FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the quarter ended: December 27, 1997 Commission File Number: 1-10730
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HAEMONETICS CORPORATION
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2882273
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
400 Wood Road, Braintree, MA 02184
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(Address of principal executive offices)
Registrant's telephone number, including area code: (781) 848-7100
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Indicate by check mark whether the registrant (1.) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) (2.) has been subject to the
filing requirements for at least the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
26,512,979 shares of Common Stock, $ .01 par value, as of
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December 27, 1997
HAEMONETICS CORPORATION
INDEX
PAGE
----
PART I. Financial Information
Consolidated Balance Sheets - December 27, 1997 2
and March 29, 1997
Consolidated Statements of Operations - 3
Three and Nine Months Ended December 27, 1997
and December 28, 1996
Consolidated Statement of Stockholders' Equity - 4
Nine Months Ended December 27, 1997
Consolidated Statements of Cash Flows - 5
Nine Months Ended December 27, 1997 and December 28, 1996
Notes to Consolidated Financial Statements 6-8
Management's Discussion and Analysis of Financial Condition 9-11
and Results of Operations
PART II. Other Information 12
Signatures 13
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 27, March 29,
ASSETS 1997 1997
------------ ---------
(unaudited)
Current assets:
Cash and cash equivalents........................................ $ 7,330 $ 8,302
Accounts receivable, less allowance of $926 at December 27, 1997
and $961 at March 29, 1997...................................... 78,407 72,199
Inventories...................................................... 60,781 55,090
Current investment in sales-type leases, net..................... 14,311 13,559
Deferred tax asset............................................... 12,811 14,290
Other prepaid and current assets................................. 14,165 4,229
----------------------
Total current assets ........................................ 187,805 167,669
----------------------
Property, plant and equipment...................................... 200,408 190,758
Less accumulated depreciation.................................... 92,688 87,148
----------------------
Net property, plant and equipment.................................. 107,720 103,610
Other assets:
Investment in sales-type leases, net............................. 38,132 30,954
Distribution rights, net......................................... 10,925 10,266
Other assets, net................................................ 14,849 11,047
----------------------
Total other assets........................................... 63,906 52,267
----------------------
Total assets................................................. $359,431 $323,546
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt........... $ 22,576 $ 19,511
Accounts payable................................................. 21,658 27,885
Accrued payroll and related costs................................ 9,405 6,814
Accrued income taxes............................................. 0 10,478
Other accrued expenses........................................... 20,285 8,936
----------------------
Total current liabilities.................................... 73,924 73,624
----------------------
Deferred income taxes.............................................. 12,580 12,770
Long-term debt, net of current maturities.......................... 50,143 10,015
Other long-term liabilities........................................ 3,721 1,863
Stockholders' equity:
Common stock, $.01 par value; Authorized - 80,000,000 shares;
Issued - 29,294,736 at December 27, 1997; 29,238,350 shares at
March 29, 1997.................................................. 293 292
Additional paid-in capital....................................... 58,403 56,547
Retained earnings................................................ 214,479 215,657
Cumulative translation adjustments............................... (7,750) (6,162)
----------------------
Stockholders' equity before treasury stock....................... 265,425 266,334
Less: treasury stock - 2,781,757 shares at cost at December
27, 1997 and 2,478,888 shares at cost at March 29, 1997..... 46,362 41,060
----------------------
Total stockholders' equity................................... 219,063 225,274
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Total liabilities and stockholders' equity................... $359,431 $323,546
======================
The accompanying notes are an integral part of these consolidated
financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except share data)
Three Months Ended Nine Months Ended
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December 27, December 28, December 27, December 28,
1997 1996 1997 1996
------------ ------------ ------------ ------------
Net revenues ............................................ $ 75,782 $76,550 $234,723 $226,482
Cost of goods sold ...................................... 40,285 38,468 127,628 106,174
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Gross profit ............................................ 35,497 38,082 107,095 120,308
Operating expenses:
Research and development .............................. 4,324 4,620 14,073 14,338
Selling, general and administrative ................... 23,831 23,121 69,964 68,584
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Total operating expenses .......................... 28,155 27,741 84,037 82,922
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Non-Recurring Restructuring Expense ..................... (25,200) 0 (25,200) 0
Operating income (loss) ................................. (17,858) 10,341 (2,142) 37,386
Interest expense ........................................ (1,088) (396) (2,556) (1,281)
Interest income ......................................... 933 678 2,958 2,099
Other income (expense), net ............................. 48 178 (53) 383
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Income (loss) before provision for income taxes ......... (17,965) 10,801 (1,793) 38,587
Provision (benefit) for income taxes .................... (6,288) 3,781 (628) 13,496
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Net income (loss) ....................................... $(11,677) $ 7,020 $ (1,165) $ 25,091
========================================================
NET INCOME (LOSS) PER SHARE ............................. $ (0.44) $ 0.26 $ (0.04) $ 0.91
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WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES
OUTSTANDING ............................................ 26,528 27,361 26,598 27,580
The accompanying notes are an integral part of these consolidated
financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited - in thousands)
Common Stock Additional Cumulative Total
-------------- Paid-in Retained Treasury Translation Stockholders'
Shares $'s Capital Earnings Stock Adjustment Equity
------ --- ---------- -------- -------- ----------- -------------
Balance March 29, 1997.................... 29,238 $292 $56,547 $215,657 $(41,060) $(6,162) $225,274
Exercise of stock options and related
tax benefit.............................. 57 1 1,856 --- --- --- 1,857
Employee stock purchase plan.............. --- --- --- (13) 264 --- 251
Treasury stock ........................... --- --- --- --- (5,566) --- (5,566)
Net income (loss)........................ --- --- --- (1,165) --- --- (1,165)
Translation adjustment.................... --- --- --- --- --- (1,588) (1,588)
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Balance December 27, 1997................. 29,295 $293 $58,403 $214,479 $(46,362) $(7,750) $219,063
==================================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited- in thousands)
Nine Months Ended
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Dec. 27, Dec. 28,
1997 1996
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Cash flows from operating activities:
Net income (loss)................................................................ $ (1,165) $ 25,091
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ................................................. 4,676 10,340
(Increase) decrease in deferred income taxes .................................. (146) 140
Increase in accounts receivable, net .......................................... (7,216) (8,811)
(Increase) decrease in inventories ............................................ (5,926) 9,249
Increase in sales-type leases ................................................. (878) (2,292)
Increase in other assets ...................................................... (7,797) (2,622)
Decrease in accounts payable, accrued expenses and deferred revenues .......... (911) 502
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Total adjustments ........................................................... (18,198) 6,506
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Net cash (used in) provided by operating activities ........................... (19,363) 31,597
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Cash flows from investing activities:
Capital expenditures on property, plant and equipment, net ...................... (3,914) (26,688)
Increase in distribution rights ................................................. (659) ---
Acquisitions in Blood Bank Management Services Business ......................... (10,508) ---
Net increase in long-term sales contracts ....................................... (7,341) (5,888)
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Net cash used in investing activities ......................................... (22,422) (32,576)
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Cash flows from financing activities:
Payments on long-term real estate mortgage ...................................... (137) (142)
Net increase in short-term revolving credit agreements .......................... 4,318 9,462
Net increase (decrease) in long-term revolving credit agreements ................ (75) (741)
Borrowings under long term senior note purchases agreements ..................... 40,000
Exercise of stock options and related tax benefit ............................... 1,857 2,802
Employee stock purchase plan .................................................... 251 275
Purchase of treasury stock ...................................................... (5,566) (6,338)
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Net cash provided by financing activities ..................................... 40,648 5,318
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Effect of exchange rates on cash .................................................. 165 (1,202)
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Net decrease in cash .............................................................. (972) 3,137
Cash at beginning of period ....................................................... 8,302 13,434
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Cash at end of period ............................................................. $ 7,330 $ 16,571
=====================
Supplemental disclosures of cash flow information:
Interest paid ................................................................... $ 2,253 $ 1,841
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Income taxes paid, net of refunds ............................................... $ 13,030 $ 4,395
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The accompanying notes are an integral part of these consolidated
financial statements.
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The results of operations for the interim periods shown in this report
are not necessarily indicative of results for any future interim period or
for the entire fiscal year. The Company believes that the quarterly
information presented includes all adjustments (consisting only of normal,
recurring adjustments) that the Company considers necessary for a fair
presentation in accordance with generally accepted accounting principles.
The accompanying consolidated financial statements and notes should be read
in conjunction with the Company's audited annual financial statements.
2. FOREIGN CURRENCY
The Company enters into forward exchange contracts to hedge certain
firm sales commitments to customers which are denominated in foreign
currencies. The purpose of the Company's foreign hedging activities is to
reduce uncertainty associated with currency movement in future periods.
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 December 27, 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) for US dollars totaling $75.7
million. Of that balance, $27.2 million represented contracts for terms of
30 days or less. Gross unrealized gains from hedging firm sales
commitments, based on current spot rates, were $4.2 million at December 27,
1997. Deferred gains and losses are recognized in earnings when the
transactions being hedged are recognized. Management anticipates that the
deferred amounts will be offset by the foreign exchange effect on sales of
product in future periods.
3. INVENTORIES
Inventories are stated at the lower of cost or market and include the
cost of material, labor and manufacturing overhead. Cost is determined on
the first-in, first-out method.
Inventories consist of the following:
December 27, March 29,
1997 1997
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(in thousands)
Raw materials $ 9,358 $12,501
Work-in-process 6,650 5,628
Finished goods 44,773 36,961
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$60,781 $55,090
======================
4. NET INCOME (LOSS) PER SHARE
In February 1997, the Financial Accounting Standards board issued SFAS
NO. 128, "Earnings per Share," which is effective for financial statements
issued for periods ending after December 15, 1997. 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 other diluted
outstanding common stock equivalents and is computed similarly to primary
earnings per share according to AFB 15. 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:
For the three months ended December 27, 1997
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Income/(Loss) Shares
(in thousands) (in thousands) Per-Share
(Numerators) (Denominator) Amount
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Basic EPS
- ---------
Income available to common stockholders $11,677 $26,513 $ (.44)
Effect of dilutive securities
- -----------------------------
Stock options - 15 -
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Diluted EPS
- -----------
Income available to common stockholders,
including assumed conversions $11,677 $26,528 $ (.44)
========================================
For the nine months ended December 27, 1997
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Income/(Loss) Shares
(in thousands) (in thousands) Per-share
(Numerator) (Denominator) Amount
---------------------------------------------
Basic EPS
- ---------
Income available to common stockholders $(1,165) $26,530 $(0.04)
Effect of dilutive securities
- -----------------------------
Stock options - 68 -
----------------------------------------
Diluted EPS
- -----------
Income available to common stockholders
including assumed conversions $(1,165) $26,598 $(0.04)
========================================
5. ACQUISITION OF BLOOD CENTERS BY BLOOD BANK MANAGEMENT SERVICES
During the nine months ended December 27, 1997, the Company purchased
substantially all of the assets of three blood centers. Each of these
acquisitions was accounted for using the purchase method of accounting, and
accordingly, the results of operations for each acquisition have been
included in the consolidated results of the Company from the respective
acquisition dates. The purchase price for the 1997 acquisitions exceeded
the underlying fair value of the net assets acquired by $4.9 million which
has been assigned to goodwill. Goodwill is included in other assets in the
accompanying consolidated Balance Sheet. The purchase price allocation is
preliminary and subject to adjustment. To finance the 1997 acquisitions,
the Company paid approximately $10.5 million in cash which was provided
through the Company's long-term revolving credit agreements.
6. RESTRUCURING CHARGE
The Company recorded a restructuring charge of $25.2 million related
to the restructuring plans announced by the Company on November 12, 1997.
From a manufacturing perspective, the Company made a decision to terminate
their rework program and no longer manufacture 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 they intend to
close or partially close, resulting in losses associated with the
abandonment of certain leases and fixed assets, and the termination of
certain employees.
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The $25.2 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 $2.9 million were written off. These included certain
strategic investments in non-core businesses which the Company no longer
intends to pursue. The Company charged $3.4 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 $6.5 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. 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
Statement of Financial Accounting Standards No. 121, "Impairment of Long
Lived Assets".
Management's Discussion and Analysis of
Financial Condition and Results of Operations
- -------------------------------------------------------------------------------
Three Months Ended December 27, 1997 Compared to Three Months Ended December
28, 1996
Net revenues in 1997 decreased 1 % to $75.8 million from $76.6 million
in 1996. Without the effects of currency, net revenues increased 5%.
Worldwide disposable sales increased 1%. Without the effects of currency,
the increase in disposable sales was approximately 7% driven by the
international markets. Disposable sales in the US were adversely effected
during the quarter due to discontinued plasma business with one customer and
lower surgical shipments due to continued inventory reduction initiatives by
our US distributor. Sales of disposables products accounted for
approximately 90% and 89% of net revenues for the three months ended
December 27, 1997 and December 28, 1996, respectively. Disposable revenue
includes $5.3 million and $2.3 million in service revenue earned for the
collection of blood products through the Company's Blood Bank Management
Services ("BBMS") for 1997 and 1996, respectively. Worldwide equipment sales
in 1997 decreased 14% to $7.5 million from $8.8 million in 1996. Without the
effects of currency, the decrease in equipment sales was approximately 10%
driven by a shortfall in the domestic market. International sales accounted
for approximately 64% and 61% of net revenues for 1997 and 1996,
respectively.
Gross profit for the three months ended December 27, 1997 decreased to
$35.5 million from $38.1 million for the three months ended December 28,
1996. As a percentage of net revenues, gross profit decreased 2.9% to 46.8%
from 49.7%. The decline in margin is due largely to higher manufacturing
costs incurred at BBMS. The negative effect of currency was fully offset by
improvements in the base margin of the Company as a result of favorable
improvements in the Company's core manufacturing.
The Company expended $4.3 million in 1997 on research and development
(5.7% of net revenues) and $4.6 million in 1996 (6.0% of net revenues in
1996.) The decrease is a result of management's targeted effort to control
spending as well as from staff reductions associated with discontinued
operations of Haemonentics Plasma Product Services under taken as part of
the restructuring.
Selling, general and administrative expenses increased to $23.8
million in 1997 from $23.1 million in 1996 and increased as a percentage of
net revenues to 31.4% from 30.2%. This increase is attributed to increased
costs of $1.5 million incurred by BBMS offset by lower expenses for the
core business.
During the quarter, the Company recorded a restructuring charge of
$25.2 million (or $16.4 million net of income taxes) related to the
restructuring plans announced by the Company on November 12, 1997. From a
manufacturing perspective, the Company made a decision to terminate their
rework program and no longer manufacture 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 they intend to close or partially
close, resulting in losses associated with the abandonment of certain leases
and fixed assets, and the termination of certain employees.
The $25.2 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 $6.5 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 $3.6 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 $2.9 million were also
written off. These included certain strategic investments in non-core
businesses which the Company no longer intends to pursue. Finally, $3.4
million relates to reserves for severance and other contractual obligations
with respect to the employee terminations.
Operating income, as a percentage of net revenues, decreased in 1997
to (23.6)% from 13.5% during the same period in 1996. Without the
restructure charge of $25.2 million taken during the current quarter, the
operating income, as a percentage of net revenues, decreased 3.8% to 9.7%
from 13.5% in 1996. This 3.8% decrease was driven by the strengthening of
the dollar and start up costs from BBMS which accounted for a combined
reduction in operating margin, as a percentage of revenues of approximately
6.0%. This 6.0% decrease was partially offset by improvements in both base
business operating expenses and gross margin before the effects of currency.
Interest expense increased $0.7 million in 1997 to $1.1 million from
$0.4 million for the same period in 1996 due to an increased level of
borrowing.
Interest income increased $0.2 million in 1997 to $0.9 million from
$0.7 million for the same period in 1996. The increase was due to the
increase in the balance of sales-type leases.
The provision for income taxes remained at approximately 35% as a
percentage of pretax income. The annualized rate for the full 12 months of
fiscal 1998 is expected to be approximately 35%.
Nine Months Ended December 27, 1997 Compared to Nine Months Ended December
28, 1996
Net revenues in 1997 increased 4% to $234.7 million from $226.5
million in 1996. Without the effects of currency, the increase was 9%.
Worldwide disposable sales increased 5%. Without the effects of currency,
the increase in disposable sales was approximately 11% driven approximately
30% by the domestic market and 70% by the international market. Sales of
disposable products accounted for approximately 89% and 88% of revenues for
the nine months ended December 27, 1997 and December 28, 1996 respectively.
Disposable revenue includes $12.2 million and $4.0 million in service
revenue earned for the collection of blood products through BBMS for 1997
and 1996 respectively. Worldwide equipment sales were approximately $26.7
million in 1997 and $27.8 million in 1996. Without the effects of currency,
equipment revenue was unchanged. International sales accounted for
approximately 64% of net revenues for 1997 and 63% in 1996.
Gross profit for the nine months ended December 27, 1997 decreased to
$107.1 million from $120.3 million for the nine months ended December 28,
1996. As a percentage of net revenues, gross profit decreased to 45.6%
from 53.1%. Approximately 40% of the decrease was a result of the
unfavorable effects of the strengthening of the dollar and 10% was due to
the mix shift in product sales from the higher margin surgical disposable
products to the lower margin plasma disposable products. The remaining 50%
of the decrease is shared equally between the investment cost in BBMS and
higher manufacturing costs.
The Company expended $14.1 million in 1997 and $14.3 in 1996 on
research and development (6.0% of net revenues in 1997 and 6.3% of net
revenues in 1996.)
Selling, general and administrative expenses increased to $70.0
million in 1997 from $68.6 million in 1996 and decreased as a percentage of
net revenues to 29.8% from 30.3%. A majority of the dollar increase is
attributed to BBMS.
Operating income, as a percentage of net revenues, decreased in 1997
to (.9)% from 16.5% during the same period in 1996. Without the restructure
charge of $25.2 million taken during the third quarter, the operating
income, as a percentage of net revenues, decreased 6.7% to 9.8% from 16.5%
in 1996. The decrease was due to higher manufacturing costs, the stronger
dollar and the costs associated with BBMS. This decrease was partially
offset by the decrease in selling, general and administrative expenses as a
percentage of net revenues.
Interest expense increased $1.3 million in 1997 to $2.6 million from
$1.3 million for the same period in 1996 due to an increased level of
borrowing.
Interest income increased $0.9 million in 1997 to $3.0 million from
$2.1 million for the same period in 1996, due to the increase in the balance
of sales-type leases.
The provision for income taxes remained at approximately 35% as a
percentage of pretax income.
Liquidity and Capital Resources
The Company historically has satisfied its cash requirements
principally from internally generated cash flow and bank borrowings. During
the nine months ended December 27, 1997, the Company utilized $19.4
million in cash flow from operating activities compared to generating $31.6
million in cash flow from operating activities for the nine months ended
December 28, 1996. The Company's need for funds is derived primarily from
capital expenditures, long-term sales contracts, acquisitions, treasury
stock purchases and working capital. During the nine months ended December
27, 1997, net cash used for investing activities totaled $22.4 million
consisting of $3.9 million (net of $14.0 million in gross write-offs due to
the restructure) related primarily to equipment utilized in the
manufacturing operations and the worldwide plasma business, $10.5 million
for acquisitions in BBMS and $7.3 million from the increase in long-term
sales contracts attributable to growth in the plasma business worldwide.
During the nine months ended December 27, 1997, the need for funds not
satisfied by the internally generated cash flow was satisfied by an increase
in committed borrowings of $44.2 million. Effective October 28, 1997 the
Company completed a private placement of $40.0 million in unsecured senior
notes. The notes have a coupon rate of 7.05% and a ten year term. The
company also amended it's Revolving Credit Agreement to reduce it's
committed line of credit from $40.0 million to $20.0 million.
The Company used $5.6 million to repurchase 318,700 shares of treasury
stock during the nine months ended December 27, 1997. Under the stock
repurchase program approved by the Board at the July 19, 1996 Board of
Directors Meeting there remain approximately 271,000 shares available to
repurchase by the Company at prevailing prices as market conditions warrant.
No shares were purchased during the second quarter.
To date, approximately $300,000 of cash has been used in connection
with the restructuring charge. it is expected that approximately $3.8
million of cash will be utilized in connection with the total restructuring
charge.
At December 27, 1997 and March 29, 1997, the Company had working
capital of $113.8 million and $94.0 million respectively. The Company
believes its sources of cash are adequate to meet 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 modifying and identifying actions to address affected systems in
time to minimize any detrimental effects on operations. The Company expects
that the costs to ensure its systems are Year 2000 compliant will not be
material to the Company's results of operations, liquidity, or consolidated
financial position.
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. In addition, the Company has
relationships with vendors, customers and other third parties that rely on
computer software that may not be Year 2000 compliant. There can be no
assurance that Year 2000 compliance failures by such third parties will not
have a material adverse effect on the Company.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a). Exhibits
The following exhibits will be filed as part of this form 10-Q:
Exhibit 10A First Amendment, dated December 26, 1997, to
the Revolving credit Agreement, dated June 25,
1997, among Haemonetics Corporation and Mellon
Bank N.A.
Exhibit 27 Financial Data Schedule
(b). Reports on Form 8-K.
The Company filed Form 8-K on February 3, 1998 to report under Item
5 that Sir Stuart Burgess has become Chairman of the Board and
that James L. Peterson has been elected as President and Chief
Executive Office on January 30, 1998. John F. White stepped down
as Chairman, Director, President and Chief Executive Officer on
that date.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HAEMONETICS CORPORATION
Date: February 9, 1998 By: /s/ JAMES L. PETERSON
----------------------------
James L. Peterson, President and
Chief Executive Officer
Date: February 9, 1998 By: /s/ BRIGID A. MAKES
----------------------------
Brigid A. Makes, Chief Financial
Officer, (Principal Financial Officer)