SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 23, 2003
HAEMONETICS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Massachusetts 1-10730 04-2882273
- ------------------------------- ---------------- ----------------------
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification Number)
400 Wood Road
Braintree, MA 02184
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 848-7100
Item 9. Regulation FD Disclosure.
- -----------------------------------
The following information is intended to be included under "Item 12.
Results of Operations and Financial Condition" and is included under this
Item 9 in accordance with SEC Release No. 33-8216.
On April 23, 2003, Haemonetics Corporation (the "Company") issued a
press release regarding its financial results for the quarter ended and
fiscal year ended March 29, 2003 and outlook for fiscal 2004. The Company's
press release is attached as Exhibit 99.1 to this Current Report on Form 8-
K.
The information in this Current Report on Form 8-K and the Exhibit
attached hereto shall not be deemed "filed" for purposes of Section 18 of
the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise
subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933 or
the Exchange Act, regardless of any general incorporation language in such
filing.
On April 23, 2003, we announced our financial results for the quarter
and fiscal year ended March 29, 2003, and certain other information. The
press release, which has been attached as Exhibit 99.1 discloses two
different types of non-GAAP financial measures; a) "as adjusted" operating
expenses, operating income, income before taxes, tax expense and net income
and b) constant currency comparisons. Both of these are considered non-
GAAP financial measures as defined under SEC rules. Generally, a non-GAAP
financial measure is a numerical measure of a company's performance,
financial position, or cash flows that either excludes or includes amounts
that are not normally excluded or included in the most directly comparable
measure calculated and presented in accordance with generally accepted
accounting principles. In order to fully assess our financial operating
results, management believes that these "as adjusted" and constant currency
figures are both valuable in evaluating our operating performance. With
the "as adjusted" figures, management tries to improve the comparability of
operating performance by excluding special items that are outside our
normal core operations. Foreign currency has a significant effect on our
business and management needs to be able to isolate its effect. However,
all non-GAAP measures should be considered in addition to, and not as a
substitute for, or superior to, operating income or other measures of
financial performance prepared in accordance with generally accepted
accounting principles as more fully discussed in our financial statements
and filings with the SEC. These non-GAAP measures included in our press
release have been reconciled to the nearest GAAP measure as is now required
under new SEC rules regarding the use of non-GAAP financial measures.
As used herein, "GAAP" refers to accounting principles generally
accepted in the United States
Exhibits
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99.1 Press Release, dated April 23, 2003, of Haemonetics
Corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HAEMONETICS CORPORATION
Date: April 23, 2003 By: s/ Ronald J. Ryan
-------------- --------------------------------
Ronald J. Ryan, Senior Vice President
and Chief Financial Officer
EXHIBIT 99.1
FOR RELEASE: CONTACT:
Date: April 23, 2003 Lisa Lopez
Time: 5:00pm Tel. (781) 356-9517
Alternate Tel. (617) 320-2401
fallon@haemonetics.com
HAEMONETICS ANNOUNCES FINANCIAL RESULTS AND FISCAL YEAR OUTLOOK
---------------------------------------------------------------
Braintree, MA, April 23, 2003 - Haemonetics Corporation today announced
earnings per share of $0.18 and $1.13 for its fourth quarter and fiscal
year ended March 29, 2003, respectively. Revenues for the fourth quarter
and fiscal year were $80.9 million and $337 million, respectively. During
fiscal 2003 Haemonetics repurchased 1.85 million shares for a total of $50
million(1). The Company also gave financial guidance for fiscal 2004 and
announced a new policy with respect to providing forward-looking financial
guidance.
The Company has decided to suspend its 10b5-1 stock repurchase plan
under which automatic share purchases are made. The Board
authorization, with $26 million remaining, continues in effect.
However, the Company's focus at this time is to preserve cash for
business development opportunities that, the Company believes, offer
greater potential for enhancing long-term shareholder value.
Fourth Quarter Analysis
- -----------------------
For the fourth quarter of fiscal 2003, the Company reported net income of
$4.5 million, or $0.18 per diluted share, compared to $7.7 million, or
$0.29 per diluted share, in the fourth quarter last year. As anticipated
and previously disclosed, foreign exchange adversely affected the quarter
by $0.11(2). Operating income for the fourth quarter was $6.1 million, versus
$11.2 million in the same quarter last year. Total revenues reached $80.9
million in the quarter, up 2.3% from $79.1 million in the year-ago period.
Released amounts are not calculated in accordance with U.S. GAAP.
Under newly released guidance by the SEC these results are reconciled
to U.S. GAAP in the attached financial summary.
Earnings for the quarter were lower than previously expected due to slower-
than-anticipated plasma revenue. The growth rates in plasma have returned
to historical low single digits levels. With inventories of "source"
plasma remaining high, plasma collections have slowed, resulting in
weakness across the industry. Plasma disposables grew 2% in the quarter.
Also impacting slower revenue growth was the Company's cardiovascular
surgical cell salvage business. While OrthoPAT(T) system revenues to
Haemonetics were flat for the quarter as the Company completes its product
enhancement program, end user usage increased by 50%. Surgical disposables
growth was 2.5% for the quarter.
Acceptance of automated red cell collection continues to grow, with the
Company's Red Cell Index (which tracks automated collections within a group
of early adopters) increasing to 11.9% for the quarter from 10.8% in
Q3:03(3). Haemonetics technology is now deployed to collect red cells in
seven of the 36 American Red Cross regions; two regions rolled out programs
in the fourth quarter. Red cell disposables growth for the quarter was
51%.
The Company will discontinue reporting on the Red Cell Index after
Q4:03 as the Index has grown above its original 10% target, showing
"mainstream" adoption of the technology by early adopters within two
years.
Fiscal 2003 Highlights
- ----------------------
For fiscal year 2003, the Company reported a revenue increase of 5.3% to
$337 million from $320 million in fiscal 2002. Net income was $28.4
million, or $1.13 per diluted share, compared to $37.2 million, or $1.37
per diluted share, both as adjusted, in fiscal 2002(2). Foreign exchange
adversely affected earnings per share for the year by $0.34(2).
Brad Nutter, Haemonetics' newly elected President and Chief Executive
Officer, commented, "The Company's results for the year were highlighted by
strong performance in a number of its market leading product lines and
operational changes were made to lay groundwork for future growth."
* The American Red Cross expanded its usage of Haemonetics's systems
into an additional four Red Cross regions in the second half of the
year, with two additional regions set to begin programs in Q1:04.
* United Blood Systems, the country's second largest blood collector,
now collects more than 20% of its total red cells using Haemonetics
technology.
* Based on its first mover advantage, Haemonetics has claimed market
leadership in the U.S. with its technology collecting almost 3% of
all red cells in the U.S. in fiscal 2003.
* Market acceptance of the OrthoPAT system for orthopedic surgical cell
salvage grew, with end-user growth in the range of 50%. The Company
made strong progress through the year in a product enhancement
program for the OrthoPAT system.
* The Company's Fifth Dimension division expanded beyond its North
American customer base into Europe. Fifth Dimension also expanded
beyond its plasma collector/fractionator customer base to the not-
for-profit
blood banking arena. Miscellaneous and service, in which
Fifth Dimension revenues are included, grew more than 50%.
Fiscal 2004 Outlook
- -------------------
The Company has recently completed its financial planning process for
fiscal 2004, taking into account current market trends and its new product
pipeline. Overall fiscal 2004 revenue growth is targeted in the high
single digits. By product line, blood bank and plasma disposables growth
for fiscal 2004 are expected to be flat. Surgical disposables growth,
including both cardiovascular and orthopedic cell salvage, is targeted in
the double digits. The Company expects its OrthoPAT system growth to mirror
end-user growth by the second half of fiscal 2004. Red cell disposables are
anticipated to grow at a rate of 40% to 50%, and result in an increase in
U.S. penetration to 4% of all red cells collected.
Haemonetics expects a gross margin in the mid- to high 40% range and an
operating margin modestly better than in fiscal 2003. The Company
anticipates a tax rate of 36% compared with 26.5% in fiscal 2003, lower
interest and other income, and positive impact from foreign exchange of
$0.05 to $0.10 compared with fiscal 2003. These factors combine to result
in anticipated earnings per share flat with those reported in fiscal 2003.
Over the longer term, the Company's product lines sold in mature markets
(plasma, platelets, and cardiovascular surgical cell salvage) are expected
to have annual revenue growth in the low single digits on a revenue base of
more than $300 million. The newer red cell and OrthoPAT product lines, with
combined fiscal 2003 revenues between $20 and $25 million, are each growing
at 40% to 50% annually.
New Forward-Looking Financial Guidance Policy
- ---------------------------------------------
Haemonetics also announced that its Board of Directors adopted a formal
policy on issuing forward-looking guidance. Beginning with fiscal 2004,
the Company will provide forward-looking guidance on anticipated full-year
results and targets only. The Company will provide annual revenue guidance
on an overall and product line disposables basis, and will continue to
provide other key financial data, including capital spending plans, tax
rate, and targeted margins. It will also continue to discuss the market,
regulatory, and other factors that contribute to its performance.
Mr. Nutter noted that the adoption by the Board of this new policy is a
positive development because it allows investors to view the Company as its
management and Board review the business. "While some investors may wish
to measure our progress on a quarter-by-quarter basis, we believe that by
looking at the results of a specific quarter within the context of the full
year is more consistent with the way in which we manage the Company. We
will strive to provide more information, not less, on the markets we serve,
and look forward to aligning all stakeholders' views."
Haemonetics will hold a conference call to review information contained in
this release at 9 am (Eastern) tomorrow. Interested parties may listen to
the call at (877) 691-0879 or (973) 582-2745 (international). The call will
be replayed through May 15, 2003. The replay can be accessed at (877) 519-
4471 (domestic) or (973) 341-3080 (international) with PIN 3688863.
Additional information will be available on our website prior to the start
of the conference call.
About Haemonetics Corporation
Haemonetics (NYSE: HAE) is a global company engaged in the design,
manufacture and worldwide marketing of automated blood processing systems.
These systems address important medical markets: surgical blood salvage,
blood component collection, plasma collection, and blood component safety.
Haemonetics has been recognized by Forbes magazine as one of the nation's
best small companies. To learn more about Haemonetics, visit the Company's
web site at http://www.haemonetics.com.
This release contains forward looking statements that involve risks and
uncertainties, including technological advances in the medical field,
product demand, market acceptance, regulatory uncertainties, the effect of
economic conditions, the impact of competitive products and pricing, blood
product reimbursement policies and practices, foreign currency exchange
rates and other risks detailed in the Company's filings with the Securities
and Exchange Commission. The forward looking statements are based on
estimates and assumptions made by management of the Company and are
believed to be reasonable, though are inherently uncertain and difficult to
predict. Actual results and experience could differ materially from the
forward looking statements.
# # #
Haemonetics Corporation Financial Summary for the Fourth Quarter FYE03
Consolidated Statements of Income
(Unaudited data in thousands, except per share data)
% Inc/(Dec)
INCOME STATEMENT 3/29/2003 3/30/2002 vs prior year
- ---------------- --------- --------- -------------
NET REVENUES $80,881 $79,053 2.3%
Gross profit 36,218 37,487 (3.4%)
R&D 4,830 4,564 5.8%
S, G & A 25,249 21,767 16.0%
Operating expenses 30,079 26,331 14.2%
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Operating income 6,139 11,156 (45.0%)
Interest expense (965) (1,050) (8.1%)
Interest income 1,103 726 51.9%
Other income (expense), net 772 (131)
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Income before taxes 7,049 10,701 (34.1%)
Tax expense 2,572 2,998 (14.2%)
------- -------
NET INCOME 4,477 7,703 (41.9%)
======= =======
Net income per common share
assuming dilution $0.18 $0.29 (37.9%)
Weighted average number of shares
Basic 24,108 26,147
Diluted 24,362 26,915
Inc/(Dec) vs
prior year
profit margin
PROFIT MARGINS: %
- --------------- -------------
Gross profit 44.8% 47.4%
R&D 6.0% 5.8%
S, G & A 31.2% 27.5%
Operating income 7.6% 14.1% (6.5%)
Income before taxes 8.7% 13.5% (4.8%)
Net income 5.5% 9.7%
Haemonetics Corporation Financial Summary for the FYE03
Consolidated Statements of Income
(Unaudited data in thousands, except per share data)
Effect of % Inc/(Dec) vs
Special Item 3/30/2002 prior year as
Income Statement: 3/29/2003 3/30/2002 (1) As adjusted adjusted
- ---------------- --------- --------- ------------ ----------- --------------
NET REVENUES $336,956 $319,969 - $319,969 5.3%
Gross profit 154,696 154,834 - 154,834 (0.1%)
R&D 19,512 19,512 - 19,512 0.0%
S, G & A 97,705 88,874 - 88,874 9.9%
Acquired R&D - 10,000 10,000 - ---
Operating expenses 117,217 118,386 10,000 108,386 8.1%
Operating income 37,479 36,448 (10,000) 46,448 (19.3%)
Interest expense (3,495) (3,908) - (3,908) (10.6%)
Interest income 2,214 3,905 - 3,905 (43.3%)
Other income, net 2,409 2,060 - 2,060 16.9%
Income before taxes 38,607 38,505 (10,000) 48,505 (20.4%)
Tax expense 10,228 10,782 (2,800) 13,582 (24.7%)
-------- -------- ------- -------- ------
Income before cumulative effect of
change in acct principle, net of tax 28,379 27,723 (7,200) 34,923 (18.7%)
Cumulative effect of change in acct
principle, net of tax (2) - 2,304 - 2,304 (100.0%)
-------- -------- ------- -------- ------
NET INCOME $28,379 $30,027 ($7,200) $37,227 (23.8%)
======== ======== ======= ======== ======
Income per common share assuming dilution:
Income per share before cumulative
effect of change in acct principle,
net of tax $1.13 $1.02 ($0.27) $1.28
Cumulative per share effect of change
in acct principle, net of tax - $0.09 $ - $0.09
Net income per common share $1.13 $1.11 ($0.27) $1.37
Weighted average number of shares
Basic 24,591 26,214 26,214 26,214
Diluted 25,048 27,155 27,155 27,155
Inc/(Dec) vs
prior year profit
margin % as
PROFIT MARGINS: adjusted
- --------------- ----------------
Gross profit 45.9% 48.4% 48.4%
R&D 5.8% 6.1% 6.1%
S,G&A 29.0% 27.8% 27.8%
Operating income 11.1% 11.4% 14.5% (3.4%)
Income before taxes incl cumulative
effect of change in acct principle 11.5% 13.0% 16.2% (4.7%)
Net income 8.4% 9.4% 11.6%
The Company's $10.0 million additional R&D expense was for the
acquistion of rights to platelet pathogen reduction technology.
Represents cumulative effect of adoption of Statement of Financial
Accounting Standard (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", effective April 1, 2001.
Haemonetics Corporation Financial Summary for the Fourth Quarter and FYE03
Revenue Analysis
(Unaudited data in thousands)
Fourth quarter Twelve Months Ended
------------------------------- -------------------------------
% %
REVENUE ANALYSIS 3-29-03 3-30-02 Inc/(Dec) 3-29-03 3-30-02 Inc/(Dec)
- ---------------- ------- ------- --------- -------- -------- ---------
Revenues by Geography
United States $30,541 $30,514 0.1 $127,241 $121,558 4.7
International 50,340 48,539 3.7 209,715 198,411 5.7
------- ------- -------- --------
Net Revenues $80,881 $79,053 2.3 $336,956 $319,969 5.3
- ------------------------------------------------------------------------ --------------------------------
Disposable Revenues by Product Line
Surgical $17,365 $16,948 2.5 $68,321 $67,010 2.0
Blood Bank 24,547 23,707 3.5 99,921 102,961 (3.0)
Red Cell 4,662 3,091 50.8 15,542 10,675 45.6
Plasma 26,058 25,549 2.0 114,436 110,178 3.9
------- ------- -------- --------
Subtotal $72,632 $69,295 4.8 $298,220 $290,824 2.5
Equipment 3,870 5,075 (23.7) 20,381 17,040 19.6
Misc & Service 4,379 4,683 (6.5) 18,355 12,105 51.6
------- ------- -------- --------
Net Revenues $80,881 $79,053 2.3 $336,956 $319,969 5.3
- ------------------------------------------------------------------------ --------------------------------
Haemonetics Corporation Financial Summary for the FYE03
Consolidated Balance Sheets
(Unaudited data in thousands)
Period ending Period ending
------------- -------------
BALANCE SHEET: 3-29-03 3-30-02 3-29-03 3-30-02
- -------------- -------- -------- -------- --------
Assets Liabilities & Stockholders' Equity
- ------ ----------------------------------
Cash & available for sale investments $ 49,885 $ 67,549 S/T debt & current maturities $ 39,005 $ 31,356
Other current liabilities 61,370 52,742
Accounts receivable, net 77,913 63,743 ------------------
Inventories, net 65,805 67,244 Total current liabilities 100,375 84,098
Other current assets 29,652 34,299 Long-term debt 31,612 40,787
-------- -------- Other long-term liabilities 3,984 3,212
Total current assets 223,255 232,835 Stockholders' equity 223,237 236,824
Net PP&E 83,988 84,877 -------- --------
Other assets 51,965 47,209
Total assets $359,208 $364,921 Total liabilities & equity $359,208 $364,921
======== ======== ======== ========
Haemonetics Corporation
Effect of Foreign Exchange on Earnings Comparisons
Fourth Quarter Fiscal Year 2003 compared to 2002
Q4 FY 2003 Q4 FY 2002 Inc/(Dec)
Spot Rate Gains/(Losses) on
Plan Hedge Contracts included
in Operating Income (1) ($3,142) $ 2,206 ($5,348)
Difference between constant
translation rate and the actual
gaap translation rate in the
period (2) 1,581 796 785
------- ------- -------
Effect of Foreign Exchange
on Operating Income ($1,561) $ 3,002 ($4,563)
Foreign Exchange Transaction
Gains/(Losses) 102 (170) 272
------- ------- -------
Effect on Income Before Taxes (1,459) 2,832 (4,291)
Income Tax Effect (533) 793 (1,325)
------- ------- -------
Effect of Foreign Exchange on
Net Income ($926) $ 2,039 ($2,966)
Effect on Diluted Earnings Per
Common Share ($0.04) $ 0.08 ($0.11)
Weighted Average Number of
Shares Diluted 24,362 26,915
The Company enters into forward foreign exchange contracts to hedge
the anticipated cash flows from forecasted foreign currency
denominated revenues. The gains and losses arising from those
contracts are excluded from the Company's constant currency
performance measures. Those gains and losses include both changes in
the spot rate over the life of the contract, and the forward points
associated with the contract. The spot rate gains and losses that
are realized on those contracts are recorded in sales when the
underlying hedged revenues are recorded. The points expensed or
earned on those contracts are recorded in other income.
Under US Generally Accepted Accounting Principles (US GAAP), local
functional currency results are translated at the average rate in
effect for the period. The average U.S. GAAP rates in effect for the
Euro were $1.06/Euro and $.88/Euro in the fourth quarter of fiscal
year '03 and '02, respectively, and for the Japanese Yen were 119
JPY/$1 and 133 JPY/$1 in the fourth quarter of fiscal year '03 and
'02. While much of our product costs are incurred in US dollars,
approximately 60% of our revenues are denominated in local functional
currencies, primarily the Euro and the Japanese Yen. In order to
compare our consolidated results from one period to another we translate
all periods at the same Euro and Yen exchange rates.
The rates used are our current constant currency rates established at
the beginning of the current fiscal year.
The constant currency rates used in arriving at the above constant
currency results were 130JPY/$1 for the Japanese Yen and $0.91/Euro
for the Euro.
We do not place significance on the actual constant currency results,
but employ them for the primary purpose of comparing one periods
performance against another while holding currency constant.
Haemonetics Corporation
Effect of Foreign Exchange on Earnings Comparisons
Full Fiscal Year 2003 compared to 2002
FY 2003 FY 2002 Inc/(Dec)
Spot Rate Gains/(Losses) on
Plan Hedge Contracts included
in Operating Income (1) ($4,483) $ 8,136 ($12,619)
Difference between constant
translation rate and the actual
gaap translation rate in the period (2) 3,866 5,285 (1,419)
------- ------- --------
Effect of Foreign Exchange on
Operating Income ($617) $13,421 ($14,038)
Foreign Exchange Transaction
Gains/(Losses) 621 (227) 848
------- ------- --------
Effect of Foreign Exchange on
Income before taxes 4 13,194 (13,190)
Income Tax Effect 1 3,694 (3,693)
------- ------- --------
Effect of Foreign Exchange on Net Income 3 9,500 ($9,497)
Effect on Diluted Earnings Per
Common Share $0.00 $0.35 $0.34
Weighted Average Number of
Shares Diluted 24,362 27,155
The Company enters into forward foreign exchange contracts to hedge
the anticipated cash flows from forecasted foreign currency
denominated revenues. The gains and losses arising from those
contracts are excluded from the Company's constant currency
performance measures. Those gains and losses include both changes in
the spot rate over the life of the contract, and the forward points
associated with the contract.
The spot rate gains and losses that are realized on those contracts
are recorded in sales when the underlying hedged revenues are
recorded. The points expensed or earned on those contracts are
recorded in other income.
Under US Generally Accepted Accounting Principles (U.S. GAAP), local
functional currency results are translated at the average rate in
effect for the period. The average U.S. GAAP rates in effect for the
Euro were $.99/Euro and $.88/Euro in fiscal year '03 and fiscal year
'02, respectively, and for the Japanese Yen were 122 JPY/$1 and 124
JPY/$1 in fiscal year '03 and fiscal year '02. While much of our
product costs are incurred in U.S. dollars, approximately 60% of our
revenues are denominated in local functional currencies, primarily
the Euro and the Japanese Yen. In order to compare our consolidated
results from one period to another we translate all periods at the
same Euro and Yen exchange rates.
The rates used are our current constant currency rates established at
the beginning of the current fiscal year.
The constant currency rates used in arriving at the above constant
currency results were 130JPY/$1 for the Japanese Yen and $0.91/Euro
for the Euro.
We do not place significance on the actual constant currency results,
but employ them for the primary purpose of comparing one periods
performance against another while holding currency constant.