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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 28, 1998. 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: None
Name of each exchange
Title of each class on which registered
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Common stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No .
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this form 10-K. [x]
The aggregate market value of the voting stock held by non-affiliates
of the registrant based on the closing sale price of May 28, 1998, was
approximately $383,000,000.
The number of shares of the registrant's common stock, $ .01 par
value, outstanding as of May 28, 1998 was 26,584,679.
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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 22,
1998.
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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 4
(c) Financial Information about Industry Segments 5
(d) Narrative Description of Business 5
(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 13
Item 6. Selected Consolidated Financial Data 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 40
Item 10. Directors and Executive Officers of the Registrant 40
(a) Identification of Directors 40
(b) Identification of Executive Officers 40
Item 11. Executive Compensation 41
Item 12. Security Ownership of Certain Beneficial Owners
and Management 41
Item 13. Certain Relationships and Related Transactions 41
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 41
(a) Financial Statements 41
(b) Reports on Form 8-K 42
(c) Exhibits 42
ITEM 1. BUSINESS
(a) New Developments in the Business.
Regulatory Developments
In April 1997, Haemonetics (the "Company") received marketing
clearance from the FDA to market its proprietary two-unit red blood cell
collection protocol for homologous (typically volunteer) donors. This
followed the clearance given in April 1996 to market the two-unit red cell
collection protocol for patients donating blood for their own surgical use
and the clearance given in October 1995 to market the one-unit red cell and
two-unit plasma protocol for the entire donor population. These protocols
allow blood centers to replace labor-intensive manual collection methods for
red blood cells with highly efficient automated apheresis systems while
producing a more consistent red blood cell transfusion unit. Haemonetics is
the first to provide its customers with the ability to collect two
transfusable units of red blood cells from a single donor. Two-unit red cell
collection saves blood banks precious dollars and labor in testing,
labeling, handling and distribution requirements.
The ability to collect red cells is a significant opportunity for the
Company. The yearly market potential for two-unit red blood cell collection
alone is approximately $500 million. However, it has not been a small
undertaking to see this technology into the marketplace as it has been five
years since the Company's first submission to the FDA for marketing
clearance for a red cell protocol. Now that the Company has received
approval to market the two-unit red blood cell protocol, the U.S. blood
centers desiring to use the two-unit red cell technology must receive
approvals from the FDA both to license their centers to use the technology
and to collect and ship products obtained through this technology across
state lines to other communities. During the year, Kansas Blood Services in
Topeka, Kansas was the first blood bank in the United States to receive
approval from the FDA to collect two-units of red blood cells and for that
blood to be shipped across state borders for use by other communities. In
addition, the international markets for red cells continued to move forward
with their red cell approvals. During the year, the French regulatory
authority approved the use of the filtered two-unit red cell protocol for
patients donating blood for their own surgical use and the German regulatory
authority approved the filtered two-unit red cell protocol for the
homologous (typically volunteer) donor.
New Business Developments
Restructuring Charge in Q3
The Company recorded a charge of $24.5 million related to the
restructuring plans announced by the Company during the third quarter of
fiscal 1998. From a manufacturing perspective, the Company made a decision
not to undertake certain rework and to terminate the manufacture of certain
products. Additionally, certain products, which would have required
additional investments to continue their useful lives, will no longer be
supported. The Company has also identified certain operations, which it
intends to close or partially close, resulting in losses associated with the
abandonment of certain leases and fixed assets, and the termination of
certain employees.
New Management
On January 27, 1998, at the request the Board of Directors, John F.
White stepped down as Chairman and Chief Executive Officer of Haemonetics
Corporation. Sir Stuart Burgess, a Board member of Haemonetics since 1992,
replaced Mr. White as Chairman of the Board. James L. Peterson, formerly
Vice Chairman and President of Haemonetics International was elected CEO and
President. Mr. Peterson has been with the Company 18 years.
Additional key management changes during the year included the
appointment of Ronald Ryan, former Chief Financial Officer and Senior Vice
President of Finance and Administration, Converse Inc., to Senior Vice
President and Chief Financial Officer; the appointment of Michael Mathews,
who has been with the Company since 1987, to President of the worldwide
Blood Bank division; the appointment of Dr. Peter Tomasulo, who held senior
positions in community blood banking and with the American and International
Red Cross, to the Vice President in charge of Blood Bank Management
Services, ("BBMS"); and the promotion of Bruno Deglaire to President of
European and Asian Field Operations.
New Direction
With the changes in management, came key changes in the direction of
the business.
Exit BBMS
On May 1, 1998, the Board of Directors approved a plan to discontinue
the Company's Blood Bank Management Services Business, citing the objectives
of bringing the Company's focus back to its core competence as a
manufacturer of medical device equipment and disposables and expanding the
available market by no longer competing with its other customers. BBMS
represented an extension into the blood services business, whereby the
Company managed blood banks owned and operated by it. The Company had key
successes in the BBMS business. Through the use of its apheresis products at
its BBMS blood centers, the Company was successful in 1) demonstrating the
ability to meet hospital's total blood product requirements, 2) improving
the donor recruiting process and 3) increasing the supply of high-quality
blood components to the communities served. In spite of the successes, the
financial performance of BBMS was below the Company's original expectations
and future improvement was not assured. The divestiture plan is underway as
management has begun to seek potential buyers for the various blood centers
within their local communities. (See Note 12 to the Consolidated Financial
Statements included herein for a further discussion of the discontinuance.)
Reinvigorate Research and Development Efforts
The Company is committed to reorganizing and expanding resources to
get more new products to the market faster, especially related to red cell
products.
Re-engineering Manufacturing and Logistics Processes
The Company has undertaken a program of reengineering its
manufacturing and logistics processes to achieve a low cost advantage in the
industry.
Move to selling direct in the U. S. cardiovascular market
The Company is planning to end its long time distributor relationship
with Bentley Laboratories, a division of Baxter International, Inc., as its
distributor and utilize its existing surgical sales force to sell its Cell
Saver[registered trademark] and related disposables directly to the U.S.
cardiovascular market.
(b) General Development of the Business.
Haemonetics Corporation was incorporated in Massachusetts in 1985. The
terms "Haemonetics" and the "Company" as used herein include its
subsidiaries and its predecessor where the context so requires.
Haemonetics was founded in 1971 and became a publicly owned company
for the first time in 1979. In August 1983, Haemonetics was acquired by
American Hospital Supply Corporation ("AHS"). In connection with the
acquisition of AHS by Baxter Travenol Laboratories, Inc. in 1985, Baxter
Travenol divested Haemonetics to address antitrust concerns related to the
acquisition. Haemonetics was purchased in December 1985 by investors that
included the Company's present executive officer James L. Peterson, E. I. du
Pont de Nemours and Company ("Du Pont"), and other present and former
employees of the Company. In May 1991, the Company completed an Initial
Public Offering, at which time Du Pont divested its entire interest in the
Company.
Haemonetics is engaged in the manufacture of both automated systems
for the collection, processing and surgical salvage of blood and until the
completion of the planned divestiture of BBMS, in the manufacture of blood
components through its service business. Since the development of its first
proprietary cell washing system in 1971, the Company has pioneered a family
of innovative systems and technologies for blood processing. The Company's
business is focused on surgical blood salvage, blood component therapy,
automated red cell and plasma collection. Haemonetics' blood processing
systems consist of proprietary disposable sets driven by specialized
equipment. The Company's equipment employs over 100 different sterile,
single-use disposable products. The Company markets its products to
hospitals, independent blood banks, commercial plasma fractionators and
national health organizations in over 50 countries.
(c) Financial Information about Industry Segments.
The Company reports the results of its operations for only one
industry segment.
(d) Narrative Description of Business.
Background
All of the Company's products involve the extracorporeal processing of
human blood. Each person has approximately 10 units of blood (1 unit = one
pint), which consists of both cellular and liquid portions. The cellular
portion, which constitutes approximately 45% of the body's blood by volume,
is composed of red blood cells, white blood cells and platelets. All of
these are derived from stem cells which originate in the bone marrow. The
liquid portion, which constitutes the remaining 55% of blood volume, is
composed of plasma and soluble blood proteins.
The practice of modern medicine relies on the availability of a safe
and adequate blood supply and the ability to treat a deficiency in one or
more of the above components. These deficiencies can be related to
hereditary disorders (e.g., hemophilia), serious injury or major surgery
(e.g., open heart surgery).
Traditionally, a deficiency in any one of the components of blood has
been addressed by the transfusion of whole blood or blood components from
one or more third-party donors ("homologous blood transfusion"). These
transfusions have major drawbacks. First, homologous blood transfusions
carry the risk of transfusion reactions ranging from mild allergic responses
to life-threatening red cell incompatibility. Second, while the vast
majority of units of blood in the United States and other developed
countries are tested for transfusion-related diseases such as AIDS,
hepatitis and cytomegalovirus, such screening tests are not completely
comprehensive and the evidence of disease contamination in the blood supply
is well documented. This risk is multiplied when using blood collected from
multiple donors.
As a result of the above risks and limitations of traditional
transfusion treatment, three important trends have emerged in blood
transfusion therapy and practice: increasing acceptance of autologous blood
transfusion which involves the reinfusion of a patient's own blood;
increasing use of techniques and systems that reduce the number of donors to
which patients are exposed in the course of therapies involving donor blood
or blood components; and increasing prevalence of blood component therapy
which involves the administration of only those blood components needed by
the patient.
Markets and Products
Haemonetics' products address four important therapeutic markets for
blood and blood components: surgical blood salvage, blood component therapy,
automated red cell and plasma collection.
Surgical Blood Salvage
Surgical blood salvage, also known as autologous blood transfusion,
involves the rapid and safe collection of a patient's own blood before,
during and after surgery for reinfusion to the same patient. This process
normally includes an additional washing procedure whereby unwanted
substances are removed from the blood prior to reinfusion.
Autologous blood transfusion reduces or eliminates a patient's
dependence on blood donated from others, which carries the risk of
transmission of diseases, such as AIDS and hepatitis, as well as potentially
severe transfusion reactions. The decision to transfuse a unit of homologous
blood involves weighing the potential therapeutic benefits of such
transfusion against the risks of the transfusion itself. The Company
believes there is increasing recognition within the medical community that
blood transfusions should be autologous wherever possible to avoid the risks
associated with homologous blood transfusion. Moreover, patients are
becoming increasingly aware of the availability and advantages of autologous
blood transfusions. Ongoing shortages of blood and blood components
reinforce the benefits of this approach.
The need for a blood transfusion during surgery is common with open
heart, trauma, transplant, vascular and orthopedic operations.
Haemonetics, which pioneered the first autologous blood transfusion
system, has developed a full line of products to address the needs of the
surgical blood salvage market. The core product line, the Cell
Saver[registered trademark] 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[registered trademark] autologous blood recovery system, an
automated portable system which requires limited operator monitoring and is
designed for lower blood loss procedures. The Collectfirst[registered
trademark] 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[registered trademark] system for washing of the
collected red blood cells.
The Company markets its surgical blood salvage products to hospital-
based medical specialists, primarily cardiovascular, orthopedic and trauma
surgeons.
Blood Component Therapy
Blood component therapy involves the treatment of patients using
specific blood components, such as platelets, red blood cells, peripheral
blood stem cells or white blood cells, as opposed to whole blood. Blood
component therapy applications are increasing and have become integral to
the treatment of a wide variety of cancers, blood disorders and conditions
involving hemorrhaging. Platelet therapy is most often used to alleviate the
side effects of bone marrow suppression, a condition in which bone marrow is
unable to produce a sufficient quantity of platelets. Bone marrow
suppression arises from a number of causes, including infection, but most
typically as a side effect of chemotherapy. The demand for platelets is
growing in conjunction with increasingly aggressive cancer therapies.
Traditionally, platelets for therapeutic use have been derived from
the manual separation of platelets from blood obtained through whole blood
donations. However, platelets constitute a very small portion of an
individual's total blood volume. Hence, a single unit of whole blood
contains only one-sixth to one-eighth the quantity of platelets required for
a therapeutically useful dosage. As a result, the medical community has had
to rely on platelet pooling (the merging of platelets from multiple donors)
to obtain a volume of platelets sufficient for therapeutic treatment, thus
amplifying the risk of transmission of blood-borne disease or adverse
reaction.
The Company addresses these drawbacks of platelet therapy with its
apheresis systems such as the Haemonetics MCS[registered trademark]+ mobile
collection system. The apheresis process permits the collection of
therapeutically useful quantities of components such as platelets from a
single donor. The end product of platelet apheresis is referred to as single
donor platelets (as opposed to pooled or random donor platelets
traditionally available from blood banks or hospital centers). Apheresis
technology conserves the donor pool since donors can donate non-red cell
blood components more often than whole blood. Whole blood donors are
restricted in their ability to donate by regulatory agencies to eight week
intervals, whereas apheresis donors may donate as often as twice a week. In
addition, apheresis systems offer a purer and safer product to the recipient
because of the significant reduction in the number of donors to which the
recipient is exposed.
The Company markets its automated apheresis systems to hematologists,
oncologists and blood bankers.
Plasma Collection
Many important therapeutic and diagnostic products are derived from
the collection and subsequent processing of plasma. Therapeutic products
derived from plasma include albumin and plasma protein fractions, which are
used primarily as volume expanders for burn and shock victims; gamma
globulins, which are used for the prevention of diseases such as tetanus,
rabies, measles, etc.; coagulation specific concentrate products such as
Factor VIII and other derivatives such as hepatitis vaccine. Several
companies have developed and applied for U.S. Food and Drug Administration
("FDA") approval to market non-plasma derived recombinant Factor VIII
products. While such products may reduce demand for plasma derived Factor
VIII, the Company believes they should have minimal effect on the demand for
other plasma products such as albumin and gamma globulin. Diagnostic
products derived from source plasma include blood grouping sera, test kit
controls and quality control reagents.
Traditionally, plasma has been collected by manual techniques as part
of whole blood collection. As in the case of manual blood component
collection, manual techniques for collection of plasma have had poor product
yields and are very time consuming.
In the United States, commercial operators account for approximately
95% of plasma collection, with the remainder collected from volunteer donors
of other blood bank organizations. Outside of the United States, plasma is
collected primarily from volunteer donors.
Commercial plasma collection firms in the United States pay donors for
their plasma and then fractionate the collected plasma themselves and sell
the resultant protein products or sell the collected plasma worldwide for
fractionation purposes. Outside the United States, virtually every
industrialized nation has expressed the desire to increase their access to
the plasma market worldwide due to the ever growing need for the plasma-
based therapeutic products and their desire to improve the quality of their
country's blood products. The increased appeal of more efficient, user-
friendly automated systems is leading to conversion from manual to automated
plasma collection techniques.
The Haemonetics automated plasma collection systems, PCS[registered
trademark] and PCS[registered trademark]2, shorten the collection procedure
to approximately forty minutes from ninety minutes required for manual
collection. Donor safety is also increased as the donor is never separated
from his or her own blood, eliminating the risk that exists in manual
collection of having the wrong red cells returned to the donor. The
PCS[registered trademark] and PCS[registered trademark]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[registered trademark] systems. Under contracts with Alpha Therapeutics
and Bayer, the Company has agreed to install and service its PCS[registered
trademark] and PCS[registered trademark]2 systems free of charge to certain
plasma collection centers operated by these parties. These fractionators, in
turn, have agreed to purchase certain minimum numbers of processing chambers
from Haemonetics.
Plasma collection from volunteer donors is undergoing dramatic changes
due to greater focus on the quality, safety and cost of plasma-based
therapeutic products. The Company has been the primary supplier of automated
plasma collection systems to the national blood collection programs of
Japan, France, Sweden, Canada and the United Kingdom. The Company is also in
the early stages of developing a plasma program in China. Haemonetics is one
of two approved vendors in China.
Automated Red Cell Collection
Red blood cell transfusions are performed to restore the oxygen-
carrying capacity of the blood in situations involving hemorrhaging, such as
surgery and trauma and other blood disorders.
Traditionally, red blood cells have been derived from the manual
separation of red blood cells obtained through whole blood donations.
However, this process involves time consuming secondary handling and
processing. It also produces a red cell transfusion product of variable
therapeutic content due to variations found in donor characteristics and the
whole blood donation process.
Haemonetics has extended its MCS[registered trademark]+ 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 28, 1998, sales of disposable products
accounted for approximately 89% of net revenues. Sales of disposable
products by the Company were 3.6% lower in 1998 than in 1997 (6.0% higher in
1998 than in 1997 without the effects of currency) and grew at a compound
average annual growth rate of 4% for the three years ended March 28, 1998.
Service revenues, which are included as part of disposables revenues,
accounted for approximately .6% of the Company's net revenues during the
year ended March 28, 1998.
Sales of equipment accounted for approximately 11% of net revenues in
fiscal 1998 and approximately 13% in fiscal 1997. Variations in the level of
the Company's sales of equipment are likely to occur from year to year and
quarter to quarter. These variations reflect the buying cycles of the
Company's customers and, in particular, the level of equipment purchases by
the national blood organizations in Europe, Japan and other countries that
are implementing programs for national self-sufficiency in blood products
with the use of the Company's products.
Marketing/Sales/Distribution
Haemonetics markets and sells its products to hospitals, independent
blood banks, commercial plasma collection centers and national health
organizations through its own direct sales force in North America, Western
Europe and Japan. This sales force is composed of full-time sales
representatives and clinical specialists based in the United States, United
Kingdom, Germany, France, Sweden, The Netherlands, Denmark, Italy,
Australia, Austria, Hong Kong, Canada, Japan, Switzerland, China 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[registered
trademark] products in North American cardiovascular hospitals primarily
through the Bentley Laboratories division of Baxter International, Inc.
("Bentley"). In addition, Haemonetics distributes its
Collectfirst[registered trademark] autologous blood collection system in the
United States and Canada through DePuy Orthopedics. In addition, Haemonetics
uses numerous distributors to market its products in South America, Eastern
Europe, the Middle East and the Far East.
Haemonetics' field service engineers support its equipment sales
through ongoing professional equipment service worldwide. The functional and
safety features of the equipment are checked to ensure correct and reliable
operation. All new equipment is covered by a 12-month warranty, during which
all service needs are covered at no charge and all equipment receives a
preventive maintenance check. After the initial warranty period, the Company
provides service compensated under preventive maintenance contracts or
through emergency service fees.
The field service engineer group is supported by a headquarters-based
technical support engineering staff which also provides 24-hour phone
support 365 days a year. Many hospital customers have their own staffs of
biomedical engineers who rely on the Company's technical training and spare
parts logistic systems.
The Company endeavors to minimize the time between the receipt of
purchase orders and the date of delivery of products. Accordingly, the
Company's backlog as of the end of any period represents only a portion of
actual sales for the succeeding period.
Research and Development
The development of extracorporeal blood processing systems has
required that Haemonetics develop technical expertise in mechanical
engineering, electrical engineering, software engineering and biomedical
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 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 biomedical engineers monitor products'
biocompatibility and clinical performance and work with major raw materials
and tooling vendors. Innovations resulting from these efforts will allow the
Company to develop systems that are faster, smaller and more user-friendly
or that incorporate additional features important to its customer base.
Haemonetics operates research and development centers in Switzerland,
Japan and the United States, so that protocol variations are incorporated
that closely match local customer requirements. For the past three fiscal
years, the Company's expenditures for research and development were $17.9
million, $18.6 million and $18.1 million, respectively. All research and
development costs are expensed as incurred. The Company expects to continue
to invest substantial resources in research and development.
Customer collaboration is an important part of Haemonetics' technical
strength and competitive advantage. Since its inception, Haemonetics has
built close working relationships with a significant number of blood
processing professionals around the world. This network of experts provides
Haemonetics with ideas for new products, ways to improve existing products,
new applications and enhanced protocols. They also provide Haemonetics with
test sites, objective evaluations and expert opinions regarding technical
and performance issues.
Manufacturing
Disposables
Each individual blood collection procedure requires a disposable
plastic set, which contains a medical-grade tubing harness, bags, filters
and a processing chamber. Haemonetics molds many of its own components which
it then assembles with manufactured and purchased tubing and sheeting to
form the final products. The Company tests the materials for purity to
determine that they are biocompatible and free of contamination. Assembly is
accomplished in a clean room environment.
Production begins with injection molding, blow 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 manufacture 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 Haemonetics' customers in Japan.
Equipment
Each Haemonetics blood processing machine is designed in-house and
assembled from components that are either manufactured by the Company or
manufactured by others to Company specifications. Many critical mechanical
assemblies are machined and fabricated utilizing the Company's own process
control procedures. The completed instruments are programmed, calibrated and
tested to ensure compliance with the Company's engineering and quality
assurance specifications. Throughout the manufacturing process, inspection
checks are made to verify proper assembly and functionality. When mechanical
and electronic components are sourced from outside vendors, detailed vendor
qualification requirements are met and verified through focused incoming
inspection programs. Approximately 99% of the Company's equipment, including
all new systems, is manufactured by Haemonetics. The remainder is
manufactured for the Company by an outside contractor.
Certain parts and components used in the Company's equipment and
disposables are purchased from various single sources. If it became
necessary to do so, the Company believes that, in most cases, alternative
sources of supply could be developed over a relatively short period of time.
Nevertheless, an interruption in supply could temporarily interfere with
production schedules and affect the Company's results of operations.
All of the Company's equipment and disposable manufacturing sites are
certified to the ISO 9000 standard and to the medical device directive
allowing placement of the CE mark of conformity.
Competition
The markets for the Company's products are developing and are highly
competitive. Although the Company competes directly with others, no one
company competes with the Company across its full line of products.
Haemonetics has established a record of innovation and leadership in each of
the areas in which it competes.
Competition in the surgical blood salvage market, where the underlying
technology among the major competitors is similar, is based upon
reliability, ease of use, service, support and price. Haemonetics competes
with Medtronics, Inc.; COBE Laboratories, Inc. ("COBE"), a subsidiary of
Gambro AB; and Sorin Biomedica.
In the blood component therapy market, competition is based upon the
ability of systems to achieve higher levels of performance as measured by
the time and efficiency of component collection and the quality of the
components collected. The Company's major competitors in this market are
COBE and Baxter International, Inc. Each of these companies has taken a
different technological approach than the Company in the design of systems
for the component therapy market.
In the red cell market, the Company has pioneered automated
collection. Currently the sole provider of automated systems for red cell
collection, the Company competes with traditional methods of collecting and
separating whole blood on the basis of total cost, process control, product
quality, and inventory management.
In the area of plasma collection, the Company competes with Baxter
International, Inc. on the basis of overall cost-effectiveness of equipment
and disposables over the long term and on the quality, ease of use and
technical features of their systems. The Company's automated systems also
compete with manual collection systems, which are less expensive, but also
slower, less efficient and clinically riskier.
The Company believes its technical staff is highly skilled, but many
of its competitors have substantially greater financial resources and larger
technical staffs at their disposal. There can be no assurance that such
competitors will not direct substantial efforts and resources toward the
development and marketing of products competitive with those of the Company.
The Company believes its ability to maintain its competitive advantage
will continue to depend on a combination of market leadership, its
reputation, its patents, its unpatented proprietary know-how in several
technological areas, the quality, safety and cost effectiveness of its
products and the need to rigorously document clinical performance.
Seasonality
Net revenues have historically been higher in the second half of the
Company's fiscal year, 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 non-U.S.
regulatory bodies.
All medical devices introduced to the U.S. 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 twelve 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 countries outside the
U.S. 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 by those countries
before they can be marketed in those countries. Haemonetics has complied
with these regulations and has obtained such qualifications.
Federal, state and foreign regulations regarding the manufacture and
sale of products such as the Company's systems are subject to change. The
Company cannot predict what impact, if any, such changes might have on its
business.
Environmental Matters
The Company does not anticipate that compliance with federal, state
and local environmental protection laws presently in effect will have a
material adverse impact upon the Company or require any material capital
expenditures.
Employees
As of March 28, 1998, Haemonetics employed 1,687 persons assigned to
the following functional areas: manufacturing, 731; sales and marketing,
258; general and administrative, 183; research and development, 84; quality
control and field service, 140; and blood bank services, 291. 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 13 of the financial statements, page 38.
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 67,000 square feet are devoted to manufacturing and
quality control operations, 35,000 square feet to warehousing, 63,000 square
feet for administrative and research and development activities and 15,000
square feet available for expansion.
The Company leases an 81,850 square foot facility in Pittsburgh,
Pennsylvania. This facility is used for warehousing, distribution of the
products and, as of November of 1991, manufacturing operations. Annual lease
expense is $280,056 for this facility.
In April 1994, the Company purchased a facility in Bothwell, Scotland.
The facility manufactures disposable components for its automated plasma
collection and surgical blood salvage systems for its European customers.
The facility and related property were acquired at a cost of approximately
$1,600,000. The facility is approximately 22,200 square feet. Manufacturing
operations began in August, 1994.
In August 1995, the Company purchased a facility in Union, South
Carolina. This facility will be used for the manufacture of sterile
solutions to support the Company's component therapy and plasma businesses
once approval to do so is received from the FDA. The Company is presently
engaged in the lengthy process of seeking such approval. The Company expects
approval to take approximately eighteen months. The facility and land were
acquired for a cost of $2,423,000. The facility is approximately 57,700
square feet.
Effective August 1997, the Company began leasing a 48,000 square foot
facility in Avon, Massachusetts. This facility is used for warehousing and
distribution of products. Annual lease expense for this facility is
$259,096.
The Company also operates 17 collection centers (11 leased and 6 owned
properties) for the BBMS business and it leases sales, service and
distribution facilities overseas in the United Kingdom, France, Sweden,
Switzerland, The Netherlands, Germany, Japan, Hong Kong, Italy, Belgium,
Austria, Taiwan and China to support the international business.
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 professional
or product liability insurance or cause the premiums for such insurances to
increase. The Company carries product liability and professional liability
(malpractice) 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 and
professional liability coverages 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)
1998 Quarter Ended 1997 Quarter Ended
------------------------------------------- -------------------------------------------
June 28, Sept. 27, Dec. 27, March 28, June 29, Sept. 28, Dec. 28, March 29,
1997 1997 1997 1998 1996 1996 1996 1997
-----------------------------------------------------------------------------------------
Net revenues $79,485 $72,520 $70,479 $63,278 $75,049 $73,230 $74,211 $80,519
Gross profit 37,088 34,734 35,402 28,531 42,140 39,893 37,916 39,214
Non-recurring restruct-
uring expense - - 24,500 - - - - -
Operating income 11,448 8,694 (14,252) 522 14,888 13,918 11,404 12,297
Earnings from continuing
operations 7,717 5,736 (9,281) (3,571) 9,910 9,319 7,717 8,688
Loss from discontinued
operations (1,236) (1,705) (2,396) (20,036) (488) (670) (697) (809)
Net income (loss) 6,481 4,031 (11,677) (23,607) 9,422 8,649 7,020 7,879
Share data:
Net Income (loss):
Basic $ 0.24 $ 0.15 $ (0.44) $ (0.89) $ 0.35 $ 0.32 $ 0.26 $ 0.29
Diluted $ 0.24 $ 0.15 $ (0.44) $ (0.89) $ 0.34 $ 0.31 $ 0.26 $ 0.29
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.
1998 Quarter Ended 1997 Quarter Ended
------------------------------------------- -------------------------------------------
June 28, Sept. 27, Dec. 27, March 28, June 29, Sept. 28, Dec. 28, March 29,
1997 1997 1997 1998 1996 1996 1996 1997
-----------------------------------------------------------------------------------------
Market price of
Common Stock
High 19-5/8 21-1/16 20-15/16 17-3/4 21-3/4 21-3/8 21-1/4 19-1/2
Low 16-1/4 16-1/16 13-11/16 13-3/8 16-5/8 17-1/4 16-5/8 16
There were approximately 565 holders of record of the Company's common
stock as of May 28, 1998.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
HAEMONETICS CORPORATION AND SUBSIDIARIES
TEN-YEAR REVIEW
(in thousands, except share data)
Summary of Operations 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------------------------------------
Net revenues $285,762 $303,009 $276,470 $261,287 $248,449 $216,286 $176,419 $157,332 $124,363 $115,244
Cost of goods sold 150,007 143,846 122,468 116,723 104,879 97,296 85,524 82,656 62,322 54,611
-----------------------------------------------------------------------------------------------------
Gross profit 135,755 159,163 154,002 144,564 143,570 118,990 90,895 74,676 62,041 60,633
-----------------------------------------------------------------------------------------------------
Operating expenses:
Research and development 17,934 18,586 18,104 16,607 15,786 13,589 10,478 8,386 5,776 5,226
Selling, general and
administrative 86,909 88,070 78,654 74,650 75,940 63,576 50,517 42,452 34,940 34,783
Non-recurring restructuring
expense 24,500 - - - - - - - - -
-----------------------------------------------------------------------------------------------------
Total Operating Expenses 129,343 106,656 96,758 91,257 91,726 77,165 60,995 50,838 40,716 40,009
-----------------------------------------------------------------------------------------------------
Operating income 6,412 52,507 57,244 53,307 51,844 41,825 29,900 23,838 21,325 20,624
Other income / (expense),
net (1,946) 2,298 931 192 (1,050) (1,839) (2,222) (2,927) (4,491) (2,822)
-----------------------------------------------------------------------------------------------------
Income from continuing
operations before taxes 4,466 54,805 58,175 53,499 50,794 39,986 27,678 20,911 16,834 17,802
Provision for income taxes 3,865 19,171 20,351 19,250 19,305 15,231 9,687 7,110 5,455 6,272
-----------------------------------------------------------------------------------------------------
Net income from continuing
operations $ 601 $ 35,634 $ 37,824 $ 34,249 $ 31,489 $ 24,755 $ 17,991 $ 13,801 $ 11,379 $ 11,530
-----------------------------------------------------------------------------------------------------
Net loss from discontinued
operations $(25,373) $ (2,664) $ (1,899) $ (604) - - - - - -
-----------------------------------------------------------------------------------------------------
Net Income (loss) $(24,772) $ 32,970 $ 35,925 $ 33,645 $ 31,489 $ 24,755 $ 17,991 $ 13,801 $ 11,379 $ 11,530
Earnings (loss) per share:
Basic $ (0.93) $ 1.21 $ 1.32 $ 1.21 $ 1.13 $ 0.89 $ 0.65 $ 0.51 $ 0.42 $ 0.43
Diluted $ (0.93) $ 1.20 $ 1.30 $ 1.18 $ 1.09 $ 0.87 $ 0.63 $ 0.50 $ 0.41 $ 0.42
Weighted average number
of shares 26,537 27,160 27,294 27,896 27,964 27,818 27,670 27,000 27,000 27,000
Common Stock Equivalents 52 291 428 547 838 794 672 554 554 554
-----------------------------------------------------------------------------------------------------
Weighted average number of
common and common
equivalent shares 26,589 27,451 27,722 28,443 28,802 28,612 28,342 27,554 27,554 27,554
=====================================================================================================
Financial and Statistical
Data: 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------------------------------------
Working capital $112,792 $ 94,045 $112,440 $108,459 $ 81,504 $ 63,431 $ 40,919 $ 29,471 $ 27,233 $ 30,369
-----------------------------------------------------------------------------------------------------
Current ratio 2.44 2.3 3.4 3.2 2.7 2.6 2.1 1.8 1.8 2.4
Property, plant and
equipment, net $ 84,219 $ 97,402 $ 82,869 $ 82,059 $ 68,342 $ 56,015 $ 46,751 $ 42,300 $ 36,214 $ 23,267
-----------------------------------------------------------------------------------------------------
Capital expenditures $ 20,380 $ 36,725 $ 19,073 $ 21,642 $ 22,891 $ 17,595 $ 11,373 $ 12,975 $ 17,538 $ 7,314
Depreciation and
amortization $ 22,861 $ 19,507 $ 12,682 $ 13,480 $ 10,720 $ 8,517 $ 6,954 $ 6,996 $ 4,561 $ 3,494
-----------------------------------------------------------------------------------------------------
Total assets $336,693 $320,474 $287,541 $280,509 $230,684 $187,755 $144,846 $117,754 $110,630 $ 87,752
Total debt $ 71,054 $ 29,526 $ 18,534 $ 33,392 $ 14,278 $ 13,562 $ 24,098 $ 24,805 $ 33,903 $ 28,588
-----------------------------------------------------------------------------------------------------
Stockholders' equity $194,655 $225,274 $216,970 $193,177 $160,776 $126,650 $ 90,581 $ 67,543 $ 54,083 $ 42,415
Return on average equity (11.8)% 14.9% 17.5% 19.0% 21.9% 22.8% 22.8% 22.7% 23.6% 31.1%
Debt as a % of stock-
holders' equity 36.5% 13.1% 8.5% 17.3% 8.9% 10.7% 26.6% 36.7% 62.7% 67.4%
-----------------------------------------------------------------------------------------------------
Employees from continuing
operations 1,396 1,405 1,202 1,235 1,109 1,002 965 923 810 742
Net revenues per employee
from continuing operation $ 205 $ 216 $ 230 $ 212 $ 224 $ 216 $ 183 $ 170 $ 154 $ 155
-----------------------------------------------------------------------------------------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On May 1, 1998, the Company adopted a plan to discontinue its Blood
Bank Management Services Business, BBMS. Accordingly, all income and expense
items and assets and liabilities related to BBMS have been excluded from the
following discussion of continuing operations.
Results of Continuing Operations
The table outlines the components of the consolidated statements of
income for continuing operations as a percentage of net revenues:
Percentage of Net Revenues Percentage Increase
---------------------------------------------- -------------------
Year Ended Year Ended Year Ended
March 28, 1998 March 29, 1997 March 30, 1996 1998/97 1997/96
--------------------------------------------------------------------
Net revenues 100.0% 100.0% 100.0% (5.7)% 9.6%
Cost of goods sold 52.5 47.5 44.3 4.3 17.5
---------------------------------------------------------------
Gross profit 47.5 52.5 55.7 (14.7) 3.4
Operating expenses:
Research and development 6.3 6.1 6.5 (3.5) 2.7
Selling, general and administrative 30.4 29.1 28.4 (1.3) 12.0
Non-recurring restructuring expense 8.6 - - 100.0 -
---------------------------------------------------------------
Total operating expenses 45.3 35.2 35.0 21.3 10.2
---------------------------------------------------------------
Operating income 2.2 17.3 20.7 (87.8) 8.3
Interest expense (1.2) (0.6) (0.8) (96.0) (24.9)
Interest income 1.2 1.0 0.8 14.5 (40.1)
Other income (expense), net (0.6) 0.4 0.4 (279.7) (3.9)
---------------------------------------------------------------
Income before provision for income taxes 1.6 18.1 21.1 (91.9) (5.8)
Provision for income taxes 1.4 6.3 7.4 (79.8) (5.8)
---------------------------------------------------------------
Earnings from continuing operations 0.2% 11.8% 13.7% (98.3%) (5.8)%
===============================================================
1998 compared to 1997
Net revenues in 1998 decreased 5.7% to $285.8 million from $303.0
million in 1997. Worldwide disposable sales decreased approximately 3.6%.
Without the effects of currency, disposable sales increased 6.0%, primarily
in international markets. Sales of disposables products accounted for
approximately 89% and 87% of net revenues for 1998 and 1997, respectively.
Service revenues generated from equipment repairs performed under preventive
maintenance contracts or emergency service billings are included as part of
disposables revenues and accounted for approximately .6% and .7% of the
Company's net revenues for 1998 and 1997, respectively. Equipment revenues
decreased approximately 19.0% with and without the effect of currency. This
decrease was attributable to 1997 non-recurring equipment revenues in the
plasma business. International sales accounted for approximately 67% and 64%
of net revenues for 1998 and 1997, respectively.
Gross profit in 1998 decreased $23.4 million from $159.2 million in
1997. As a percentage of net revenues, gross profit percent decreased by
5.0% to 47.5% in 1998 from 52.5% in 1997. Approximately 44% of the decrease
was due to the unfavorable effects of the strengthening dollar and 56% of
the decrease was due to higher product costs and less favorable product mix.
A portion of higher product costs is attributed to non-recurring charges
approximating $1.8 million.
The Company expended $17.9 million in 1998 on research and development
(6.3% of net revenues) and $18.6 million in 1997 (6.1% of net revenues).
Selling, general and administrative expenses decreased to $86.9
million in 1998 from $88.1 million in 1997 but increased as a percentage of
net revenues to 30.4% from 29.1% due to lower sales. Approximately $1.8
million, or .6% of the 1998 expenses as a percent of sales, related to one-
time charges.
Operating income, as a percentage of net revenues, decreased 15.1% to
2.2% in 1998 from 17.3% in 1997.
During the third quarter of fiscal 1998, the Company recorded a charge
of $24.5 million related to the restructuring plans announced by the Company
on November 12, 1997. The Company made a decision not to undertake certain
rework and to terminate the manufacture of certain products. Additionally,
certain products, which would have required additional investments to
continue their useful lives, will no longer be supported. The Company has
also identified certain operations, which it has closed or partially closed,
resulting in losses associated with the abandonment of certain leases and
fixed assets, and the termination of certain employees.
The $24.5 million charge consists of $8.6 million related to the
write-off of certain disposable and equipment inventories. These inventories
and equipment were scrapped or abandoned in conjunction with decisions to
discontinue a disposable rework program and to exit certain product lines.
An additional $6.2 million relates to the write down of certain property,
plant and equipment, principally older generation commercial plasma
equipment, which the Company no longer intends to support. The Company also
recorded charges of $3.8 million related to the cost of exiting certain long
term supply commitments for products which the Company no longer plans to
sell. Other assets totaling $3.8 million were also written off. These
included certain investments in non-core businesses which the Company no
longer intends to pursue. Finally, $2.1 million relates to reserves for
severance and other contractual obligations with respect to the employee
terminations.
Operating income before the $24.5 million restructure charge, as a
percentage of net revenues, decreased 6.5% to 10.8% in 1998 from 17.3% in
1997. Greater than 100.0% of decrease was due to the gross profit decrease,
offset by a slight decrease in selling, general and administrative expenses.
Interest expense increased in 1998 to $3.4 million from $1.7 million
in 1997 due to an increase in the average level of borrowing through the
year. Interest income increased in 1998 to $3.4 million from $2.9 million in
1997 resulting from an increase in sales-type leases.
Other income (expense) decreased $3.0 million to $1.9 million of
expense in 1998 from $1.1 million of income in 1997. The decrease is largely
attributed to the $2.1 million write-off of a non-strategic initiative the
Company decided not to pursue.
The provision for income taxes, as a percentage of pretax income,
increased 51.5% from 35.0% in 1997 to 86.5% in 1998. The increase was due to
the shift in taxable income from the domestic operations to the higher taxed
foreign operations as a result of the one-time restructure charge of $24.5
million and the $28.0 million pre-tax charge from the discontinuance of
BBMS. Additionally, certain foreign operating losses were not given
financial statement benefit.
1997 compared to 1996
Net revenues in 1997 increased 9.6% to $303.0 million from $276.5
million in 1996. Worldwide disposable sales increased approximately 8.2% due
to growth in the international markets. Worldwide disposable sales increased
2.9% without the effect of currency. Sales of disposables products accounted
for approximately 87% and 88% of net revenues for 1997 and 1996,
respectively. Service revenues, generated from equipment repairs performed
under preventive maintenance contracts or emergency service billings, are
included as part of disposables revenues and accounted for approximately .7%
and 1.1% of the Company's net revenues for 1997 and 1996, respectively.
Equipment sales increased approximately 19.5% due to growth in the domestic
surgical market and shipments to China. International sales accounted for
approximately 64% and 62% of net revenues for 1997 and 1996, respectively.
Gross profit in 1997 increased to $159.2 million from $154.0 million
in 1996. As a percentage of net revenues, gross profit percent decreased by
3.2% to 52.5% in 1997 from 55.7% in 1996. The decrease was due to pressure
on product prices and to less favorable product mix partially offset by a
favorable effect of currency.
The Company expended $18.6 million in 1997 on research and development
(6.1% of net revenues) and $18.1 million in 1996 (6.5% of net revenues).
Selling, general and administrative expenses increased to $88.1
million in 1997 from $78.7 million in 1996 and increased as a percentage of
net revenues to 29.1% from 28.4%. Costs associated with the worldwide
regulatory efforts related to red cell apheresis contributed to the
increase.
Operating income, as a percentage of net revenues, decreased 3.4% to
17.3% in 1997 from 20.7% in 1996. The decrease was due to pressure on
product prices and to less favorable product mix partially offset by a
favorable effect of currency.
Interest expense decreased in 1997 to $1.7 million from $2.3 million
in 1996 due to a decrease in both the average borrowings and borrowing
rates. Interest income increased in 1997 to $2.9 million from $2.1 million
in 1996 resulting from an increase in the Company's investment in sales-type
leases and higher average cash balances during the year.
The provision for income taxes remained at approximately 35% as a
percentage of pretax income for 1997 and 1996.
Results of Discontinued Operations
1998 compared to 1997
Net revenues increased 165.1% in 1998 to $18.0 million from $6.8
million in 1997. Gross profit in 1998 decreased to $(.2) million in 1998
from $.6 million in 1997 and operating losses increased 127.6% to $(10.8)
million in 1998 from $(4.1) million in 1997. The decrease in gross profit
and the increase in operating losses were the result of high manufacturing
and operating costs associated with the acquisition of three blood banks in
the service business: Tri-Counties Blood Bank, Kansas Blood Services and
Gateway Blood Services.
1997 compared to 1996
Net revenues increased 289.9% in 1997 to $6.8 million from $1.7
million in 1996. Gross profit remained relatively unchanged at $.6 million
in both 1997 and 1996 and operating losses increased 41.1% to $(4.1) million
in 1997 from $(2.9) million in 1996. The neutral gross profit performance
and the increase in operating losses was the result of higher manufacturing
and operating costs attributed to the ramp up of the service business in
1997. In years prior to 1997, the service business was limited to one
facility in Arizona, the Arizona Blood Institute, purchased in fiscal year
1994 as both a blood bank and training facility for Haemonetics Corporation.
Liquidity and Capital Resources
The Company has satisfied its cash requirements principally from
internally generated cash flow and borrowings. The Company's need for funds
is derived primarily from capital expenditures, acquisitions, stock
purchases, new business development and working capital.
In 1998, the Company increased cash balances by $13.5 million from
operating, investing and financing activities which represents an increase
of $18.7 million from the $5.1 million utilized by the Company's operating,
investing and financing activities in 1997. The increase was largely a
result of $37.4 million more cash provided by financing activities in 1998
versus 1997 offset by $21.0 million of additional cash utilized by the
Company's discontinued operations in 1998 as compared to 1997.
Operating Activities
The Company generated $32.1 million in cash from operating activities
of continuing operations in 1998 as compared to $48.2 million generated
during 1997. The $16.1 million decrease in operating cash flow from
continuing operations was a result of an increase in inventory investment by
$13.9 million; a $14.4 million swing in accounts payable, accrued expenses
and other current liabilities; an increase in other assets investment of
$10.3 million due to increases in tax deferrals and prepayments; and a
decrease in net income from continuing operations adjusted for non-cash
items, (depreciation and amortization, the 1998 restructuring charge and
deferred tax benefit) of $7.2 million. These increased uses were offset by
additional sources of cash generated in 1998 as compared to 1997 due to
accounts receivable, $25.8 million, and current sales-type leases, $3.9
million.
During 1998, the Company's discontinued operations utilized $11.7
million in operating cash flows, an increase of $10.4 million over the $1.3
million of uses in 1997.
Investing Activities
The Company utilized $31.0 million in cash for investing activities in
1998, a decrease of $15.8 million from 1997. During 1998, the Company
incurred $20.4 million in capital expenditures net of retirements and
disposals. Included in this amount is a $(1.4) million net decrease in long-
term demonstration assets. In 1997, the Company utilized $36.7 million for
capital expenditures net of retirements and disposals, including $6.9
million for net expenditures in long-term demonstration assets. The $16.3
million decrease in expenditures on property, plant and equipment,
commercial plasma machines and other revenue generating assets from 1997 to
1998 is due primarily to lower commercial plasma machine placements.
Finally, the Company utilized $8.9 million for long-term sales-type leases
in 1998, compared with $10.1 million utilized in 1997.
During 1998, the Company invested $16.0 million in discontinued
operations. Capital expenditures relating to discontinued operations were
approximately $10.8 million in 1998 and $5.3 million in 1997.
Financing Activities
During 1998, the need for funds not satisfied by internal sources was
satisfied by an increase in borrowings of $42.5 million. Forty million in
notes were issued during the third quarter of 1998 having a coupon rate of
7.05% and a ten year term.
Net debt increased $29.0 million to $49.3 million in 1998, $27.7
million of which was utilized by the discontinued operations.
The Company used $5.6 million to repurchase 318,700 shares of treasury
stock during 1998. There remains approximately 271,100 shares authorized for
repurchase by the Company at prevailing prices as market conditions warrant.
The Company does not intend to repurchase any shares during the next fiscal
year.
At March 29, 1997, the Company had working capital of $112.8 million.
This reflects an increase of $18.8 million in working capital for the twelve
months ended March 28, 1998. The Company believes its sources of cash are
adequate to meet its projected needs.
Year 2000 Compliance
Based upon information currently available, management does not
anticipate that the Company will incur material costs to update its computer
software programs and applications to be "Year 2000" compliant. The Year
2000 problem which is common to most corporations concerns the inability of
information systems, primarily computer software programs, to properly
recognize and process date sensitive information as the year 2000
approaches. The Company has completed an assessment of its internal systems,
has developed a workplan to address this issue and is in the process of
implementing actions which address affected systems in time to minimize any
detrimental effects on operations.
In addition the Company relies on third party providers for some of
its systems support. To the extent that the Company will be relying on its
outside software vendors, Year 2000 compliance matters will not be entirely
within the Company's direct control. Finally, the Company has relationships
with vendors, customers and other third parties who rely on computer
software that may not be Year 2000 compliant. Many of these third parties,
operate outside of the U.S. in countries where compliance programs may be
less further along than in the U.S. There can be no assurance that Year 2000
compliance failures by such third parties will not have a material adverse
effect on the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPLLEMENTARY DATA
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 28, March 29,
1998 1997
---------------------
ASSETS
Current assets:
Cash and cash equivalents $ 21,766 $ 8,272
Accounts receivable, less allowance of $818 in 1998
and $961 in 1997 58,886 70,913
Inventories 61,664 54,928
Current investment in sales-type leases, net 11,887 13,559
Deferred tax asset 21,777 14,290
Other prepaid and current assets 15,170 4,229
Current assets net of current liabilities of
discontinued operations - 269
--------------------
Total current assets 191,150 166,460
Property, plant and equipment:
Land, building, and building improvements 23,197 21,737
Machinery and equipment 65,236 74,158
Furniture and fixtures 9,216 5,987
Commercial plasma and rental equipment 72,612 81,375
--------------------
Total property, plant and equipment 170,261 183,257
Less: accumulated depreciation 86,042 85,855
--------------------
Net property, plant and equipment 84,219 97,402
Other assets:
Investment in sales-type leases, net (long-term) 38,596 30,954
Distribution rights, net 10,718 10,266
Other assets, net 5,204 7,978
Property, plant and equipment and other assets net
of long-term liabilities of discontinued operations 6,806 7,414
--------------------
Total other assets 61,324 56,612
--------------------
Total assets $336,693 $320,474
====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt $ 17,468 $ 19,511
Accounts payable 21,689 27,465
Accrued payroll and related costs 7,726 6,559
Accrued income taxes 5,750 10,478
Other accrued liabilities 15,132 8,402
Current liabilities and accrued losses net of
current assets of discontinued operations 10,593 -
--------------------
Total current liabilities 78,358 72,415
Deferred income taxes 9,944 12,770
Long-term debt, net of current maturities 53,586 10,015
Other long-term liabilities 150 -
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, $.01 par value; Authorized-80,000,000 shares;
Issued-29,341,648 shares in 1998; 29,238,350 shares in 1997 293 292
Additional paid-in capital 59,142 56,547
Retained earnings 190,757 215,657
Cumulative translation adjustment (9,588) (6,162)
--------------------
Stockholders' equity before treasury stock 240,604 266,334
Less: treasury stock at cost-2,756,969 shares in 1998;
2,478,888 shares in 1997 45,949 41,060
--------------------
Total stockholders' equity 194,655 225,274
--------------------
Total liabilities and stockholders' equity $336,693 $320,474
====================
Supplemental disclosure of balance sheet information:
Net debt $ 49,288 $ 21,254
====================
The accompanying notes are an integral part of these
consolidated financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
Year Ended
-------------------------------
March 28, March 29, March 30,
1998 1997 1996
-------------------------------
Net revenues $285,762 $303,009 $276,470
Cost of goods sold 150,007 143,846 122,468
-------------------------------
Gross profit 135,755 159,163 154,002
-------------------------------
Operating expenses:
Research and development 17,934 18,586 18,104
Selling, general and administrative 86,909 88,070 78,654
Non-recurring restructuring expense 24,500 - -
-------------------------------
Total operating expenses 129,343 106,656 96,758
-------------------------------
Operating income 6,412 52,507 57,244
Interest expense (3,373) (1,721) (2,290)
Interest income 3,366 2,940 2,098
Other income (expense), net (1,939) 1,079 1,123
-------------------------------
Income from continuing operations before
provision for income taxes 4,466 54,805 58,175
Provision for income taxes 3,865 19,171 20,351
-------------------------------
Earnings from continuing operations 601 35,634 37,824
Discontinued operations:
Loss from operations, net of income tax
benefit of ($3,863) in 1998, ($1,433)
in 1997 and ($1,022) in 1996 (7,173) (2,664) (1,899)
Loss on disposal, net of income tax
benefit of ($9,800) (18,200) - -
-------------------------------
Loss from discontinued operations (25,373) (2,664) (1,899)
Net income (loss) $(24,772) $ 32,970 $ 35,925
===============================
Basic income (loss) per common share
Continued operations $ 0.02 $ 1.31 $ 1.39
Discontinued operations $ (0.96) $ (0.10) $ (0.07)
Net income (loss) $ (0.93) $ 1.21 $ 1.32
Income (loss) per common share assuming dilution
Continued operations $ 0.02 $ 1.30 $ 1.36
Discontinued operations $ (0.95) $ (0.10) $ (0.07)
Net income (loss) $ (0.93) $ 1.20 $ 1.30
Weighted average shares outstanding
Basic 26,537 27,160 27,294
Diluted 26,589 27,451 27,722
The accompanying notes are an integral part of these
consolidated financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
Common Stock Additional Cumulative Total
-------------- Paid-in Retained Treasury Translation Stockholders'
Shares $'s Capital Earnings Stock Adjustment Equity
----------------------------------------------------------------------------------
Balance, April 1, 1995 28,403 $284 $50,086 $146,824 $(17,519) $ 13,502 $193,177
Employee stock purchase
plan - - - (42) 633 - 591
Exercise of stock options
and related tax benefit 367 4 2,269 - - - 2,273
Purchase of treasury stock - - - - (8,881) - (8,881)
Net income - - - 35,925 - - 35,925
Translation adjustment - - - - - (6,115) (6,115)
--------------------------------------------------------------------------------
Balance, March 30, 1996 28,770 288 52,355 182,707 (25,767) 7,387 216,970
Employee stock purchase
plan - - - (20) 537 - 517
Exercise of stock options
and related tax benefit 468 4 4,192 - - - 4,196
Purchase of treasury stock - - - - (15,830) - (15,830)
Net income - - - 32,970 - - 32,970
Translation adjustment - - - - - (13,549) (13,549)
--------------------------------------------------------------------------------
Balance, March 29, 1997 29,238 292 56,547 215,657 (41,060) (6,162) 225,274
Employee stock purchase
plan - - - (128) 677 - 549
Exercise of stock options
and related tax benefit 104 1 2,595 - - - 2,596
Purchase of treasury stock - - - - (5,566) - (5,566)
Net loss - - - (24,772) - - (24,772)
Translation adjustment - - - - - (3,426) (3,426)
--------------------------------------------------------------------------------
Balance, March 28, 1998 29,342 $293 $59,142 $190,757 $(45,949) $ (9,588) $194,655
================================================================================
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended
---------------------------------
March 28, March 29, March 30,
1998 1997 1996
---------------------------------
Cash Flows from Operating Activities:
Net income (loss) $(24,772) $ 32,970 $ 35,925
Less net loss from discontinued operations (25,373) (2,664) (1,899)
--------------------------------
Net income from continuing operations 601 35,634 37,824
Adjustments to reconcile net income to net
cash provided by operating activities:
Non cash items:
Depreciation and amortization 22,861 19,507 12,682
Restructuring charge 24,500 - -
Deferred tax benefit (338) (300) (907)
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable-net 9,668 (16,156) (1,605)
Increase in inventories (14,675) (733) (169)
(Increase) decrease in sales-type leases (current) 967 (3,014) 242
(Increase) decrease in other assets (8,743) 1,564 4,998
Increase (decrease) in accounts payable, accrued
expenses and other current liabilities (2,745) 11,658 6,752
--------------------------------
Net cash provided by operating activities,
continuing operations 32,096 48,160 59,817
--------------------------------
Net cash (used in) operating activities,
discontinued operations (11,697) (1,293) (1,508)
--------------------------------
Net cash provided by operating activities 20,399 46,867 58,309
Cash Flows from Investing Activities:
Capital expenditures on property, plant and equipment,
net of retirements and disposals (20,380) (36,725) (19,073)
Increase in distribution rights (1,717) - -
DHL asset acquisition - - (6,189)
Net increase in sales-type leases (long-term) (8,923) (10,136) (3,501)
--------------------------------
Net cash (used in) investing activities,
continued operations (31,020) (46,861) (28,763)
--------------------------------
Net cash (used in) investing activities,
discontinued operations (15,965) (5,337) (637)
--------------------------------
Net cash (used in) investing activities (46,985) (52,198) (29,400)
Cash Flows from Financing Activities:
Payments on long-term real estate mortgage (186) (186) (152)
Net increase (decrease) in short-term revolving
credit agreements (1,038) 17,545 (4,022)
Net increase (decrease) in long-term revolving
credit agreements 3,757 (3,450) (8,798)
Borrowings under long-term senior note
purchases agreements 40,000 - -
Employee stock purchase plan 549 517 591
Exercise of stock options and related tax benefit 2,596 4,161 2,273
Purchase of treasury stock (5,566) (15,830) (8,881)
--------------------------------
Net cash provided by (used in) financing activities 40,112 2,757 (18,989)
Effect of exchange rates on cash and cash equivalents (32) (2,586) (718)
--------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 13,494 (5,160) 9,202
Cash and Cash Equivalents at Beginning of Year 8,272 13,432 4,230
--------------------------------
Cash and Cash Equivalents at End of Year $ 21,766 $ 8,272 $ 13,432
================================
Supplemental disclosures of cash flow information:
Net (decrease) in cash and cash equivalents,
discontinued operations $(27,662) $ (6,630) $ (2,145)
Net increase in cash and cash equivalents,
continuing operations $ 41,156 $ 1,470 $ 11,347
Increase (decrease) in net debt $ 29,039 $ 19,069 $(22,174)
Interest paid $ 2,423 $ 2,834 $ 1,791
Income taxes paid, net of refunds $ 16,792 $ 15,228 $ 22,058
================================
The accompanying notes are an integral part of these
consolidated financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS
Haemonetics Corporation and subsidiaries (the "Company") designs,
manufactures and markets automated systems for the collection, processing
and surgical salvage of blood. Haemonetics will also collect blood products
until the divestiture of the BBMS business.
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 1998, Fiscal 1997 and Fiscal 1996 each included 52 weeks.
Fiscal 1999 will include 53 weeks, with 14 weeks in the first quarter. The
first quarter will end on July 4, 1998.
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 (Loss) per Share
In 1998, the Company adopted Statement of Financial Accounting
Standard (SFAS) NO. 128, "Earnings per Share," which is effective for
financial statements issued for periods ending after December 15, 1997.
Prior period per share amounts have been restated to comply with this new
statement. SFAS 128 supersedes Accounting Principles Board Opinion No. 15
(APB 15) and establishes new standards for the presentation of earnings per
share under SFAS 128, "Basic Earnings Per Share" excludes dilution and is
computed by dividing income available to common stockholders by weighted
average shares outstanding. "Diluted Earnings Per Share" reflects the effect
of all dilutive outstanding common stock equivalents. The following table
provides a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations, as required by SFAS 128:
Years Ended
------------------------------------------------------
March 28, 1998 March 29, 1997 March 30, 1996
------------------------------------------------------
(Dollars and shares in thousands except share amounts)
Basic EPS
Net Income (Loss) $(24,772) $32,970 $35,925
Weighted Average shares 26,537 27,160 27,294
------------------------------------------------
Basic income (loss) per share $ (0.93) $ 1.21 $ 1.32
Diluted EPS
Net Income (Loss) $(24,772) $32,970 $35,925
Basic Weighted Average shares 26,537 27,160 27,294
Effect of Stock options 52 291 428
------------------------------------------------
Diluted Weighted Average shares 26,589 27,451 27,722
Diluted income (loss) per share $ (0.93) $ 1.20 $ 1.30
================================================
Foreign Currency
Foreign currency transactions and financial statements are translated
into U.S. dollars following the provisions of SFAS No. 52, "Foreign Currency
Translation." Accordingly, assets and liabilities of foreign subsidiaries
are translated into U.S. dollars at exchange rates in effect at year-end.
Net revenues and costs and expenses are translated at average rates in
effect during the year. Included in other income/expense in 1998, 1997 and
1996 are $318,000, $288,000 and $710,000, respectively, in foreign currency
transaction gains.
The Company enters into forward exchange contracts to hedge certain
firm sales commitments to customers, which are denominated in foreign
currencies. The purpose of the Company's foreign currency hedging activities
is to protect the Company from the risk that the eventual dollar cash flows
resulting from the sale of products to international customers will be
adversely affected by changes in exchange rates. Gains and losses realized
on these contracts are recorded in operations, offsetting the related
foreign currency transactions. The cash flows related to the gains and
losses on these foreign currency hedges are classified in the statements of
cash flows as part of cash flows from operating activities.
At March 28, 1998 and March 29, 1997, 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 $77,662,000 and $98,200,000, respectively. Gross unrealized
gains and losses from hedging firm sales commitments, based upon current
forward rates, were a $4,093,000 gain and a $11,000 loss at March 28, 1998
and a $7,132,000 gain and a $4,000 loss at March 29, 1997. Deferred gains
and losses are recognized in earnings when the future sales are recognized.
Management anticipates that these deferred amounts at March 28, 1998 will be
offset by the foreign exchange effect on sales of products to international
customers in fiscal 1999.
The Company is exposed to credit loss in the event of nonperformance
by counter-parties on these foreign exchange contracts. The Company does not
anticipate nonperformance by any of these parties.
Financial Instruments
SFAS No. 107 "Disclosures About Fair Value of Financial Instruments,"
requires disclosure of an estimate of the fair value of certain financial
instruments. The fair value of certain of the Company's financial
instruments, including cash and cash equivalents, notes payable and long-
term debt, pursuant to SFAS No. 107 approximated their carrying values at
March 28, 1998 and March 29, 1997. 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 2-10 Years
Furniture and fixtures 5-8 Years
Commercial plasma and rental equipment 6-8 Years
Leasehold improvements are amortized over the lesser of their useful
lives or the term of the lease. Maintenance and repairs are charged to
operations as incurred. When equipment and improvements are sold or
otherwise disposed of, the asset cost and accumulated depreciation are
removed from the accounts, and the resulting gain or loss, if any, is
included in the results of operations. Fully depreciated assets are removed
from the accounts when they are no longer in use.
Inventories
Inventories are stated at the lower of cost or market and include the
cost of material, labor and manufacturing overhead. Cost is determined on
the first-in, first-out basis.
Inventories consist of the following:
March 28, March 29,
1998 1997
----------------------
(in thousands)
Raw materials $11,532 $12,501
Work-in-process 5,878 5,628
Finished goods 44,254 36,799
--------------------
$61,664 $54,928
====================
Revenue Recognition
Revenues from equipment and disposable product sales and sales-type
leases are recognized upon shipment. Service revenues are recognized ratably
over the contractual periods or as the services are provided. The Company
provides for the cost of warranty based on product shipments.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences
of the temporary differences between the tax and financial reporting bases
of assets and liabilities.
Distribution Rights
Distribution rights represent the cost to reacquire the right to
directly distribute certain of the Company's products in foreign markets.
These rights were acquired in several different acquisitions. The historical
cost of these acquisitions was approximately $15,610,000 and $13,900,000 as
of March 28, 1998 and March 29, 1997, respectively. The distribution rights
are amortized on a straight-line basis over 20 years. The accumulated
amortization was approximately $4,697,000 and $3,253,000 for the years ended
March 28, 1998 and March 29, 1997.
Accounting for Long-lived assets
The Company periodically reviews its long-lived assets for potential
impairment. The Company assesses the future useful life of these assets,
primarily property, plant, equipment and distribution rights, whenever
events or changes in circumstances indicate that the current useful life has
diminished. The Company considers the future undiscounted cash flows of
these assets in assessing their recoverability. If impairment has occurred,
any excess of carrying value over fair value is recorded as a loss. In the
opinion of management, no impairment in the Company's long-lived assets has
occurred, subsequent to the restructuring charge taken in the third quarter
of the fiscal year 1998.
Accounting for Stock-Based Compensation
In December 1995, the FASB issued SFAS No. 123, "Accounting for Stock-
Based Compensation," which became effective for the Company in fiscal 1997.
SFAS No. 123 requires that employee stock-based compensation be recorded or
disclosed at its fair value. The Company has elected to adopt the disclosure
provision for stock-based compensation in SFAS No. 123 but to continue to
account for stock-based compensation under APB No. 25. No accounting
recognition is given to options granted at fair market value until they are
exercised. Upon exercise, net proceeds, including tax benefits realized, are
credited to equity.
New Pronouncements
In June 1997, The Financial Accounting Standards board issued SFAS No.
130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information". SFAS 130 requires the
presentation, by major components and as a single total, the change in the
Company's net assets during a period from non-owner sources. Currently, the
Company's non-owner changes in equity are the foreign currency translation
adjustments, which totaled ($9.6) million, ($6.2) million and $7.4 million
in 1998, 1997 and 1996, respectively. SFAS 131 requires companies to present
segment information using the management approach. The management approach
is based upon the way that management organizes the segments within a
Company for making operating decisions and assessing performance. SFAS 130
is effective for the Company in the first quarter of 1999 and SFAS 131 is
effective for the Company's 1999 annual financial statements. Adoption of
these standards will not impact the Company's consolidated financial
position, results of operations or cash flows, and any effect will be
limited to the form and content of its disclosures.
Reclassifications
Certain amounts in the prior year financial statements have been
reclassified to conform with the 1998 presentation.
3. INVESTMENT IN SALES-TYPE LEASES
The Company leases equipment to customers under sales-type leases. The
components of the Company's net investment in sales-type leases are as
follows:
March 28, March 29,
1998 1997
----------------------
(in thousands)
Total minimum lease payments receivable $64,762 $55,236
Less - Unearned interest 14,279 10,723
--------------------
Net investment in sales-type leases 50,483 44,513
Less - Current portion 11,887 13,559
--------------------
$38,596 $30,954
====================
Future minimum lease payments receivable under noncancelable leases as
of March 28, 1998 are as follows:
Fiscal Year Ending (in thousands)
------------------
1999 $17,661
2000 14,401
2001 11,653
2002 8,125
2003 and thereafter 12,922
-------
$64,762
=======
4. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consist of the following:
March 28, March 29,
1998 1997
----------------------
(in thousands)
Real estate mortgage $ 8,568 $ 8,754
Borrowings under credit facilities 18,613 20,772
Senior notes 40,000 -
Non-U.S. long-term debt 3,873 -
--------------------
71,054 29,526
Less - Current portion 17,468 19,511
--------------------
$53,586 $10,015
====================
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.
Credit Facilities
U.S. borrowings are evidenced by a $20,000,000 committed, unsecured
revolving credit facility and a $10,000,000 uncommitted, unsecured credit
line. The committed facility is under a joint financing agreement dated June
25, 1997, which originally consisted of promissory notes for $40,000,000
(the "Agreement"). On December 26, 1997 and April 30, 1998, the Agreement
was amended and restated. The initial amendment to the Agreement included
the withdrawal of two members of the original bank group eliminating each of
their commitments of $10,000,000. The amendments to the Agreement also
included restatement of among other terms, interest rate options, as well as
revisions to and additions of financial covenants. The current $20,000,000
facility is available through June 25, 2000, on which date all borrowings
become due. The uncommitted line is under a financing agreement dated August
12, 1997, and is available through July 31, 1998. As of March 28, 1998
neither the credit facility nor the uncommitted line had outstanding
borrowings.
At the Company's option, the interest rate per annum applicable to the
revolving credit facility is based on (a) the bank's prime rate, (b) the
Euro-Rate plus the applicable margin or (c) the Federal Funds Rate plus the
applicable margin. The applicable margin ranges from 0.45% to 0.65%. The
Agreement provides for a commitment fee ranging from 0.20% to 0.35% of the
undrawn portion of the commitments based upon the company's ratio of
consolidated total indebtedness to consolidated tangible net worth. Interest
rates on the uncommitted line are a function of rates in effect on the date
of the borrowing.
Non-U.S. borrowings represent the financing arranged by the Company's
subsidiaries with local banks which may be guaranteed by the Company. The
majority of the amounts outstanding as of March 28, 1998 are short-term in
nature.
The weighted average short-term rates for U.S. and non-U.S. borrowings
were 1.77%, 1.69% and 5.47% as of March 28, 1998, March 29, 1997 and March
30, 1996, respectively.
Senior Notes
Haemonetics Corporation privately placed $40,000,000 of 7.05% Senior
Notes due 2007 (the "Senior Notes"). The proceeds were used to repay
outstanding bank debt incurred previously using credit facilities and for
general corporate purposes. The Company is required to make annual
prepayments of principal each year in the amount $5,714,286 beginning on
October 15, 2001 and concluding with the final principal payment on October
15, 2007.
Interest on the Senior Notes is computed on the basis of a 360-day
year of twelve 30-day months on the unpaid balance at the rate of 7.05% per
annum, payable semiannually, on April 15 and October 15 each year. The
Senior Notes contain affirmative and negative covenants and restrictions
similar to those required under the terms of the revolving credit facility.
The Company obtained a limited waiver through April 3, 1999 to a covenant of
the Senior Notes which required the Company to maintain consolidated
stockholders equity of $200 million. The Company expects to be in compliance
with the covenant prior to the expiration of the limited waiver.
Non-U.S. Long Term Debt
On March 27, 1998, Haemonetics Japan Limited secured a term loan in
the amount of JPY 500.0 million. This loan bears interest at a rate of
2.125%, and matures on March 29, 2000. As of March 28, 1998, the U.S. dollar
equivalent for this balance was $3.8 million.
As of March 28, 1998, notes payable and long-term debt mature as
follows:
Fiscal Years Ending (in thousands)
-------------------
1999 $17,468
2000 5,439
2001 8,147
2002 5,714
2003 and thereafter 34,286
-------
$71,054
=======
5. INCOME TAXES
The components of domestic and foreign income from continuing
operations before the provision for income taxes are as follows:
Years Ended
-----------------------------------
March 28, March 29, March 30,
1998 1997 1996
-----------------------------------
(in thousands)
Domestic $1,123 $43,505 $45,941
Foreign 3,343 11,300 12,234
--------------------------------
$4,466 $54,805 $58,175
================================
The provision for income taxes from continuing operations consists of
the following components:
Years Ended
-----------------------------------
March 28, March 29, March 30,
1998 1997 1996
-----------------------------------
(in thousands)
Current
Federal $1,031 $14,856 $16,565
State 125 2,286 2,390
Foreign 3,047 2,329 2,303
---------------------------------
4,203 19,471 21,258
---------------------------------
Deferred
Federal (316) (1,998) (980)
State (50) (137) (154)
Foreign 28 1,835 227
---------------------------------
(338) (300) (907)
---------------------------------
$3,865 $19,171 $20,351
=================================
Included in the federal and state income tax provisions for fiscal
years 1998, 1997 and 1996 are approximately $333,000, $2,247,000 and
$3,209,000, respectively, provided on foreign source income of approximately
$2,375,000 in 1998, $6,419,000 in 1997 and $9,169,000 in 1996, taxes on
which are payable in the United States.
The total provision for income taxes included in the consolidated
financial statements was as follows:
Years Ended
-----------------------------------
March 28, March 29, March 30,
1998 1997 1996
-----------------------------------
(in thousands)
Continuing operations $ 3,865 $19,171 $20,351
Discontinued operations (13,663) (1,433) (1,022)
----------------------------------
$ (9,798) $17,738 $19,329
==================================
The tax effect of significant temporary differences composing the net
deferred tax asset (liability) is as follows:
Years Ended
----------------------
March 28, March 29,
1998 1997
----------------------
(in thousands)
Discontinued operations $ 9,800 $ -
Depreciation (11,594) (9,691)
Amortization (3,348) (3,535)
Inventory 12,079 12,221
Accruals and reserves 5,690 2,138
Other (794) 387
---------------------
Total net deferred taxes $ 11,833 $ 1,520
=====================
The provision for income taxes from continuing operations differs from
the amount computed by applying the statutory U.S. federal income tax rate
of 35% in 1998, 1997 and 1996 due to the following:
Years Ended
-----------------------------------
March 28, March 29, March 30,
1998 1997 1996
-----------------------------------
(in thousands)
Tax at federal statutory rate $1,563 $19,181 $20,362
Difference due to:
Foreign sales corporation - (1,605) (1,268)
Difference between U.S. tax rate and tax
rates used in other tax jurisdictions 1,904 167 147
State taxes, net of federal income tax benefit 49 1,403 1,355
Other, net 349 25 (245)
---------------------------------
$3,865 $19,171 $20,351
=================================
6. COMMITMENTS AND CONTINGENCIES
The Company leases facilities and certain equipment under operating
leases expiring at various dates through fiscal year 2013. Facility leases
require the Company to pay certain insurance expenses, maintenance costs and
real estate taxes.
For continuing operations, approximate future basic rental commitments
under operating leases as of March 28, 1998 are as follows:
Fiscal Year Ending (in thousands)
------------------
1999 $ 3,208
2000 2,822
2001 2,198
2002 1,804
2003 and thereafter 4,055
-------
$14,087
=======
Rent expense for continuing operations in 1998, 1997, and 1996 was
$3,078,000, $2,486,000, and $4,219,000, 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 1998 and 1997, the Company repurchased 318,700 shares and
902,100 shares respectively, of its outstanding common stock at average
prevailing prices of $17.44 and $17.46, respectively. The Company expects
any repurchased shares to be made available for issuance pursuant to its
employee benefit and incentive plans and for other corporate purposes.
Stock Plans
The Company has a long-term incentive stock option plan under which a
maximum of 3,438,231 shares of the Company's common stock may be issued
pursuant to incentive and or non-qualified stock options and stock awards
granted to key employees, consultants and advisers (the "Long-Term Incentive
Plan"). The Long-Term Incentive Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee") consisting of two or
more disinterested members of the Company's Board of Directors. The exercise
price for non-qualified options granted under the Long-Term Incentive Plan
is determined by the Committee, but in no event shall such option price be
less than 50% of the fair market value of the common stock at the time the
option is granted. Incentive options may be granted at a price not less than
fair market value on the date of grant. Options become exercisable in a
manner determined by the Committee, generally between four and seven years,
and incentive options expire not more than ten years from the date of the
grant. There were 753,054 shares available for future grant at March 28,
1998.
The Company also has a non-qualified stock option plan for non-
employee directors for the purchase of common stock (the "Non-employee
Plan"). Under the Non-employee Plan, a maximum of 6,000 shares can be
granted to each director, not to exceed 24,000 shares per calendar year, and
a maximum of 86,000 shares in aggregate. Options are granted at not less
than fair market value on the date of grant, vest over 4 years and expire
not more than ten years from the date of grant. There were no shares
available for future grant at March 28, 1998 under this plan. A new stock
option plan for Non-Employee Directors will be voted on at the shareholder's
meeting on July 22, 1998.
The Company also has a stock option plan which grants options to key
employees for the purchase of common stock (the "Option Plan"). The Option
Plan is administered by the Committee, which is empowered to grant either
non-qualified or incentive stock options. Under the Option Plan, options to
purchase up to 1,468,800 shares may be granted at a price, in the case of
incentive options, not less than fair market value on the date of grant.
Options become exercisable in a manner determined by the Committee,
generally over 4 or 5 years, and incentive options expire not more than ten
years from the date of grant. At the year ended March 28, 1998 there were
1,550 shares available for future grant.
During 1998, the Board of Directors approved a stock option re-pricing
to $18.000 per share. On the date of the repricing, the fair market value of
the Company's common stock was less than the option exercise price;
therefore no compensation expense was recognized. The re-pricing affected
options to purchase 387,876 shares of common stock held by optionees other
than members of the CEO's staff. The options were originally priced between
$18.375 and $24.5625 with a weighted average price of $21.1536.
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 the fiscal year ended March 28, 1998, due to limited share
availability, the Company abbreviated the first buying period of fiscal
1999, ending it on February 21, 1998. Consequently, fiscal 1998, has three
buying periods as compared to two. The Plan has been subsequently
terminated. A new Employee Stock Purchase Plan will be voted on at the
shareholders meeting on July 22, 1998.
During 1998, there were 39,082 shares purchased at a range of $11.90
to $15.94 per share under the Purchase Plan. During 1997, there were 33,181
shares purchased at a range of $15.09 to $15.51 per share under the Purchase
Plan.
The Company accounts for these plans under APB Opinion No. 25, under
which no compensation cost has been recognized for options granted at fair
market value. Had the compensation cost for these plans been determined
consistent with the SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company's net income and earnings per share would have been the
following pro forma amounts:
1998 1997
-----------------------------
Net Income: As Reported $(24,772,000) $32,970,000
Pro Forma $(28,071,000) $31,526,000
Basic EPS: As Reported (0.93) 1.21
Pro Forma (1.06) 1.16
Diluted EPS: As Reported (0.93) 1.20
Pro Forma (1.06) 1.15
For purposes of the pro forma disclosure, the fair value of each
option is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions:
1998 1997
---------------
Volatility 28.5% 28.3%
Risk-Free Interest Rate 6.6% 6.5%
Expected Life of Options 7 yrs. 7 yrs.
The weighted average grant date fair value of options granted during
1998 and 1997 was approximately $7.663 and $8.223, respectively.
The fair values of shares purchased under the Employee Stock Purchase
Plan is estimated using the Black-Scholes option pricing model with the
following weighted average assumptions:
1998 1997
--------------
Volatility 27.8% 28.3%
Risk-Free Interest Rate 5.5% 5.3%
Expected Life of Options 5 mos. 6 mos.
The weighted average grant-date fair value of options granted under
the Purchase Plan was $4.13 in 1998 and $4.34 in 1997.
The effects of applying SFAS No. 123 for the purposes of providing pro
forma disclosures may not be indicative of the effects on reported net
income per share for future years, as the pro forma disclosures include the
effects of only those awards granted after April 2, 1995.
A summary of stock option activity for the combined plans for the
three years ended March 28, 1998 is as follows:
Weighted
Average
Number of Exercise
Shares Price per Share
-----------------------------
Outstanding at April 1, 1995 2,202,612 $14.464
Granted 652,079 $16.989
Exercised (367,488) $ 6.218
Terminated (142,992) $16.528
-------------------------
Outstanding at March 30, 1996 2,344,211 $16.333
Granted 595,425 $18.018
Exercised (468,004) $ 8.775
Terminated (208,601) $17.239
-------------------------
Outstanding at March 29, 1997 2,263,031 $18.231
Granted 1,918,871 $17.103
Exercised (103,298) $14.959
Terminated (1,184,030) $18.891
-------------------------
Outstanding at March 28, 1998 2,894,574 $17.450
The following table summarizes information about stock options
outstanding at March 28, 1998:
Options Outstanding Options Exercisable
------------------------------------ -----------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 3/28/98 Life Price at 3/28/98 Price
---------------------------------------------------------------------------------
$14.4375 to $17.0000 1,177,490 8.13 $16.1634 330,491 $15.8926
$17.4375 to $18.0000 1,267,241 7.79 $17.7665 393,726 $17.9972
$18.3750 to $24.5625 449,843 6.06 $19.9253 327,343 $20.3015
---------------------------------------------------------------
Total 2,894,574 7.66 $17.4499 1,051,560 $18.0531
===============================================================
Shareholders Rights Agreement
In April, 1998, the Board of Directors adopted a shareholder rights
plan (the Plan). The Plan is intended to help ensure that all Haemonetics
shareholders receive fair and equal treatment in the event of any proposed
takeover of Haemonetics and to guard against abusive takeover tactics which
do not offer all stockholders a fair price. The Plan entails a dividend of
one right for each outstanding share of the Company's common stock. These
rights, which expire in 2008, entitle their holders to purchase from the
Company, one share of common stock, par value $0.01 for a cash exercise
price of $90 per share, subject to adjustment. The rights are represented by
and traded with the Company's common stock. There are no separate
certificates or market for the rights. The rights will trade separately from
the common stock and will become exercisable after a person or group has
acquired or announced an intent to make an offer to acquire 15% or more of
the outstanding common stock of the Company. A person or group that acquires
shares of common stock pursuant to a tender or exchange offer which is for
all outstanding shares of common stock at a price and on terms which a
majority of the outside Directors determines to be fair and in the best
interest of the Company and its stockholders will not be deemed to be an
acquiring person and such ownership will not trigger the exercisability of
the rights. The rights are redeemable by the Board of Directors at a price
of $0.01 per right any time before a person or group acquires 15% or more of
the outstanding common stock or before the expiration of the rights.
In the event the rights become exercisible, each holder will have the
right ("flip in right") to receive, upon exercise, the number of shares of
common stock having a value equal to two times the aggregate exercise price
of $90 per right. Additionally, the Board of Directors, at its option, may
exchange each right for one share of common stock in lieu of the flip in
right, provided that no one person is the beneficial owner of more than 50%
or more of the outstanding shares of common stock at the time of such
exchange. In the event the Company is acquired in a merger or other business
combination, whereby more than 50% of the Company's assets or earnings power
is sold, each holder of rights shall have the right ("flip over right") to
receive, upon exercise, shares of common stock of the acquiring Company
having a value equal to two times the aggregate exercise price of $90 per
right.
8. SAVINGS PLUS PLAN
The Company's Savings Plus Plan is a 401k plan which allows employees
to accumulate savings on a pretax basis. In addition, the Company makes
matching contributions to the Plan based upon preestablished rates. The
Company can also make additional discretionary contributions if approved by
the Board of Directors. The Company's matching contributions amounted to
approximately $641,000, $660,000 and $616,000 in 1998, 1997, and 1996,
representing a dollar for dollar match up to $1,000 per participant per Plan
year. On May 1, 1998, the Board of Directors approved a change to the
matching calculation which will take effect during FY99. The new formula is
a dollar for dollar match up to 6% of earnings (capped at $100,000) per
participant per Plan year.
The Board of Directors declared discretionary contributions of
approximately $1,100,000 for the Savings Plan years ended March 28, 1998 and
March 30, 1996. No discretionary contribution was made for the Savings Plan
year ended March 29, 1997.
The Company has no material obligation for postretirement or
postemployment benefits.
9. TRANSACTIONS WITH RELATED PARTIES
The Company advances money to various employees for relocation costs
and incentive purposes. Loans to employees, which are included in other
assets, amounted to approximately $476,000 as of March 28, 1998 and $593,000
as of March 29, 1997, and are payable within five years. Certain loans are
interest-bearing, and the Company records interest income on these loans
when collected. Certain loans have forgiveness provisions based upon
continued service or compliance with various guidelines. The Company
amortizes the outstanding loan balance as a charge to operating expense as
such amounts are forgiven.
10. ACQUISITION OF BLOOD CENTERS
During the second quarter of 1998, the Company purchased substantially
all of the assets of three blood centers; Tri-Counties Blood Bank, Kansas
Blood Services and Gateway Blood Services. Each of these acquisitions was
accounted for using the purchase method of accounting, and accordingly, the
results of operations for each acquisition were included in the consolidated
results of the Company from the respective acquisition dates. The purchase
price for the acquisitions, approximated $10.5 million and exceeded the
underlying fair value of the net assets acquired by $4.9 million which has
been assigned to goodwill. As further discussed in footnote 12, the Company
has decided to discontinue its operations in the blood bank services
business. The assets remaining after recording the loss on disposal are
included on the accompanying consolidated balance sheet.
11. RESTRUCTURING CHARGE
The Company recorded a restructuring charge of $24.5 million related
to the restructuring plans announced by the Company during the third quarter
of fiscal 1998. The Company made a decision not to undertake certain rework
and to terminate the manufacture of certain products. Additionally, certain
products, which would have required additional investments to continue their
useful lives, will no longer be supported. The Company also identified
certain operations, which it has closed or partially closed, resulting in
losses associated with the abandonment of certain leases and fixed assets,
and the termination of certain employees.
The $24.5 million charge consists of $8.6 million related to the
write-off of certain disposable and equipment inventories. These inventories
and equipment were scrapped or abandoned in conjunction with decisions to
discontinue a disposable rework program, and to exit certain product lines.
The Company also recorded charges of $3.8 million related to the cost of
exiting certain long term supply commitments for products which the Company
no longer plans to resell or use in its operations. Other assets totaling
$3.8 million were written off which represent certain strategic investments
in non-core businesses which the Company no longer intends to pursue. The
Company charged $2.1 million which was related to reserves for severance and
other contractual obligations. These reserves and other restructuring costs
discussed above were provided in accordance with Emerging Issues Task Force
Issue 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)". Finally, an additional $6.2 million related to the write
down of certain property, plant and equipment, principally older generation
commercial plasma equipment, which the Company no longer intends to support.
This write down was computed using management's estimate of future cash
flows to be provided by the equipment, and the costs to service the
equipment, consistent with SFAS No. 121, "Impairment of Long Lived Assets".
12. DISCONTINUED OPERATIONS
On May 1, 1998, the Board of Directors announced a plan to discontinue
the Company's Blood Bank Services Business, ("BBMS"). Accordingly, the
operating results for BBMS have been segregated from the results for the
continuing operations and reported as a separate line on the consolidated
statements of income for all periods presented.
The operating losses for BBMS are detailed as follows:
Years Ended
-----------------------------------
March 28, March 29, March 30,
1998 1997 1996
-----------------------------------
(in thousands)
Net Revenues $ 18,046 $ 6,808 $ 1,746
Gross Profit (189) 598 611
Operating expenses:
Research and Development 364 388 363
Selling, general and administrative 10,228 4,265 3,121
Total operating expenses 10,592 4,653 3,484
Operating loss (10,781) (4,055) (2,873)
Other income(expense), net (255) (42) (48)
Taxes (3,863) (1,433) (1,022)
----------------------------------
Net loss $ (7,173) $(2,664) $(1,899)
==================================
Other income(expense) includes an allocation of corporate interest
expense of approximately $255,000, $42,000 and $48,000, in 1998, 1997 and
1996 respectively. The allocation of corporate interest was calculated based
upon the percentage of net assets of BBMS to total domestic assets.
The net loss on disposal of $18,200,000 million includes a provision
for estimated losses after taxes for BBMS of $5,195,000 from March 30, 1998
through disposal.
The remaining net assets of BBMS included in the consolidated balance
sheet for March 28, 1998 and March 29, 1997 are as follows:
March 28, March 29,
1998 1997
-----------------------
(in thousands)
Current Assets $ 5,167 $ 1,478
Net property, plant and equipment 8,217 8,383
Other assets 39 894
---------------------
Total assets $13,423 $10,755
Current liabilities and accrued losses $15,760 $ 1,209
Other long-term liabilities 1,450 1,863
---------------------
Total liabilities $17,210 $ 3,072
13. 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 Continuing Operations for 1998, 1997 and 1996 is as follows:
Geographic Area
-------------------------------------------------
Europe & Far East &
Domestic All Other Japan Consolidated
-------------------------------------------------
(in thousands)
Year ended March 28, 1998:
Net revenues $ 93,104 $91,744 $100,914 $285,762
-----------------------------------------------
Income before provision for income taxes $ (9,728) $ 8,178 $ 6,016 $ 4,466
-----------------------------------------------
Identifiable assets $227,207 $67,844 $ 41,642 $336,693
-----------------------------------------------
Year ended March 29, 1997:
Net revenues $110,023 $97,026 $ 95,960 $303,009
-----------------------------------------------
Income before provision for income taxes $ 31,162 $15,206 $ 8,437 $ 54,805
-----------------------------------------------
Identifiable assets $212,338 $71,791 $ 36,345 $320,474
-----------------------------------------------
Year ended March 30, 1996:
Net revenues $106,406 $78,423 $ 91,641 $276,470
-----------------------------------------------
Income before provision for income taxes $ 39,179 $11,063 $ 7,933 $ 58,175
-----------------------------------------------
Identifiable assets $166,494 $82,598 $ 38,449 $287,541
-----------------------------------------------
Intercompany transfers to foreign subsidiaries are transacted at
prices intended to allow the subsidiaries comparable earnings to those of
unaffiliated distributors. Sales to unaffiliated distributors and customers
outside the United States, including U.S. export sales, were approximately
$194,857,000 in 1998, which represented 68% of net revenue; $194,849,000 in
1997, which represented 64% of net revenues and $171,410,000 in 1996, which
represented 62% of net revenues.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Haemonetics Corporation:
We have audited the accompanying consolidated balance sheets of
Haemonetics Corporation (a Massachusetts corporation) and subsidiaries as of
March 28, 1998 and March 29, 1997, and the related consolidated statements
of income, stockholders' equity and cash flows for each of the three years
in the period ended March 28, 1998. 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 28, 1998 and March 29, 1997, and
the results of their operations and their cash flows for each of the three
years in the period ended March 28, 1998, in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in
item 14 (a) is the responsibility of the Company's management and is
presented for the purpose of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly states, in all material respects, the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
April 23, 1998
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 22, 1998.
(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:
JAMES L. PETERSON joined Haemonetics in 1980 as Director of European
Operations. In 1982, he was promoted to Vice President and in 1988, to
Executive Vice President. In 1994, Mr. Peterson was promoted to President,
International Operations. In January, 1998 Mr. Peterson was elected
President and Chief Executive Officer by the Board of Directors. 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.
THOMAS A. ASLAKSON joined Haemonetics in 1986 and has served in many
capacities with increasing responsibility. These positions include Cell
Saver 4 Product Manager, Government Contracts Administrator, National
Accounts Manager, Director of Field Service, Director of Marketing and
Director of Quality Assurance. In 1994, Mr. Aslakson was promoted to Vice
President of Quality Assurance for Pittsburgh and Braintree. In December,
1997, Mr. Aslakson was promoted to President, Surgical Business Division.
Prior to joining Haemonetics Mr. Aslakson was employed with Cobe
Laboratories, Lakewood, Colorado.
BRUNO DEGLAIRE joined Haemonetics' European Operation in 1987 as
Director of Haemonetics International Finance and Administration. In 1993,
Mr. Deglaire was promoted to Director of European Marketing and Product
Development. In 1996, he was named Vice President of European Field
Operations. In February 1998, Mr. Deglaire was appointed to the position of
President, Europe and Asian Field Operations. Prior to joining Haemonetics
Mr. Deglaire held various positions of increasing responsibility at Dupont
de Nemours in Geneva, Switzerland.
MICHAEL P. MATHEWS joined Haemonetics in 1987 as Vice President,
Quality Assurance. In 1990, Mr. Mathews assumed the position of Vice
President of Sales and Marketing. In 1991, Mr. Mathews resumed the position
of Vice President, Quality Assurance. In 1994, Mr. Mathews was promoted to
Senior Vice President, Quality Assurance and Solutions Development. In April
1996, Mr. Mathews was promoted to Executive Vice President. In February
1998, Mr. Mathews was promoted to President, Blood Banks Division. From 1985
until joining Haemonetics Mr. Mathews served in various management positions
with V. Mueller, a Division of Baxter International, Inc., Niles, Illinois.
YUTAKA SAKURADA, Ph.D. joined Haemonetics in 1991 as President of
Haemonetics Japan and Vice President of Haemonetics Corporation. In April
1995, Dr. Sakurada was promoted to Senior Vice President of Haemonetics
Corporation. Prior to joining Haemonetics, Dr. Sakurada was employed by
Kuraray Plastics Co., Ltd. in Japan, where he was responsible for the
planning, development , and establishment of medical products business. Dr.
Sakurada has been a member of the Haemonetics Board of Directors since
joining Haemonetics in 1991.
RONALD J. RYAN joined Haemonetics in February, 1998 as Senior Vice
President and Chief Financial Officer. Prior to joining Haemonetics Mr. Ryan
was employed by Converse Inc., North Reading, Massachusetts, where his most
recent position was Senior Vice President of Operations. Previously, Mr.
Ryan was Senior Vice President of Finance and Administration and Chief
Financial Officer. Prior to Converse, Inc., Mr. Ryan was employed with
Bristol-Myers Squibb as Vice President of Finance and Business Planning for
the Europe, Middle East and Africa Divisions. Prior to Bristol-Myers Squibb
Mr. Ryan was Vice President of Planning and Control, International, at
American Can Company.
ROBERT EBBELING joined Haemonetics in 1987 as Manager of Injection
Molding and in December 1987 he became Manager, Molding and Lapping. In
April 1988, Mr. Ebbeling was promoted to Manager, Bowls, Molding, and
Lapping. In April, 1989 he became Director, Disposables Manufacturing. In
January 1994, Mr. Ebbeling was promoted to Vice President, US Disposables
Manufacturing. In April, 1995 he was named Vice President, Disposables
Manufacturing. In August, 1996, Mr. Ebbeling was promoted to Senior Vice
President, Manufacturing. Prior to joining Haemonetics, Mr. Ebbeling was
Vice President, Manufacturing, for Data Packaging Corporation, Somerset,
Massachusetts.
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 22,
1998.
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 22,
1998.
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 19
Consolidated Statements of Operations 20
Consolidated Statements of Stockholders' Equity 21
Consolidated Statements of Cash Flows 22
Notes to Consolidated Financial Statements 23
Report of Independent Public Accountants 39
Schedules required by Article 12 of Regulation S-X
II Valuation and Qualifying Accounts 46
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 44, which is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HAEMONETICS CORPORATION
By: /s/ SIR STUART BURGESS
----------------------------------
Sir Stuart Burgess
Chairman
By: /s/ JAMES L. PETERSON
----------------------------------
James L. Peterson, President
and Chief Executive Officer
June 12, 1998
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/ SIR STUART BURGESS Chairman of the Board June 12, 1998
- --------------------------
Sir Stuart Burgess
/s/ JAMES L. PETERSON President and Chief Executive Officer June 12, 1998
- -------------------------- Director
James L. Peterson
/s/ RONALD J. RYAN Sr. Vice President of Finance and Chief Financial June 12, 1998
- -------------------------- Officer, (Principal Financial and Accounting Officer)
Ronald J. Ryan
/s/ YUTAKA SAKURADA Sr. Vice President Haemonetics Corp. and June 12, 1998
- -------------------------- President, Haemonetics Japan
Yutaka Sakurada Director
/s/ BENJAMIN L. HOLMES Director June 12, 1998
- --------------------------
Benjamin L. Holmes
/s/ JERRY E. ROBERTSON Director June 12, 1998
- --------------------------
Jerry E. Robertson
/s/ DONNA C. E. WILLIAMSON Director June 12, 1998
- --------------------------
Donna C. E. Williamson
EXHIBITS FILED WITH SECURITIES AND EXCHANGE COMMISSION
Number and Description of Exhibit
---------------------------------
3. Articles of Organization
3A* Articles of Organization of the Company effective August 29,
1985, as amended December 12, 1985 and May 21, 1987 (filed as
Exhibit 3A to the Company's Form S-1 No. 33-39490 and
incorporated herein by reference).
3B* Form of Restated Articles of Organization of the Company (filed
as Exhibit 3B to the Company's Form S-1 No. 33-39490 and
incorporated herein by reference).
3C* By-Laws of the Company presently in effect (filed as Exhibit 3C
to the Company's Form 10-K No. 1-10730 for the year ended April
3, 1993 and incorporated herein by reference).
3D* Articles of Amendment to the Articles of Organization of the
Company filed May 8, 1991 with the Secretary of the Commonwealth
of Massachusetts (filed as Exhibit 3E to the Company's Amendment
No. 1 to Form S-1 No. 33-39490 and incorporated herein by
reference).
4. Instruments defining the rights of security holders
4A* Specimen certificate for shares of common stock (filed as
Exhibit 4B to the Company's Amendment No. 1 to Form S-1 No. 33-
39490 and incorporated herein by reference).
10. Material Contracts
10A* The 1990 Stock Option Plan, as amended (filed as Exhibit 4A to
the Company's Form S-8 No. 33-42006 and incorporated herein by
reference).
10B* Form of Option Agreements for Incentive and Non-qualified
Options (filed as Exhibit 10B to the Company's Form S-1 No. 33-
39490 and incorporated herein by reference).
10C* Distribution Agreement dated April 11, 1990 between Baxter
Healthcare Corporation, acting through its Bentley Laboratories
Division, and the Company (filed as Exhibit 10C to the Company's
Form S-1 No. 33-39490 and incorporated herein by reference).
10D* 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).
10E* 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).
10F* 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).
10G* 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).
10H* 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).
10I* 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).
10J* 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).
10K* 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).
10L* 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).
10M* 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).
10N* 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).
10O* 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).
10P* 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).
10Q* 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).
10R* Asset Purchase Agreement dated as of July 18, 1995 between DHL
Laboratories and the Company (filed as Exhibit 10AF to the
Company's Form 10-K No. 1-10730 for the year ended March 30,
1996 and incorporated herein by reference).
10S* First Amendment to lease dated July 17, 1990 between Buncher
Company and the Company of property in Pittsburgh, Pennsylvania
(filed as Exhibit 10AI to the Company's Form 10-Q No. 1-10730
for the quarter ended December 28, 1996 and incorporated herein
by reference).
10T* Revolving Credit Agreement among Mellon Bank, N.A., the First
National Bank of Boston and Haemonetics Corporation dated as of
October 1, 1996. (filed as Exhibit 10AE to the Company's Form
10-K No. 1-10730 for the year ended March 29, 1997 and
incorporated herein by reference).
10U* Amendment, dated April 18, 1997 to the 1992 Long-Term Incentive
Plan (filed as Exhibit 10V to the Company's Form 10-K No. 1-
10730 for the year ended March 29, 1997 and incorporated herein
by reference).
10V* $40,000,000 Revolving Credit Facility Among Mellon Bank, N.A.
For Itself and as Agent BankBoston, N.A. and The Sanwa Bank,
Limited to Haemonetics Corporation. (filed as Exhibit 10A to the
Company's Form 10-Q No. 1-10730 for the quarter ended June 28,
1997 and incorporated herein by reference).
10W* Note Purchase agreements, dated October 15, 1997 whereby
Haemonetics Corporation authorized sale of $40,000,000, 7.05%
Senior Notes due October 15, 2007. (filed as Exhibit 10A to the
Company's Form 10-Q No. 1-10730 for the quarter ended September
27, 1997 and incorporated herein by reference).
10X* First Amendment, dated December 26, 1997 to the Revolving Credit
Agreement, dated June 25, 1997, among Haemonetics Corporation
and Mellon Bank N.A. (filed as Exhibit 10A to the Company's Form
10-Q No. 1-10730 for the quarter ended December 27, 1997 and
incorporated herein by reference).
10Y Second Amendment, dated April 30, 1998 to the Revolving Credit
Agreement, dated June 25, 1997, among Haemonetics Corporation
and Mellon Bank N.A.
10Z 1998 Employee Stock Purchase Plan
10AA 1998 Stock Option Plan for Non-Employee Directors
10AB Lease, dated July 29, 1997 between New Avon Limited Parnership
and the Company for the property in Avon, Massachusetts.
10AC Limited waiver under Note Purchase Agreements, dated April 30,
1998.
21. Subsidiaries of the Company
23. Consent of the Independent Public Accountants
27 Financial Data Schedule
- --------------------
* Incorporated by reference.
(All other exhibits are inapplicable.)
SCHEDULE II
HAEMONETICS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Balance at Charged to Write-Offs Balance at
Beginning Costs and (Net of End
Allowance for Doubtful Accounts of Period Expenses Recoveries) of Period
- ----------------------------------------------------------------------------------------
For the Year Ended March 28, 1998 $961 $263 $(406) $818
For the Year Ended March 29, 1997 984 431 (454) 961
For the Year Ended March 30, 1996 681 321 (18) 984
EXHIBIT 10Y
-----------
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
This Second Amendment to Revolving Credit Agreement (the or this
"Second Amendment") is made as of this 30 day of April, 1998 by and between
HAEMONETICS CORPORATION (the "Borrower"), a Massachusetts corporation, and
MELLON BANK, N.A., a national banking association (the "Agent").
NOW, THEREFORE, for the promises herein contained and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
I. Background
As of June 25, 1997, the Borrower and the Banks entered into a
revolving loan arrangement of up to Forty Million Dollars ($40,000,000) (the
"Original Loan"). The Original Loan was evidenced by three promissory
notes: a $20,000.000 note dated June 25, 1997 made by the Borrower to the
order of Mellon Bank, N.A., a $10,000,000 note dated June 25, 1997 made by
the Borrower to the order of BankBoston, N.A. and a $10,000,000 note dated
June 25, 1997 made by the Borrower to the order of The Sanwa Bank, Limited
(collectively, the "Notes"). The Borrower and the Banks entered into a
revolving credit agreement dated as of June 25, 1997 (the "Original Credit
Agreement").
BankBoston, N.A. and The Sanwa Bank, Limited have withdrawn from the
bank group and each of their commitments of Ten Million Dollars
$10,000,000.00 have been eliminated. The total Commitment (as defined in
the Original Loan Agreement) is, on the date hereof, Twenty Million Dollars
($20,000,000.00), which is held by Mellon Bank, N.A. ("Mellon"). The
Borrower has no credit available hereunder in excess of Twenty Million
Dollars ($20,000,000.00).
The Borrower and the Agent entered into a First Amendment to Revolving
Credit Agreement (the "First Amendment") dated as of December 26, 1997, to
provide for certain pricing options and to exclude certain non-cash charges
from the covenant calculations.
The Borrower and the Agent have agreed to enter into this Second
Amendment, inter alia, to provide for certain limited waivers, revisions to
and additions of certain financial covenants.
Capitalized terms used in this Second Amendment and not defined herein
shall have the meaning given such terms in the Original Loan Agreement, as
amended by the First Amendment. The Original Loan Agreement, as amended by
the First Amendment, as amended by the Second Amendment, as may be further
amended, supplemented, modified or recast from time to time, is referred to
as the "Loan Agreement."
II. Amendment to Article I. Section 1.01, "Certain Definitions" is hereby
amended as follows:
A. The following definitions are hereby added:
1. "Consolidated EBIT" shall mean Consolidated Net Income
plus Consolidated Interest Expense plus tax expenses minus
the benefit of any tax losses used in the calculation of
Consolidated Net Income of the Borrower and its
subsidiaries during the period of determination on a
consolidated basis, but excluding in any event: (i) any
restructuring charge taken by the Borrower in its fiscal
quarter ended December 27, 1997 and (ii) any restructuring
charges taken by the Borrower up to the amount of
$27,300,000.00 in its fiscal quarter ended March 28, 1998
relating to the Borrower's disposition of its Blood Bank
Management Services.
2. "Consolidated Interest Expense" shall mean any interest
expense of the Borrower and its subsidiaries during the
period of determination determined on a consolidated basis
in accordance with GAAP.
3. "Consolidated EBITDA" shall mean for any period
Consolidated EBIT plus amortization plus depreciation as
determined on a consolidated basis in accordance with GAAP.
4. "Consolidated Net Worth" shall mean at any time the
stockholders' equity of the Borrower and its Consolidated
Subsidiaries, determined and consolidated in accordance
with GAAP except that there shall be excluded therefrom
the amount, whether positive or negative, of foreign
currency translation adjustments to stockholders' equity
of the Borrower and its Subsidiaries as determined in
accordance with GAAP.
III. Amendment to Article V. Article V, "Affirmative Covenants" is hereby
amended as follows:
A. Section 5.1(j) is hereby added, which states as follows:
"On or about June 30 of each year the Borrower shall
deliver to Agent a plan which contains projections for the
then current fiscal year of the Borrower's income
statement, balance sheet and cash flow statements,
including any non-recurring events then anticipated and
such other information as the Agent may request, all in
reasonable detail as requested by the Agent.
IV. Amendment to Article VI. Article VI, "Negative Covenants" is hereby
amended as follows:
A. Section 6.01 Financial Maintenance Covenants.
Subsection (a) is hereby amended by deleting the words therein
contained and inserting the following in lieu thereof:
"Commencing with the fiscal quarter ending April 3, 1999,
the Borrower shall maintain Consolidated Net Worth which
is at all times equal to $200,000,000.00 increased
quarterly on a cumulative basis by an amount equal to
fifty percent (50%) of the Borrower's positive net income
(not to be reduced for losses), as determined in
accordance with GAAP, for each succeeding fiscal quarter.
B. Section 6.01 Financial Maintenance Covenants is hereby further
amended by deleting the words contained in subsection (b) and
hereby inserting the following in lieu thereof:
"Commencing with the fiscal quarter ending March 28, 1998
and for each fiscal quarter thereafter, the ratio of the
Consolidated EBIT to Consolidated Interest Expense shall
not be less than 2.0 to 1.0 for any four consecutive
fiscal quarter period ending on the date of any
determination."
C. Section 6.01, Financial Maintenance Covenants is hereby further
amended by deleting subsection (c) and inserting the following
in lieu thereof:
"Commencing with the fiscal quarter ending March 28, 1998
and for each fiscal quarter thereafter, the ratio of (x)
Consolidated Total Indebtedness as of the last day of such
fiscal quarter to (y) the sum of EBITDA for the period of
the four (4) consecutive quarters of the Borrower then
ending shall not be more than the following: 3.0:1
D. The following Section 6.11 is hereby added:
"(a) The Borrower will not, except as hereinafter provided:
(i) Declare or pay any dividends, either in cash
or property, on any shares of its capital
stock of any class (except dividends or other
distributions payable solely in shares of
common stock of the Borrower);
(ii) Directly or indirectly, or through any
Subsidiary or through any Affiliate of the
Borrower, purchase, redeem or retire any
shares of its capital stock of any class or
any warrants, rights or options to purchase or
acquire any shares of its capital stock; or
(iii) Make any other payment or distribution, either
directly or indirectly or through any
Subsidiary, in respect of its capital stock;
(such declarations or payments of dividends,
purchases, redemptions or retirements of capital
stock and warrants, rights or options and all such
other payments or distributions being herein
collectively called "Restricted Payments"), if after
giving effect thereto the sum of (1) the aggregate
amount of Restricted Payments made during the period
from and after March 29, 1997 to and including the
date of the making of the Restricted Payment in
question plus (2) the aggregate amount of all
Restricted Investments (as defined in that certain
Note Purchase Agreement by and between the Borrower
and Allstate Life Insurance Company, Employers
Insurance Company of Wausau, State Farm Life
Insurance Company and Nationwide Mutual Fire
Insurance Company dated as of October 15, 1997) made
by the Borrower or any Subsidiary during said period
would exceed the sum of:
(i) 50% of Consolidated Net Income (or if such
Consolidated Net Income is a deficit figure,
then minus 100% of such deficit) for such
period determined on a cumulative basis for
said entire period; plus
(ii) an amount equal to the aggregate net cash
proceeds received by the Borrower from the
sale on or after the date of this Agreement of
shares of its common stock or other securities
convertible into common stock of the Borrower.
(b) The Borrower will not declare any dividend which
constitutes a Restricted Payment payable more than
60 days after the date of declaration thereof.
(c) For the purposes of this Section 6.11, the amount of
any Restricted Payment declared, paid or distributed
in property shall be deemed to be the greater of the
book value or fair market value (as determined in
good faith by the Board of Directors of the
Borrower) of such property at the time of the making
of the Restricted Payment in question.
(d) The Borrower will not authorize or make a Restricted
Payment if after giving effect to the proposed
Restricted Payment, a Default or Event of Default
would exist.
Notwithstanding anything to the contrary contained in this
Section 6.11, during the period commencing on March 28, 1998 and
ending on April 3, 1999, the Borrower shall not declare or pay
any Restricted Payments (it being expressly agreed that
dividends or other distributions payable solely in shares of
common stock of the Borrower or rights to acquire common stock
of the Borrower shall be permitted)."
V. Ratification and Consent
A. The loan documents shall otherwise remain unaltered, ratified,
confirmed and in full force and effect. The Borrower hereby also ratifies
and confirms that the amount of the Commitment is Twenty Million Dollars
($20,000,000.00), which is held by Mellon on the date hereof.
B. The Borrower represents and warrants as follows: There are no
defenses, offsets or counterclaims against obligations to the Banks
evidenced by the Notes or the other loan documents, and to the extent there
are any defenses, offsets or counterclaims, the same are hereby waived. All
the representations and warranties contained in the Loan Agreement are true,
correct and accurate in all material respects as of the date hereof.
IN WITNESS WHEREOF, the parties hereto have set their hand and seal as
of the date first above written.
Dated as of April 30, 1998.
HAEMONETICS CORPORATION
By: /s/ Ronald J. Ryan
--------------
Its
MELLON BANK
By: /s/ R. Jane Westrich
----------------
Its
Exhibit 10Z
-----------
HAEMONETICS CORPORATION
1998 Employee Stock Purchase Plan
---------------------------------
1. Purpose
-------
It is the purpose of this 1998 Employee Stock Purchase Plan to provide
a means whereby eligible employees may purchase Common Stock of Haemonetics
Corporation (the "Company") through payroll deductions. It is intended to
provide a further incentive for employees to promote the best interests of
the Company and to encourage stock ownership by employees in order that they
may participate in the Company's economic growth.
It is the intention of the Company that the Plan qualify as an
"employee stock purchase plan" within the meaning of Section 423 of the
Internal Revenue Code and the provisions of this Plan shall be construed in
a manner consistent with the Code.
2. Definitions
-----------
The following words or terms, when used herein, shall have the
following respective meanings:
(a) "Plan" shall mean the 1998 Employee Stock Purchase Plan.
(b) "Company" shall mean Haemonetics Corporation, a Massachusetts
corporation.
(c) "Account" means the Employee Stock Purchase Account established
for a Participant under Section 7 hereunder.
(d) "Basic Compensation" shall mean the regular rate of salary or
wages in effect immediately prior to a Purchase Period,
including sales commissions, before any deductions or
withholdings, but shall exclude overtime, bonuses and amounts
paid in reimbursement for expenses.
(e) "Board of Directors" shall mean the Board of Directors of
Haemonetics Corporation.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) "Committee" shall mean the Stock Purchase Plan Committee
appointed and acting in accordance with the terms of the Plan.
(h) "Common Stock" shall mean shares of the Company's common stock
with a par value of $.01 per share.
(i) "Effective Date" shall mean May 1, 1998.
(j) "Eligible Employees" shall mean all persons employed by the
Company or one of its subsidiaries as defined in Section 424 of
the Code, but excluding:
(1) Persons who have been employed by the Company or its
subsidiaries for less than six months on the first day of
the Purchase Period with the exception of persons
previously eligible;
(2) Persons whose customary employment is less than twenty
hours per week or five months or less per year; and
(3) Persons who are deemed for purposes of Section 423(b)(3)
of the Code to own stock possessing 5% or more of the
total combined voting power or value of all classes of
stock of the Company, its parent or a subsidiary.
For purposes of the Plan, employment will be treated as continuing
intact while a Participant is on military leave, sick leave, or other bona
fide leave of absence, for up to 90 days or so long as the Participant's
right to re-employment is guaranteed either by statute or by contract, if
longer than 90 days.
(k) "Exercise Date" shall mean the last day of a Purchase Period;
provided, however, that if such date is not a business day,
"Exercise Date" shall mean the immediately preceding business
day.
(l) "Participant" shall mean an Eligible Employee who elects to
participate in the Plan under Section 6 hereunder.
(m) Except as provided below, there shall be two "Purchase Periods"
in each full calendar year during which the Plan is in effect,
one commencing on November 1st of each calendar year and
continuing through April 30 of such calendar year, and the
second commencing on May 1st of each calendar year and
continuing through October 31st of such calendar year. The
first Purchase Period after adoption of the Plan shall commence
on November 1, 1998. The last Purchase Period shall commence on
May 1, 2008 and end on October 31, 2008.
(n) "Purchase Price" shall mean the lower of (i) 85% of the fair
market value of a share of Common Stock for the first business
day of the relevant Purchase Period, or (ii) 85% of such value
on the relevant Exercise Date. If the shares of Common Stock
are listed on any national securities exchange, or traded on the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ") National Market System, the fair market value
per share of Common Stock on a particular day shall be the
closing price, if any, on the largest such exchange, or if not
traded on an exchange, the NASDAQ National Market System, on
such day, and, if there are no sales of the shares of Common
Stock on such particular day, the fair market value of a share
of Common Stock shall be determined by taking a weighted average
of the means between the highest and lowest sales on the nearest
date before and the nearest date after the particular day in
accordance with Treasury Regulations Section 25.2512-2. If the
shares of Common Stock are not then listed on any such exchange
or the NASDAQ National Market System, the fair market value per
share of Common Stock on a particular day shall be the mean
between the closing "Bid" and the closing "Asked" prices, if
any, as reported in the National Daily Quotation Service for
such day. If the fair market value cannot be determined under
the preceding sentences, it shall be determined in good faith by
the Board of Directors.
3. Grant of Option to Purchase Shares.
-----------------------------------
Each Eligible Employee shall be granted an option effective on the
first day of each Purchase Period to purchase shares of Common Stock. The
term of the option shall be the length of the Purchase Period. The number
of shares subject to each option shall be the quotient of the aggregate
payroll deductions in the Purchase Period authorized by each Participant in
accordance with Section 6 divided by the Purchase Price, but in no event
greater than 800 shares per option. Notwithstanding the foregoing, (i) no
employee shall be granted an option which permits his right to purchase
shares under the Plan and under all other Code Section 423(b) employee stock
purchase plans of the Company or any parent or subsidiary corporation to
accrue at a rate which exceeds in any one calendar year $25,000 of the fair
market value of the Common Stock as of the date the option to purchase is
granted.
4. Shares.
-------
There shall be 375,000 shares of Common Stock reserved for issuance to
and purchase by Participants under the Plan, subject to adjustment as herein
provided. The shares of Common Stock subject to the Plan shall be either
shares of authorized but unissued Common Stock or shares of Common Stock
reacquired by the Company and held as treasury shares. Shares of Common
Stock not purchased under an option terminated pursuant to the provisions of
the Plan may again be subject to options granted under the Plan.
The aggregate number of shares of Common Stock which may be purchased
pursuant to options granted hereunder, the number of shares of Common Stock
covered by each outstanding option, the maximum number of shares that may be
granted in any Purchase Period and the purchase price for each such option
shall be appropriately adjusted for any increase or decrease in the number
of outstanding shares of Common Stock resulting from a stock split or other
subdivision or consolidation of shares of Common Stock or for other capital
adjustments or payments of stock dividends or distributions or other
increases or decreases in the outstanding shares of Common Stock effected
without receipt of consideration by the Company.
5. Administration.
---------------
The Plan shall be administered by the Board of Directors or a Stock
Purchase Plan Committee appointed from time to time by the Board of
Directors. All members of the Committee shall serve at the discretion of
the Board. The Board of Directors or the Committee, if one has been
appointed, is vested with full authority to make, administer and interpret
such equitable rules and regulations regarding the Plan as it may deem
advisable. The Board of Directors', or the Committee's, if one has been
appointed, determinations as to the interpretation and operation of the Plan
shall be final and conclusive. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under the Plan.
6. Election to Participate.
------------------------
An Eligible Employee may elect to become a Participant in the Plan for
a Purchase Period by completing a "Stock Purchase Agreement" form prior to
the first day of the Purchase Period for which the election is made. Such
Stock Purchase Agreement shall be in such form as shall be determined by the
Board of Directors or the Committee. The election to participate shall be
effective for the Purchase Period for which it is made. There is no limit
on the number of Purchase Periods for which an Eligible Employee may elect
to become a Participant in the Plan. In the Stock Purchase Agreement, the
Eligible Employee shall authorize regular payroll deductions of any full
percentage of his Basic Compensation, but in no event less than two percent
nor more than eight percent (8%) of his Basic Compensation. An Eligible
Employee may not change his authorization except as otherwise provided in
Section 9. Options granted to Eligible Employees who have failed to execute
a Stock Purchase Agreement within the time periods prescribed by the Plan
will automatically lapse.
7. Employee Stock Purchase Account.
--------------------------------
An Employee Stock Purchase Account will be established for each
Participant in the Plan for bookkeeping purposes, and payroll deductions
made under Section 6 will be credited to such Accounts. However, prior to
the purchase of shares in accordance with Section 8 or withdrawal from or
termination of the Plan in accordance with the provisions hereof, the
Company may use for any valid corporate purpose all amounts deducted from a
Participant's wages under the Plan and credited for bookkeeping purposes to
his Account.
The Company shall be under no obligation to pay interest on funds
credited to a Participant's Account, whether upon purchase of shares in
accordance with Section 8 or upon distribution in the event of withdrawal
from or termination of the Plan as herein provided.
8. Purchase of Shares.
-------------------
Each Eligible Employee who is a Participant in the Plan automatically
and without any act on his part will be deemed to have exercised his option
on each Exercise Date to the extent that the balance then in his Account
under the Plan is sufficient to purchase at the Purchase Price whole shares
of the Common Stock subject to his option. Any balance remaining in the
Participant's Account shall be carried forward and credited for use in the
next Purchase Period. If the Employee chooses not to participate in the
next Purchase Period, any balance will be refunded to him in cash.
Notwithstanding the foregoing, any balance remaining in a Participant's
Account at the end of a Purchase Period as a result of aggregate payroll
deductions having exceeded the limitations set forth in Section 3 shall be
refunded to the Participant in cash without interest.
9. Withdrawal.
-----------
A Participant who has elected to authorize payroll deductions for the
purchase of shares of Common Stock may cancel his election by written notice
of cancellation delivered to the office or person designated by the Company
to receive Stock Purchase Agreements ("Cancellation"), but any such notice
of Cancellation must be so delivered not later than ten (10) days before the
relevant Exercise Date.
A Participant will receive in cash, as soon as practicable after
delivery of the notice of Cancellation, the amount credited to his Account.
Any Participant who so withdraws from the Plan may again become a
Participant at the start of the next Purchase Period in accordance with
Section 6.
Upon dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving entity every option
outstanding hereunder shall terminate, in which event each Participant shall
be refunded the amount of cash then in his Account.
10. Issuance of Stock Certificates.
-------------------------------
The shares of Common Stock purchased by a Participant shall, for all
purposes, be deemed to have been issued and sold at the close of business on
the Exercise Date. Prior to that date none of the rights or privileges of a
stockholder of the Company, including the right to vote or receive
dividends, shall exist with respect to such shares.
Within a reasonable time after the Exercise Date, the Company shall
issue and deliver a certificate for the number of shares of Common Stock
purchased by a Participant for the Purchase Period, which certificate shall
be registered either in the Participant's name, jointly in the names of the
Participant and his spouse, or in the name of the Participant or his spouse
as guardian for their children, as the Participant shall designate in his
Stock Purchase Agreement. Such designation may be changed at any time by
filing notice thereof with the party designated by the Company to receive
such notices.
11. Termination of Employment.
--------------------------
(a) Upon a Participant's termination of employment for any reason,
other than death, no payroll deduction may be made from any
compensation due him and the entire balance credited to his
Account shall be automatically refunded.
(b) Upon the death of a Participant, no payroll deduction shall be
made from any compensation due him at time of death, and the
entire balance in the deceased Participant's Account shall be
paid in cash to the Participant's designated beneficiary, if
any, under a group insurance plan of the Company covering such
employee, or otherwise to his estate.
12. Rights Not Transferable.
------------------------
The right to purchase shares of Common Stock under this Plan is
exercisable only by the Participant during his lifetime and is not
transferable by him. If a Participant attempts to transfer his right to
purchase shares under the Plan, he shall be deemed to have requested
withdrawal from the Plan and the provisions of Section 9 hereof shall apply
with respect to such Participant.
13. No Guarantee of Continued Employment.
-------------------------------------
Granting of an option under this Plan shall imply no right of
continued employment with the Company for any Eligible Employee.
14. Notice.
-------
Any notice which an Eligible Employee or Participant files pursuant to
this Plan shall be in writing and shall be delivered personally or by mail
addressed to Haemonetics Corporation, 400 Wood Road, Braintree,
Massachusetts 02184 Attn: Alicia R. Lopez, General Counsel. Any notice
to a Participant or an Eligible Employee shall be conspicuously posted in
the Company's principal office or shall be mailed addressed to the
Participant or Eligible Employee at the address designated in the Stock
Purchase Agreement or in a subsequent writing.
15. Application of Funds.
---------------------
All funds deducted from a Participant's wages in payment for shares
purchased or to be purchased under this Plan may be used for any valid
corporate purpose provided that the Participant's Account shall be credited
with the amount of all payroll deductions as provided in Section 7.
16. Government Approvals or Consents.
---------------------------------
This Plan and any offering and sales to Eligible Employees under it
are subject to any governmental approvals or consents that may be or become
applicable in connection therewith. Subject to the provisions of Section
17, the Board of Directors of the Company may make such changes in the Plan
and include such terms in any offering under this Plan as may be necessary
or desirable, in the opinion of counsel, to comply with the rules or
regulations of any governmental authority, or to be eligible for tax
benefits under the Code or the laws of any state.
17. Amendment of the Plan.
----------------------
The Board of Directors may, without the consent of the Participants,
amend the Plan at any time, provided that no such action shall adversely
affect options theretofore granted hereunder, and provided that no such
action by the Board of Directors without approval of the Company's
stockholders may: (a) increase the total number of shares of Common Stock
which may be purchased by all Participants; or (b) change the class of
employees eligible to receive options under the Plan.
For purposes of this Section 17, termination of the Plan by the Board
of Directors pursuant to Section 18 shall not be deemed to be an action
which adversely affects options theretofore granted hereunder.
18. Term of the Plan.
-----------------
The Plan shall become effective on the Effective Date, provided that
it is approved within twelve months after adoption by the Board of Directors
at a duly-held stockholder's meeting by stockholders of the Company holding
a majority of the Company's voting stock. The Plan shall continue in effect
through October 31, 2008, provided, however, that the Board of Directors
shall have the right to terminate the Plan at any time. In the event of the
expiration of the Plan or its termination, all options then outstanding
under the Plan shall automatically be canceled and the entire amount
credited to the Account of each Participant hereunder shall be refunded to
each such Participant.
19. Withholding of Additional Income Taxes.
---------------------------------------
By electing to participate in the Plan, each Participant acknowledges
that the Company is required to withhold taxes with respect to the amounts
deducted from the Participant's compensation and accumulated for the benefit
of the Participant under the Plan and each Participant agrees that the
Company may deduct additional amounts from the Participant's compensation,
when amounts are added to the Participant's account, used to purchase Common
Stock or refunded, in order to satisfy such withholding obligations. Each
Participant further acknowledges that when Common Stock is purchased under
the Plan, the Company may be required to withhold taxes with respect to all
or a portion of the difference between the fair market value of the Common
Stock purchased and its purchase price, and each Participant agrees that
such taxes may be withheld from compensation otherwise payable to such
Participant. It is intended that tax withholding will be accomplished in
such a manner that the full amount of payroll deductions elected by the
Participant under Section 6 will be used to purchase Common Stock. However,
if amounts sufficient to satisfy applicable tax withholding obligations have
not been withheld from compensation otherwise payable to any Participant,
then, notwithstanding any other provision of the Plan, the Company may
withhold such taxes from the Participant's accumulated payroll deductions
and apply the net amount to the purchase of Common Stock, unless the
Participant pays to the Company, prior to the exercise date, an amount
sufficient to satisfy such withholding obligations. Each Participant
further acknowledges that the Company may be required to withhold taxes in
connection with the disposition of stock acquired under the Plan and agrees
that the Company may take whatever action it considers appropriate to
satisfy such withholding requirements, including deducting from compensation
otherwise payable to such Participant an amount sufficient to satisfy such
withholding requirements or conditioning any disposition of Common Stock by
the Participant upon the payment to the Company of an amount sufficient to
satisfy such withholding requirements.
20. General.
--------
Whenever the context of this Plan permits, the masculine gender shall
include the feminine and neuter genders.
Exhibit 10AA
------------
HAEMONETICS CORPORATION
1998 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
-------
The purpose of this Haemonetics Corporation 1998 Stock Option Plan for
Non-Employee Directors (the "Plan") is to attract and retain the services of
experienced and knowledgeable independent directors who are not employees
(sometimes referred to herein collectively as "Participants") of Haemonetics
Corporation ("Haemonetics" or the "Company") or its subsidiaries for the
benefit of Haemonetics and its stockholders and to provide additional
incentive for such Participants to continue to work in the best interests of
Haemonetics and its stockholders through continuing ownership of its common
stock.
2. SHARES SUBJECT TO THE PLAN
--------------------------
The total number of shares of common stock, par value $.01 per share
of Haemonetics ("Common Stock") available for stock options granted under
this Plan shall not exceed 500,000 shares in the aggregate, subject to
adjustment in accordance with Section 12 hereof. Shares issued under the
Plan may be authorized but unissued shares of Common Stock or shares of
Common Stock held in treasury. Options granted pursuant to the Plan shall
be authorized by action of the Board of Directors. Stock issuable upon the
exercise of an option granted under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall
be determined by the Board of Directors.
3. ADMINISTRATION OF THE PLAN
--------------------------
The Plan shall be administered by the Board of Directors. The Board
shall, subject to the provisions of this Plan, have the power to construe
this Plan, to determine all questions of interpretation and application of
the Plan and to adopt and amend such rules and regulations for the
administration of the Plan as the Board may deem desirable. No member of
the Board shall be liable for any action or determination made in good faith
with respect to this Plan or any option granted under it.
4. ELIGIBILITY
-----------
Members of the Board of Directors of Haemonetics who are not employees
of Haemonetics or its subsidiaries are eligible to be granted options under
the Plan.
5. OPTION AGREEMENT
----------------
Each option granted under the Plan shall be evidenced by an option
agreement (the "Agreement") duly executed on behalf of Haemonetics and by
the director to whom such option is granted, which Agreements shall (i)
comply with and be subject to the terms and conditions of the Plan and (ii)
provide that the optionee agrees to continue to serve as a director of
Haemonetics, during the term for which he or she was elected.
6. OPTION EXERCISE PRICE
---------------------
Subject to the provisions of Section 10 hereof, the option exercise
price for an option granted under the Plan shall be the fair market value of
the shares of the Common Stock of Haemonetics covered by the option on the
date of grant of the option. For the purposes hereof and Section 7, the
fair market value of the Common Stock of Haemonetics shall be the mean
between the high and low sales prices of the Common Stock of Haemonetics on
the New York Stock Exchange ("NYSE") on the date of grant, or (if the Common
Stock of Haemonetics did not trade on such date) on the most recent date
prior to the date of grant on which such trading occurred.
7. TIME AND MANNER OF EXERCISE OF OPTIONS
--------------------------------------
Each option granted under the Plan shall, subject to Section 8 and
Section 10 hereof, be exercisable at such time or times and during such
period as is determined by the Board of Directors and set forth in the
Agreement; provided, however, that no option granted under the Plan shall
have a term in excess of ten (10) years from the date of grant. To the
extent that the right to exercise an option has accrued and is in effect,
the option may be exercised in full at one time or in part from time to time
by giving written notice, signed by the person or persons exercising the
option, to Haemonetics, stating the number of shares with respect to which
the option is being exercised, accompanied by payment in full for such
shares, which payment may be in cash or in whole or in part in shares of the
Common Stock of Haemonetics already owned for a period of at least six
months by the person or persons exercising the option, valued at fair market
value, as determined under Section 6 hereof, on the date of exercise. Upon
such exercise, delivery of a certificate for paid-up non-assessable shares
shall be made as promptly as practicable at the principal office of
Haemonetics to the person or persons exercising the option.
8. TERM OF OPTIONS
---------------
(a) Each option shall expire ten (10) years from the date of the
granting thereof, but shall be subject to earlier termination as herein
provided.
(b) In the event of the death of an optionee, the option granted to
such optionee may be exercised, to the extent the optionee was entitled to
do so on the date of such optionee's death, by the estate of such optionee
or by any person or persons who acquired the right to exercise such option
by bequest or inheritance or otherwise by reason of the death of such
optionee. Such option may be exercised at any time within one (1) year
after the date of death of such optionee, at which time the option shall
terminate, or prior to the date on which the option otherwise expires by its
terms, whichever is earlier.
(c) In the event that an optionee ceases to be a director of
Haemonetics, the option granted to such optionee may be exercised by him or
her, but only to the extent that under Section 7 hereof the right to
exercise the option has accrued and is in effect. Such option may be
exercised at any time within three (3) months after the date such optionee
ceases to be a director of Haemonetics, at which time the option shall
terminate, but in any event prior to the date on which the option expires by
its terms, whichever is earlier, unless termination as a director, (a) was
by Haemonetics for cause, in which case the option shall terminate
immediately at the time the optionee ceases to be a director of Haemonetics,
(b) was because the optionee has become disabled (within the meaning of
Section 22(e)(3) of the Code), or (c) was by reason of the death of the
optionee. In the case of death, see Section 8(b) above. In the case of
disability, the option may be exercised, to the extent then exercisable
under Section 7 hereof, at any time within one (1) year after the date of
termination of the optionee's directorship with Haemonetics, at which time
the option shall terminate, but in any event prior to the date on which the
option otherwise expires by its terms, whichever is earlier.
9. OPTIONS NOT TRANSFERABLE
------------------------
The right of any optionee to exercise an option granted to him or her
under the Plan shall not be assignable or transferable by such optionee
otherwise than by will or the laws of descent and distribution, or pursuant
to a qualified domestic relations order as defined by the Code or Title I of
the Employee Retirement Income Security Act, or the rules thereunder. Any
option granted under the Plan shall be exercisable during the lifetime of
such optionee only by him or her. Any option granted under the Plan shall
be null and void and without effect upon any attempted assignment or
transfer, except as herein provided, including without limitation any
purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition, attachment, trustee process or similar
process, whether legal or equitable, upon such option.
10. RECAPITALIZATIONS, REORGANIZATIONS AND THE LIKE
-----------------------------------------------
(a) In the event that the outstanding shares of the Common Stock of
the Company are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividends
payable in capital stock, appropriate adjustment shall be made in the number
and kind of shares as to which options may be granted under the Plan and as
to which outstanding options or portions thereof then unexercised shall be
exercisable, to the end that the proportionate interest of the optionee
shall be maintained as before the occurrence of such event; such adjustment
in outstanding options shall be made without change in the total price
applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share.
(b) In addition, unless otherwise determined by the Board in its sole
discretion, in the case of any (i) sale or conveyance to another entity of
all or substantially all of the property and assets of the Company or (ii)
Change in Control (as hereinafter defined) of the Company, the purchaser(s)
of the Company's assets or stock may, in his, her or its discretion, deliver
to the optionee the same kind of consideration that is delivered to the
shareholders of the Company as a result of such sale, conveyance or Change
in Control, or the Board may cancel all outstanding options in exchange for
consideration in cash or in kind which consideration in both cases shall be
equal in value to the value of those shares of stock or other securities the
optionee would have received had the option been exercised (to the extent
then exercisable) and no disposition of the shares acquired upon such
exercise been made prior to such sale, conveyance or Change in Control, less
the option price therefor. Upon receipt of such consideration by the
optionee, his or her option shall immediately terminate and be of no further
force and effect. The value of the stock or other securities the optionee
would have received if the option had been exercised shall be determined in
good faith by the Board, and in the case of shares of the Common Stock of
the Company, in accordance with the provisions of Section 6 hereof. The
Board shall also have the power and right to accelerate the exercisability
of any options, notwithstanding any limitations in this Plan or in the
Agreement upon such a sale, conveyance or Change in Control. A "Change in
Control" shall be deemed to have occurred if any person, or any two or more
persons acting as a group, and all affiliates of such person or persons, who
prior to such time owned less than thirty five percent (35%) of the then
outstanding Common Stock of the Company, shall acquire such additional
shares of the Company's Common Stock in one or more transactions, or series
of transactions, such that following such transaction or transactions, such
person or group and affiliates beneficially own thirty five percent (35%) or
more of the Company's Common Stock outstanding.
(c) Upon dissolution or liquidation of the Company, all options
granted under this Plan shall terminate, but each optionee (if at such time
associated with the Company or any of its subsidiaries) shall have the
right, immediately prior to such dissolution or liquidation, to exercise his
or her option to the extent then exercisable.
(d) No fraction of a share shall be purchasable or deliverable upon
the exercise of any option, but in the event any adjustment hereunder of the
number of shares covered by the option shall cause such number to include a
fraction of a share, such number shall be adjusted to the nearest smaller
whole number of shares.
11. RESTRICTIONS ON ISSUE OF SHARES
-------------------------------
Notwithstanding the provisions of Section 7 hereof, Haemonetics may
delay the issuance of shares covered by the exercise of any option and the
delivery of a certificate for such shares until one of the following
conditions shall be satisfied:
(i) the shares with respect to which an option has been exercised are
at the time of the issue of such shares effectively registered under
applicable Federal and state securities acts now in force or hereafter
amended; or
(ii) counsel for Haemonetics shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such shares
are exempt from registration under applicable Federal and state securities
acts now in force or hereafter amended.
It is intended that all exercises of options shall be effective.
Accordingly, Haemonetics shall use its best efforts to bring about
compliance with the above conditions within a reasonable time, except that
Haemonetics shall be under no obligation to cause a registration statement
or a post-effective amendment to any registration statement to be prepared
at its expense solely for the purpose of covering the issue of shares in
respect of which any option may be exercised, except as otherwise agreed to
by Haemonetics in writing.
12. RIGHTS OF HOLDER ON PURCHASE FOR INVESTMENT; SUBSEQUENT REGISTRATION
--------------------------------------------------------------------
Unless the shares to be issued upon exercise of an option granted
under the Plan have been effectively registered under the Securities Act of
1933, as now in force or hereafter amended, Haemonetics shall be under no
obligation to issue any shares covered by any option unless the person who
exercises such option, in whole or in part, shall give a written
representation and undertaking to Haemonetics which is satisfactory in form
and scope to counsel to Haemonetics and upon which, in the opinion of such
counsel, Haemonetics may reasonably rely, that he or she is acquiring the
shares issued pursuant to such exercise of the option for his or her own
account as an investment and not with a view to, or for sale in connection
with, the distribution of any such shares, and that he or she will make no
transfer of the same except in compliance with any rules and regulations in
force at the time of such transfer under the Securities Act of 1933, or any
other applicable law, and that if shares are issued without such
registration a legend to this effect may be endorsed upon the securities so
issued. In the event that Haemonetics shall, nevertheless, deem it
necessary or desirable to register under the Securities Act of 1933 or other
applicable statutes any shares with respect to which an option shall have
been exercised, or to qualify any such shares for exemption from the
Securities Act of 1933 or other applicable statutes, then Haemonetics shall
take such action at its own expense and may require from each optionee such
information in writing for use in any registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for
such purpose and may require reasonable indemnity to Haemonetics and its
officers and directors from such holder against all losses, claims, damages
and liabilities arising from such use of the information so furnished and
caused by any untrue statement of any material fact therein or caused by the
omission to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances
under which they were made.
13. APPROVAL OF STOCKHOLDERS
------------------------
The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of Haemonetics voting in
person or by proxy at a duly held stockholders' meeting, or by written
consent of all of the stockholders, and shall take effect immediately as of
its date of adoption upon such approval.
14. EXPENSES OF THE PLAN
--------------------
All costs and expenses of the adoption and administration of the Plan
shall be borne by Haemonetics, and none of such expenses shall be charged to
any optionee.
15. TERMINATION AND AMENDMENT OF PLAN
---------------------------------
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly approved by the
Board. The Board may at any time terminate this Plan or make such
modification or amendment thereof as it deems advisable.
16. LIMITATION OF RIGHTS IN THE OPTION SHARES
-----------------------------------------
An optionee shall not be deemed for any purpose to be a stockholder of
Haemonetics with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the
optionee.
17. NOTICES
-------
Any communication or notice required or permitted to be given under
the Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to Haemonetics, to its principal place of business,
attention: General Counsel, and, if to an optionee, to the address as
appearing on the records of Haemonetics.
APPROVED BY BOARD OF DIRECTORS: May 1, 1998
EXHIBIT 10AB
------------
LEASE INFORMATION PAGE
Date of Lease: July 29, 1997
Landlord: New Avon Limited Partnership
Landlord Notice Address: c/o Urban Equities
21A Highland Circle
Needham, MA 02194
Tenant: Haemonetics Corporation, a Delaware
corporation registered to do business
in the Commonwealth of Massachusetts
Tenants Notice Address: 400 Wood Road
Braintree, MA 02184
Building: The building commonly known as The
Odyssey Building located at 40 Robbie
Road, Avon Massachusetts, containing
approximately 152,545 square feet of
space, appurtenant common areas,
parking areas and access ways.
Demised Premises: Approximately 48,000 square feet, as
specifically shown on Exhibit A,
annexed hereto.
Lease Term: Five (5) years and four (4) months,
unless sooner terminated as hereinafter
provided.
Commencement Date: August 1, 1997
Expiration Date: November 30, 2002
Option Period: December 1, 2002 to November 30, 2007;
Rent: Rent is due and payable on the first
day of the month.
Annual Rent for the initial Lease Term
of:
Commencing on December 1, 1997,
$136,320 in monthly installments
of $17,040 for year one (no Annual
Rent shall be due for the period
August 1, 1997 to November 30,
1997).
$199,680 in monthly installments
of $16,640 for year two.
$204,480 in monthly installments
of $17,040 for year three.
$210,720 in monthly installments
of $17,560 for year four.
$211,200 in monthly installments
of $17,600 for year five.
$70,400 in monthly installments of
$17,600 for the four months of
year six.
Annual Rent for the Option Period shall
be at Fair Market Rate, but in no event
less than the rent charged in the
immediately preceding year.
Security Deposit: $22,500.00
Permitted Use: Warehousing of disposable medical
products (and not any biological, blood
or blood component products) and
associated office use
Listed Broker: Hunneman Commercial Corporation and
Donahue Associates
Tenant Share of the Real Estate
Taxes and Operation Cost: 31.47% (payable monthly commencing
August 1, 1997)
Tenant's Initial Estimated Monthly
Payment on Account: Real Estate Taxes $ 2,098.00
Operating Cost 2,720.00
----------
Total Monthly Payment: $ 4,818.00
Limited Access Period: From Date of Lease until Commencement
Date Tenant shall have limited access
to the Demised Premises, subject to the
rights of any existing tenants, for the
sole purpose of completing certain
tenant improvements, as more fully set
forth in Section 6 herein, provided
such access and work does not interfere
with the rights of such existing
tenants, and that such access and
tenant improvements shall be at
Tenant's sole cost, expense and
liability. During the Limited Access
Period, Tenant shall be responsible for
dealing with any such existing tenants
with respect to said access, and shall
also be solely responsible for
provision and payment for any utilities
serving the Demised Premises (not
otherwise the responsibility of
existing tenants).
Assigned Parking: Tenant shall have the exclusive use of
the parking spaces for employees, and
trucks, as designated on Exhibit A
annexed hereto; Tenant shall be
responsible for signage and enforcement
of the exclusively assigned spaces.
Neither Tenant, its employees, visitors
or other vehicle owners related to
Tenant shall park (whether temporarily
or permanently) in any other areas.
1. PARTIES. The Landlord named in the Lease Information Page of this lease
(hereinafter called "Landlord", which expression shall include Landlord's
heirs, legal representatives, successors and assigns where the context so
admits) does hereby lease to the Tenant named in said Lease Information Page
(hereinafter called "Tenant", which expression shall include Tenant's heirs,
legal representatives, successors and assigns where the context so admits), and
Tenant hereby leases the following described premises:
2. PREMISES. The Demised Premises described in said Lease Information Page,
said premises being within the Building described in said Lease Information
Page.
There is appurtenant to the Demised Premises the right to use, in common with
others entitled thereto, any and all common facilities, improvements or
services serving the building in which the Demised Premises are situated (the
"Building").
Landlord reserves the right from time to time to install, repair, replace, use,
maintain and relocate for service to the Demised Premises and to other parts of
the building, or either, building service fixtures and equipment wherever
located in the Building. Landlord expressly reserves the right to install and
maintain in the Demised Premises pipes, conduits, electric lines and other
facilities serving other portions of the building, provided, however, that such
installation and maintenance shall not unreasonably interfere with Tenant's use
and enjoyment of the Demised Premises.
3. TERM. The term of this lease (the "term") shall be for the period set
forth in said Lease Information Page. The commencement date of the term (the
"Commencement Date") of this lease shall be the first day of the term. Upon the
request of Landlord, Tenant shall execute a written instrument, confirming the
commencement date.
4. RENT. Tenant shall pay to Landlord during the term annual rent at the
rate set forth in said Lease Information Page, payable in equal monthly
installments. The first payment of annual rent shall be due and payable on the
date specified in the Lease Information page for the commencement of annual
rent. Annual rent shall be paid monthly in advance on the first day of each and
every calendar month thereafter during the term. Rent for any fraction of a
month at the commencement or expiration of Tenant's obligation to pay annual
rent shall be pro rated. All payments of rent (annual and additional) shall be
made payable to the Landlord named in said Lease Information Page and shall be
sent to said Landlord at the address set forth herein, or to such other person
or to such other address as Landlord shall from time to time designate by
advance written notice to Tenant.
5. REAL ESTATE TAXES. For the purpose of this Article 5, the following terms
shall have the following meanings:
A. Real Estate Taxes - real estate taxes levied against the land and building
of which the Demised Premises are a part, including betterment assessments and
other governmental charges which may be charged, assessed or imposed upon the
land, building and other improvements of which the Demised Premises are a part,
but specifically excluding any income, franchise or estate taxes.
B. Operation Cost - all reasonable costs and expenses incurred by Landlord in
connection with the maintenance and operation of the land and building of which
the Demised Premises are a part. Operation Cost shall include, without
limitation, all reasonable costs and expenses incurred by Landlord (a) in
making repairs to the building and its appurtenances and the exterior signs
thereon, (b) in carrying fire, casualty, plate glass, rent and liability
insurance upon the building (including, without limitation, insurance carried
under so-called "blanket" and/or "umbrella" policies), (c) in providing
services including but not limited to lighting, plowing, cleaning, maintaining
and beautifying the exterior of the building and the land appurtenant to the
building and the landscaping and gardening (if any) thereof, (d) in paying
Landlord's costs associated with all customarily expenses of personnel engaged
in the management and operation of the building (appropriately prorated where a
person's duties are not limited solely to the building), (e) in paying for
electricity, water and sewerage and other utilities charges imposed by the
entity providing such services, to the extent not separately metered to the
Demised Premises as hereinafter provided, and servicing only the common areas,
and the cost of maintaining any utility systems outside the Demised Premises
(including, without limitation, any roof top HVAC equipment), and (f) a
management fee equal to five percent (5%) of gross receipts from the operation
of the building. Operation Cost shall not include Landlord's leasing costs,
attorneys fees and the cost of and depreciation of capital expenditures (unless
such capital expenditure is intended to substantially reduce one or more items
within Operation Cost, in which event such capital expenditure shall be treated
as an amortized Operation Cost based upon the generally accepted "pay-back"
period for the capital expenditure).
C. Tenant's Tax and Operation Cost Obligation - for any calendar year (or
partial calendar year) occurring during the term, the sum of Real Estate Taxes
and Operation Cost, multiplied by Tenant's Share of Operation Cost (as
specified on the Lease Information Page). For the partial calendar years at the
beginning and end of the term, Tenant's Tax and Operation Cost Obligation shall
be equal to Tenant's Tax and Operation Cost Obligation as determined pursuant
to the immediately preceding sentence, multiplied by that fraction of the
relevant calendar year during which this lease was in effect.
Tenant shall pay to Landlord, as additional rent, Tenant's Tax and Operation
Cost Obligation for each calendar year (or prorated portion for any partial
calendar year) during the term.
Tenant shall pay to Landlord on the first day of every month during the term,
in advance, payments on account of Tenant's obligations under this Article.
Tenant's initial monthly payment on account of Tenant's obligations under this
Article is the amount specified on the Lease Information Page as Tenant's
Initial Monthly Payment on Account of Tenant's Tax and Operation Cost
Obligation. From time to time, Landlord shall have the right to adjust the
amount of Tenant's monthly payments. Following the end of each calendar year,
Landlord shall determine the exact amount of Tenant's Tax and Operation Cost
Obligation with respect to the calendar year then ended, and appropriate
adjustments shall be made (either by additional payment by Tenant or
crediting/refund by Landlord toward subsequent obligations of Tenant under this
Article 5), so that the amount of such adjustment, when aggregated with the
amount of Tenant's monthly payments during the preceding calendar year, will
equal Tenant's Tax and Operation Cost Obligation for such calendar year. Tenant
shall receive an annual statement from Landlord detailing the previous twelve
months operating expenses for the building, and the estimated monthly Operation
Cost Obligation for the subsequent period.
In addition to the foregoing, Tenant shall pay all taxes upon its property in
or upon the Demised Premises.
With respect to the pro-ration of annual water usage by all Tenants in the
building, in the event that a Tenant occupying a portion of the building uses a
greater amount of water than is customarily used by other tenants' in the
building or discharges any water due to its use of the premises (unrelated to
kitchen/utility sink and bathroom discharges), the water/discharge usage for
that Tenant shall be separately metered (at that tenant's expense) and billed
to that Tenant, exclusive of the other Tenants in the building.
6. LANDLORD'S WORK AND TENANT'S WORK. Landlord is delivering the Demised
Premises and the building "as is". Tenant shall perform, at its sole risk and
its own cost and expense, "Tenant's Work" consisting of the items set forth on
Exhibit TW, annexed. Tenant shall also perform all additional work required to
obtain a certificate of occupancy and otherwise prepare the Demised Premises
for Tenant's occupancy (pursuant to plans and specifications therefor submitted
to and approved in writing by Landlord, which approval shall not be
unreasonably withheld) and shall equip the Demised Premises with all trade
fixtures and personal property suitable or appropriate to the regular and
normal operation of the type of business in which Tenant is engaged. All of
Tenant's Work and all of Tenant's trade fixtures and personal property shall be
of quality consistent with trade fixtures and personal property in the
remainder of the building, and shall be subject to Landlord's reasonable
approval. Tenant shall not permit any mechanics' liens, or similar liens, to
remain upon the Demised Premises for labor and material furnished to Tenant or
claimed to have been furnished to Tenant in connection with work of any
character performed or claimed to have been furnished at the direction of
Tenant and shall cause any such lien to be released of record forthwith without
cost to Landlord.
From and after the first entry by Tenant or its agents for the purpose of
performing Tenant's Work (whether or not the commencement date has occurred),
Tenant shall comply with all of the provisions of this lease
7. ALTERATIONS -- ADDITIONS -- SIGNS. Tenant shall not make structural or
exterior alterations or additions to the Demised Premises, but may make
non-structural interior alterations provided Landlord consents thereto in
writing, which consent shall not be unreasonably withheld or delayed. All such
allowed alterations shall be at Tenant's expense and shall be in quality at
least equal to the construction of the Demised Premises as of the commencement
date. Tenant shall not permit any mechanics' liens, or similar liens, to remain
upon the Demised Premises for labor and material furnished to Tenant or claimed
to have been furnished to Tenant in connection with work of any character
performed or claimed to have been furnished at the direction of Tenant and
shall cause any such lien to be released of record forthwith without cost to
Landlord. Any alterations or improvements made by Tenant, shall be Landlord's
property upon expiration of the lease term, unless Landlord notifies Tenant to
the contrary contemporaneously with Landlord's consent therefor. In such event,
at or about the time of expiration or termination hereof, Tenant shall remove
any or all of such alterations, and Tenant shall repair all damage caused to
the Demised Premises or the building in so removing the same. Any alterations
and additions shall be done in a good workman manner using first class
materials, and in accordance with (and only after having received appropriate
permitting) all local, state and federal laws, codes and regulations.
Any sign installed by Tenant from time to time shall be subject to the prior
written approval of Landlord (in all respects; i.e. size, content, location,
materials, etc.), which consent shall not be unreasonably withheld or delayed,
and shall be in conformity with all governing codes. Tenant shall maintain any
such sign, at its sole cost and expense, in good condition, working order and
appearance. Upon the expiration or earlier termination of this lease, Tenant
shall remove all of its signs, and shall repair any damage to the Demised
Premises or the building resulting from such removal. Moreover, Landlord shall
have the right, upon fifteen (15) days written notice to Tenant, to remove any
sign installed by Tenant in violation of the first sentence of this paragraph,
and Tenant shall reimburse Landlord, promptly upon demand thereof, for all
costs incurred in removing any such sign and restoring any damage to the
Demised Premises or the building resulting from such removal.
8. USE OF DEMISED PREMISES. Subject to the provisions of this Article 8 and
the provisions of Articles 9 and 15, below, Tenant shall have the right to
utilize the Demised Premises for its business purposes at any time. Tenant
shall comply with the reasonable Rules and Regulations annexed hereto, as well
as such other reasonable rules and regulations as may be established by
Landlord from time to time with notice to Tenant, and which are applicable to
all tenants, in order to assure the safety and security of persons and property
in and about the building, as well as the efficient and harmonious activities
of the occupants of the building. In the event of any breach of any rules and
regulations by tenant (including any amendments or additions thereto), Landlord
shall have all of the remedies in this lease provided for default of Tenant.
Landlord shall use reasonable efforts to cause all occupants of the building to
comply with Landlord's rules and regulations. However, no failure of any other
occupant of the building to comply with any rules and regulations shall result
in any liability by Landlord, or justify any failure of Tenant to comply with
all rules and regulations.
9. COMPLIANCE WITH LAWS. Tenant agrees that no trade or occupation shall be
conducted in the Demised Premises or use made thereof which will be unlawful,
improper or contrary to any law or any municipal by-law or ordinance in force
in the city or town in which the building is situated. Tenant and those
claiming under Tenant shall not use, handle, store, release or discharge oil,
hazardous materials or hazardous waste in or about the Demised Premises.
Tenant shall not use any portion of the Demised Premises for the use,
generation, treatment, storage or disposal of "oil", "hazardous material,"
"hazardous waste", or "hazardous substances" (collectively, the "Materials"),
as such terms are defined under any applicable federal, state and local laws,
rules and regulations now or hereafter in effect, without the express written
prior consent of Landlord (not to be unreasonably withheld) and, if required,
its mortgagees, and then only to the extent that the presence of the Materials
is (i) properly licensed and approved by all appropriate governmental officials
and in accordance with all applicable laws and regulations and (ii) in
compliance with any terms and conditions stated in said prior written approvals
by Landlord or its mortgagees. In the event of any release of Materials upon
the Demised Premises, Building or property, or upon adjacent lands, if caused
by Tenant or its agents, representatives or those claiming under Tenant, Tenant
shall promptly remedy the problem in accordance with all applicable laws and
requirements and shall indemnify, defend and hold Landlord and its mortgagee(s)
harmless from and against all loss, costs, liability and damage, including
attorneys' fees and the cost of litigation, arising from the presence or
release of any Materials caused by Tenant or its agents, representative, and
those claiming under Tenant in or on the Demised Premises, building or
property, or upon adjacent lands. In the event of any release of Materials upon
the Demised Premises, Building or property, or upon adjacent lands, if caused
by Landlord or its agents, representatives, Landlord shall promptly remedy the
problem in accordance with all applicable laws and requirements and shall
indemnify, defend and hold Tenant harmless from and against all loss, costs,
liability and damage, including attorneys' fees and the cost of litigation,
arising from the presence or release of any Materials caused by Landlord or its
agents and representatives.
10. UTILITIES. Landlord shall, in the first instance, furnish and install
electrical service and other utilities, to standards comparable with buildings
similar to the Building. (Electrical and gas service to the Demised Premises
shall be separately metered). In the event that additional services are
required for Tenant's activities the Tenant shall be solely responsible for
metering and installation of such services, subject to prior written approval
of Landlord which may not be unreasonably withheld or delayed. Thereafter,
Tenant shall connect to and through such services and be responsible for
payment for its usage and consumption of all utilities or services at the
Demised Premises and also promptly pay any bills and other charges, as to the
same as and when the same become due or payable (which if not paid could have a
material negative effect on the Demised Premises or the Building), including,
but not limited to, heat, hot water, gas, electricity, air conditioning,
garbage disposal, and any all other services or utilities supplied to or
consumed at or in the Demised Premises throughout the term, whether or not
measured by meter. Tenant shall heat and maintain the interior of the Demised
Premises, at all times, at a reasonable temperature (but in no event less than
sixty degrees). Landlord shall not be liable to Tenant for any compensation or
reduction of rent by reason of inconvenience or annoyance, or for loss of
business, arising from power losses or shortages, or the interruption of any
utilities services to the Demised Premises, unless such interruption results
from the negligence of Landlord. Landlord reserves the right to stop any
service or utility system when necessary in Landlord's opinion by reason of
accident or emergency or until necessary repairs have been completed.
11. REPAIRS. Landlord agrees to make all necessary repairs or alterations to
the property which Landlord is required to maintain, as hereinafter set forth.
The property which Landlord is required to maintain is the foundation, roof,
exterior walls, structural columns, and structural beams of the building; all
HVAC equipment and utility pipes, lines and conduits located outside the
Demised Premises but within the building and which do not serve exclusively the
Demised Premises; and the landscaped areas on the lot on which the building is
situated. Notwithstanding the foregoing, if any of the repairs or alterations
to be made by Landlord pursuant to the provisions of this lease shall be made
necessary by reason of repairs, installations, additions or improvements made
by Tenant or anyone claiming under Tenant, by reason of the fault or negligence
of Tenant or anyone claiming under Tenant, by reason of the failure of
performance or observance of any agreements, conditions or other provisions on
the part of Tenant to be performed or observed, or by reason of any special use
(other than the Permitted Uses) to which the Demised Premises may be put,
Tenant shall make all such repairs or alterations as may be necessary (or, at
Landlord's option, upon the expiration of any applicable notice period related
thereto, shall reimburse Landlord, as additional rent hereunder, for all
reasonable costs and expenses incurred by Landlord in effecting such repairs or
alterations). Landlord shall not be deemed to have committed a breach of any
obligation to make repairs or alterations or perform any other act unless it
shall have received notice from Tenant designating the particular repairs or
alterations or other act and shall fail to undertake such repairs or
alterations or perform such other act within a reasonable time after the
receipt of such notice. As used in this lease, the expression "exterior walls"
does not include doors, window sashes or frames, or door frames of the Demised
Premises.
Tenant agrees that it will during the term of this lease make all repairs and
alterations to the Demised Premises which Tenant is required to maintain, as
hereinafter set forth, which may be necessary to maintain the same in good
repair and condition or which may be required by this lease, and if due solely
to Tenants use of the Demised Premises, by any laws, ordinances, regulations or
requirements of any public authorities having jurisdiction, subject only to the
provisions of Article 15, eminent domain and reasonable wear and tear excepted.
The property which Tenant is required to repair and maintain in good order and
condition is the Demised Premises and every part thereof including, but without
limitation, all utility pipes, lines and conduits located within the Demised
Premises, and all utility fixtures and equipment whether located within the
Demised Premises or within the building which contains the Demised Premises
(including, without limitation, the heating and air conditioning system) which
exclusively serve the Demised Premises, all walls, ceilings, floors and doors,
window sashes and frames, and door frames of the Demised Premises.
Notwithstanding the foregoing, Tenant shall not be under any obligation to make
any repairs or alterations to the property which Landlord is required to
maintain, except to the extent provided in the first paragraph of this Article.
Tenant specifically agrees to replace all glass damaged with glass of the same
kind and quality or better. Tenant also agrees to keep the Demised Premises
attractive in appearance. Tenant agrees that it shall give Landlord reasonable
advance notice of any occasion when Tenant or its agents, employees or
contractors propose to go upon the roof of the building for the purpose of
making any repairs or alterations or for any other purpose whatsoever. In order
to assure the proper maintenance of the HVAC systems serving the Demised
Premises, Tenant, at it's sole cost and expense, shall maintain (and shall
provide Landlord with evidence of the existence of) a contract with a reputable
HVAC maintenance company, providing for the regular quarterly inspection,
maintenance and repair of such equipment. Landlord agrees to cooperate with
Tenant or Tenant's agents with respect to any warranties which may or may not
exist for any equipment serving exclusively the Demised Premises.
12. LANDLORD'S ACCESS. Upon advance notice from Landlord to Tenant of not
less than 24 hours and with the consent of Tenant (which consent may not be
unreasonably withheld or delayed) (except in the event of an emergency, in
which event no notice or consent shall be required), Landlord or agents of
Landlord may, at reasonable times, enter to view the Demised Premises or for
the purpose of repairing or altering the Demised Premises or any portion of the
building or for bringing materials into or through the Demised Premises in
connection with the making of repairs or alterations, and may remove placards
and signs not approved and affixed as herein provided, and may show the Demised
Premises to agents, employees, contractors, architects, prospective mortgagees
and purchasers, and, at any time within six (6) months before the expiration of
the term, may affix to any suitable part of the Demised Premises a notice for
letting affixed without hindrance or molestation and may show the Demised
Premises to prospective tenants. Without limiting the generality of the
foregoing, Landlord, its agents and other tenants of the building shall have
continuing access (at reasonable times and upon reasonable notice, unless in an
emergency), to the main electrical panels, telephone switch boards and
interface equipment and water main within the Demised Premises which is the
only interior access to said utilities. Tenant agrees to keep such areas and
access thereto reasonably free of Tenant's fixtures and possessions to allow
unimpeded access to said areas of the building and Demised Premises. Landlord
shall not be liable to Tenant for any compensation or reduction of rent by
reason of Landlord's entering the Demised Premises for any of the purposes
authorized herein, except for negligent acts of Landlord or its agents.
13. FORCE MAJEURE. In any case where either party hereto is required to do
any act (other than make a payment of money), delays caused by or resulting
from Acts of God, war, civil commotion, fire or other casualty, labor
difficulties, shortages of labor, materials or equipment, government
regulations or other causes beyond such party's reasonable control (other than
such party's financial condition) shall not be counted in determining the time
during which such act shall be completed, whether such time be designated by a
fixed date, a fixed time or "a reasonable time". In case Landlord is prevented
or delayed from making any repairs, alterations, or improvements or furnishing
any service or performing any other covenant or duty to be performed on
Landlord's part by reason of any cause beyond Landlord's reasonable control,
Landlord shall not be liable to Tenant therefor, nor shall Tenant be entitled
to any abatement or reduction of rent by reason thereof, nor shall the same
give rise to a claim in Tenant's favor that such failure constitutes actual or
constructive, total or partial, eviction from the Demised Premises, unless the
same prevents Tenant's use and occupation of the Demised Premises for a
continuous period of four months or more. In any case where work is to be paid
for out of insurance proceeds or condemnation awards, due allowance shall be
made, both to the party required to perform such work and to the party required
to make such payment, for delays in the collection of such proceeds and awards.
14. ASSIGNMENT -- SUBLEASING. Tenant shall not assign this lease or sublet
(or otherwise permit anyone to lease or occupy) the whole or any part of the
Demised Premises, without the consent of the Landlord which consent shall not
be unreasonably withheld. Notwithstanding the aforesaid, the Landlord may
unreasonably withhold its consent if Landlord is not satisfied with the
creditworthiness, proposed use or reputation of the proposed sub-tenant or
assignee.
15. FIRE, CASUALTY -- EMINENT DOMAIN. In case, after the execution hereof
and before the expiration of the term, the Demised Premises or more than
twenty-five (25%) percent thereof or more than twenty-five (25%) percent of the
building or the property of which the Demised Premises are a part shall be
taken by any exercise of the right of eminent domain or by action of any public
or other authority, or in case, after the execution hereof and before the
expiration of the term, the Demised Premises or more than twenty-five (25%)
percent thereof or more than twenty-five (25%) percent of the building or the
property of which the Demised Premises are a part shall be destroyed or damaged
by fire or casualty, then this lease and the term of this lease shall terminate
at the election of Landlord, which election must be exercised by written notice
to tenant within sixty (60) days after such taking, destruction, damage or
action, and such election may be made in case of any such taking
notwithstanding the entire interest of Landlord may have been divested by such
taking. In any such event, if Landlord shall not elect to terminate this lease,
the annual rent, or a just and proportionate part thereof, according to the
nature, extent and duration of the injuries sustained, shall be abated until
the Demised Premises or the building or the property of which the Demised
Premises are a part, as the case may be, shall have been restored as provided
herein. If Landlord shall not elect to terminate this lease, Landlord shall
with reasonable promptness restore the Demised Premises to a single contiguous
unit in substantially the same condition as the Demised Premises were in at
time of casualty. However, in connection with such restoration, Landlord shall
not be required to expend amounts in excess of Landlord's insurance proceeds or
damages or awards resulting from such taking, destruction, damage or action
allocable to the Demised Premises, as the case may be, after deducting
Landlord's reasonable costs and expenses of collecting same and amounts
retained by Landlord's mortgagee(s). If the Demised Premises are not so
restored (or if, at any time following the taking, destruction, damage or
action, Tenant and Landlord agree, in the exercise or good faith judgement,
that it is not reasonably likely that the Demised Premises will be restored)
within five (5) months after such taking, destruction, damage or action, Tenant
may elect to terminate this lease by written notice to Landlord (such right
shall be exercised, if at all, by notice to Landlord not later than the date of
substantial completion of restoration). If the Demised Premises or the building
or the property of which the Demised Premises are a part or any part thereof
shall be taken by eminent domain, all damages from such taking, other than that
which relates solely to Tenant's fixtures and equipment, shall vest in Landlord
and Tenant covenants and agrees to execute such assignments or other document
and to take any steps which may be necessary to vest such damages in Landlord,
Tenant hereby irrevocably appointing Landlord as its agent and attorney-in-fact
for the limited purpose to execute and deliver any such assignments and
documents which Landlord deems necessary or appropriate to carry out the intent
and purpose of the preceeding sentence such appointment being a power coupled
with an interest.
16. FIRE INSURANCE. Tenant shall not permit any use of the Demised Premises
which will make voidable any insurance on the property of which the Demised
Premises are a part, or on the contents of said property, or which shall be
contrary to any regulation from time to time established by any insurance
inspection board having jurisdiction. Tenant shall promptly comply with all
reasonable respects and requirements of the insurance company providing fire
insurance coverage to the building. Tenant shall on demand reimburse Landlord,
for all extra insurance premiums caused by Tenant's use of the Demised
Premises. Any such demand shall be accompanied by a written statement executed
by a reputable insurance company or insurance broker, setting forth (i) the
nature of Tenant's use of the Demised Premises which resulted in extra
insurance premiums, (ii) the insurance premiums which would have been charged
to the demanding party if Tenant had not engaged in such use, and (iii) the
insurance premiums charged to the demanding party as a result of tenant's
continued engagement in such use. At Tenant's request (and at Tenant's sole
cost and expense), Landlord will also use reasonable efforts (including
arbitration if the same is available) to cause its insurer to reconsider its
determination that extra insurance premiums are chargeable, and to suggest
modifications in Tenant's activities which would result in reduction or
elimination of extra insurance premiums. Tenant agrees that it will at all
times keep all furniture and personal property within the Demised Premises
insured against all loss and damage by reason of fire or any of the casualties
covered under the standard Massachusetts extended coverage policy. Such
insurance shall be carried with responsible insurance companies authorized to
do business in Massachusetts and having a "Best's" rating of A- or higher, and
shall be in an amount equal to the full replacement cost of the insured
property. Tenant shall deposit with Landlord certificates for such insurance at
or prior to the commencement date, and thereafter at least twenty (20) days
prior to the expiration of any such policy. At the request of the local fire
department, or other state or municipal safety authority, Tenant shall provide
such requesting authority with a key to the premises.
17. TENANT'S LIABILITY INSURANCE. Tenant shall maintain, with respect to the
Demised Premises and the property of which the Demised Premises are a part,
comprehensive public liability insurance in amounts not less Two Million
Dollars ($2,000,000) with respect to injuries or death suffered by one or more
persons and not less than Two Million Dollars ($2,000,000) with respect to
property damage. Said insurance shall be issued by responsible insurance
companies authorized to do business in the state in which the Demised Premises
are situated and having a "Best's" rating of A- or higher, and shall insure as
named insureds Tenant, and with respect to acts or omissions of Tenant, the
Landlord and any mortgagee of the Building. Tenant shall deposit with Landlord
certificates for such insurance at or prior to the commencement date, and
thereafter at least twenty (20) days prior to the expiration of any such
policies. All such insurance certificates shall provide that such policies (as
well as the policies of Tenant's insurance required pursuant to Article 16,
above) shall not be canceled or modified without at least twenty (20) days
prior written notice to each insured named therein. Tenant also agrees that
upon Landlord's request from time to time Tenant shall increase the limits of
the public liability insurance described above to such limits as are
customarily carried with respect to premises similar to the Demised Premises
within the metropolitan area in which the Demised Premises are situated.
Notwithstanding anything contained herein to the contrary, it is hereby
understood and agreed that in the event the Landlord files a claim with
Tenant's comprehensive public liability carrier, the Landlord shall
contemporaneously provide a copy of the same to Tenant.
18. INDEMNIFICATION OF LIABILITY. Tenant agrees to indemnify and save
harmless Landlord from and against all claims of whatever nature arising from
any act, omission or negligence of Tenant or Tenant's contractors, licensees,
agents, servants, invitees or employees, arising from any accident, injury or
damage whatsoever caused to any person, or to the property of any person,
occurring after the commencement of construction work by Tenant, and until the
end of the term of this lease and thereafter, so long as Tenant is in occupancy
of any part of the Demised Premises, in or about the Demised Premises; or
arising from any accident, injury or damage occurring outside of the Demised
Premises, where such accident, damage or injury outside of the Demised Premises
results or is claimed to have resulted from any act or omission on the part or
Tenant or Tenant's agents, invitees, employees or independent contractors. This
indemnity and hold harmless agreement shall include indemnity against all
costs, expenses and liabilities incurred in or in connection with any such
claim or proceeding brought thereon, and the defense thereof with counsel
reasonably acceptable to Landlord. So long as the act, omission or negligence
as to which Tenant is required to indemnify Landlord is covered by insurance
maintained by Tenant, Tenant's liability under this paragraph, in connection
with any specific occurrence, shall be limited to the greater of (i) the amount
of insurance which Tenant is required to maintain pursuant to Article 17, above
(including any deductible thereunder) and (ii) the amount of insurance actually
maintained by Tenant (but excluding any deductible thereunder).
Commencing with the commencement of construction work by Tenant, and thereafter
for so long as Tenant has a right to occupy any part of the Demised Premises,
Landlord agrees to indemnify and save harmless Tenant from and against all
claims arising from any accident, injury or damage results from the negligent
act or omission of Landlord or Landlord's agents, contractors, servants,
invitees or employees. This indemnity and hold harmless agreement shall include
indemnity against all costs, expenses and liabilities incurred in or in
connection with any such claim or proceeding brought thereon, and the defense
thereof with counsel reasonably acceptable to Tenant. However, if the act or
omission against which Landlord is required to indemnify Tenant is covered by
any insurance maintained by Landlord, then Landlord's liability under this
paragraph shall be limited to the amount of Landlord's insurance coverage
(including any deductible thereunder).
To the maximum extent permitted by law, if Tenant or anyone claiming under
Tenant or the whole or any part of the property of Tenant or anyone claiming
under Tenant shall be injured, lost or damaged by theft, failure to remove snow
or ice, fire, water or steam or in any other way or manner, whether similar or
dissimilar to the foregoing, no part of said injury, loss or damage is to be
borne by Landlord or its agents, unless such injury, loss or damage results
from the negligence of Landlord. To the maximum extent permitted by law, all of
Tenant's property shall be in the Demised Premises at Tenant's sole risk and
hazard. Tenant agrees that Landlord shall not be liable to Tenant or anyone
claiming under Tenant for any injury, loss or damage that may be caused by or
result from the fault or negligence of any persons occupying (or claiming under
any persons occupying) other premises in the building.)
19. WAIVER OF SUBROGATION. Each of Landlord and Tenant hereby releases the
other from any and all liability or responsibility to the other (or anyone
claiming through or under them by way of subrogation or otherwise) for any loss
or damage to property caused by fire or any of the extended coverage or
supplementary contract casualties, even if such fire or other casualty shall
have been caused by the fault or negligence of the released party, or anyone
for whom such party may be responsible, provided, however, that this release
shall be applicable and in force and effect only with respect to loss or damage
occurring during such time as the releasor's insurance policies shall contain a
clause or endorsement to the effect that any such release shall not adversely
affect or impair said policies or prejudice the right of the releasor to
recover thereunder. Each of Landlord and Tenant agrees that its policies will
include such a clause or endorsement so long as the same shall be obtainable
without extra cost, or if extra cost shall be charged therefor, so long as the
first party shall advise the other thereof of the amount of the extra cost, and
the other party, at is election, may pay the same, but shall not be obliged to
do so.
20. SURRENDER. Tenant shall at the expiration or other termination of this
lease remove all of Tenant's goods and effects from the Demised Premises,
including, without hereby limiting the generality of the foregoing, all signs
and lettering affixed or painted by Tenant, either inside or outside the
Demised Premises. Tenant shall deliver to Landlord the Demised Premises, broom
clean and in the same condition as they were in at the earlier of the
commencement of the term or completion of initial Tenant improvements,
reasonable wear and tear and damage by fire or other casualty only excepted,
which shall include the removal of any changes and improvements made to the
Demised Premises by Tenant during the term hereof, and the return of the
Demised Premises to their original configuration and design. In the event of
Tenant's failure to remove any of Tenant's property from the Demised Premises,
Landlord is hereby authorized, without liability to Tenant for loss or damage
thereto, and at the sole risk of Tenant, to remove and store any of the
property at Tenant's expense, or to retain the same under Landlord's control or
to sell at public sale, without notice, any or all of the property not so
removed without obligation to account to Tenant therefor, or Landlord may, if
it so desires, destroy such property.
21. DEFAULT AND BANKRUPTCY. In the event that:
(a) Tenant shall default in the payment of any installment of rent or other sum
herein specified and such default shall continue for five (5) days; or
(b) Tenant shall default in the observance or performance of any other of
Tenant's covenants, agreements, or obligations hereunder and such default shall
not be corrected within thirty (30) days after notice thereof, or if not
susceptible to cure within said thirty (30) days, for a reasonable period to
cure so long as Tenant commences to cure within said thirty (30) days, and
diligently prosecutes said cure; or
(c) Tenant shall be declared bankrupt or insolvent according to law, or if any
bankruptcy or insolvency proceedings shall be commenced by or against Tenant,
or if any assignment shall be made of Tenant's property for the benefit of
creditors, or if a receiver, trustee or assignee shall be appointed for the
whole or any part of Tenant's property (provided that, in the case of an
involuntary bankruptcy petition or involuntary appointment of a receiver or
trustee, such occurrence shall constitute a default only if the same is not
dismissed within sixty (60) days) then Landlord shall have the right thereafter
to re-enter and take possession of the Demised Premises, to declare the term
ended and remove Tenant's effects without prejudice to any remedies which might
otherwise be used for arrears of rent or other default. If Tenant shall
default, after thirty (30) days' notice thereof (or, in the case of emergency,
after such notice thereof as may be reasonable under the circumstances), in the
observance or performance of any conditions or covenants on Tenant's part to be
observed or performed under or by virtue of any of the provisions in any
Article of this lease, Landlord without being under any obligation to do so and
without thereby waiving such default, may remedy such default for the account
and at the expense of Tenant. If Landlord makes any expenditures or incurs any
obligations for the payment of money in connection therewith, including, but
not limited to, reasonable attorneys' fees in instituting, prosecuting or
defending any action or proceeding plus all court costs, such sums paid or
obligations incurred, with interest at an annual rate (the "Default Rate")
equal to the lesser of (i) 4% above the "Prime Rate" most recently announced by
The First National Bank of Boston and (ii) the highest rate of interest which
may lawfully be charged by Landlord, shall be paid to Landlord by Tenant as
additional rent. If Tenant shall consist of more than one person, or if there
shall be any guarantor of Tenant's obligations, then the liability of all such
persons, including any such guarantor, shall be joint and several, and the word
"Tenant", as used in clause (c) above, shall be deemed to mean any one of such
persons.
In the event (i) any payment of rent (annual or additional) is not post-marked
within three (3) days of the due date, or (ii) a check received by Landlord
from Tenant shall be dishonored, then because actual damages for a late payment
or for a dishonored check are extremely difficult to fix or ascertain, but
recognizing that damage and injury result therefrom, Tenant agrees to pay
$200.00 as liquidated damages for each late payment and $35.00 as liquidated
damages for each time a check is dishonored. (The grace period herein provided
is strictly related to the liquidated damages for a late payment and shall in
no way modify or stay Tenant's obligation to pay rent when it is due, nor shall
the same preclude Landlord from pursuing its remedies under this Article 21, or
as otherwise allowed by law.) In the event that two (2) or more Tenant's checks
are dishonored, Landlord shall have the right, in addition to all other rights
under this lease, to demand all future payments by certified check or money
order. Furthermore, if any payment of rent (annual or additional) or any other
payment payable hereunder by the Tenant to Landlord shall not be paid when due,
the same shall bear interest, from the date when the same was due until the
date paid, at the Default Rate. Such interest shall constitute additional rent
payable hereunder.
If Landlord shall have the right to re-enter the Demised Premises as aforesaid,
then in lieu thereof, Landlord may send written notice to Tenant of the
termination of this lease, and in such event the term shall end on the fifth
(5th) day next following the date of the sending of the notice. Notwithstanding
the provisions of clause (a) of the first sentence of this Article, if Landlord
shall have rightfully given Tenant notice of default pursuant to said clause
twice during any twelve-month period, and if Tenant shall thereafter default in
the payment of rent or other payments, then Landlord shall have no further
obligation to provide notice of such default, and the grace period provided
above shall commence immediately on the date of Tenant's failure to perform the
relevant obligation. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws in the event of
Tenant being evicted or dispossessed for any cause.
In case this lease shall be so terminated, Tenant will indemnify Landlord each
month against all loss of rent and all obligations which Landlord may incur by
reason of any such termination between the time of termination and the
expiration of the term; or at the election of Landlord, exercised at the time
of the termination or at any time thereafter, Tenant will indemnify Landlord
each month until the exercise of the election against all loss of rent and
other obligations which Landlord may incur by reason of such termination during
the period between the time of the termination and the exercise of the
election, and upon the exercise of the election Tenant will pay Landlord as
damages such amount as at the time of the exercise of the election represents
the amount by which the rental value of the Demised Premises for the period
from the exercise of the election until the expiration of the term shall be
less than the amount of rent and other payments provided herein to be paid by
Tenant to Landlord during said period. It is understood and agreed that at the
time of the termination or at any time thereafter Landlord may rent the Demised
Premises (and agrees to use reasonable efforts in attempting to do so), for a
term which may expire before or after the expiration of the term, without
releasing Tenant from any liability (excluding acts of new tenant) whatsoever,
and that Tenant shall be liable for any expenses incurred by Landlord in
connection with obtaining possession of the Demised Premises, with removing
from the Demised Premises property of Tenant and persons claiming under it
(including warehouse charges), with putting the Demised Premises into good
condition for reletting, and with any reletting, including, but without
limitation, reasonable attorneys' fees and brokers' fees, and that any monies
collected from any reletting shall be applied first to the foregoing expenses
and then to the payment of rent and all other payments due from Tenant to
Landlord for the period to which such monies collected relate, and any
remaining monies shall be and remain the sole property of Landlord.
22. HOLDING OVER. If Tenant shall continue to occupy the Demised Premises
following the expiration or earlier termination of this lease, Tenant shall be
deemed to be occupying the Demised Premises as a tenant at sufferance. Such
tenancy at sufferance shall be upon all of the terms and conditions set forth
in this lease with the exception of rent payments, which shall be in the form
of use and occupancy, and at a rate equal to one hundred and fifty (150%)
percent of the amount of rent last provided for hereunder.
23. SECURITY DEPOSIT. Landlord acknowledge that it has received from Tenant
the security deposit set forth in said Lease Information Page, said sum to
serve as security for the payment of rents and the performance and observance
of the agreements and conditions in this lease contained on the part of Tenant
to be performed and observed. In the event of any default or defaults in such
payment, performance or observance, Landlord may apply said sum or any part
thereof toward curing of any such default or defaults and/or toward
compensating Landlord for any loss or damage arising from any such default or
defaults. Upon the expiration or earlier termination of this lease, said sum
(or so much thereof as may remain after application in satisfaction of any
existing defaults or liabilities of Tenant hereunder) shall be returned to
Tenant, without interest. It is understood and agreed that Landlord shall
always have the right to apply said sum, or any other remedy or remedies in the
event of any such default or defaults, without prejudice to any other remedy or
remedies which Landlord may have or Landlord may pursue any other such remedy
or remedies in lieu of (and in addition to) applying said sum or part thereof.
If Landlord shall apply said sum or any part thereof as aforesaid, Tenant shall
upon demand pay to Landlord the amount so applied by Landlord, to restore the
security to its original amount.
24. WAIVER. Failure of either party to complain of any act or omission on
the part of the other party, no matter how long the same may continue, shall
not be deemed to be a waiver by either party of any of its rights hereunder. No
waiver by either party at any time, express or implied, of any breach of any
provision of this lease shall be deemed a waiver of a breach of any other
provision of this lease or a consent to or approval of any other action on the
same or any subsequent occasion. No payment by tenant or acceptance by Landlord
shall be deemed to be anything but payment on account, and the acceptance by
Landlord of a check for a lesser amount with an endorsement or statement
thereon or upon a letter accompanying said check that said lesser amount is
payment if full shall not be deemed an accord and satisfaction, and Landlord
may accept said check without prejudice to its right to recover the balance due
or pursue any other remedy. Any and all rights and remedies which Landlord may
have under this lease or by operation of law, either at law or in equity, upon
any breach, shall be distinct, separate and cumulative and shall not be deemed
inconsistent with each other; and no one of them, whether exercised by Landlord
or not, shall be deemed to be in exclusion of any other; and any two or more of
all of such rights and remedies may be exercised at the same time.
25. LANDLORD'S LIABILITY. The word "Landlord", as used herein, means only
the owner for the time being of Landlord's interest in this lease. That is, in
the event of any transfer of Landlord's interest in this lease, the transferor
shall cease to be liable, and shall be released from all liability for the
performance or observance of any agreements or conditions on the part of
Landlord to be performed or observed subsequent to the time of said transfer,
and the transferee shall be liable for the performance and observance of said
agreements and conditions. If all or any part of Landlord's interest in this
lease shall be held by a trust, corporation or any other form of business
entity, no trustee, shareholder or beneficiary of said trust, corporation or
business entity shall be personally liable for any of the covenants or
agreements, expressed or implied, hereunder. Landlord's covenants or agreements
shall be binding upon the trustees of said trust, as trustees as aforesaid, or
upon the corporation or business entity, as the case may be, but not
individually, and upon the trust, corporate or business entity's estate.
Without limiting the generality of the foregoing, and whether or not all or any
part of Landlord's interest in this lease shall be held by a trust, corporation
or business entity, Tenant specifically agrees to look solely to Landlord's
interest in the building (and Landlords liability insurance coverage) for
recovery of any judgment from Landlord: it being specifically agreed that
Landlord's shall never otherwise be personally liable for any such judgment.
However, each succeeding holder of the Landlord's interest hereunder shall be
liable for the defaults of the Landlord hereunder occurring during or prior to
the period during which such person holds the Landlord's interest hereunder. In
no event shall Landlord be liable to Tenant for any incidental or consequential
damages sustained by Tenant from whatever cause.
If Landlord fails to perform any of its agreements contained in this Lease
and such failure continues for thirty (30) days after written notice thereof
(except (i) where a shorter period is reasonably required due to emergency, or
(ii) where a longer period is reasonably required to complete such cure),
Tenant may cure such failure on behalf of and at the expense of Landlord and do
all reasonably necessary work, make all reasonably necessary payments, or
otherwise take such other reasonable action at law or in equity as Tenant deems
necessary, notwithstanding any other remedy provided for herein. Landlord
agrees to reimburse Tenant for any amount so paid or incurred within thirty
(30) days after completion of such work and proof of payment thereof, (together
with interest thereon at the same rate as the default rate chargeable to Tenant
herein, if not so timely paid), in default of which Tenant shall have the right
to set off all such sums against future payments of rent due hereunder.
26. NOTICE. Any notice from Landlord to Tenant shall be deemed duly served
if hand delivered, mailed by registered or certified mail, return receipt
requested, postage prepaid, or if sent by prepaid Federal Express or other
similar overnight delivery service, addressed to Tenant (to the attention of
John F. White, President and CEO and with a copy to Alicia R. Lopez, General
Counsel) at Tenant's Notice Address. Any notice from Tenant to Landlord shall
be deemed duly served if mailed to Landlord by registered or certified mail,
return receipt requested, postage prepaid, or if sent by prepaid Federal
Express or other similar overnight delivery service, addressed to Landlord at
Landlord's Notice Address, as specified on the Lease Information Page, or at
such other address or addresses as may be designated in writing by Landlord
from time to time.
27. SUBORDINATION. This lease shall be subject and subordinate to any and
all mortgages, deeds of trust and other instruments in the nature of a mortgage
now or at any time hereafter a lien or liens on the property of which the
Demised Premises are a part, and Tenant shall, when requested, promptly execute
and deliver such written instruments as shall be necessary to show the
subordination of this lease to said mortgages, deeds of trust or other such
instruments in the nature of a mortgage. Landlord agrees to obtain a
"non-disturbance agreement" on behalf of Tenant from the holder of any
mortgage, deed of trust or other instruments in the nature of a mortgage to
which this Lease is to be subordinate. Any mortgagees may, at its election,
make its mortgage subordinate to this lease. In any event, Tenant expressly
agrees to attorn to any mortgagee (and to the successor in interest to any
mortgagee) which succeeds to the interest of Landlord hereunder. At any time or
times during the term of this lease and within fifteen (15) days after written
request therefor by Landlord, Tenant agrees to deliver to Landlord or to any
mortgagee a certificate stating that Tenant has entered into occupancy of the
Demised Premises in accordance with the provisions of this lease, that this
lease is in full force and effect, and any other information reasonably
requested.
28. BROKERS. Tenant hereby represents and warrants to Landlord that, except
for the broker listed on said Lease Information Page, if any, it has dealt with
no broker in connection with this lease. Tenant hereby agrees to hold Landlord
harmless from, and indemnified against, all loss or damage (including, but
without limitation, the cost of defending the same) arising from any claim by
any broker or other person (other then said listed broker, if any, whose
compensation shall be paid by Landlord) claiming to have dealt with Tenant.
29. EXTENSION OPTION. Provided Tenant is not then in default under this
Lease (and shall not be in default on the expiration date of this lease, or any
subsequent option period, beyond any applicable cure period), Tenant shall have
the option, subject to the conditions set forth below, to extend this Lease for
the terms set forth on the Lease Information Page (the "extension period"),
upon the terms and conditions as in this Lease contained. To exercise this
option Tenant shall give written notice to Landlord not later than one hundred
and eighty (180) days prior to the expiration of the original term herein
provided. Tenant shall pay to Landlord for each year of such extension period
base annual rent equal to that set forth on the Lease Information Page, for the
option term.
30. RECORDING. Tenant shall not record this lease, but, at the request of
either party hereto, Landlord and Tenant shall execute and record a "Notice of
Lease", in the form (and containing the information) provided by law.
31. SUCCESSORS AND ASSIGNS. This lease shall be binding upon, and inure to
the benefit of any permitted successors and assigns of Tenant and any
successors and assigns of Landlord.
32. MARGINAL NOTES. The marginal notes used as headings for the various
Articles of this lease are used only as a matter of convenience for reference,
and are not to be considered a part of this lease or to be used in determining
the intent of the parties to this lease.
33. DEFINITIONS AND INTERPRETATION. This lease shall be governed in all
respects by the laws of the Commonwealth of Massachusetts as the same may be in
effect from time to time. It is agreed that if any provisions of this lease
shall be determined to be void by any court of competent jurisdiction, then
such determination shall not affect any other provisions of this lease, all of
which other provisions shall remain in full force and effect; and it is the
intention of the parties hereto that if any provision of this lease is capable
of two constructions, one of which would render the provision void and the
other of which would render the provision valid, then the provision shall have
the meaning which renders it valid.
This instrument contains the entire and only agreement between the parties, and
no oral statements or representations or prior written matter not contained or
referred to in this instrument shall have any force or effect. This lease shall
not be modified in any way except by writing subscribed by both parties.
The submission of this lease for examination does not constitute a reservation
of, or option for, the Demised Premises, and this lease becomes effective as a
lease only upon execution and unconditional delivery thereof by both Landlord
and Tenant.
IN WITNESS WHEREOF, this lease has been executed as a sealed instrument as of
the Date of Lease set forth on said Lease Information Page.
LANDLORD: TENANT:
New Avon Limited Partnership Haemonetics, Inc.
by its general partner
New Avon Development Corp.
By: /s/ ***** By: /s/ JOHN F. WHITE
---------------------------------- ----------------------------------
John F. White, President
Hereunto duly authorized
RULES AND REGULATIONS
(A) The holder of the interest of Tenant under the lease shall always conduct
it's operations in the Demised Premises under it's present trade name (Tenant
representing that it has the right to use such trade name) or any subsequent
trade name which Tenant has the right to use, subject to Tenant providing
Landlord with (30) days prior written notice of a change in Tenant's trade
name.
(B) Tenant shall at all times appropriately light, heat and air condition the
Demised Premises. Tenant shall cooperate with Landlord in all reasonable
respects, in order to assure the efficient and effective use of the heating and
air conditioning system and the electric and other utilities systems serving
the Demised Premises;
(C) The plumbing and utilities systems serving the Demised Premises shall not
be used for any purpose other than that for which they were constructed, and no
foreign substance of any kind shall be thrown therein. Tenant will not overload
the utilities systems serving the Demised Premises or the floor, ceiling or
walls of the Demised Premises. Tenant shall not permit the Demised Premises to
be damaged, stripped or defaced, nor suffer any waste.
(D) No awning or other projections shall be attached by Tenant to the exterior
walls of the Demised Premises;
(E) All loading and unloading of goods shall be done only in the areas and
through the entrances designated for such purpose by Landlord;
(F) All garbage and refuse shall be kept in containers specified by Landlord,
shall be placed in the areas specified by landlord;
(G) No radio or television or other similar device shall be installed, and no
aerial shall be erected on the roof, or on exterior walls of the Demised
Premises or the building, without in each instance having obtained Landlord's
prior written consent. Any such device or aerial so installed without such
prior written consent shall be subject to Landlord's right to require removal
of the device or aerial at any time, without notice, at Tenant's sole cost and
expense;
(H) No loudspeakers, television sets, phonographs, radios or other devices,
equipment or machinery shall be used in a manner so as to be heard or seen
outside of the Demised Premises without the prior written consent of Landlord;
(I) Sales using the auction method of selling, fire sales and closing out or
going out of business sales shall not be conducted on or about the Demised
Premises without the prior written consent of Landlord;
(J) Tenant shall not place or permit any obstructions or merchandise in (or
otherwise use in a way which interferes with the use thereof by others entitled
thereto) any service corridors, sidewalks, entrances, passages, courts,
corridors, elevators or stairways;
(K) Tenant shall use, at Tenant's cost, a pest extermination contractor who
will provide services in a professional manner in accordance with tenant's
regulatory requirements;
(L) Except for those exclusively for use by employees of Tenant which are not
visible from the sales area of the Demised Premises or the exterior of the
Demised Premises, Tenant shall not operate any coin-or token-operated vending
machine or similar device for the sale of any goods, wares, merchandise, food,
beverages or services, including, but not limited to, pay telephones, pay
lockers, pay toilets, scales, amusement devices and machines for the sale of
beverages, food, candy, cigarettes or other commodities, without the prior
written consent of the Landlord;
(M) Tenant shall keep the Demised Premises in a clean and neat condition.
Tenant shall not make unreasonable noises, cause disturbances or vibrations or
use or operate any electrical devices or other devices that emit sound or other
waves or disturbances, or create odors, or otherwise create or permit to exist
in and about the Demised Premises any nuisance which may be offensive to other
tenants and occupants of the building or that would interfere substantially
with the operation of any device or equipment or radio or television
broadcasting or reception from or within the building or elsewhere;
(N) No additional or different locks or bolts shall be affixed by Tenant to
the doors of the Demised Premises except by prior written notice to Landlord.
Landlord consents to the Tenants installation of an electronic card access
system, the installation of which shall be subject to the terms and conditions
of this Lease. Tenant will make suitable arrangements for Landlord's access to
the premises. Not later than the date on which Tenant assumes exclusive
possession of the Demised Premises, Tenant will provide Landlord with the name
and home telephone number of persons who will be available on a twenty-four
hour basis, in order to assure Landlord of the ability to gain access to the
Demised Premises whenever permitted to do so pursuant to the terms of the
lease;
EXHIBIT C
---------
Determination of Market Rate
Landlord shall, within thirty (30) days of receiving Tenant's written notice of
Tenants exercise of the Extension Option(s), designate the Market Rate for the
Demised Premises for the Option Period(s), as such term is defined on the Lease
Information Page. If Tenant disagrees with Landlord's designation of the Market
Rate, Tenant shall have the right by written notice given within thirty (30)
days after Tenant has been notified of Landlord's designation, to submit the
determination of Market Rate to arbitration. Market Rate shall be submitted to
arbitration as follows: Market Rate shall be determined by impartial
arbitrators, one to be chosen by Tenant at the time it submits such Market Rate
to arbitration, one to be chosen by Landlord within fifteen (15) days
thereafter, and a third to be selected, if necessary, as provided below. Each
arbitrator shall be an M.A.I. appraiser or shall have at least five (5) years
experience in evaluating real estate similar to the Demised Premises. The
unanimous decision of the two first chosen, without selection and participation
of a third arbitrator, or otherwise, the written decision of the third
arbitrator chosen and selected as provided below, shall be conclusive and
binding upon Landlord and Tenant. Unless the two arbitrators selected by
Landlord and Tenant have reached a designation, they shall so notify the then
Regional Director of the Boston chapter of the American Arbitration Association
and request him to select an impartial third arbitrator, to determine Market
Rate as herein defined. Within thirty (30) days after being designated, the
third arbitrator shall determine the Market Rate as being either the Market
Rate determined by Landlord's appraiser or the Market Rate determined by
Tenant's appraiser, whichever he believes to be closer to the true Market Rate.
The arbitration contemplated hereunder shall be governed by the commercial
arbitration rules of the American Arbitration Association. Landlord shall bear
the costs and expenses of the arbitrator which it chooses and Tenant shall bear
the cost and expenses of the arbitrator which it chooses. In arriving at their
determination hereunder, the arbitrators shall consider the rental market for
space comparable to the space adjacent to the Demised Premises within a five
(5) mile radius of the Building. Landlord and Tenant shall bear the expense of
the third arbitrator and the costs and expenses of the arbitration proceeding
hereunder equally. If the dispute between the parties as to the Market Rate has
not been resolved before the commencement of the extension term, then Tenant
shall pay rent for the extension term based upon the minimum rent during the
time period set forth herein and its additional share of Real Estate Taxes and
Operation Cost payable with respect to the time period in question until either
the agreement of the parties as to the Market Rate, or the decision of the
arbitrators, as the case may be, at which time Tenant shall pay any
underpayment of rent with respect to the time period in question to Landlord.
EXHIBIT A
HAEMONETICS, INC.
[DIAGRAM OF THE ODYSSEY BUILDING]
Exhibit 10AC
------------
LIMITED WAIVER UNDER NOTE PURCHASE AGREEMENTS
This Limited Waiver Under Note Purchase Agreements (the "Waiver") is
made as of this 30th day of April, 1998 by and among Allstate Life Insurance
Company, Employers Insurance of Wausau A Mutual Company, State Farm Life
Insurance Company and Nationwide Mutual Fire Insurance Company (herein
collectively the "Purchasers") and Haemonetics Corporation, a Massachusetts
corporation (the "Company"). Capitalized words used as defined terms herein
and not otherwise defined shall have the meaning ascribed thereto in the
Note Purchase Agreements (as defined below).
WITNESSETH
WHEREAS, the Purchasers and the Company have entered into separate and
several Note Purchase Agreements each dated as of October 15, 1997 (the
"Note Purchase Agreements") relating to the issuance by the Company of
$40,000,000 in aggregate principal amount of its 7.05% Senior Notes due
October 15, 2007;
WHEREAS, Section 10.1 of the Note Purchase Agreements provides that
the Company will at all times keep and maintain Consolidated Stockholders'
Equity at an amount not less than $200,000,000; and
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Purchasers and the Company
hereby agree as follows:
1. Limited Waiver. The Purchasers hereby waive the Company's non-
compliance with the provisions of Section 10.1 of the Note Purchase
Agreements during the period commencing on March 28, 1998 and ending on
April 3, 1999 (the "Waiver Period"), but no other Default or Event of
Default which may exist under the Note Purchase Agreements or the Notes,
provided that the Waiver provided in this Section 1 shall terminate (a) if
at any time during the Waiver Period Consolidated Stockholders' Equity shall
be less than $185,000,000 or (b) if any covenant or agreement of the Company
in Section 2 of this Waiver is violated or breached during the Waiver
Period. Upon expiration of the Waiver Period or other termination of this
Waiver all covenants of the Company under the Note Purchase Agreements as in
effect prior to this Waiver shall be reinstated.
2. Representations, Warranties and Covenants of the Company. To
induce the Purchasers to grant the waiver requested herein, the Company
hereby represents, warrants and covenants to the Purchasers as follows:
(a) The representations and warranties of the Company contained
in the Note Purchase Agreements were true and correct when
made and are true and correct at and as of the date hereof,
except that all representations and warranties that expressly
related to specific financial statements of the Company are
deemed to be made herein with respect to the financial
statements of the Company as of and for the period ended
December 31, 1997, copies of which have been delivered to the
Purchasers.
(b) There exists no Default or Event of Default, after giving
effect to the waiver contemplated hereby, under the Note
Purchase Agreements or the Notes.
(c) The Company has not, directly or indirectly, paid or caused
to be paid any remuneration, whether by way of supplemental
or additional interest, fee or otherwise, or granted any
security, to any holder of the Notes or any other creditor of
the Company as consideration for or as an inducement to the
entering into by any holder of the Notes or any other
creditor of this Waiver or the Bank Waiver referred to in
Section 3 hereof.
(d) Notwithstanding anything to the contrary contained in Section
10.5 of the Note Purchase Agreements, during the period
commencing on March 28, 1998 and ending on April 3, 1999, the
Company shall not declare or pay any Restricted Payments (it
being expressly agreed that dividends or other distributions
payable solely in shares of common stock of the Company or
rights to acquire common stock of the Company shall be
permitted).
(e) The ratio of the Consolidated EBIT to Consolidated Interest
Expense (as defined below) shall not be less than 2.0 to 1.0
for any four fiscal quarter period ending during the period
commencing on March 28, 1998 and ending on April 3, 1999.
"Consolidated EBIT" shall mean Consolidated Net Income plus
interest and tax expenses of the Company and its Subsidiaries
during the period of determination, determined on a
consolidated basis after eliminating earnings or losses
attributable to outstanding Minority Interests, but excluding
in any event: (i) any restructuring charge taken by the
Company in its fiscal quarter ended December 27, 1997 and
(ii) any charge taken by the Company in its fiscal quarter
ended March 28, 1998 relating to the Company's disposition of
Blood Bank Management Services. "Consolidated Interest
Expense" shall mean all interest expense of the Company and
its Subsidiaries during the period of determination,
determined on a consolidated basis after eliminating interest
expense, if any, attributable to outstanding Minority
Interests.
3. Condition to Effectiveness. The effectiveness of the waiver
requested herein shall be subject to (a) the Purchasers' receipt of pro
forma financial statements reflecting the Company's forecasted sources and
uses of income and cash flows for its fiscal years 1998 through 2008, after
giving effect to the divesture of the Company's blood collection centers,
which financial statements shall be acceptable in form and substance in all
respects to the Required Holders and demonstrate that the Company remains
able to service its obligations under the Notes and otherwise (receipt of
which, by their execution below, is hereby acknowledged), (b) the Company's
and the Purchasers' receipt of this Waiver duly executed by the Company and
the Required Holders, and (c) the Company's receipt of a waiver (the "Bank
Waiver") under that certain Revolving Credit Agreement dated as of June 25,
1997 among the Company, as Borrower, and Mellon Bank, N.A., BankBoston, N.A.
and the Sanwa Bank, Limited, as the Banks, as the same may be amended,
modified or supplemented through the date hereof, which waiver shall waive
the Company's non-compliance with certain provisions contained therein in
form and substance satisfactory to the Required Holders.
4. Effect of Waiver. The Waiver set forth herein shall be limited
precisely as written and shall not be deemed a waiver or modification of any
other term or condition of the Note Purchase Agreements or to be a consent
to any future waiver of any provision thereof.
5. Note Purchase Agreements and Notes Ratified. This Waiver shall be
construed in connection with each of the Note Purchase Agreements, and
except as expressly modified by this Waiver, all terms, conditions and
covenants contained in the Note Purchase Agreements and Notes are hereby
ratified and shall be and remain in full force and effect.
6. Counterparts. This Waiver may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one instrument.
7. Governing Law. This Waiver shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law
of the State of Illinois.
* * * * * * * * * * * *
The foregoing waiver is hereby accepted and agreed to as of the date
first written above.
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Patricia W. Wilson
-----------------------------
By: /s/ Daniel Leimbach
-----------------------------
EMPLOYERS INSURANCE OF WAUSAU
A MUTUAL COMPANY
By:_____________________________
STATE FARM LIFE INSURANCE COMPANY
By:_____________________________
By:_____________________________
NATIONWIDE MUTUAL
FIRE INSURANCE COMPANY
By:_____________________________
HAEMONETICS CORPORATION
By:_____________________________
The foregoing waiver is hereby accepted and agreed to as of the date
first written above.
ALLSTATE LIFE INSURANCE COMPANY
By:_____________________________
By:_____________________________
EMPLOYERS INSURANCE OF WAUSAU
A MUTUAL COMPANY
By: /s/ James W. Pruden
-----------------------------
Attorney-in-fact
STATE FARM LIFE INSURANCE COMPANY
By:_____________________________
By:_____________________________
NATIONWIDE MUTUAL
FIRE INSURANCE COMPANY
By:_____________________________
HAEMONETICS CORPORATION
By:_____________________________
The foregoing waiver is hereby accepted and agreed to as of the date
first written above.
ALLSTATE LIFE INSURANCE COMPANY
By:_____________________________
By:_____________________________
EMPLOYERS INSURANCE OF WAUSAU
A MUTUAL COMPANY
By:_____________________________
STATE FARM LIFE INSURANCE COMPANY
By:_____________________________
By:_____________________________
NATIONWIDE MUTUAL
FIRE INSURANCE COMPANY
By: /s/ James W. Pruden
-----------------------------
Vice President, Municipal Securities
HAEMONETICS CORPORATION
By:_____________________________
The foregoing waiver is hereby accepted and agreed to as of the date
first written above.
ALLSTATE LIFE INSURANCE COMPANY
By:_____________________________
By:_____________________________
EMPLOYERS INSURANCE OF WAUSAU
A MUTUAL COMPANY
By:_____________________________
STATE FARM LIFE INSURANCE COMPANY
By:_____________________________
By:_____________________________
NATIONWIDE MUTUAL
FIRE INSURANCE COMPANY
By:_____________________________
HAEMONETICS CORPORATION
By: /s/ Ronald J. Ryan
-----------------------------
Senior Vice President of Finance
EXHIBIT 21
SUBSIDIARIES OF HAEMONETICS CORPORATION
Name Jurisdiction of Incorporation
- ------------------------------------------------------------------------------
Haemonetics S.A. International Switzerland
Haemonetics Scandinavia AB Sweden
Haemonetics GmbH Germany
Haemonetics France SARL France
Haemonetics U.K. Ltd. England
Haemonetics Japan Co., Ltd. Japan
Haemonetics Ventures Corp. Massachusetts
Haemonetics Foreign Sales Corp. Virgin Islands
Haemonetics Services, Inc. Delaware
Nyon Associates, Inc. Delaware
Haemonetics Blood Services and Training Institute, Inc. Delaware
Blood Management Services Inc. Delaware
Haemonetics Belgium S.A./N.V. Belgium
Haemonetics Italia S.R.L. Italy
Haemonetics Handelsgesellschaft.m.b.H. Austria
Haemonetics Asia Incorporated Delaware
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K, into the Company's
previously filed Registration Statement File Nos. 33-42005, 33-42006, 33-
70932, 33-70934, and 33-80652.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
June 19, 1998
5
12-MOS
MAR-28-1998
MAR-28-1998
21,766
0
59,704
818
61,664
191,150
170,261
86,042
336,693
78,358
53,586
0
0
293
194,362
336,693
285,762
285,762
150,007
150,007
42,434
263
3,373
4,466
3,865
601
(25,373)
0
0
(24,772)
(0.93)
(0.93)
5
12-MOS 12-MOS
MAR-29-1997 MAR-30-1996
MAR-29-1997 MAR-30-1996
8,272 13,432
0 0
71,874 60,984
961 984
54,928 56,710
166,460 158,602
183,257 156,585
85,855 73,716
320,474 287,541
72,415 46,162
10,015 15,156
0 0
0 0
292 288
224,982 216,682
320,474 287,541
303,009 276,470
303,009 276,470
143,846 122,468
143,846 122,468
18,586 18,104
431 321
1,721 2,290
54,805 58,175
19,171 20,351
35,634 37,824
(2,664) (1,899)
0 0
0 0
32,970 35,925
1.21 1.32
1.20 1.30
