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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 30, 1996. 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
------------------- -------------------
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. [_]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT BASED ON THE CLOSING SALE PRICE OF MAY 22, 1996, WAS APPROXIMATELY
$471,000,000.
THE NUMBER OF SHARES OF THE REGISTRANT'S COMMON STOCK, $.01 PAR VALUE,
OUTSTANDING AS OF MAY 22, 1996, WAS 27,242,229.
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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 19, 1996.
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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.................. 3
(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....................................... 12
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.................................. 33
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
2
ITEM 1. BUSINESS
(A) NEW DEVELOPMENTS IN THE BUSINESS.
FDA Developments
In April 1996, Haemonetics received marketing clearance from the FDA to
market its proprietary two-unit red blood cell collection protocol for
autologous donors. This follows the clearance given in October 1995 to market
the single-unit red cell and two-unit plasma protocol. 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, for the first
time, blood centers now have the ability to practice total apheresis, the
automated collection of transfusable units of any of the three blood
components; red blood cells, plasma, or platelets. Total apheresis will allow
for the most efficient and cost effective use of an ever shrinking donor
population.
In April 1996, Haemonetics received marketing clearance from the FDA for a
new protocol which allows the collection of 130-155 ml of leukocytes in
addition to 450-750 ml source plasma or plasma for reinfusion. Leukocytes
(white blood cells) collected from donors are used as a raw material in the
manufacturing of diagnostic tests and as therapeutic agents. Currently, many
of Haemonetics' customers collect leukocytes and separate them from plasma
using manual methods. This new protocol will allow the Company's customers to
automate the process using apheresis technology. The protocol produces two
products for subsequent sale: leukocytes and source plasma, making it very
cost effective for the collector.
In February 1996, Haemonetics received marketing clearance from the FDA for
a double, single-donor platelet protocol. The ability to get a double unit
platelet product from a single donor is very important given the donor
population continues to decrease.
In July 1995, Haemonetics received FDA substantial equivalence for the
CollectFirst(TM) system. This system is the newest product offering from
Haemonetics in the area of surgical autotransfusion. It is approved for both
intraoperative and postoperative autotransfusion and it allows for the
continuous collection, filtration, and reinfusion of salvaged blood. This
system offers versatility to the physician through its unique ability to be
used either for direct reinfusion or with the Haemonetics(R) Cell Saver(R)
system for washing of collected red blood cells.
Acquisition Developments
Haemonetics acquired the assets of DHL Laboratories in Union, South Carolina
in August 1995. The acquisition is expected to allow the Company to expand its
offerings to include the solutions used during automated blood collection
procedures. This expansion in capability is particularly critical for the
storage and anticoagulant solutions used in the red blood cell business.
In October 1995, Haemonetics announced the formation of HPPS, Haemonetics
Plasma Product Services. HPPS was founded to provide expertise to blood
banking systems throughout the world to assist them in all phases of plasma
processing from collection to fractionation. The goal of HPPS is to enhance
the progress made by the Company's customers to convert plasma collected into
biological products. HPPS will be based in Lille, France.
(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
3
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 which
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 design, manufacture and worldwide marketing of
automated systems for the collection, processing and surgical salvage of
blood. 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 collection firms and national health organizations in over 50
countries.
(C) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
The Company operates in and 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.
4
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(TM) 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.
5
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 announced, and is implementing, major programs to
reduce dependence on imports of blood components from commercial operators and
to become self-sufficient in plasma collection. Increased competitive
pressures from these self-sufficiency programs and 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 the 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 Armour
pharmaceuticals, 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.
6
Plasma collection from volunteer donors is undergoing dramatic changes due
to the implementation of national self-sufficiency programs driven by the
threat of AIDS and other infectious diseases. 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.
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 recently 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 30, 1996, sales of disposable products accounted for
approximately 88% of net revenues. Sales of disposable products by the Company
were 7.7% higher in 1996 than in 1995 and grew at a compound average annual
growth rate of 12% for the three years ended March 30, 1996. 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, have in recent years accounted for approximately 1.0% of the
Company's net revenues.
Sales of equipment accounted for approximately 12% of net revenues in fiscal
1996 and approximately 13% in fiscal 1995. 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 which 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 exclusively through the Bentley Laboratories
division of Baxter International, Inc. ("Bentley"). This relationship gives
Haemonetics valuable additional exposure to the important North American
cardiovascular market. In
7
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 which
closely match local customer requirements. For the past three fiscal years,
the Company's expenditures for research and development were $18.5 million,
$16.7 million and $15.8 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.
8
Production begins with injection, molding or extrusion of plastic parts.
Molding tools are 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 98% 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 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.
9
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.
10
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 30, 1996, Haemonetics employed 1,251 persons assigned to the
following functional areas: manufacturing, 575; sales and marketing, 258;
general and administrative, 189; research and development, 100; quality
control and field service, 129. 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 11 of the financial statements, page 30.
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, 38,000 square feet to warehousing, 60,000 square feet for
administrative and research and development activities and 10,000 square feet
available for expansion.
In July 1991, the Company leased 9,631 square feet of space on property
adjacent to the main facility in Braintree. The space is used for general
office requirements. Annual lease rental expense is $81,863. In January of
1992, an additional 5,400 square feet was leased in the building. This space
is used to operate Kids Space at Haemonetics, a child care facility for use by
employees of the Company. Annual lease expense for this space is $104,913. In
November of 1992, the original 9,631 square feet was increased by 16,370
square feet in order to accommodate additional office space requirements.
Annual lease expense for this is $187,531.
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 $251,000 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 September 1994, the Company acquired a facility in Tucson, Arizona. This
facility provides administrative, training and blood donation center space for
Haemonetics Blood Services and Training Institute. This facility was acquired
at a cost of approximately $1,850,000 for four floors totaling 28,500 square
feet.
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. 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.
11
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)
1996 QUARTER ENDED 1995 QUARTER ENDED
------------------------------------ ---------------------------------
JULY 1, SEPT. 30, DEC. 30, MARCH 30, JULY 2, OCT. 1, DEC. 31, APRIL 1,
1995 1995 1995 1996 1994 1994 1994 1995
------- --------- -------- --------- ------- ------- -------- --------
Net revenues............ $68,775 $69,133 $69,858 $70,450 $63,311 $65,337 $65,574 $68,194
Gross profit............ 37,317 38,565 39,120 39,611 35,815 36,695 36,040 36,305
Operating income........ 13,560 13,724 13,760 13,327 12,641 13,812 12,953 12,972
Net income.............. 8,740 9,200 8,886 9,099 8,100 8,505 8,465 8,575
Net income per share.... $ 0.32 $ 0.33 $ 0.32 $ 0.33 $ 0.28 $ 0.30 $ 0.30 $ 0.31
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.
1996 QUARTER ENDED 1995 QUARTER ENDED
------------------------------------ ---------------------------------
JULY 1, SEPT. 30, DEC. 30, MARCH 30, JULY 2, OCT. 1, DEC. 31, APRIL 1,
1995 1995 1995 1996 1994 1994 1994 1995
------- --------- -------- --------- ------- ------- -------- --------
Market price of
Common Stock
High................... 19 3/8 23 1/8 23 18 20 7/8 19 1/2 21 1/2 18 1/8
Low.................... 12 7/8 18 3/8 16 5/8 16 1/4 15 1/4 14 16 1/8 14 3/8
There were approximately 773 holders of record of the Company's common stock
as of May 22, 1996.
12
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
HAEMONETICS CORPORATION AND SUBSIDIARIES
TEN-YEAR REVIEW
(IN THOUSANDS, EXCEPT SHARE DATA)
SUMMARY OF OPERATIONS 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- --------------------- --------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Net revenues......... $ 278,216 $ 262,416 $ 248,449 $ 216,286 $ 176,419 $ 157,332 $ 124,363 $ 115,244 $ 91,409 $ 52,682
Cost of goods sold... 123,603 117,561 104,879 97,296 85,524 82,656 62,322 54,611 42,840 28,800
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Gross profit......... 154,613 144,855 143,570 118,990 90,895 74,676 62,041 60,633 48,569 23,882
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Operating expenses:
Research and
development........ 18,467 16,729 15,786 13,589 10,478 8,386 5,776 5,226 4,799 3,206
Selling, general and
administrative..... 81,775 75,748 75,940 63,576 50,517 42,452 34,940 34,783 26,724 17,543
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Total Operating
Expenses........... 100,242 92,477 91,726 77,165 60,995 50,838 40,716 40,009 31,523 20,749
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Operating income..... 54,371 52,378 51,844 41,825 29,900 23,838 21,325 20,624 17,046 3,133
Other
income/(expense),
net................. 883 192 (1,050) (1,839) (2,222) (2,927) (4,491) (2,822) (263) (764)
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Income before
provision for income
taxes............... 55,254 52,570 50,794 39,986 27,678 20,911 16,834 17,802 16,783 2,369
Provision for income
taxes............... 19,329 18,925 19,305 15,231 9,687 7,110 5,455 6,272 6,782 373
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Net income........... $ 35,925 $ 33,645 $ 31,489 $ 24,755 $ 17,991 $ 13,801 $ 11,379 $ 11,530 $ 10,001 $ 1,996
========= ========= ========= ========= ========= ========= ========= ========= ======== ========
Earnings per share:
Net income.......... $ 1.30 $ 1.18 $ 1.09 $ 0.87 $ 0.63 $ 0.50 $ 0.41 $ 0.42 $ 0.36 $ 0.07
Weighted average
number of common and
common equivalent
shares.............. 27,722 28,443 28,802 28,612 28,342 27,554 27,554 27,554 27,554 27,554
========= ========= ========= ========= ========= ========= ========= ========= ======== ========
FINANCIAL AND
STATISTICAL DATA: 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ----------------- --------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Working capital...... $ 112,440 $ 108,459 $ 81,504 $ 63,431 $ 40,919 $ 29,471 $ 27,233 $ 30,369 $ 19,668 $ 12,122
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Current ratio........ 3.4 3.2 2.7 2.6 2.1 1.8 1.8 2.4 1.7 2.0
Property, plant and
equipment, net...... $ 86,416 $ 82,059 $ 68,342 $ 56,015 $ 46,751 $ 42,300 $ 36,214 $ 23,267 $ 20,403 $ 14,801
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Capital expenditures. $ 19,710 $ 24,907 $ 22,891 $ 17,595 $ 11,373 $ 12,975 $ 17,538 $ 7,314 $ 7,616 $ 4,599
Depreciation and
amortization........ $ 13,143 $ 13,711 $ 10,720 $ 8,517 $ 6,954 $ 6,996 $ 4,561 $ 3,494 $ 4,569 $ 3,957
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Total assets......... $ 287,818 $ 280,509 $ 230,684 $ 187,755 $ 144,846 $ 117,754 $ 110,630 $ 87,752 $ 68,399 $ 41,747
Total debt........... $ 18,534 $ 33,392 $ 14,278 $ 13,562 $ 24,098 $ 24,805 $ 33,903 $ 28,588 $ 14,792 $ 10,399
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Stockholders' equity. $ 216,970 $ 193,177 $ 160,776 $ 126,650 $ 90,581 $ 67,543 $ 54,083 $ 42,415 $ 31,627 $ 21,313
Return on average
equity.............. 17.5% 19.0% 21.9% 22.8% 22.8% 22.7% 23.6% 31.1% 37.8% 11.6%
Debt as a % of
stockholders'
equity.............. 8.5% 17.3% 8.9% 10.7% 26.6% 36.7% 62.7% 67.4% 46.8% 48.8%
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
Number of employees.. 1,251 1,282 1,109 1,002 965 923 810 742 780 625
Net revenues per
employee............ $ 222 $ 205 $ 224 $ 216 $ 183 $ 170 $ 154 $ 155 $ 117 $ 84
--------- --------- --------- --------- --------- --------- --------- --------- -------- --------
13
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 30, 1996 APRIL 1, 1995 APRIL 2, 1994 1996/95 1995/94
-------------- ------------- ------------- ------- -------
Net revenues............ 100.0% 100.0% 100.0% 6.0% 5.6%
Cost of goods sold...... 44.4 44.8 42.2 5.1 12.1
----- ----- ----- ----- -----
Gross profit............ 55.6 55.2 57.8 6.7 0.9
Operating expenses:
Research and develop-
ment................. 6.6 6.4 6.3 10.4 6.0
Selling, general and
administrative....... 29.5 28.8 30.6 8.0 --
----- ----- ----- ----- -----
Total operating ex-
penses............. 36.1 35.2 36.9 8.4 0.8
----- ----- ----- ----- -----
Operating income........ 19.5 20.0 20.9 3.8 1.0
Interest expense........ (0.8) (0.7) (0.7) 26.4 3.8
Interest income......... 0.8 0.9 1.1 (17.6) (6.9)
Other income (expense),
net.................... 0.4 (0.2) (0.8) 321.9 (74.8)
----- ----- ----- ----- -----
Income before provision
for income taxes....... 19.9 20.0 20.5 5.1 3.5
Provision for income
taxes.................. 7.0 7.2 7.8 2.1 (2.0)
----- ----- ----- ----- -----
Net income.............. 12.9% 12.8% 12.7% 6.8 6.8
===== ===== ===== ===== =====
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 an increase as a percentage of net revenues to 29.5%
from 28.8%. The increased spending resulted from 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.
14
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.
1995 Compared to 1994
Net revenues in 1995 increased 5.6% to $262.4 million from $248.4 million in
1994. Worldwide disposable sales increased 8.0%, with increases in both the
domestic and international markets. This represents 6.7% of the increase in
revenues, offset 1.1% by a worldwide equipment sales decrease of 7.3%. Sales
of disposable products accounted for approximately 87% and 85%, respectively,
of total net revenues in fiscal 1995 and 1994. During the year ended April 1,
1995, the Company discontinued distribution of the SCD system and its
disposables wafers. Without the effects of such sales in both years, net
revenues increased 8.7% in 1995 from 1994, composed of an increase in
worldwide disposables sales of 10.7% and a decrease in worldwide equipment
sales of 2.9%.
Gross profit in 1995 increased to $144.9 million from $143.6 million in
1994. As a percentage of net revenues, gross profit decreased to 55.2% from
57.8%. Unfavorable results in manufacturing costs and efficiencies resulted in
a 1.0% reduction in gross profit. The remaining 1.6% reduction was
attributable to worldwide pricing pressure on equipment and the overall
product mix of both equipment and disposable sales.
The Company expended $16.7 million in 1995 (6.4% of net revenues) and $15.8
million in 1994 (6.3% of net revenues) on research and development. The
increase resulted primarily from increased staffing, related personnel costs
and use of external resources.
Selling, general and administrative expenses decreased to $75.7 million in
1995 from $75.9 million in 1994 and decreased as a percentage of net revenues
to 28.8% from 30.6%. Increased staffing, related personnel costs and
distribution expenses, primarily in the international markets, were offset by
a decrease in various domestic expenses.
Interest expense remained level at $1.8 million in 1995 and 1994 and as a
percentage of net revenues of 0.7% in 1995 and 1994.
Interest income decreased to $2.5 million in 1995 from $2.7 million in 1994
resulting primarily from a decrease in the Company's average investment in
sales-type leases of its equipment. Other expense net, decreased to $0.5
million in 1995 from $2.0 million in 1994, primarily due to reduced net
expenses of $1.6 million on foreign currency hedging expenses.
The provision for income taxes decreased as a percentage of pretax income to
approximately 36.0% in 1995 from 38.0% in 1994, due to utilization of tax
credits and favorable tax treatment of the Company's Foreign Sales
Corporation.
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has satisfied its cash requirements principally
from internally generated cash flow, stock offerings and bank borrowings.
During the twelve months ended March 30, 1996, the Company generated $54.8
million in cash flow from operating activities compared to $15.6 million in
cash flow from operating activities for the twelve months ended April 1, 1995.
The Company's need for funds is derived primarily from capital expenditures,
acquisitions, treasury stock purchases and working capital. Cash used to pay
down the Company's revolving credit agreements totaled $12.8 million for the
twelve months ended March 30, 1996. During the twelve months ended March 30,
1996, net cash used for capital expenditures was $19.7 million related to
equipment utilized in the U.S. commercial plasma business and investments in
facilities and manufacturing equipment. The Company utilized $6.2 million to
acquire the assets and related liabilities of DHL Laboratories on August 18,
1995. The change in accounts receivable utilized net cash of $1.9 million. The
Company used $8.9 million to repurchase 514,141 shares of treasury stock
during the twelve months ended March 30, 1996. On January 19, 1996, the
Company's Board of Directors approved an additional 1,000,000 share
15
repurchase program to be implemented upon the completion of the existing
1,000,000 share program. Combined under both programs there remains
approximately 1,492,000 shares available to repurchase by the Company at
prevailing prices as market conditions warrant. The Company believes that
committed bank lines, combined with internally generated funds, will be
sufficient to meet future liquidity and capital needs.
At March 30, 1996, the Company had working capital of $112.4 million. This
reflects an increase of $4.0 million in working capital for the twelve months
ended March 30, 1996.
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 30, APRIL 1,
1996 1995
--------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 13,434 $ 4,230
Accounts receivable, less allowance of $984 in 1996 and
$681 in 1995............................................. 60,326 63,277
Inventories............................................... 56,729 59,993
Current investment in sales-type leases, net.............. 11,020 10,821
Deferred tax asset........................................ 10,911 10,911
Other prepaid and current assets.......................... 6,459 8,362
-------- --------
Total current assets.................................... 158,879 157,594
PROPERTY, PLANT AND EQUIPMENT:
Land, building, and building improvements................. 23,156 17,598
Machinery and equipment................................... 73,149 67,152
Furniture and fixtures.................................... 6,599 3,253
Commercial plasma and rental equipment.................... 57,920 54,924
-------- --------
Total property, plant and equipment..................... 160,824 142,927
Less: accumulated depreciation.......................... 74,408 60,868
-------- --------
Net property, plant and equipment....................... 86,416 82,059
OTHER ASSETS:
Investment in sales-type leases, net...................... 21,428 19,192
Distribution rights, net.................................. 12,418 15,517
Other assets, net......................................... 8,677 6,147
-------- --------
Total other assets...................................... 42,523 40,856
-------- --------
Total assets............................................ $287,818 $280,509
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current maturities of long-term debt.... $ 3,378 $ 8,325
Accounts payable.......................................... 16,909 15,646
Accrued payroll and related costs......................... 8,305 8,328
Accrued income taxes...................................... 8,345 8,485
Other accrued liabilities................................. 9,502 8,351
-------- --------
Total current liabilities............................... 46,439 49,135
DEFERRED INCOME TAXES....................................... 9,253 13,130
LONG-TERM DEBT, NET OF CURRENT MATURITIES................... 15,156 25,067
COMMITMENTS AND CONTINGENCIES (NOTE 6)
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; Authorized--80,000,000
shares; Issued--28,770,346 shares in 1996; 28,402,858
shares in 1995........................................... 288 284
Additional paid-in capital................................ 52,355 50,086
Retained earnings......................................... 182,707 146,824
Cumulative translation adjustment......................... 7,387 13,502
-------- --------
Stockholders' equity before treasury stock................ 242,737 210,696
Less: treasury stock at cost--1,607,354 shares in 1996;
1,133,048 shares in 1995............................... 25,767 17,519
-------- --------
Total stockholders' equity.............................. 216,970 193,177
-------- --------
Total liabilities and stockholders' equity.............. $287,818 $280,509
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
17
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED
-----------------------------
MARCH 30, APRIL 1, APRIL 2,
1996 1995 1994
--------- -------- --------
Net revenues..................................... $278,216 $262,416 $248,449
Cost of goods sold............................... 123,603 117,561 104,879
-------- -------- --------
Gross profit..................................... 154,613 144,855 143,570
-------- -------- --------
Operating expenses:
Research and development....................... 18,467 16,729 15,786
Selling, general and administrative............ 81,775 75,748 75,940
-------- -------- --------
Total operating expenses..................... 100,242 92,477 91,726
-------- -------- --------
Operating income................................. 54,371 52,378 51,844
Interest expense................................. (2,338) (1,849) (1,781)
Interest income.................................. 2,098 2,547 2,735
Other income (expense), net...................... 1,123 (506) (2,004)
-------- -------- --------
Income before provision for income taxes......... 55,254 52,570 50,794
Provision for income taxes....................... 19,329 18,925 19,305
-------- -------- --------
Net income....................................... $ 35,925 $ 33,645 $ 31,489
======== ======== ========
Net income per share............................. $ 1.30 $ 1.18 $ 1.09
======== ======== ========
Weighted average common and common equivalent
shares outstanding.............................. 27,722 28,443 28,802
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
18
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 3, 1993.. 28,016 $ 280 $46,339 $ 81,708 $ (2,061) $ 384 $126,650
Employee stock
purchase plan........ 41 -- 864 -- -- -- 864
Exercise of stock
options and related
tax benefit.......... 158 2 1,471 -- -- -- 1,473
Purchase of treasury
stock................ -- -- -- -- (115) -- (115)
Net income............ -- -- -- 31,489 -- -- 31,489
Translation
adjustment........... -- -- -- -- -- 415 415
------- ----- ------- -------- -------- ------- --------
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
======= ===== ======= ======== ======== ======= ========
The accompanying notes are an integral part of these consolidated financial
statements.
19
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEAR ENDED
-----------------------------
MARCH 30, APRIL 1, APRIL 2,
1996 1995 1994
--------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................... $ 35,925 $ 33,645 $ 31,489
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................ 13,143 13,711 10,720
Increase (decrease) in deferred income taxes. (3,178) 892 (1,586)
Increase in accounts receivable--net......... (1,931) (9,880) (7,876)
Increase in inventories...................... (188) (13,474) (10,636)
Increase in sales-type leases................ (3,259) (48) (2,670)
(Increase) decrease in other assets.......... 7,968 (3,166) 1,210
Increase (decrease) in accounts payable,
accrued expenses and deferred revenue....... 6,330 (6,052) 6,361
-------- -------- --------
Total adjustments.......................... 18,885 (18,017) (4,477)
-------- -------- --------
Net cash provided by operating activities.. 54,810 15,628 27,012
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures on property, plant and
equipment, net................................ (19,710) (24,907) (22,891)
Increase in distribution rights................ -- (5,195) (1,333)
DHL asset acquisition.......................... (6,189) -- --
-------- -------- --------
Net cash used in investing activities...... (25,899) (30,102) (24,224)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term real estate mortgage..... (152) (152) (124)
Net increase (decrease) in short-term revolving
credit agreements............................. (4,022) 2,175 1,459
Net increase (decrease) in long-term revolving
credit agreements............................. (8,798) 14,132 (1,712)
Employee stock purchase plan................... 591 747 864
Exercise of stock options and related tax
benefit....................................... 2,273 1,030 1,473
Purchase of treasury stock..................... (8,881) (15,724) (115)
-------- -------- --------
Net cash provided by (used in) financing
activities................................ (18,989) 2,208 1,845
Effect of exchange rates on cash and cash
equivalents..................................... (718) 339 1,263
-------- -------- --------
Net Increase (Decrease) in Cash and Cash
Equivalents..................................... 9,204 (11,927) 5,896
Cash and Cash Equivalents at Beginning of year... 4,230 16,157 10,261
-------- -------- --------
Cash and Cash Equivalents at End of year......... $ 13,434 $ 4,230 $ 16,157
======== ======== ========
Supplemental disclosures of cash flow
information:
Interest paid.................................. $ 1,791 $ 1,441 $ 1,587
Income taxes paid, net of refunds.............. $ 22,058 $ 22,583 $ 15,252
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
20
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.
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 1996, fiscal 1995 and fiscal 1994 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.
Foreign Currency
Foreign currency transactions and financial statements are translated into
U.S. dollars following the provisions of Statement of Financial Accounting
Standards 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 1996, 1995, and 1994 are $710,000, $583,000 and $711,000,
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.
21
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At March 30, 1996 and April 1, 1995, 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 $144,234,000 and $157,651,000, respectively. Gross unrealized
gains and losses from hedging firm sales commitments, based on current spot
rates, were a $6,964,000 gain and a $333,000 loss at March 30, 1996 and a
$154,000 gain and a $8,665,000 loss at April 1, 1995. Deferred gains and
losses are recognized in earnings when the future sales are recognized.
Management anticipates that these deferred amounts at March 30, 1996 will be
offset by the foreign exchange effect on sales of products to international
customers in fiscal year 1997.
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
Statement of Financial Accounting Standards No. 107 ("SFAS 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 the Company's financial instruments, including cash and cash
equivalents, notes payable and long-term debt, pursuant to SFAS 107
approximated their carrying values at March 30, 1996 and April 1, 1995. 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 fully depreciated, 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.
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 method.
Inventories consist of the following:
MARCH 30, APRIL 1,
1996 1995
--------- --------
(IN THOUSANDS)
Raw materials............................................. $ 6,727 $ 6,214
Work-in-process........................................... 6,699 5,186
Finished goods............................................ 43,303 48,593
------- -------
$56,729 $59,993
======= =======
22
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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 Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." SFAS 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.
Accounting for Stock-Based Compensation
In December 1995, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 123 (SFAS No. 123) "Accounting for Stock-Based
Compensation," which is to become effective for fiscal years beginning after
December 15, 1995. SFAS No. 123 requires that employee stock-based
compensation be recorded or disclosed at its fair value. Management expects to
continue to account for stock-based compensation under APB No. 25 and does not
expect to adopt the new accounting provision for stock-based compensation in
SFAS No. 123 but will include the additional required disclosures in their
fiscal 1997 consolidated financial statements.
Accounting for Impairment of Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (SFAS No. 121),"Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of,"
which is effective for the Company in Fiscal 1997. SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The statement also
requires that certain long-lived assets and identifiable intangibles that are
to be disposed be reported at the lower of the carrying amount or fair value
less cost to sell. The Company has not completed its analysis with respect to
the provisions of SFAS No. 121 and, accordingly, has not determined the effect
on the Company's consolidated financial condition or results of operations.
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 30, APRIL 1,
1996 1995
--------- --------
(IN THOUSANDS)
Total minimum lease payments receivable................... $39,537 $35,897
Less--Unearned interest.................................. 7,089 5,884
------- -------
Net investment in sales-type leases....................... 32,448 30,013
Less--Current portion.................................... 11,020 10,821
------- -------
$21,428 $19,192
======= =======
23
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Future minimum lease payments receivable under noncancelable leases as of
March 30, 1996 are as follows:
FISCAL YEAR ENDING
------------------ (IN THOUSANDS)
1997.......................................................... $13,905
1998.......................................................... 11,379
1999.......................................................... 7,835
2000.......................................................... 4,434
2001 and thereafter........................................... 1,984
-------
$39,537
=======
4. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consist of the following:
MARCH 30, APRIL 1,
1996 1995
--------- --------
(IN THOUSANDS)
Real estate mortgage...................................... $ 8,923 $ 9,075
U.S. borrowings........................................... 1,080 11,200
Non-U.S. borrowings....................................... 8,531 13,117
------- -------
18,534 33,392
Less -- Current portion................................... 3,378 8,325
------- -------
$15,156 $25,067
======= =======
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 facilities are under separate financing agreements dated
October 1, 1993 and October 15, 1993 (the "Agreements"), amended February 9,
1995 and March 10, 1995, respectively. These facilities are available through
September 30, 1996, on which date all borrowings become due. The uncommitted
line is under a financing agreement dated February 8, 1995, amended May 8,
1995. The credit line is available through June 30, 1996, on which date all
borrowings become due. As of March 30, 1996 this credit line had no funds
drawn against it.
Interest on all facilities are at the bank's base rate, or, at the Company's
option, may be based on the one year London Interbank Offered Rate or at the
bank's money market rate. At March 30, 1996, the interest rate on U.S.
borrowings was 5.9% which represents the bank's money market rate.
The Agreements provide for a commitment fee of 0.20% on the unused portion
of the revolving credit facility. The Agreements contain 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 are guaranteed by the Company. The long-
term borrowings have maturities at various dates through 1998. Interest rates
ranged from 1.38% to 13.0% in fiscal 1996 and fiscal 1995.
The weighted average short-term rates for U.S. and Non-U.S. borrowings were
5.47%, 5.69% and 7.48% as of March 30, 1996, April 1, 1995 and April 2, 1994
respectively.
24
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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 30, 1996, notes payable and long-term debt mature as follows:
FISCAL YEARS ENDING (IN THOUSANDS)
------------------- --------------
1997.......................................................... $ 3,378
1998.......................................................... 6,573
1999.......................................................... 208
2000.......................................................... 230
2001 and thereafter........................................... 8,145
-------
$18,534
=======
5. INCOME TAXES
The components of domestic and foreign income before the provision for
income taxes are as follows:
YEARS ENDED
---------------------------
MARCH 30, APRIL 1, APRIL 2,
1996 1995 1994
--------- -------- --------
(IN THOUSANDS)
Domestic......................................... $43,020 $42,910 $39,686
Foreign.......................................... 12,234 9,660 11,108
------- ------- -------
$55,254 $52,570 $50,794
======= ======= =======
25
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The provision for income taxes consists of the following components:
YEARS ENDED
----------------------------
MARCH 30, APRIL 1, APRIL 2,
1996 1995 1994
--------- -------- --------
(IN THOUSANDS)
Current
Federal....................................... $15,543 $16,229 $15,304
State......................................... 2,390 2,447 2,857
Foreign....................................... 2,303 2,351 2,749
------- ------- -------
20,236 21,027 20,910
------- ------- -------
Deferred
Federal....................................... (980) (1,414) (1,150)
State......................................... (154) (258) (212)
Foreign....................................... 227 (430) (243)
------- ------- -------
(907) (2,102) (1,605)
------- ------- -------
$19,329 $18,925 $19,305
======= ======= =======
Included in the federal and state income tax provisions for fiscal years
1996, 1995 and 1994 are approximately $3,209,000, $3,321,000 and $3,089,000,
respectively, provided on foreign source income of approximately $9,169,000 in
1996, $9,224,000 in 1995 and $7,942,000 in 1994, taxes on which are payable in
the United States.
The tax effect of significant temporary differences comprising the net
deferred tax asset / (liability) is as follows:
YEARS ENDED
------------------
MARCH 30, APRIL 1,
1996 1995
--------- --------
(IN THOUSANDS)
Depreciation............................................. $(6,345) $(8,200)
Amortization............................................. (2,908) (4,929)
Inventory................................................ 10,148 10,588
Accruals and reserves.................................... 753 328
Other.................................................... 10 (6)
------- -------
Total net deferred taxes............................... $ 1,658 $(2,219)
======= =======
26
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The provision for income taxes differs from the amount computed by applying
the statutory U.S. federal income tax rate of 35% in 1996, 1995 and 1994 due
to the following:
YEARS ENDED
----------------------------
MARCH 30, APRIL 1, APRIL 2,
1996 1995 1994
--------- -------- --------
(IN THOUSANDS)
Tax at federal statutory rate................... $19,340 $18,399 $17,778
Difference due to:
Foreign sales corporation..................... (1,268) (1,462) (1,026)
Difference between U.S. tax rate and tax rates
used in other tax jurisdictions.............. 1,457 1,768 1,400
State taxes, net of federal income tax benefit.. 1,355 1,422 1,719
Foreign tax credits and research and develop-
ment........................................... (1,310) (1,335) (724)
Adjustment of estimated tax liabilities....... (173)
Other, net...................................... (245) 133 331
------- ------- -------
$19,329 $18,925 $19,305
======= ======= =======
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 30, 1996 are as follows:
FISCAL YEAR ENDING (IN THOUSANDS)
------------------ --------------
1997.......................................................... 5,440
1998.......................................................... 3,579
1999.......................................................... 3,324
2000.......................................................... 2,868
2001 and thereafter........................................... 13,709
-------
$28,920
=======
Rent expense in 1996, 1995 and 1994 was $4,219,000, $3,713,000, and
$4,217,000, 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 1996 and 1995, the Company repurchased 514,141 shares and 1,005,311
shares, respectively, of its outstanding common stock at average prevailing
prices of $17.24 and $15.64, 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.
27
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Stock Options
The Company has a long-term incentive plan under which a maximum of
2,278,057 shares of the Company's common stock may be issued pursuant to
incentive and or nonqualified 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
nonqualified 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, and incentive options expire not more than ten years from the date
of the grant.
The Company also has a nonqualified 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
90,000 shares in aggregate. Options are granted at not less than fair market
value on the date of grant.
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 nonqualified 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, and
incentive options expire not more than ten years from the date of grant.
A summary of stock option information for the combined plans is as follows:
PRICE NUMBER OF
RANGE SHARES
-------------- ---------
Outstanding at April 3, 1993....................... $ 5.555-23.875 1,844,002
Granted............................................ 18.375-24.563 449,428
Exercised.......................................... 5.555-19.406 (157,365)
Terminated......................................... 5.555-17.625 (24,200)
-------------- ---------
Outstanding at April 2, 1994....................... $ 5.555-24.563 2,111,865
Granted............................................ 14.438-18.250 466,613
Exercised.......................................... 5.555-13.938 (163,300)
Terminated......................................... 5.555-24.563 (212,566)
-------------- ---------
Outstanding at April 1, 1995....................... $ 5.555-24.563 2,202,612
Granted............................................ 15.438-21.875 652,079
Exercised.......................................... 5.555-19.406 (367,488)
Terminated......................................... 5.555-24.563 (142,992)
-------------- ---------
Outstanding at March 30, 1996...................... $ 5.555-24.563 2,344,211
At March 30, 1996, 714,095 shares were available for future grants. Options
exercisable at March 30, 1996 total 895,956, at prices ranging from $5.555 to
$24.563.
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.
28
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1991 Employee Stock Purchase Plan
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 1996, there were 39,835 shares purchased at a range of $14.66 to
$15.09 per share under the Purchase Plan. During 1995, there were 49,708
shares purchased at a range of $14.66 to $15.41 per share under the Purchase
Plan.
8. DISTRIBUTION AGREEMENTS
In fiscal 1992, the Company acquired the direct distribution rights for its
blood component therapy and plasma collection products in Japan from Labo
Science Co., Ltd., Tokyo, Japan, at a historical cost of approximately $7.4
million. The rights are being amortized on a straight-line basis over an
estimated useful life of 20 years. Accumulated amortization was $1,976,000 as
of March 30, 1996 and $1,483,000 as of April 1, 1995. Haemonetics Japan, a
wholly owned subsidiary of the Company, will provide all sales, service and
marketing for its blood component therapy and plasma collection business in
Japan.
In fiscal 1994, the Company signed an agreement with its exclusive Italian
distributor, G. Cremascoli Srl, to transition Haemonetics distribution and
sales to Haemonetics Italia Srl, a subsidiary of Haemonetics Corporation.
Cremascoli purchased a 20% minority interest in the subsidiary, effective
March, 1994. The authority to distribute directly was acquired at a cost of
approximately $1.3 million and is being amortized on a straight-line basis
over an estimated useful life of 20 years. Accumulated amortization was
$152,000 as of March 30,1996 and $84,000 as of April 1, 1995.
In fiscal 1995, the Company acquired the direct distribution rights for its
surgical blood salvage products in Japan from Kuraray Co., Ltd. at a
historical cost of approximately $4.6 million. The rights are being amortized
on a straight-line basis over an estimated useful life of 20 years.
Accumulated amortization was $349,000 as of March 30, 1996 and $114,900 as of
April 1, 1995. Haemonetics Japan will provide sales, service, and marketing
for its surgical products business in Japan.
In fiscal 1995, the Company also acquired the direct distribution rights and
created a wholly owned subsidiary in Belgium at a historical cost of
approximately $0.6 million. The rights are being amortized on a straight-line
basis over an estimated useful life of 20 years. Accumulated amortization was
approximately $54,000 as of March 30, 1996 and $22,000 as of April 1, 1995.
29
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. 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 contribution amounted to approximately
$616,000, $565,000 and $551,000 in 1996, 1995 and 1994, respectively. The
Board of Directors declared a discretionary contribution of approximately
$1,100,000 and $1,940,000 for the Savings Plan years ended March 30, 1996 and
April 2, 1994, respectively. No discretionary contribution was made for the
Savings Plan year ended April 1, 1995.
The Company has no material obligation for post retirement or post
employment benefits.
10. 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 $916,000 as of March 30, 1996 and $953,000 as of
April 1, 1995 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. The Company amortizes the outstanding loan balance as a charge to
operating expense as such amounts are forgiven.
11. 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 1996, 1995 and
1994 is as follows:
GEOGRAPHIC AREA
------------------------------------------
EUROPE & FAR EAST &
DOMESTIC ALL OTHER JAPAN CONSOLIDATED
-------- --------- ---------- ------------
(IN THOUSANDS)
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
-------- -------- ------- --------
Year ended April 2, 1994:
Net revenues...................... $101,914 $ 75,286 $71,249 $248,449
-------- -------- ------- --------
Income before provision for income
taxes............................ $ 38,463 $ 7,184 $ 5,147 $ 50,794
-------- -------- ------- --------
Identifiable assets............... $155,428 $ 46,761 $28,495 $230,684
-------- -------- ------- --------
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
$171,410,000 in 1996, which represented 62%
30
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
of net revenues; $158,609,000 in 1995, which represented 60% of net revenues;
and $149,574,000 in 1994, which represented 60% of net revenue.
12. PURCHASE OF MANUFACTURING FACILITY IN SOUTH CAROLINA
On August 18, 1995, the Company acquired the assets of DHL Laboratories of
Union South Carolina. DHL Laboratories was a contract pharmaceutical
manufacturer specializing in mixing, filling and terminally sterilizing liquid
products in flexible packaging. The facility and related property and
equipment were acquired at a cost of approximately $6.2 million.
This facility will be integrated into the U.S. manufacturing organization.
Prior to the acquisition, DHL and Haemonetics had initiated work to receive
licenses from the FDA for anticoagulant and storage solution used by
Haemonetics' U.S. blood bank and plasma center customers. Haemonetics will
continue to provide contract manufacturing services while selectively seeking
out new opportunities.
31
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 30,
1996 and April 1, 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended March 30, 1996. 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 30, 1996 and April 1, 1995, and the results of
their operations and their cash flows for each of the three years in the
period ended March 30, 1996, 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 the
index on page 39 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 16, 1996
32
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 19, 1996.
(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 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. 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 19, 1996.
33
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 19, 1996.
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.
34
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
/s/ John F. White
By: _________________________________
JOHN F. WHITE, CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
May 10, 1996
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 May 10, 1996
- ------------------------------------- and Chief Executive
JOHN F. WHITE Officer
/s/ James L. Peterson Vice Chairman and May 10, 1996
- ------------------------------------- President,
JAMES L. PETERSON International
Operations
/s/ Brigid A. Makes Vice President of May 10, 1996
- ------------------------------------- Finance and Chief
BRIGID A. MAKES Financial Officer,
(Principal Financial
and Accounting
Officer)
/s/ John R. Barr President, North May 10, 1996
- ------------------------------------- American
JOHN R. BARR Operations,
Director
/s/ Sir Stuart Burgess Director May 10, 1996
- -------------------------------------
SIR STUART BURGESS
/s/ Yutaka Sakurada Sr. Vice President May 10, 1996
- ------------------------------------- Haemonetics Corp.
YUTAKA SAKURADA and President,
Haemonetics Japan
Director
/s/ Jerry E. Robertson Director May 10, 1996
- -------------------------------------
JERRY E. ROBERTSON
/s/ Donna C. E. Williamson Director May 10, 1996
- -------------------------------------
DONNA C. E. WILLIAMSON
35
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).
36
NUMBER AND DESCRIPTION OF EXHIBIT
---------------------------------
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* Equipment Lease Agreement dated October 13, 1992 between First
Security Bank of Utah and Haemonetics Services Inc. (filed as Exhibit
10T to the Company's Form 10-K No. 1-10730 for the year ended April 3,
1993 and incorporated herein by reference).
10U* 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).
10V* 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).
10W* 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).
10X* Revolving Credit Agreement dated October 1, 1993 between Mellon Bank,
N.A. and the Company (filed as Exhibit 10X to the Company's Form 10-K
No. 1-10730 for the year ended April 2, 1994 and incorporated herein
by reference).
10Y* Revolving Credit Agreement dated October 15, 1993 between The First
National Bank of Boston and the Company (filed as Exhibit 10Y to the
Company's Form 10-K No. 1-10730 for the year ended April 2, 1994 and
incorporated herein by reference).
10Z* 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).
37
NUMBER AND DESCRIPTION OF EXHIBIT
---------------------------------
10AA* 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).
10AB* 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).
10AC* 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).
10AD* Amendment No. 1 dated February 9, 1995 to Revolving Credit Agreement
dated October 1, 1993 between Mellon Bank, N.A. and the Company
(filed as Exhibit 10AD to the Company's form 10-K No. 1-10730 for the
year ended April 1, 1995 and incorporated herein by reference).
10AE* Amendment No. 1 dated March 10, 1995 to Revolving Credit Agreement
dated October 15, 1993 between The First National Bank of Boston and
the Company (filed as Exhibit 10AE to the Company's form 10-K No. 1-
10730 for the year ended April 1, 1995 and incorporated herein by
reference).
10AF Asset Purchase Agreement dated as of July 18, 1995 between between
the Company and DHL Laboratories, Inc.
11. Statement re: computation of per share earnings
21. Subsidiaries of the Company
23. Consent of the Independent Public Auditors
27. Financial Data Schedule
- --------
* Incorporated by reference.
(ALL OTHER EXHIBITS ARE INAPPLICABLE.)
38
SCHEDULE II
HAEMONETICS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS 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 30, 1996. $681 $321 $(18) $984
For the Year Ended April 1, 1995.. 464 222 (5) 681
For the Year Ended April 2, 1994.. 307 173 (16) 464
39