FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the quarter ended: June 29, 1996 Commission File Number: 1-10730
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HAEMONETICS CORPORATION
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2882273
- --------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
400 Wood Road, Braintree, MA 02184
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(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 848-7100
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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) (2.) has been subject to the
filing requirements for at least the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
28,941,580 shares of Common Stock, $ .01 par value, as of
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June 29, 1996
HAEMONETICS CORPORATION
INDEX
PAGE
----
PART I. Financial Information
Consolidated Balance Sheets - June 29, 1996 and 2
and March 30, 1996
Consolidated Statements of Income - 3
Three Months Ended June 29, 1996 and
July 1, 1995
Consolidated Statement of Stockholders' Equity - 4
Three Months Ended June 29, 1996
Consolidated Statements of Cash Flows - 5
Three Months Ended June 29, 1996 and July 1, 1995
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
PART II. Other Information 8
Signatures 9
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except share data)
June 29, March 30
ASSETS 1996 1996
-------- --------
Current assets:
Cash and short term investments................................... $ 10,928 $ 13,434
Accounts receivable, less allowance of $1,061 at June 29, 1996
and $984 at March 30, 1996....................................... 65,002 60,326
Inventories....................................................... 58,331 56,729
Current investment in sales-type leases, net...................... 12,097 11,020
Deferred tax asset................................................ 10,911 10,911
Other prepaid and current assets.................................. 7,048 6,459
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Total current assets............................................ 164,317 158,879
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Property, plant and equipment....................................... 164,827 160,824
Less accumulated depreciation..................................... 77,057 74,408
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Net property, plant and equipment................................... 87,770 86,416
Other assets:
Investment in sales-type leases, net.............................. 23,766 21,428
Distribution rights, net.......................................... 11,949 12,418
Other assets, net................................................. 8,379 8,677
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Total other assets.............................................. 44,094 42,523
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Total assets.................................................... $296,181 $287,818
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt............ $ 6,877 $ 3,378
Accounts payable.................................................. 12,131 16,909
Accrued payroll and related costs................................. 8,879 8,305
Accrued income taxes.............................................. 9,941 8,345
Other accrued expenses............................................ 10,645 9,502
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Total current liabilities....................................... 48,473 46,439
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Deferred income taxes............................................... 9,498 9,253
Long-term debt, net of current maturities........................... 12,319 15,156
Stockholders' equity:
Common stock, $.01 par value; Authorized - 80,000,000 shares;
Issued - 28,941,580 at June 29, 1996;
28,770,346 shares at March 30, 1996..................... 290 288
Additional paid-in capital........................................ 54,525 52,355
Retained earnings................................................. 192,129 182,707
Cumulative translation adjustments................................ 4,714 7,387
-------- --------
Stockholders' equity before treasury stock........................ 251,658 242,737
Less: treasury stock - 1,607,354 shares at cost at June 29,
and March 30, 1996............................................. 25,767 25,767
-------- --------
Total stockholders' equity...................................... 225,891 216,970
-------- --------
Total liabilities and stockholders' equity...................... $296,181 $287,818
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands, except per share data)
Three Months Ended
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June 29, July 1,
1996 1995
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Net revenues................................ $75,506 $68,775
Cost of goods sold.......................... 33,190 31,458
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Gross profit................................ 42,316 37,317
Operating expenses:
Research and development.................. 5,037 4,283
Selling, general and administrative....... 23,132 19,474
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Total operating expenses.................... 28,169 23,757
Operating income............................ 14,147 13,560
Interest expense........................... (412) (639)
Interest income............................. 648 554
Other income (expense), net................. 99 (41)
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Income before provision for income taxes.... 14,482 13,434
Provision for income taxes.................. 5,060 4,694
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Net income.................................. $ 9,422 $ 8,740
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NET INCOME PER SHARE........................ $ 0.34 $ 0.32
======= =======
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING....... 27,707 27,675
The accompanying notes are an integral part of these consolidated financial
statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited - in thousands)
Common Stock Additional Cumulative Total
------------ Paid-in Retained Treasury Translation Stockholders'
Shares $'s Capital Earnings Stock Adjustment Equity
------ ---- ---------- -------- -------- ----------- -------------
Balance, March 30, 1996........... 28,770 $288 $52,355 $182,707 ($25,767) $7,387 $216,970
Exercise of stock options......... 172 2 2,170 --- --- --- 2,172
Employee stock purchase plan...... --- --- --- --- --- --- 0
Treasury stock.................... --- --- --- --- --- --- 0
Net income........................ --- --- --- 9,422 --- --- 9,422
Translation adjustment............ --- --- --- --- --- (2,673) (2,673)
------ ---- ------- -------- -------- ------ --------
Balance June 29, 1996............. 28,942 $290 $54,525 $192,129 ($25,767) $4,714 $225,891
====== ==== ======= ======== ======== ====== ========
The accompanying notes are an integral part of these consolidated financial
statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited- in thousands)
Three Months Ended
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June 29, July 1,
1996 1995
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Cash flows from operating activities:(estimated)
Net income.......................................... $ 9,422 $8,740
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 2,452 4,232
Decrease in deferred income taxes................. 259 (76)
Increase in accounts receivable, net.............. (5,325) (1,644)
(Increase) decrease in inventories................ (2,095) 319
(Increase) decrease in sales-type leases.......... (3,616) (333)
(Increase) decrease in other assets............... (698) 1,410
Increase (decrease) in accounts payable,
accrued expenses and deferred revenues........... (1,767) (5,476)
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Total adjustments............................... (10,790) (1,568)
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Net cash provided by operating activities......... (1,368) 7,172
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Cash flows from investing activities:
Capital expenditures on property,
plant and equipment, net........................... (4,197) (4,373)
Increase in distribution rights..................... --- ---
DHL asset acquisition............................... --- ---
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Net cash used in investing activities............. (4,197) (4,373)
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Cash flows from financing activities:
Payments on long-term real estate mortgage.......... (57) (37)
Net increase (decrease) in short-term revolving
credit agreements.................................. 3,637 (3,842)
Net increase (decrease) in long-term revolving
credit agreements.................................. (2,271) 5,012
Exercise of stock options........................... 2,172 350
Employee stock purchase plan........................ --- ---
Purchase of treasury stock.......................... --- (4,765)
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Net cash used in financing activities............. 3,481 (3,282)
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Effect of exchange rates on cash...................... (422) (11)
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Net increase (decrease) in cash....................... (2,506) (494)
Cash at beginning of period........................... 13,434 4,230
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Cash at end of period................................. $10,928 $3,736
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Supplemental disclosures of
cash flow information:
Interest paid....................................... $ 451 $ 517
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Income taxes paid, net of refunds................... $ 3,916 $5,840
======= ======
The accompanying notes are an integral part of these consolidated financial
statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The results of operations for the interim periods shown in this report
are not necessarily indicative of results for any future interim period or
for the entire fiscal year. The Company believes that the quarterly
information presented includes all adjustments (consisting only of normal,
recurring adjustments) that the Company considers necessary for a fair
presentation in accordance with generally accepted accounting principles.
The accompanying consolidated financial statements and notes should be read
in conjunction with the Company's audited annual financial statements.
2. FOREIGN CURRENCY
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 hedging activities is to
protect the Company from the risk that the eventual dollar cash flows
resulting from the sale of products to international customers will be
adversely affected by changes in exchange rates. Gains and losses realized
on these contracts are recorded in operations, offsetting the related
foreign currency transactions. The cash flows related to the gains and
losses on these foreign currency hedges are classified in the statements of
cash flows as part of cash flows from operating activities.
At June 29, 1996 the Company had forward exchange contracts, all
having maturities of less than one year, to exchange foreign currencies
(major European currencies and Japanese yen) for U.S. dollars totaling
$120.7 million. Of that balance, $70.2 million represented contracts for
terms of 30 days or less. Gross unrealized gains from hedging firm sales
commitments, based on current spot rates, were $4.3 million at June 29,
1996. Deferred gains and losses are recognized in earnings when the
transactions being hedged are recognized.
3. 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:
June 29, March 30,
1996 1996
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(in thousands)
Raw materials $ 6,856 $ 6,727
Work-in-process 6,956 6,699
Finished goods 44,519 43,303
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$58,331 $56,729
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4. NET INCOME PER SHARE
Net income per share data is computed using the weighted average
number of shares of common stock outstanding and common equivalent shares
from stock options (using the treasury stock method).
Management's Discussion and Analysis of
Financial Condition and Results of Operations
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Three Months Ended June 29, 1996 Compared to Three Months Ended July 1, 1995
Net revenues in 1996 increased 9.8% to $75.5 million from $68.8
million in 1995. Worldwide disposable sales increased 7%, with an increase
of 21% internationally, partially due to favorable currency impact, offset
by a decrease of 12% in the domestic market. Sales of disposables products
accounted for approximately 86% and 88%, respectively, of net revenues for
the three months ended June 29,1996, and July 1,1995
Gross profit in 1996 increased to $42.3 million from $37.3 million in
the same period of 1995. As a percentage of net revenues, gross profit
increased 1.7% to 56.0% in 1996 from 54.3% in 1995. The 1.7% increase was
attributable to a higher percentage of international sales which have a
better gross profit margin than domestic sales and favorable currency
impact.
The Company expended $5.0 million in 1996 on research and development
(6.7% of net revenues) and $4.3 million in the same period of 1995 (6.3% of
net revenues).
Selling, general and administrative expenses increased to $23.1
million in 1996 from $19.4 million in 1995 and increased as a percentage of
net revenues to 30.6% from 28.2%. The increase resulted from increased
staffing and related personnel costs in both the domestic and international
markets.
Interest expense decreased in 1996 to $0.4 million from $0.6 million
in the same period of 1995 due to a decreased level of borrowing. Total
debt increased $0.7 million to $19.2 million as compared to $18.5 million as
of March 30, 1996. Total debt decreased $15.2 million from a year ago.
The provision for income taxes remained at approximately 35% as a
percentage of pretax income. The annualized rate for the full 12 months of
fiscal 1997 will be approximately 35%.
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 three months ended June 29, 1996, the Company
utilized $1.4 million of its' cash flow for operating activities compared to
generating $7.2 million in cash flow from operating activities for the three
months ended July 1, 1995. The Company's need for funds was driven primarily
by increases in sales-type leases of $3.6 million, accounts receivable of
$5.3 million due to higher quarterly sales, and inventory increases of $2.1
million. Cash flows from an increase in revolving credit agreements totaled
$1.4 million for the three months ended June 29, 1996. During the three
months ended June 29, 1996, net cash used for capital expenditures was $4.2
million related to equipment utilized in the U.S. commercial plasma business
and investments in facilities and manufacturing equipment. The Company
believes that committed bank lines, combined with internally generated
funds, will be sufficient to meet future liquidity and capital needs.
At June 29, 1996, the Company had working capital of $115.8 million.
This reflects an increase of $3.3 million in working capital as compared
with $112.5 million as of March 30, 1996.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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Not applicable.
Item 2. Changes in Securities
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Not applicable.
Item 3. Defaults upon Senior Securities
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Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
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Not applicable.
Item 5. Other Information
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Effective May 3, 1996, Ms. Brigid A. Makes was named Chief
Financial Officer. Ms. Makes replaces Neal Armstrong, who resigned
from the Board of Directors and from his position as Chief
Financial Officer in November 1995.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a). Exhibits None
(b). Reports on Form 8-K. None
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HAEMONETICS CORPORATION
Date: August 6, 1996 By: /s/ JOHN F. WHITE
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John F. White, President
Date: August 6, 1996 By: /s/ BRIGID A. MAKES
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Brigid A. Makes, Chief Financial Officer,
(Principal Financial Officer)
5
0000313143
HAEMONETICS CORPORATION
1,000
3-MOS
MAR-29-1997
MAR-31-1996
JUN-29-1996
10,928
0
66,063
1,061
58,331
164,317
164,827
77,057
296,181
48,473
12,319
0
0
290
225,601
296,181
75,506
75,506
33,190
33,190
5,037
0
412
14,482
5,060
9,422
0
0
0
9,422
.34
.34
