K No. 1-10730 for the year ended April
3, 1993 and incorporated herein by reference).
10U* 1992 Long-Term Incentive Plan (filed as Exhibit 10V to the
Company's Form 10-K No. 1-10730 for the year ended April 3, 1993
and incorporated herein by reference).
10V* Agreement dated April 3, 1993 between Cellco, Inc. and Haemonetics
Ventures Corporation for the purchase of Cellco, Inc. Preferred
Shares and Warrants (filed as Exhibit 10W to the Company's Form
10-K No. 1-10730 for the year ended April 2, 1994 and incorporated
herein by reference).
10W* Bridge loan and convertible promissory notes dated April 15 and
June 10, 1994 between Cellco, Inc. and the Company (filed as
Exhibit 10Z to the Company's Form 10-K No. 1-10730 for the year
ended April 1, 1995 and incorporated herein by reference).
10X* Real Estate purchase agreement dated May 1, 1994 between 3M UK
Holding PLC and the Company (filed as Exhibit 10AA to the Company's
Form 10-K No. 1-10730 for the year ended April 1, 1995 and
incorporated herein by reference).
10Y* Real Estate purchase agreement dated September 30, 1994 between The
Midland Mutual Life Insurance Company and the Company (filed as
Exhibit 10AB to the Company's Form 10-K No. 1-10730 for the year
ended April 1, 1995 and incorporated herein by reference).
10Z* Purchase agreement dated October 1, 1994 between Kuraray Co. and
the Company (filed as Exhibit 10AC to the Company's Form 10-K No.
1-10730 for the year ended April 1, 1995 and incorporated herein by
reference).
10AA* Asset Purchase Agreement dated as of July 18, 1995 between DHL
Laboratories and the Company (filed as Exhibit 10AF to the
Company's Form 10-K No. 1-10730 for the year ended March 30, 1996
and incorporated herein by reference).
10AB* Lease dated May 10, 1996 between Charlotte E. Flatley and John P.
Garrahan, trustees of the 1970 Flatley Family Trust and the Company
for the property located at Forbes Business Center, Braintree,
Massachusetts (filed as Exhibit 10AG to the Company's Form 10-Q No.
1-10730 for the quarter ended September 28, 1996 and incorporated
herein by reference).
10AC* Supplement to the lease dated May 10, 1996 between Charlotte E.
Flatley and John P. Garrahan, trustees of the 1970 Flatley Family
Trust and the Company for the property located at Forbes Business
Center, Braintree, Massachusetts (filed as Exhibit 10AH to the
Company's Form 10-Q No. 1-10730 for the quarter ended September 28,
1996 and incorporated herein by reference).
10AD* First Amendment to lease dated July 17,1990 between Buncher Company
and the Company of property in Pittsburg, Pennsylvania (filed as
Exhibit 10AI to the Company's Form 10-Q No. 1-10730 for the quarter
ended December 28, 1996 and incorporated herein by reference).
10AE Revolving Credit Agreement among Mellon Bank, N.A., the First
National Bank of Boston and Haemonetics Corporation dated as of
October 1, 1996
10AF Amendment, dated April 18, 1997 to the 1992 Long-Term Incentive
Plan (filed as Exhibit 10V to the Company's Form 10-K No. 1-10730
for the year ended April 3, 1993 and incorporated herein by
reference).
11. Statement re: computation of per share earnings
21. Subsidiaries of the Company
23. Consent of the Independent Public Accountants
27. Financial Data Schedule
- --------------------
* Incorporated by reference.
(All other exhibits are inapplicable.)
SCHEDULE II
HAEMONETICS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Balance at Charged to Write-Offs Balance at
Beginning Costs and (Net of End
Allowance for Doubtful Accounts of Period Expenses Recoveries) of Period
- ------------------------------- ---------- ---------- ----------- ----------
For the Year Ended March 29, 1997............... $ 984 $ 431 $ (454) 961
For the Year Ended March 30, 1996............... 681 321 (18) 984
For the Year Ended April 1, 1995................ 464 222 (5) 681