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ACCESSION NUMBER: 0000910647-03-000228
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 15
CONFORMED PERIOD OF REPORT: 20030329
FILED AS OF DATE: 20030609
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: HAEMONETICS CORP
CENTRAL INDEX KEY: 0000313143
STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
IRS NUMBER: 042882273
STATE OF INCORPORATION: MA
FISCAL YEAR END: 0403
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-14041
FILM NUMBER: 03737242
BUSINESS ADDRESS:
STREET 1: 400 WOOD RD
CITY: BRAINTREE
STATE: MA
ZIP: 02184
BUSINESS PHONE: 7818487100
MAIL ADDRESS:
STREET 1: 400 WOOD ROAD
CITY: BRAINTREE
STATE: MA
ZIP: 02184
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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 29, 2003. Commission file number 1-10730
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
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 848-7100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act.) Yes X No ____
The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the Registrant (assuming for these purposes that
all executive officers and Directors are "affiliates" of the Registrant) as
of September 28, 2002, the last business day of the registrant's most
recently completed second fiscal quarter was $433,000,000 (based on the
closing sale price of the Registrant's Common Stock on that date as
reported on the New York Stock Exchange).
The number of shares of the registrant's common stock, $.01 par
value, outstanding as of May 15, 2003 was 24,071,289.
Documents Incorporated By Reference
Portions of the Company's Proxy Statement for the Annual Meeting of
Shareholders to be held on July 22, 2003, are incorporated by reference in
Part III.
===========================================================================
<PAGE> 1
TABLE OF CONTENTS
Page Number
-----------
Item 1. Business
(a) General History of the Business 3
(b) Financial Information about Industry Segments 4
(c) Narrative Description of Business 4
(d) Financial Information about Foreign and
Domestic Operations and Export Sales 11
Item 2. Properties 12
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 14
Item 6. Selected Consolidated Financial Data 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Item 7A. Quantitative and Qualitative Disclosures about
Market Risk 31
Item 8. Financial Statements and Supplementary Data 32
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 71
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors 71
(b) Identification of Executive Officers 71
Item 11. Executive Compensation 71
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters 72
Item 13. Certain Relationships and Related Transactions 72
Item 14. Controls and Procedures 72
Item 15. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
(a) Financial Statement Schedules 73
(b) Reports on Form 8-K 73
(c) Exhibits 73
<PAGE> 2
ITEM 1. BUSINESS
(a) General History of the Business
Our Company was founded in 1971 and became a publicly owned company
for the first time in 1979. In August 1983, we were acquired by American
Hospital Supply Corporation ("AHS"). In connection with the acquisition of
AHS by Baxter Travenol Laboratories, Inc. in 1985, Baxter Travenol divested
us in order to address antitrust concerns related to that acquisition. We
were purchased in December 1985 by investors that included E. I. du Pont de
Nemours and Company ("Du Pont") and present and former employees. We were
incorporated in Massachusetts in 1985. In May 1991, we completed an Initial
Public Offering, at which time Du Pont divested its entire interest. The
terms "Haemonetics," "we," "us," "our," and "the Company" as used herein
include its subsidiaries and its predecessor where the context so requires.
We are a pioneer and a market leader in developing and manufacturing
technology to help ensure the blood supply is safe, supplies are adequate,
and that blood banks and hospitals operate efficiently and in compliance
with regulatory requirements. To that end, we are engaged in manufacturing
automated systems and single use disposables for the collection,
processing, and surgical blood salvage, as well as associated consumables
and data management technology. We developed our first automated system in
1971 and for more than 30 years we have been driven to improve the safety
and practice of transfusion medicine.
We market primarily to two customer groups: hospitals and blood
collectors. To our hospital customers, we offer surgical blood salvage
systems, which are used before, during and after surgery to collect a
patient's own blood for reinfusion. To our blood collector customers, which
include both for-profit plasma collectors and not-for-profit blood banks,
we offer: 1) automated plasma collection systems that collect plasma, which
is then generally processed into therapeutic pharmaceuticals; 2) automated
platelet collection systems that enable the collection of a larger volume
of platelets from a single donor, which are then generally given to cancer
patients and others with bleeding disorders; 3) automated red cell
collection systems, developed to maximize the volume of red cells that can
be collected from a single donor, thus helping to alleviate blood
shortages; and 4) cell processing systems that can be employed to freeze
and thaw blood and to wash and remove foreign substances or solutions from
blood.
Our principal operations are in the U.S., Europe, and Japan. Our
products are marketed in more than 50 countries around the world via a
direct sales force as well as, in some instances, independent distributors.
We have pursued a two-pronged growth strategy, focusing both on
internal product development and on acquisitions or alliances with
companies that can provide us with products that expand penetration of
automated technologies or deepen product or service offerings in existing
markets. During fiscal 2003, we continued development of the automated
double red cell market as well as the market for orthopedic surgical
salvage. We continued to expand the market presence of our Fifth Dimension
data management programs to improve the safety and efficiency of blood
component collection at commercial plasma and not-for-profit blood banks
worldwide.
Blood shortages and blood safety issues continue to be areas of great
concern to health care providers around the world. We are a leader in the
development and commercialization of technology to address these
challenges; our mission is to provide innovative devices and services to
advance the safety, quality, and availability of transfusion products for
patients worldwide and to improve the operations of our blood collector
customers. We are focused on continuing our market leadership and
consistently growing shareholder value through intense customer focus, a
culture that demonstrates leadership and employee development at all
levels, and a commitment to trust, quality, and innovation.
<PAGE> 3
(b) Financial Information about Industry Segments
We manage our business on the basis of one operating segment: the
design, manufacture, and marketing of automated blood processing systems.
Our chief operating decision maker uses consolidated financial results to
make operating and strategic decisions. Manufacturing processes, as well as
the regulatory environment in which we operate, are largely the same for
all product lines.
The financial information required for the business segment is
included herein in Note 10 of the financial statements, entitled SEGMENT,
GEOGRAPHIC AND CUSTOMER INFORMATION.
(c) Narrative Description of the Business
Products
We have developed and marketed a variety of 1) automated systems that
collect, process, and surgically salvage blood and 2) data management
systems to promote efficient and compliant operations of blood collectors.
Automated systems allow users to collect and process only the blood
component(s) they target, enabling the collection of more of the targeted
component(s) and the return of unneeded components to the donor. Our
systems consist of proprietary disposable sets that operate on our
specialized equipment. Our systems are used with more than 100 different
sterile, single-use disposable products. Our Fifth Dimension data
management systems are used by blood collectors to improve the safety and
efficiency of blood component collection by eliminating previously manual
functions at commercial plasma and not-for-profit blood banks worldwide.
Our customers include hospitals, independent blood banks, commercial plasma
centers and fractionators, and national health organizations in more than
50 countries.
All of our automated collection systems involve the extracorporeal
processing of human blood, which comprises red blood cells, plasma,
platelets, and white blood cells. The practice of modern medicine relies on
treatment of patients with blood components, rather than whole blood.
Component therapy is often necessary in cases of hereditary disorders
(e.g., hemophilia); serious injury involving blood loss; major surgery
(e.g., organ transplant or open heart surgery); and chemotherapy.
As a general practice we place our own equipment at customers' sites,
with contractual requirements that customers purchase a certain number of
disposables in a predetermined time frame. Within this model, we may
redeploy equipment should utilization be less than optimal. Cell processing
equipment is most commonly sold outright.
Our products address three important customer bases: hospital-based
surgeons; commercial plasma collectors; and not-for-profit blood banks.
Surgical Blood Salvage for Hospitals
The products that we market to hospitals all address the need for
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 that
patient. This process usually includes a washing and filtration procedure
that removes unwanted substances from the blood prior to reinfusion. We
market our surgical blood salvage products to hospital-based medical
specialists, primarily cardiovascular, orthopedic, and trauma surgeons.
Loss of blood is common in open heart, trauma, transplant, vascular,
and orthopedic procedures, and the need for the transfusion of oxygen-
carrying red cells to make up for lost volume is common. Surgical blood
salvage reduces or eliminates a patient's dependence on blood donated from
others, which carries the risk of transmission
<PAGE> 4
of infectious agents, as well as the risk of severe transfusion reactions.
Surgical blood salvage also eliminates the need for pre-surgery "banked"
blood donations by the patient. Blood shortages and rising prices of blood
components have also reinforced the benefits of this approach.
Our Company, which pioneered the first surgical salvage systems,
offers hospitals a range of products targeted to cardiovascular procedures
that involve rapid and high blood loss, as well as slower, lower volume
blood loss orthopedic procedures. The Cell Saver(R) autologous blood recovery
system can reduce a patient's dependence on homologous red cell
transfusions (from donors) and enables the rapid "recycling" of blood to
surgical patients losing volume quickly. The OrthoPAT(R) system was
designed specifically for orthopedic surgery (including hip and knee
replacements and spine surgery) in which a smaller volume of blood is lost
over a longer period of time, beginning during surgery and continuing post-
operation. Use of the OrthoPAT(R) eliminates the need for "banking" the
patient's own blood prior to surgery and helps streamline the practice of
orthopedic surgery.
Automated Plasma Collection and Data Management for
Commercial Plasma Collectors
Automated plasma collection technology allows for the safe and
efficient collection of plasma, which is then further processed
("fractionated") by pharmaceutical companies into therapeutic and
diagnostic products that aid in the treatment of: immune diseases,
inherited coagulation disorders (e.g., hemophilia) and volume depletion
(e.g. from trauma). The collected plasma is also used in the manufacture of
vaccines and blood testing and quality control reagents. We participate
only in the provision of collection and data management systems to plasma
collectors and we are not involved in the actual collection, fractionation,
or distribution of plasma-derived pharmaceuticals.
Until automated plasma collection technology was pioneered and
introduced by the Company in the 1980s, plasma for fractionation was
collected manually. Manual collection was time-consuming, labor-intensive,
produced relatively poor yields, and posed risk to donors. Currently the
vast majority of plasma collections worldwide are performed using automated
collection because it is safe and cost-effective. We market our PCS(R)2
automated plasma collection systems to commercial plasma collectors as well
as not-for-profit blood banks and governmental plasma collectors worldwide.
We offer "one stop shopping" to our plasma collection customers,
enabling them to source from us the full range of equipment, disposables,
consumables, and data management technology necessary to operate. To that
end, in addition to providing our traditional line of plasma collection
equipment and disposables, we offer plasma collection containers, I.V.
solutions necessary for plasma collection and storage, and data management
technology to automate plasma collectors' operations.
In December 2001 we announced our acquisition of Fifth Dimension
Information Systems, the leading provider of information management
products and services for plasma collectors and fractionators. As a
majority of plasma collectors currently use manual systems to track their
donors and collected plasma, the market for such technology is relatively
untapped. During fiscal year 2003 Fifth Dimension expanded its customer
base beyond North America, into Europe; and beyond commercial plasma
collectors, into the not-for-profit blood banking market.
Automated Platelet Collection and Platelet Safety
Systems for Not-for-Profit Blood Banks
Automated platelet collection systems allow for the collection of one
or more therapeutic "doses" of platelets from a single donor. Platelets
were traditionally derived through manual separation from whole blood
donations; however, because platelets comprise only a very small portion of
whole blood volume, a single unit of whole blood contains only one-sixth to
one-eighth the quantity of platelets necessary for a single dose. Before
the advent of our MCS(R)+ automated platelet collection system, the
"pooling" of platelets from six to eight donors was
<PAGE> 5
necessary to make a single therapeutically useful dose. Our MCS(R)+ system
innovated the collection of one to two doses from a single donor.
Platelet therapy is typically 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 is most
commonly a side effect of chemotherapy. The medical community has
increasingly turned to "single donor" platelets (i.e., those collected via
automation) for platelet therapy to minimize a patient's exposure to
multiple donors and the blood-borne diseases that they could be carrying.
From the approximately five million units of platelets transfused annually,
approximately 60% are single donor platelets, and the remainder are pooled
from multiple donors.
In December 2001 we entered into an agreement with Baxter
International, Inc. (Baxter) to enable us to seamlessly integrate our
platelet collection devices with the INTERCEPT Platelet System, which
utilizes pathogen reduction technology being jointly developed by Baxter
and Cerus Corporation. The agreement gives us access to their Intersol
solution, in which platelets must be stored in preparation for the
reduction of bacteria, viruses, and other pathogens. The agreement allows
us to offer our worldwide platelet collection customers an easy and
economical way to incorporate the INTERCEPT Platelet System into their
operations, making pathogen reduction more widely available to platelet
transfusion recipients. European regulatory clearance of the system was
received in fiscal 2003, with U.S. and other clearances anticipated to
follow over the next few years.
Automated Red Cell Collection for Not-for-Profit Blood Banks
Automated red cell collection which we pioneered allows for the safe
and efficient collection of more red cells from a single donor.
Traditionally, red cells were derived from manual collection of whole
blood, after which the components of whole blood were separated. However,
this manual procedure involves time-consuming, error-prone secondary
handling and processing in a laboratory. Red cell shortages are a common
problem plaguing the U.S. and other healthcare systems. Automated red cell
collection helps blood centers to collect more red cells to address this
shortage.
Our MCS(R)+ automated red cell collection system enables blood
collectors to collect up to two transfusible "units" of red cells from a
single donor while removing blood volume similar to a whole blood
collection, thus assisting in the alleviation of blood shortages.
Additionally, the MCS(R)+ system automates the separation function,
eliminating the need for laboratory processing. The MCS(R)+ system also
contains a protocol that allows blood banks to collect one unit of red
cells and a "jumbo" (double) unit of plasma from a single donor. The
MCS(R)+ system enables the leukoreduction (removal of potentially harmful
white blood cells) for double red cell collections. Leukoreduction has been
adopted in many countries worldwide; it is estimated that 80% of all red
cells in the U.S. are now leukoreduced.
During fiscal year 2003, blood shortages continued and blood banks
continued their adoption of double red cell collection. United Blood
Services, the second largest collector of blood in the U.S., expanded its
automated double red cell program to collect 20% of all of its red cells.
In December 2002 the American Red Cross expanded the use of our technology;
we finished the fiscal year with our technology being used in seven of the
American Red Cross' thirty-five regions.
We submitted a 510(k) for FDA approval of the Chairside Separator(R)
system during fiscal year 2002. The Chairside Separator(R) is a blood
collection system that automates the whole blood collection process by
drawing whole blood from a donor and separating it into its red cell and
plasma components, not returning any components to the donor. This process
eliminates the laboratory separation process and also offers the benefit of
automating much of the procedure documentation mandated by the FDA. The
Chairside Separator(R) will allow blood collection centers to reduce their
laboratory handling cost and space requirements while also improving their
regulatory compliance.
<PAGE> 6
During fiscal year 2003, we redirected resources supporting
regulatory approval of the Chairside Separator(R) to develop and obtain
regulatory approval of the Red Cell Collector, a portable, automated device
used to collect and process two units of red cells from donors. The Red
Cell Collector is our next generation double red cell collection device and
will benefit customers with its smaller size and weight, battery power
option, and enhanced mobility. Clinical trials for the Red Cell Collector
will commence in Europe in fiscal 2004.
Cell Processing and Red Cell Safety for Not-for-Profit Blood Banks
Our cell processing business is based on technology that enables
users to add and remove solutions or other substances to and from blood
components. Our cell processing technology allows the freezing and thawing
of blood to enable blood banks to better manage their red cell inventory.
We are also collaborating with V.I. Technologies (NSDQ: VITX; "VITEX") in
the area of pathogen reduction of red cells.
Although it has been possible for some time to freeze red cells for
up to ten years, the freezing and thawing processes took place in a manual,
open-circuit system, which exposed red cells to the potential for bacterial
contamination. Once cells were thawed, they had to be transfused within 24
hours. The ACP(R)215 Automated Cell Processing system, which was cleared by
the FDA in fiscal 2002, extends thawed cells' shelf life to 14 days by
moving the freezing and thawing processes to an automated, closed-circuit
technology.
During fiscal year 2003, we also continued our collaboration with
V.I. Technologies to develop a pathogen reduction system for red blood
cells. VITEX's Inactine(R) is an agent that will kill bacteria and viruses
that could be transfused to a patient receiving a red cell transfusion. We
are developing technology to "wash" red blood cells to eliminate the
Inactine agent following the pathogen reduction process. VITEX is currently
in Phase III clinical trials for its red cell pathogen reduction system,
which uses our cell washing systems.
Revenue Detail
In the fiscal year ended March 29, 2003, sales of disposable products
accounted for approximately 88.5% of net revenues. Sales of our disposable
products were 2.5% higher in 2003 than in 2002 and grew at a compound
average annual growth rate of 6.0% for the three years ended March 29,
2003. Service and other miscellaneous revenues accounted for approximately
5.4% of our net revenues during the fiscal year ended March 29, 2003.
Sales of equipment accounted for approximately 6.0% of net revenues
in fiscal year 2003 and approximately 5.3% in fiscal year 2002,
representing a dollar increase of $3.3 million. The increase in equipment
revenue is a result of an increase in the number of machines sold in the
Japan plasma and platelet markets and in the Europe plasma market.
Marketing/Sales/Distribution
We market and sell our products to hospitals, blood systems and
independent blood banks, commercial plasma collection centers, and national
health organizations through our own direct sales force (including full-
time sales representatives and clinical specialists) as well as independent
distributors. Sales representatives target the primary decision-makers
within each of those organizations.
In fiscal year 2003, we announced that we received for the third
straight year the Omega NorthFace ScoreBoard Award for exemplary service to
customers. This award is presented to the highest-ranked organizations
based on customer ratings of firms' actual performance against customer
expectations in areas such as phone support, on-site operations, technical
services, and training.
<PAGE> 7
United States
In fiscal 2003, 38% of consolidated net sales were generated through
sales to customers in the U.S. In the U.S., we sell the majority of our
products through our direct sales force. We have an exclusive distribution
agreement with Zimmer Inc., for the sale and marketing of the OrthoPAT(R)
system within the U.S.
Outside the United States
In fiscal 2003, 62% of consolidated net sales were generated through
sales to non-U.S. customers. Our direct sales force in Europe and Asia,
includes full-time sales representatives and clinical specialists based in
the United Kingdom, Germany, France, Sweden, the Netherlands, Italy,
Austria, Hong Kong, Canada, Japan, Switzerland, Czech Republic, China,
Taiwan, and Belgium. We also use various distributors to market our
products in South America, the Middle East, and parts of Europe and the Far
East.
Research and Development
The development of extracorporeal blood processing systems has
required us to maintain technical expertise in various engineering
disciplines, including mechanical, electrical, software, biomedical, and
materials. Innovations resulting from these various engineering efforts
enable us to develop systems that are faster, smaller, and more user-
friendly, or that incorporate additional features important to our customer
base.
We operate research and development centers in Switzerland, Japan,
and the United States, so that protocol variations are incorporated to
closely match local customer requirements. In addition to the above
research and development facilities, our Fifth Dimension subsidiary
maintains development operations in Edmonton, Alberta, Canada. Our
expenditures for research and development were $19.5 million for both
fiscal 2003 and 2002 and $19.0 million for fiscal 2001. All research and
development costs are expensed as incurred. We expect to continue to invest
resources in research and development.
Customer collaboration is an important part of our technical strength
and competitive advantage. We have built close working relationships with a
significant number of transfusion experts around the world. This network of
individuals provides us with ideas for new products, ways to improve
existing products, new applications, enhanced protocols, and information
about potential test sites, objective evaluations, and expert opinions
regarding technical and performance issues.
Manufacturing
Our principal manufacturing operations (equipment, disposables, and
solutions) are located in Braintree, Massachusetts; Leetsdale,
Pennsylvania; Union, South Carolina; and Bothwell, Scotland.
In general, our production activities occur in a controlled
environment setting or "cleanroom" environment. Each step of the
manufacturing and assembly process is quality checked, qualified, and
validated. Critical process steps and materials are documented to ensure
that every unit is produced consistently and meets performance
requirements.
Some component manufacturing is performed by outside contractors
according to our specifications. We maintain important relationships with
two Japanese manufacturers that provide finished sets in Singapore, Japan,
and Thailand. Certain parts and components are purchased from various
single sources. If necessary, we believe that, in most cases, alternative
sources of supply could be identified and developed within a relatively
short period of time. Nevertheless, an interruption in supply could
temporarily interfere with production schedules and affect our operations.
All of our 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.
<PAGE> 8
Each blood processing machine is designed in-house and assembled from
components that are either manufactured by us or by others to our
specifications. Many critical mechanical assemblies are machined and
fabricated utilizing our own process control procedures. The completed
instruments are programmed, calibrated, and tested to ensure compliance
with our engineering and quality assurance specifications. Inspection
checks are conducted throughout the manufacturing process to verify proper
assembly and functionality. When mechanical and electronic components are
sourced from outside vendors, those vendors must meet detailed
qualification requirements, and the components are subjected to focused
incoming inspection programs. During fiscal year 2003, we manufactured
approximately 80% of our equipment. The remainder was manufactured for us
by an outside contractor.
We have established a Customer Oriented Redesign for Excellence
("CORE") program, which is based on the tenets of Total Quality of
Management ("TQM"). This program's goals include: 1) improving customer
satisfaction through top quality and on-time deliveries, 2) lowering
production costs, and 3) optimizing inventories. In fiscal 2003, we saved
$2.9 million through the CORE program, bringing total CORE savings on an
annualized basis of $20.6 million over the last five years.
Intellectual Property
We hold patents in the United States and abroad on some of our
machines, processes and disposables. These patents cover certain elements
of our systems, including protocols employed in our equipment and certain
aspects of our processing chambers and disposables. We consider our patents
to be important but not indispensable to our business. To maintain our
competitive position, we rely to a greater degree on the technical
expertise and know-how of our personnel than on our patents. We pursue an
active and formal program of invention disclosure and patent application in
both the United States and abroad. We own various trademarks that have been
registered in the United States and certain other countries.
Our policy is to file patent and trademark applications in the U.S.
and foreign countries where rights are available and we believe it is
commercially advantageous to do so. However, the standards for
international protection of intellectual property vary widely. We cannot
assure that pending patent and trademark applications will result in issued
patents and trademarks, that patents issued to or licensed by us will not
be challenged or circumvented by competitors or that our patents will not
be found to be invalid.
Competition
The markets for our products are developing and are highly
competitive. Although we compete directly with others, no one company
competes with us across the full line of products. We created the markets
and have established a record of innovation and market leadership in each
of the areas in which we compete. In order to remain competitive, we must
continue to develop and acquire cost-effective new products, technologies
and services. We believe that our ability to maintain a competitive
advantage will continue to depend on a combination of factors, including
factors within our control (reputation; regulatory approvals; patents;
unpatented proprietary know-how in several technological areas; product
quality, safety and cost effectiveness; and continual and rigorous
documentation of clinical performance) as well as factors outside of our
control (regulatory standards, medical standards and the practice of
medicine).
Competition in the surgical blood salvage market for high blood loss
blood collection, where the underlying technology among major competitors
is similar, is based upon reliability, ease of use, service, support, and
price. We compete principally with Medtronic, Fresenius, and Sorin
Biomedica. There are no direct competitors for the OrthoPAT(R), which is
used in integrated intra- and post-operative low blood loss surgical blood
salvage.
In the automated plasma collection markets, we compete with Baxter
International, Inc. on the basis of quality, ease of use, services and
technical features of systems, and on the long-term cost-effectiveness of
<PAGE> 9
equipment and disposables. To a much lesser degree, our automated systems
also compete with manual collection systems, which are less expensive, but
are also slower, less efficient, and clinically riskier. Baxter has pursued
a strategy of developing plasma collection sites and acquiring collection
centers, which has had the effect of altering the competitive landscape.
There can be no assurance that Baxter will not continue to acquire plasma
collection centers, some of which may currently use our collection
technology.
In the automated platelet collection markets, competition is based on
continual performance improvement, as measured by the time and efficiency
of component collection and the quality of the components collected. Our
major competitors in this market are Gambro BCT and Baxter International,
Inc. Each of these companies has taken a different technological approach
from Haemonetics in how their systems are designed for the automated
platelet collection market. In the platelet collection market, we also
compete with whole blood collections from which pooled platelets are
derived. Single donor (automated collection) platelets constitute
approximately 60% of the platelet transfusion market; the remainder are
pooled.
We created the market for automated red cell collection. We compete
with traditional (manual) methods of deriving red cells by collecting and
separating whole blood on the basis of total cost, process control, product
quality, and inventory management. Additionally, we compete with Gambro BCT
and Baxter International, Inc. in certain automated red cell collection
protocols. Less than 1% of red cells worldwide are collected via
automation; the remainder are derived from whole blood collections.
In the cell processing market, competition is based on semi-
automated, labor-intensive, open systems, which are weaker in GMP
compliance. Gambro BCT is the only competitor that offers an open system
cell processor; blood processed through this system has a 24 hour shelf
life. Our closed system cell processor gives blood processed through it a
14 day shelf life and has no competition.
Our technical staff is highly skilled, but many 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 ours.
Seasonality
Net revenues have historically been higher in the second half of our
fiscal year, reflecting principally the seasonal buying patterns of our
customers. This has proven true in four of our last five fiscal years with
the exception of fiscal 2003 where the second half of our fiscal
year had slightly lower revenues due principally to market conditions in
plasma.
Government Regulation
The products we manufacture and market are subject to regulation by
the Center of Biologics Evaluation and Research ("CBER") and the Center of
Devices and Radiological Health ("CDRH") of the United States Food and Drug
Administration ("FDA"), and other non-United States regulatory bodies.
All medical devices introduced to the United States 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"). In the United States, software used to automate blood
center operations and blood collections and to track those components
through the system are considered by FDA to be medical devices, subject to
510(k) premarket notification. Intravenous ("IV") solutions marketed by us
for use with our automated systems (blood anticoagulants and solutions for
storage of red blood cells) require us to obtain from CBER an approved New
Drug Application ("NDA") or Abbreviated New Drug Application ("ANDA"). A
510(k) premarket clearance indicates FDA's agreement with an applicant's
determination that the product for which clearance has been sought is
substantially equivalent to another legally marketed medical device. The
process of obtaining a
<PAGE> 10
510(k) clearance may take up to 24 months and involves the submission of
clinical data and supporting information. The process of obtaining NDA
approval for solutions is likely to take much longer than 510(k) approvals
both because the FDA review process is more complicated and because we do
not have significant experience and expertise in submitting NDAs.
We maintain customer complaint files, record all lot numbers of
disposable products, and conduct periodic audits to assure compliance with
FDA regulations. We place special emphasis on customer training and advise
all customers that blood processing procedures should be undertaken only by
qualified personnel.
We are also subject to regulation in the countries outside the United
States in which we market our products. Many of the regulations applicable
to our products in such countries are similar to those of the FDA. However,
the national health or social security organizations of certain countries
require our products to be qualified by those countries before they can be
marketed in those countries. We have complied with these regulations and
have obtained such qualifications.
Federal, state and foreign regulations regarding the manufacture and
sale of products such as ours are subject to change. We cannot predict what
impact, if any, such changes might have on our business.
Environmental Matters
We do not anticipate that compliance with federal, state, and local
environmental protection laws presently in effect will have a material
adverse impact upon our business or will require any material capital
expenditures. However, environmental laws, including those that regulate
raw materials for medical grade plastics, are subject to change. We cannot
predict what impact, if any, such changes might have on our business.
Employees
As of March 29, 2003, we employed 1,497 persons assigned to the
following functional areas: manufacturing, 753; sales and marketing, 223;
general and administrative, 191; research and development, 131; and quality
control and field service, 199. We consider our employee relations to be
satisfactory.
Availability of Reports and Other Information
Our web site is www.Haemonetics.com. On this web site the public can
access, free of charge, our annual, quarterly and current reports and other
documents filed or furnished to the Securities and Exchange Commission as
soon as reasonably practicable after we electronically file such material
with, or furnish it to, the SEC.
(d) Financial Information about Foreign and Domestic Operations
and Export Sales
The financial information required by this item is included herein in
note 10 of the financial statements, entitled Segment, Geographic and
Customer Information. For information concerning significant customers, see
subheading of note 2 of the financial statements, entitled, Concentration
of Credit Risk and Significant Customers.
Cautionary Statement
Statements contained in this report, as well as oral statements we
make which are prefaced with the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," "designed," and
similar expressions, are intended to identify forward looking statements
regarding events, conditions and financial trends that may affect our
future plans of operations, business strategy, results of operations, and
financial position. These statements are based on our current expectations
and estimates as to prospective events and circumstances
<PAGE> 11
about which we can give no firm assurance. Further, any forward-looking
statement speaks only as of the date on which such statement is made, and
we undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which such statement is
made. As it is not possible to predict every new factor that may emerge,
forward-looking statements should not be relied upon as a prediction of our
actual future financial condition or results. These forward-looking
statements, like any forward-looking statements, involve risks and
uncertainties that could cause actual results to differ materially from
those projected or anticipated. Such risks and uncertainties include
technological advances in the medical field and our standards for
transfusion medicine and our ability to successfully implement products
that incorporate such advances and standards, product demand and market
acceptance of our products, regulatory uncertainties, the effect of
economic and political conditions, the impact of competitive products and
pricing, foreign currency exchange rates, changes in customers' ordering
patterns and the effect of uncertainties in markets outside the U.S.
(including Europe and Asia) in which we operate. The foregoing list should
not be construed as exhaustive.
ITEM 2. PROPERTIES
Our main facility 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
70,000 square feet are devoted to manufacturing and quality control
operations, 35,000 square feet to warehousing, 68,000 square feet for
administrative and research and development activities and 7,000 square
feet available for expansion. See Note 4 to the financial statements for
details of our mortgage on the Braintree facility.
We lease a 81,850 square foot facility in Leetsdale, Pennsylvania.
This facility is used for warehousing, distribution and manufacturing
operations. Annual lease expense is $311,330 for this facility.
In April 1994, we purchased a facility in Bothwell, Scotland. The
facility manufactures disposable components for 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, we purchased a facility in Union, South Carolina.
This facility is used for the manufacture of sterile solutions to support
our blood bank (component therapy) and plasma businesses. The facility and
land were acquired for a cost of $2,423,000. The facility is approximately
69,300 square feet.
In August 1997, we 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 $269,572.
Effective January 2002, we acquired Fifth Dimension Information
Systems Inc. and as part of the acquisition the Company assumed lease
payments of $112,203 annually for 10,270 square feet of office space in
Edmonton, Alberta, Canada.
We also lease sales, service, and distribution facilities in Japan,
Europe (Austria, Belgium, Czech Republic, France, Germany, Italy, Sweden,
Switzerland, the Netherlands, United Kingdom) China, Hong Kong and Taiwan
to support our international business.
ITEM 3. LEGAL PROCEEDINGS
We are presently engaged in various legal actions, and although
ultimate liability cannot be determined at the present time, we believe
that any such liability will not materially affect our consolidated
financial position or our results of operations.
Our 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
<PAGE> 12
their condition or treatment, we, along with others, may be sued, and
whether or not we are ultimately determined to be liable, we may incur
significant legal expenses. In addition, such litigation could damage our
reputation and, therefore, impair our ability to market our products or to
obtain professional or product liability insurance or cause the premiums
for such insurances to increase. We carry product liability coverage. While
we believe 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, we may in the future be unable to obtain product
and professional liability coverages in amounts and on terms that we find
acceptable, if at all.
In order to aggressively protect our intellectual property throughout
the world, we have a program of patent disclosures and filings in markets
where we conduct significant business. While we believe this program is
reasonable and adequate, the risk of loss is inherent in litigation as
different legal systems offer different levels of protection to
intellectual property, and it is still possible that even patented
technologies may not be protected absolutely from infringement.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
The information concerning our Executive Officers is as follows.
Executive officers are elected by and serve at the discretion of our Board
of Directors.
ROBERT EBBELING joined our Company 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; and, in February 2003, he was promoted to
Executive Vice President, Manufacturing. Prior to joining our Company, Mr.
Ebbeling was Vice President, Manufacturing, for Data Packaging Corporation,
Somerset, Massachusetts.
THOMAS D. HEADLEY joined our Company in September 2000 as Executive
Vice President, Corporate R&D. Since December 2002, he has served as
Executive Vice President, Business Unit Groups and Corporate R&D. Prior to
joining our Company, Mr. Headley worked for Transfusion Technologies
Corporation, which he founded with two other executives in 1994. While with
Transfusion Technologies, Mr. Headley served as President and CEO from 1994
through 1999 and as Chairman of the Board from 1999 to 2000, the year the
Company acquired Transfusion Technologies. In addition, Mr. Headley worked
at our Company from 1975 until 1992. During that period, he held various
positions including Director of R&D and QA, General Manager - Japan and Far
East, and Director of the US Commercial Plasma Business.
ALICIA R. LOPEZ joined our Company in April 1988 as General Counsel
and Director of Human Resources. Since April 1990, Ms. Lopez has served as
Clerk to the Board of Directors. In November 1994, she was promoted to
Corporate Vice President; and, in January 2000, Ms. Lopez was promoted to
Senior Vice President. From 1995 to 2000, Ms. Lopez was also responsible
for regulatory affairs and from 1997 to present she is also responsible for
investor relations. Prior to joining our Company, Ms. Lopez was a
litigation associate with the law firm of Sullivan & Worcester.
BRAD NUTTER joined our Company April 1, 2003 as Board Member,
President and Chief Executive Officer. From 2000 to 2001, Mr. Nutter was
President and Chief Executive Officer of Gambro Healthcare, a $1.3 billion
international dialysis provider business. From 1997 to 2000, Mr. Nutter
held the position of Executive Vice President and Chief Operating Officer
of Syncor International, a $520 million international provider of
<PAGE> 13
radiopharmaceuticals and medical imaging. Mr. Nutter has 25 years of
healthcare experience including senior positions for American Hospital
Supply and Baxter International.
JAMES L. PETERSON resigned from the Board of Directors and his
position of President and CEO of our Company effective March 28, 2003. He
joined our Company 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. Prior to joining our Company, he was employed by Hewlett-Packard
Company in various management positions. Mr. Peterson was a member of our
Board of Directors from 1985 until his resignation.
RONALD J. RYAN joined our Company in 1998 as Senior Vice President
and Chief Financial Officer. Prior to joining our Company 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 Division. Prior to Bristol-Myers Squibb,
Mr. Ryan was Vice President of Planning and Control International at
American Can Company.
TIMOTHY R. SURGENOR resigned from our Company in December 2002. He
joined our Company in January 2000 as Executive Vice President. He was
responsible for business development, global business unit product
development and marketing, quality assurance, and clinical and regulatory
affairs. Prior to joining our Company, Mr. Surgenor was President of
Genzyme Tissue Repair, a publicly traded cell therapy division of Genzyme
Corporation, Cambridge, Massachusetts, from 1995 until 1999. Prior to
Genzyme, Mr. Surgenor was Executive Vice President and Chief Financial
Officer of BioSurface Technology, Inc. and held various positions in
operations at Integrated Genetics, Inc.
STEPHEN C. SWENSON joined our Company in December 2000, as Executive
Vice President responsible for the worldwide field organization,
encompassing the sales and marketing teams for the United States, Europe,
and Asia. Prior to joining our Company, Mr. Swenson was President and CEO
of Illuminis Corporation, a healthcare company that focused on internet
communications for diagnostic medical images. Prior to this, he spent
twenty years with the Hewlett-Packard Medical Group. His most recent
responsibilities were Worldwide Marketing Manager and General Manager,
North American Field Operations.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Our common stock is listed on the New York Stock Exchange under
symbol HAE. The following table sets forth for the periods indicated the
high and low sales prices of such common stock, which represent actual
transactions as reported by the New York Stock Exchange.
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
---------------------------------------------------------------
<s> <c> <c> <c> <c>
Fiscal year ended March 29, 2003:
Market price of Common Stock
High $34.80 $29.20 $25.75 $23.08
Low $28.10 $22.51 $18.02 $19.45
Fiscal year ended March 30, 2002:
Market price of Common Stock
High $34.30 $37.50 $41.87 $34.08
Low $28.40 $28.80 $32.22 $26.43
</TABLE>
There were approximately 535 holders of record of the Company's
common stock as of May 15, 2003. The Company has never paid cash dividends
on shares of its common stock and does not expect to pay cash dividends in
the foreseeable future.
<PAGE> 14
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
Haemonetics Corporation and Subsidiaries
Five-Year Review
(in thousands, except share and employee data)
<TABLE>
<CAPTION>
Summary of Operations 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Net revenues $336,956 $319,969 $293,860 $280,612 $284,513(a)
Cost of goods sold 182,260 165,135 151,447 149,155 150,866
-------------------------------------------------------------------------
Gross profit 154,696 154,834 142,413 131,457 133,647
-------------------------------------------------------------------------
Operating expenses:
Research and development 19,512 19,512 19,039 14,943 15,153
Selling, general and administrative 97,705 88,874 86,734 82,895 86,879
Acquired research and development - 10,000 18,606(b) 2,871(b) -
Other unusual charges - - 4,614(b) 10,305(b) -
-------------------------------------------------------------------------
Total operating expenses 117,217 118,386 128,993 111,014 102,032
-------------------------------------------------------------------------
Operating income 37,479 36,448 13,420 20,443 31,615
Other income (expense), net 1,128 2,057 3,906 3,254 969
-------------------------------------------------------------------------
Income from continuing operations
before provision for income taxes 38,607 38,505 17,326 23,697 32,584
Provision for income taxes 10,228 10,782 10,090 8,471 11,405
-------------------------------------------------------------------------
Income from continuing operations
before cumulative effect of a change
in accounting principle 28,379 27,723 7,236 15,226 21,179
-------------------------------------------------------------------------
Income(loss) from discontinued
operations - - - 144 (102)
Cumulative effect of a change in
accounting principle - 2,304(c) - - -
-------------------------------------------------------------------------
Net income(loss) $ 28,379 $ 30,027 $ 7,236 $ 15,370 $ 21,077
=========================================================================
Income(loss) per share:
Basic $ 1.15 $ 1.15 $ 0.29 $ 0.59 $ 0.79
Diluted $ 1.13 $ 1.11 $ 0.28 $ 0.58 $ 0.78
Weighted average number of shares 24,591 26,214 25,299 26,087 26,744
Common stock equivalents 457 941 706 414 142
-------------------------------------------------------------------------
Weighted average number of common
and common equivalent shares 25,048 27,155 26,005 26,501 26,886
=========================================================================
<CAPTION>
Financial and Statistical Data: 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------
Working capital $122,880 $148,737 $139,717 $121,443 $162,188
-------------------------------------------------------------------------
Current ratio 2.2 2.8 2.8 2.4 3.3
Property, plant and equipment, net $ 83,988 $ 84,877 $ 83,251 $ 81,608 $ 83,016
-------------------------------------------------------------------------
Capital expenditures $ 13,535 $ 21,602 $ 16,146 $ 17,346 $ 22,466
Depreciation and amortization $ 28,431 $ 25,616 $ 24,499 $ 24,906 $ 24,573
-------------------------------------------------------------------------
Total assets $359,208 $364,921 $345,314 $334,760 $344,675
Total debt $ 70,617 $ 72,143 $ 69,719 $ 74,202 $ 59,171
-------------------------------------------------------------------------
Stockholders' equity $223,237 $236,824 $215,516 $202,815 $221,861
Return on average equity 12.3% 13.3% 3.5% 7.2% 10.1%
Debt as a % of stockholders' equity 31.6% 30.5% 32.3% 36.6% 26.7%
-------------------------------------------------------------------------
Employees from continuing operations 1,497 1,498 1,357 1,328 1,329
Net revenues per employee
from continuing operations $ 225 $ 214 $ 217 $ 211 $ 214
-------------------------------------------------------------------------
(footnotes on following page)
<PAGE> 15
<FN>
(a) Revenues for 2000 and 1999 shown were restated to include additional
shipping and handling revenue billed to customers in accordance with
Emerging Issues Task Force (EITF) Issue 00-10, "Accounting for
Shipping and Handling Fees and Costs" (EITF 00-10) which the Company
adopted in the fourth quarter of fiscal 2001. Prior to the Company's
adoption of EITF 00-10, amounts billed to customers for shipping and
handling were netted against the related costs in cost of goods sold
or S,G&A (see Note 2 to the consolidated financial statements for
further discussion).
(b) In September of fiscal 2001, the Company acquired Transfusion
Technologies Corporation. As part of the acquisition the Company
recognized $18.6 million in in-process research and development costs
and $4.6 million in other unusual charges. Fiscal year 2000 was
adjusted to include a $2.9 million charge for in-process research and
development and $0.7 million for other unusual charges related to the
acquisition of Transfusion Technologies Corporation (see Note 11 to
the consolidated financial statements for further discussion). Also
reflected in Other unusual charges was a write down of a sales-type
lease with the Chinese government for $9.5 million (see Note 12 to
the consolidated financial statements for further discussion).
(c) Effective April 1, 2001, the Company adopted SFAS 133, as amended,
which resulted in the recognition of $2.3 million as a cumulative
effect of a change in accounting principle, net of tax. This amount
is the change in the fair value of forward contracts related to
forward points, which the Company excludes from its assessment of
hedge effectiveness (see Note 2 to the consolidated financial
statements for further discussion).
</FN>
</TABLE>
--------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
The table outlines the components of the consolidated statements of
operations as a percentage of net revenues:
<TABLE>
<CAPTION>
Percentage of Net Revenues Percentage
--------------------------------- Increase (Decrease)
March 29, March 30, March 31, -------------------
Years Ended 2003 2002 2001 2003/02 2002/01
- ------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Net revenues 100.0% 100.0% 100.0% 5.3% 8.9%
Cost of goods sold 54.1 51.6 51.5 10.4 9.0
- -----------------------------------------------------------------------------------------------------------
Gross profit 45.9 48.4 48.5 (0.1) 8.7
- -----------------------------------------------------------------------------------------------------------
Operating expenses:
Research and development 5.8 6.1 6.5 - 2.5
Selling, general and administrative 29.0 27.8 29.5 9.9 2.5
Acquired research and development - 3.1 6.3 (100.0) (46.3)
Other unusual charges - - 1.6 - (100.0)
- -----------------------------------------------------------------------------------------------------------
Total operating expenses 34.8 37.0 43.9 (1.0) (8.2)
- -----------------------------------------------------------------------------------------------------------
Operating income 11.1 11.4 4.6 2.8 >100.0
Interest expense (1.0) (1.2) (1.3) (10.6) 4.8
Interest income 0.6 1.2 1.6 (43.3) (15.2)
Other income, net 0.7 0.6 1.0 16.9 (32.1)
- -----------------------------------------------------------------------------------------------------------
Income from operations before
provision for income taxes 11.4 12.0 5.9 0.3 >100.0
Provision for income taxes 3.0 3.3 3.4 (5.1) 6.9
- -----------------------------------------------------------------------------------------------------------
Income from operations before cumulative
effect of a change in accounting principle 8.4 8.7 2.5 2.4 >100.0
- -----------------------------------------------------------------------------------------------------------
Cumulative effect of a change in accounting
principle, net of tax - 0.7 - (100.0) 100.0
- -----------------------------------------------------------------------------------------------------------
Net income 8.4% 9.4% 2.5% (5.5)% >100.0%
===========================================================================================================
</TABLE>
<PAGE> 16
2003 COMPARED TO 2002
Net Revenue Summary
<TABLE>
<CAPTION>
By location
% Increase/
2003 2002 (a) (Decrease)
---------------------------------------
<s> <c> <c> <c>
United States $127,241 $121,558 4.7%
International 209,715 198,411 5.7
---------------------------------------
Net revenues $336,956 $319,969 5.3%
<CAPTION>
By product type
% Increase/
2003 2002 (a) (Decrease)
---------------------------------------
<s> <c> <c> <c>
Disposables $298,220 $290,824 2.5%
Misc. & service 18,355 12,105 51.6
Equipment 20,381 17,040 19.6
---------------------------------------
Net revenues $336,956 $319,969 5.3%
<CAPTION>
Disposable revenue by product line
% Increase/
2003 2002 (Decrease)
---------------------------------------
<s> <c> <c> <c>
Surgical $ 68,321 $ 67,010 2.0%
Blood bank 99,921 102,961 (3.0)
Red Cells 15,542 10,675 45.6
Plasma 114,436 110,178 3.9
---------------------------------------
Total disposables revenue $298,220 $290,824 2.5%
<FN>
(a) We made certain reclassifications to the 2002 disposables and Misc. &
service revenue amounts to conform to 2003 presentation.
</FN>
</TABLE>
2003 Compared to 2002
Net Revenues
Net revenues in fiscal 2003 increased $17.0 million to $337.0 million
from $320.0 million in fiscal 2002. The increase was a result of volume
increases from both disposable and software sales. Foreign currency
contributed to a small decrease in sales. We recorded $4.5 million of
losses on our plan hedges in the current year compared to $8.1 million of
gains recorded on our plan hedges in fiscal 2002. These losses were largely
offset by the increase in reported revenues due to the relative strength of
the Euro and the Japanese yen. See the discussion below entitled, Foreign
Exchange, for a complete discussion of how foreign exchange impacts our
business. International sales accounted for 62.0% of net sales for both
fiscal years 2003 and 2002.
<PAGE> 17
Disposable Sales
Disposable sales increased 2.5% or $7.4 million. By product line,
disposable sales increased in worldwide Red Cell (up 45.6%), worldwide
Plasma sales (up 3.9%), worldwide Surgical (up 2.0%), partly offset by
decreases in worldwide Bloodbank (down 3.0%).
Red Cell - Worldwide Red Cell sales grew due to volume increases in
the U.S. as customers (new and existing) reacted to red cell
shortages by introducing automation into their collection operations
as a means to increase the number of units of blood collected from a
declining number of eligible donors. The decline in the red cell
supply in the U.S. relates primarily to blood shortages and recently
adopted donor deferral regulations mandated by the U.S. Food and Drug
Administration.
Plasma - The growth in worldwide Plasma disposable sales is
attributed to volume increases of products sold in Japan, Asia and
Europe partially offset by volume decreases in the U.S. market, which
represents over one-half of our plasma business. Acquisition of
smaller plasma collection centers by large plasma manufacturing
companies, including Baxter International (Baxter), has altered the
competitive landscape. The U.S. volume decrease is due to declining
sales to one customer as a result of industry consolidation. In
addition, Baxter announced that they would acquire, subject to
regulatory approval, the plasma collection operations of Alpha
Therapeutic Corporation (Alpha) during the first half of calendar
2003. In fiscal 2003, sales of plasma disposables, including bowls,
collection bottles and solutions, to Alpha were approximately $19.5
million. Alpha has several exclusive purchasing contracts with us
which begin to lapse in January 2005 through 2009. We are unable to
estimate the impact upon future operating results because we are
uncertain about whether or when the sale will be consummated, and
about Baxter's plans for the collection centers, if purchased.
Surgical - Worldwide Surgical disposable sales, including both our
traditional cardiovascular cell salvage business and our new
OrthoPAT(R) business, grew modestly. We continue to implement a
quality enhancement program for the OrthoPAT(R), therefore we slowed
down the manufacture and sale of OrthoPAT(R) products to our
distributor. We anticipate sales of our OrthoPAT(R) product will
accelerate in fiscal 2004 to reflect the higher sales growth rates
experienced by our distributor. Our cardiovascular cell salvage
business is stable, although we experienced a modest reduction in
volume in 2003.
Bloodbank - Worldwide Bloodbank disposable sales decreased as
compared to 2002 due to volume decreases in both the U.S. and
European platelet markets and volume decreases of our Automated Cell
Processing ("ACP") (R) 215 system. The effects of these decreases
were somewhat mitigated by volume growth in our Asia platelet
business. The newest platelet collection technologies use a single
disposable to collect multiple platelet units thereby reducing the
number of disposables needed. Prior year sales related to our
ACP(R)215 system disposables were high due to the demand resulting
from the events of September 11, 2001. As the majority of our
Bloodbank disposable sales are in our international markets, currency
negatively impacted our Bloodbank results to a greater extent than
the other product lines.
Miscellaneous and Service Sales
Miscellaneous and service sales includes revenues generated from
equipment repairs performed under preventive maintenance contracts or
emergency service billings and revenue from our software division, Fifth
Dimension, acquired on January 1, 2002.
Miscellaneous and service sales increased 51.6% or $6.3 million year
over year primarily as a result of a $3.9 million increase from Fifth
Dimension software products.
<PAGE> 18
Equipment Sales
Equipment sales increased 19.6% or $3.3 million year over year due
primarily to an increase in the volume of machines sold. We increased
equipment sales in our Japanese plasma and platelet markets and in the
European plasma market. Most of our equipment sales occur in markets
outside the U.S. As in the U.S. we generally place equipment with a
customer in exchange for an agreement to purchase disposables or to pay a
rental fee. Due to the variable nature of equipment sales, we give no
assurance as to whether or not this level of equipment sales will continue
in the foreseeable future.
Gross profit
Gross profit of $154.7 million for fiscal 2003 decreased $0.1 million
from $154.8 million for fiscal 2002. As a percentage of sales, gross profit
decreased 2.5% in fiscal 2003 to 45.9%. The $0.1 million decrease in gross
profit was a result of the negative effects of foreign currency, which were
partially offset by the additional contribution from the increase in sales
and from cost reductions generated by the Customer Oriented Redesign for
Excellence ("CORE") program. The negative effect of foreign currency was
primarily the result of $4.5 million in losses recorded on our plan hedges
in fiscal 2003 compared with $8.1 million in gains recorded on our plan
hedges in fiscal 2002. These losses were only partially offset by an
increase in reported gross profit due to the relative strength of the Euro
and the Japanese yen.
In fiscal 2003, the CORE program generated a $2.9 million improvement
in our gross profit by automating and redesigning the way certain products
are made and by negotiating reduced raw material prices from suppliers.
Expenses
* Research and Development
We spent $19.5 million on research and development for both fiscal
2003 and 2002. Small decreases in spending were offset by increases in
expenses reported due to the relative strength of the Euro and the Japanese
yen.
* Selling, general and administrative
Selling, general and administrative expenses increased $8.8 million
in fiscal 2003 from $88.9 million in fiscal 2002. The increase in spending
is related to increases in selling, marketing, and field support expenses
to support the higher volumes of sales, a full fiscal year of expenses from
Fifth Dimension, which we acquired in Q4 of fiscal 2002, and increases in
expenses reported due to the relative strength of the Euro and the Japanese
yen.
* Acquired research and development
In the third quarter of fiscal 2002, we paid Baxter $10.0 million for
the right to integrate the new pathogen reduction technology which Baxter
was developing into our platelet collection devices after the technology
receives regulatory approval. In the fourth quarter of this fiscal year we
made an additional $3.8 million milestone payment to Baxter as they
acquired their initial regulatory approvals in the European market. Because
this technology has achieved commercial viability, this payment was
capitalized as developed technology, and will be amortized over its useful
life.
<PAGE> 19
Operating Income
Operating income for fiscal 2003 increased $1.0 million from fiscal
2002 but decreased to 11.1% of sales in fiscal 2003 from 11.4% in fiscal
2002. The $1.0 million increase in operating income was a result of 1) the
reduction in acquired research and development, 2) revenue driven gross
profit improvements, and 3) cost reductions generated by the CORE program,
and was almost fully offset by 1) increased selling, general and
administrative spending and 2) most significantly the negative effect of
foreign currency. The negative effect of foreign currency was primarily the
result of $4.5 million in losses recorded on our plan hedges in fiscal 2003
compared with $8.1 million in gains recorded on our plan hedges in fiscal
2002.
Foreign Exchange
Approximately 62% of our sales are generated outside the U.S., yet
our reporting currency is the U.S. dollar. Foreign exchange risk arises
because we engage in business in foreign countries in local currency,
primarily the Euro and the Japanese Yen. Exposure is partially mitigated by
producing and sourcing product in local currency and expenses incurred by
local sales offices. However, whenever the U.S. dollar strengthens relative
to the other major currencies, there is an adverse affect on our results of
operations and alternatively, whenever the U.S. dollar weakens relative to
the other major currencies there is a positive effect on our results of
operations.
It is our policy to minimize for a period of time, the unforeseen
impact on our financial results of fluctuations in foreign exchange rates
by using derivative financial instruments known as forward contracts to
hedge the anticipated cash flows from forecasted foreign currency
denominated sales. We refer to these contracts as our plan hedges. Hedging
through the use of forward contracts does not eliminate the volatility of
foreign exchange rates, but because we generally enter into forward
contracts one year out, rates are fixed for a one-year period, thereby
facilitating financial planning and resource allocation.
We compute a composite rate index for purposes of measuring,
comparatively, the change in foreign currency hedge spot rates from the
hedge spot rates of the corresponding period in the prior year. The
relative value of currencies in the index is weighted by sales in those
currencies. The composite was set at 1.00 based upon the weighted rates at
March 31, 1997. The composite rate is presented in the period corresponding
to the maturity of the underlying forward contracts.
The favorable or (unfavorable) changes are in comparison to the same
period of the prior year. A favorable change is presented when we will
obtain relatively more U.S. dollars for each of the underlying foreign
currencies than we did in the prior period. An unfavorable change is
presented when we obtain relatively fewer U.S. dollars for each of the
underlying foreign currencies than we did in the prior period. These
indexed hedge rates impact sales, and as a result also gross profit,
operating income and net income, in our financial statements. The final
impact of currency fluctuations on the results of operations is dependent
on the local currency amounts hedged and the actual local currency results.
<PAGE> 20
<TABLE>
<CAPTION>
Composite Index Favorable/(Unfavorable)
Hedge Spot Rates Change versus Prior Year
----------------------------------------------
<s> <c> <c> <c>
FY2001 Q1 1.04 5.4%
Q2 1.00 8.2%
Q3 0.92 12.9%
Q4 0.97 10.2%
----------------------------------------------
2001 Total 0.98 9.1%
FY2002 Q1 0.99 5.2%
Q2 0.97 3.3%
Q3 1.01 (8.6%)
Q4 1.05 (7.5%)
----------------------------------------------
2002 Total 1.00 (2.0%)
FY2003 Q1 1.09 (8.9%)
Q2 1.08 (10.3%)
Q3 1.10 (8.1%)
Q4 1.17 (11.0%)
----------------------------------------------
2003 Total 1.11 (9.5%)
FY2004 Q1 1.13 (3.6%)
Q2 1.05 3.6%
Q3 1.06 3.2%
Q4 1.01 15.9%
----------------------------------------------
2004 Total 1.06 4.9%
FY2005 Q1 0.97 15.7%
----------------------------------------------
</TABLE>
Other income (expense), net
Interest expense for fiscal 2003 was relatively flat compared to
fiscal 2002. Nearly all of our long-term debt is at fixed rates. Interest
income decreased $1.7 million from 2002 to 2003, due primarily to lower
average balances of cash invested and lower investment yields. Other
income, net increased $0.3 million from fiscal 2002 to fiscal 2003 due to
foreign exchange transaction gains in fiscal 2003 as compared to
transaction losses in fiscal 2002 and income recorded to reflect an
anticipated payment for a customer contract termination. These increases in
other income were offset in large part by decreases in income earned from
points on forward contracts in fiscal 2003 as compared to fiscal 2002.
Points on forward contracts are amounts, either expensed or earned, based
on the interest rate differential between two foreign currencies in a
forward hedge contract.
Taxes
The provision for income tax as a percentage of pretax income was
26.5% for 2003, down from 28.0% in 2002. The decrease in fiscal 2003
effective tax rate and tax expense results from an anticipated income tax
refund. The Q4 fiscal 2003 effective tax rate was 36.0%, which is also
anticipated to be our fiscal year 2004 effective tax rate.
<PAGE> 21
2002 COMPARED TO 2001
Net Revenue Summary
<TABLE>
<CAPTION>
By location
% Increase/
2002 (a) 2001 (a) (Decrease)
---------------------------------------
<s> <c> <c> <c>
United States $121,558 $ 96,555 25.9%
International 198,411 197,305 0.6
---------------------------------------
Net revenues $319,969 $293,860 8.9%
<CAPTION>
By product type
% Increase/
2002 2001 (Decrease)
---------------------------------------
<s> <c> <c> <c>
Disposables $290,824 $267,183 8.8%
Misc. & service 12,105 12,825 (5.6)
Equipment 17,040 13,852 23.0
---------------------------------------
Net revenues $319,969 $293,860 8.9%
<CAPTION>
Disposable revenue by product line
% Increase/
2002 2001 (Decrease)
---------------------------------------
<s> <c> <c> <c>
Surgical $ 67,010 $ 62,721 6.8%
Blood bank 102,961 106,256 (3.1)
Red Cells 10,675 8,029 33.0
Plasma 110,178 90,174 22.2
---------------------------------------
Total disposables revenue $290,824 $267,183 8.8%
<FN>
(a) We made reclassifications to both the 2002 and 2001 product type and
product line information to conform to 2003 reporting
classifications.
</FN>
</TABLE>
2002 Compared to 2001
Net Revenues
Net revenues in 2002 increased $26.1 million to $320.0 from $293.9 in
2001. The increase was a result of volume increases from both disposable
and software sales offset by the significant negative effects of foreign
currency. The relative strength of the U.S. dollar compared to the Japanese
yen and to a much lesser extent the Euro in fiscal 2002 had a negative
impact on reported revenues, this was offset by $3.2 million in additional
gains from our plan hedges. International sales accounted for 62.0% and
67.1% of net sales for fiscal 2002 and 2001, respectively.
<PAGE> 22
Disposable Sales
Disposable sales increased 8.8% year over year. This increase
resulted from growth in worldwide Surgical (up 6.8%), worldwide Red Cell
(up 33.0%), and worldwide Plasma (up 22.2%) offset by a decrease in
worldwide Bloodbank (down 3.1%.).
Surgical - The growth in worldwide Surgical disposable sales was
mainly attributed to volume increases of existing products in the
European markets and the success of our recently launched OrthoPAT(R)
products in the U.S. orthopedic market.
Red Cell - The growth in worldwide Red Cell sales was attributed to
volume increases in the U.S. and European markets. The growth of Red
Cells was unfavorably impacted in the aftermath of September 11, 2001
as customers temporarily slowed or suspended conversion to
automation, and by the delay announced in January 2002 in the further
rollout of the double Red Cell technology by the American Red Cross
("ARC"). Subsequently, the ARC received approval from the Food and
Drug Administration on its software information system changes and
standard operating procedure upgrades necessary to expand its red
cell program beyond the pilot sites using our technology. The ARC's
decision to continue expansion of its red cell program was announced
in December of 2002.
Plasma - The growth in worldwide Plasma disposable sales was
attributed to volume increases of products sold in the U.S. due to
increased plasma collections in fiscal 2002. Approximately 36% of our
volume growth in the U.S. was due to sales of bottles as we purchased
a container business in the fourth quarter of last year and from the
sales of Haemonetics brand anticoagulant solution introduced to our
Plasma product line in fiscal 2001.
Bloodbank - Worldwide Bloodbank disposable sales grew slightly in
fiscal 2002 as compared to fiscal 2001, however the negative effects
of currency more than offset this growth. The growth in worldwide
Bloodbank disposable sales resulted from volume increases in platelet
disposable sales in Japan and Asia and from volume increases in the
U.S. market resulting from the rollout of the ACP(R)215 automated
cell processing system.
Miscellaneous and Service Sales
Miscellaneous and service sales include revenues generated from
equipment repairs performed under preventive maintenance contracts or
emergency service billings and, effective the fourth quarter of 2002,
revenue from our software division, Fifth Dimension.
Miscellaneous and service sales decreased 5.6% or $0.7 million as a
result of negative effects of currency partly offset by $1.1 million of
increases from Fifth Dimension software products.
Equipment Sales
Equipment sales increased 23.0% or $3.2 million year over year due to
volume increases. The volume increase was primarily because of sales of our
ACPr215 systems due to demand resulting from the events of September 11,
2001. Most of our equipment sales occur in markets outside the U.S. In the
U.S. we generally place equipment with a customer in exchange for an
agreement to purchase disposables or to pay a rental fee. Due to the
variable nature of equipment sales, we give no assurance as to whether or
not this level of equipment sales will continue in the foreseeable future.
<PAGE> 23
Gross profit
Gross profit of $154.8 million in fiscal 2002 increased $12.4 million
from $142.4 million in fiscal 2001. The increase from fiscal 2001 was a
result of increased contribution from higher sales, efficiency gains due to
higher manufacturing volumes and cost reductions partly offset by
significant negative effects from foreign currency. The relative strength
of the US dollar compared to the Japanese yen and the Euro in fiscal 2002
had a negative impact on gross profit. This was somewhat offset by $3.7
million in additional gains from our plan hedges.
In 1998, we initiated the Customer Oriented Redesign for Excellence
("CORE") Program CORE Program to increase operational effectiveness and
improve all aspects of customer service. The CORE Program is based on Total
Quality of Management, ("TQM") principals, and the program aims to increase
the efficiency and the quality of processes and products, and to improve
the quality of management at Haemonetics. For fiscal 2002, the CORE program
generated $3.8 million improvement in our gross profit by automating and
redesigning the way certain products are made and by negotiating reduced
raw material prices from suppliers.
Expenses
* Research and development
We spent $19.5 million, 6.1% of net revenues, on research and
development in 2002 and $19.0 million, 6.5% of net revenues, in 2001.
* Selling, general and administrative
Selling, general and administrative expenses increased $2.2 million
from $86.7 million in fiscal 2001 to $88.9 million in fiscal 2002. The
increase was due to higher sales and increased spending behind new product
sales and marketing activities partly offset by reductions in the amount of
reported expenses due to the relative strength of the U.S. dollar.
Acquired Research and Development
Pathogen Reduction Technology
In the third quarter of fiscal 2002, we paid $10.0 million to Baxter
for the right to integrate a new pathogen reduction technology into our
platelet collection devices. Initial European regulatory clearance was
received in fiscal 2003 and clearances in other geographies are anticipated
over the next few years.
Transfusion Technologies In Process Research and Development (IPR&D)
Upon consummation of the acquisition of Transfusion Technologies
Corporation ("Transfusion") in the second quarter of fiscal 2001, we
incurred costs representing the value of the research and development
projects. Included in the purchase price allocation for the acquisition of
Transfusion was an aggregate amount of purchased in-process research and
development ("IPR&D") of $21.5 million, $2.9 million of which is reflected
in the restatement of fiscal year 2000 relative to our original 19.8%
investment. The values represent purchased in-process technology that had
not yet reached technical feasibility and had no alternative future use.
Accordingly, the amounts were immediately expensed in the consolidated
statement of operations as acquired research and development (see Note 11
in the audited consolidated financial statements for further discussion of
the acquisition and IPR&D charges).
<PAGE> 24
A brief description of the IPR&D projects related to the acquisition
of Transfusion, including their estimated stage of completion and
associated discount rates is outlined below.
Chairside Separator(R). The Chairside Separator(R) is a portable,
automated device used for the donor-side collection and processing of a
single unit of whole blood into a unit of red cell concentrate and plasma.
Unlike our other red cell collection systems, the Chairside Separator(R)
does not return any blood components to the donor during a donation. The
system is designed for use in a blood center, hospital, or mobile blood
drive location and can be powered either through a standard AC outlet or by
DC battery packs. At the time of the acquisition, we estimated that the
Chairside Separator(R) project was 95% complete and that product sales
would commence by the fourth quarter of fiscal 2002. The IPR&D value
assigned to the Chairside Separator(R) was $17.6 million. A discount rate
of 33% was employed in the analysis.
We completed the clinical safety study on July 13, 2001 and submitted
the 510(k) to the Food and Drug Administration ("FDA") on September 21,
2001. The FDA has not yet approved the Chairside Separator(R) and we have
reallocated resources to speed the development of the Red Cell Collector
discussed below. We estimate the remaining cost to obtain marketing
clearance from the FDA at approximately $100,000.
Red Cell Collector ("RCC"). The RCC is a portable, automated device
used for the collection and processing of two units of red blood cells from
donors. The system collects and automatically anticoagulates a donor's
whole blood while separating it into red blood cells and plasma. The plasma
and 500 ml of saline is then re-infused back to the donor. The system is
designed for use in a blood center, hospital, or mobile blood drive
location and can be powered either through a standard AC outlet or by DC
battery packs. At the time of the acquisition, we estimated that the RCC
project was 65% complete and that product sales would commence by the
second quarter 2003. The IPR&D value assigned to the RCC was $3.9 million.
A discount rate of 33% was employed in the analysis.
As of March 29, 2003, the estimated percent completion of the RCC
project is 85%. Product sales are expected to commence in Europe during
fiscal year 2004. Estimates for cost of sales, SG&A expenses and income tax
rates relative to the RCC project remain unchanged. The majority of design,
software programming, disposable set development, and sourcing requirements
are complete. In addition, clinical trials will be conducted prior to
submission of a 510(k) to the FDA. The estimated cost to be incurred to
develop the purchased in-process RCC technology into a commercially viable
product is $1.5 million in fiscal 2004.
Other Unusual Charges
Unusual charges expensed as a result of the acquisition of
Transfusion amounted to $4.6 million and included $2.8 million in bonuses
paid to key Transfusion executives hired by Haemonetics and severance to
employees laid off due to overlaps created by the merger; a $0.5 million
write-off of an investment in fluid warming technology which Haemonetics
decided not to pursue in lieu of the technologies acquired in the merger;
and the adjustment required to modify our investment of 19.8% of
Transfusion in November of fiscal 2000 from the cost method to the equity
method of accounting as required by generally accepted accounting
principles. To affect this change, the historic cost of the 19.8%
investment made by Haemonetics was written down by its 19.8% share of the
monthly losses incurred by Transfusion from November 1999. The charge to
the statement of operations related to this adjustment was $1.3 million for
the year ended March 31, 2001.
Operating Income
Operating income for 2002 increased $23.0 million to 11.4% as a
percentage of net revenues from 4.6% in fiscal 2001. The $23.0 million
increase in operating income resulted largely from improvements in gross
profit
<PAGE> 25
and $13.3 million in decreased acquired research and development and unusual
charges in fiscal 2002 as compared to fiscal 2001. These operating income
increases were offset by increases in fiscal 2002 in both research and
development and selling, general and administrative expenses and significant
negative effects from foreign currency.
Other income (expense), net
Interest expense for 2002 was relatively flat as compared to 2001. As
nearly 100% of our long-term debt is at fixed rates, we have not benefited
from lower interest rates in the marketplace. Interest income decreased
$0.7 million from 2001 to 2002, due primarily to the continuing trend of
customer preference for, and our policy of moving toward, placing on loan
Company-owned equipment versus selling it under long-term sales-type
leases. Investment income was relatively flat from 2001 to 2002, as lower
interest rates have offset the benefit from higher average cash and
available-for-sale investment balances. Including the cumulative effect of
accounting change of $3.2 million related to the adoption of SFAS 133, as
amended, other income, net increased $2.2 million, due to the reduction of
foreign exchange transaction losses and to the reduction of amortization
expense as a result of our adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets," effective April 1, 2001, which required that we cease
amortization of goodwill.
Taxes
The income tax provision, as a percentage of pretax income, was 28.0%
for fiscal 2002, down from 58.2% in fiscal 2001. Excluding the non-
deductible charges in connection with the Transfusion Technologies'
acquisition, our effective tax rate was 27% in 2001.
The decrease in tax expense from the federal statutory to our
effective tax rate is primarily attributable to the Foreign Sales
Corporation and the Extraterritorial Income Exclusion and differences
between U.S. and foreign statutory rates.
Cumulative Effect of Accounting Change, Net of Tax
In accordance with Statement of Financial Accounting Standards No.
137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133," we adopted SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities" and
SFAS No. 138 "Accounting for Certain Derivative Instruments and Hedging
Activities, an Amendment of FASB Statement No. 133," (collectively, SFAS
No. 133, as amended) effective, April 1, 2001, the beginning of our 2002
fiscal year. As required, these standards were adopted as a change in
accounting principle and accordingly, the effect at adoption of $3.2
million was shown net of taxes of $0.9 million as a cumulative effect of a
change in accounting principle on the face of the consolidated statements
of operations in the year ended March 30, 2002.
Critical Accounting Policies
Our significant accounting policies are summarized in Note 2 of our
financial statements. While all of these significant accounting policies
impact our financial condition and results of operations, we view certain
of these policies as critical. Policies determined to be critical are those
policies that have the most significant impact on our financial statements
and require management to use a greater degree of judgment and/or
estimates. Actual results may differ from those estimates.
The accounting policies identified as critical are as follows:
<PAGE> 26
Revenue Recognition
We recognize revenues in accordance with generally accepted
accounting principles as outlined in SAB No. 101 which requires that four
basic criteria be met before revenue can be recognized: (1) persuasive
evidence of an arrangement exists, (2) product delivery, including customer
acceptance, has occurred or services have been rendered, (3) the price is
fixed or determinable and (4) collectibility is reasonably assured. We
believe that our revenue recognition policy is critical because revenue is
a very significant component of our results of operations.
With our acquisition of Fifth Dimension Information Systems, Inc.
("Fifth Dimension") in January 2002, we have recorded software sales in
accordance with Statement of Position ("SOP") 97-2, "Software Revenue
Recognition," as amended, and in instances where services are essential to
the functionality of the software, which represents the majority of Fifth
Dimension's software sales, revenue is recognized in accordance with SOP
81-1, "Accounting for Performance of Construction-Type and Certain
Production-Type Contracts."
In accordance SOP 97-2, when the services are essential to the
functionality of the software, or payment of the license fees are dependent
upon the performance of the services, the software license, configuration,
training and implementation fees are recognized under the contract method
of accounting using labor hours to measure the completion percentage. In
order to apply the contract method of accounting, management is required to
estimate the number of hours needed to complete a particular project. As a
result, recognized revenues and profits are subject to revisions as the
contract progresses to completion.
Income Taxes
In preparing our consolidated financial statements, income tax
expense is calculated for each of the jurisdictions in which we operate.
This process involves estimating actual current taxes due plus assessing
temporary differences arising from differing treatment for tax and
accounting purposes which are recorded as deferred tax assets and
liabilities. Deferred tax assets are periodically evaluated to determine
their recoverability, and where their recovery is not likely, a valuation
allowance is established and a corresponding additional tax expense is
recorded in our statement of operations. In the event that actual results
differ from our estimates given changes in assumptions, the provision for
income taxes could be materially impacted. As of March 29, 2003, no
valuation allowance existed on our books. The total net deferred tax asset
as of March 29, 2003 was $20.3 million.
Inventories
We value our inventory at the lower of the actual cost to purchase
and/or manufacture or the current estimated market value of the inventory.
On a quarterly basis, inventory quantities on hand are reviewed and an
analysis of the provision for excess and obsolete inventory is performed
based primarily on our estimated forecast of product demand and production
requirements for the next twenty-four months. A significant increase in the
demand for our products could result in a short-term increase in the cost
of inventory purchases while a significant decrease in demand could result
in an increase in the amount of excess inventory quantities on hand.
Additionally, our estimates of future product demand may prove to be
inaccurate in which case we may have understated or overstated the
provision required for excess and obsolete inventory. In the future, if our
inventory is determined to be overvalued as a result of understating its
provision for excess and obsolete inventory, such costs would be required
to be recorded in our cost of goods sold at the time of such determination.
Likewise, if our inventory is determined to be undervalued, as a result of
overstating our provision for excess and obsolete inventory, we may have
over-reported our costs of goods sold in previous periods and would be
required to recognize such additional operating income at the time of sale.
Therefore, although every effort is made to ensure the accuracy of our
forecasts of future product demand, any significant unanticipated changes
in demand could have a significant impact on the value of our inventory and
reported operating results.
<PAGE> 27
Other Intangibles
Purchase accounting requires extensive use of accounting estimates
and judgments to allocate the purchase price to the fair market value of
the assets and liabilities purchased, with the excess value, if any, being
classified as goodwill. In addition, as described in Notes 2 and 11 of our
financial statements, as a result of our acquisitions, values were assigned
to intangible assets for patented and unpatented technologies and customer
contracts and related relationships. For those assets with finite lives,
useful lives were assigned to these intangibles and they will be amortized
over their remaining life. If conditions exist that indicate that the
carrying value of these assets may not be recoverable, we review these
assets for impairment to ensure they are appropriately valued. Such
conditions may include a change in the competitive landscape, a decision to
employ new or different technology strategies, or a significant change in
the prices paid for our products. We estimate the future cash flows
expected to result from the use and, if applicable, the eventual
disposition of our assets. The key variables that management must estimate
include sales volume, prices, inflation, marketing spending, exchange rates
and capital spending. For developed technology that has not been deployed
we also must estimate the likelihood of pursuing a particular strategy.
Significant judgment is involved in making these estimates. Future write-
downs may be required if the value of the assets become impaired.
Property, Plant and Equipment
Property, plant and equipment are depreciated over their useful
lives. Useful lives are based on our estimate of the period that the assets
will generate revenue. Any change in conditions that would cause us to
change our estimate as to the useful lives of a group or class of assets
may significantly impact our depreciation expense on a prospective basis.
Liquidity and Capital Resources
Our primary sources of capital include cash and short-term
investments, internally generated cash flows and bank borrowings. We
believe these sources to be sufficient to fund our requirements, which are
primarily capital expenditures, acquisitions, new business development,
share repurchase, and working capital for at least the next twelve months.
During the fiscal year ended March 29, 2003, we funded our activities
primarily with $43.7 million of cash flows generated by operations, $32.6
million of gross proceeds from the sale of available-for-sale securities
and $4.0 million in stock option proceeds.
Working capital at March 29, 2003, was $122.9 million. This reflects
a decrease of $25.8 million in working capital from the same period in the
prior year largely due to decreases in available-for-sale investments and
increases in short-term borrowings and increases in accrued liabilities.
<PAGE> 28
Contractual Obligations and Contingencies
A summary of our contractual and commercial commitments as of March
29, 2003, were as follows (see Note 4 and Note 6 to the consolidated
financial statements):
<TABLE>
<CAPTION>
Payments Due by Period
-----------------------------------------------------------
Less than 1-3 4-5 After
Contractual Obligations (in thousands) Total 1 year years years 5 years
-----------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Debt $70,617 $39,005 $12,382 $12,555 $6,675
Operating Leases 19,205 5,107 8,684 4,386 1,028
Other purchase commitments* 8,690 8,690
----------------------------------------------------------
Total $98,512 $52,802 $21,066 $16,941 $7,703
==========================================================
<FN>
* Includes amounts we are committed to spend on significant purchase
orders with contract manufacturers, specifically Nova Biomedical, for
the purchase of OrthoPAT(R) machines and JMS Co. LTD, and Kawasumi
Laboratories for the manufacture of certain disposable products.
</FN>
</TABLE>
Contingent Commitments
The acquisition of Fifth Dimension, which occurred on January 1,
2002, involves potential earn-out payments of up to $4.1 million based on
Fifth Dimension reaching certain performance milestones prior to fiscal
2008. The first milestone payment, in the amount of $1.0 million was earned
and accrued as of the end of our fiscal 2003. This payment was allocated to
goodwill. This payment will be made in the first quarter of fiscal 2004.
The acquisition of the right to integrate a new pathogen reduction
technology into our platelet collection devices includes certain
incremental milestone payments based on the receipt of regulatory approvals
in the U.S., Europe and Japan. The total amount of these potential
milestone payments is $14.5 million. In the third quarter of fiscal 2003,
Baxter received initial regulatory approval in the European market. In
connection with this approval, we made an initial $3.8 million milestone
payment to Baxter during the fourth quarter of fiscal 2003. We expect that
the remaining European approvals will be obtained during fiscal 2004 and we
anticipate making an additional milestone payment of $3.8 million to Baxter
at that time. These payments will be recorded as other technology, an
intangible asset, and amortized over their useful lives.
Cash Flow Overview
Cash and short-term investments during the fiscal year ended March
29, 2003, before the effect of exchange rates, increased $14.2 million,
which represents an increase in cash flow of $24.5 million compared to the
$10.3 million in cash used during the fiscal year ended March 30, 2002. The
$24.5 million increase was primarily a result of the cash generated in
fiscal 2003 from the available-for-sale investments and from our operating
activities. These increases were largely offset by the increase in fiscal
2003 treasury stock repurchases and less cash received in fiscal 2003 from
stock option exercises.
Operating Activities
Cash provided by operating activities was $43.7 million for the
fiscal year ended March 29, 2003, as compared to $33.3 million in fiscal
2002. The $10.4 million increase in operating cash flow for 2003 compared
to 2002 was due largely to the leveling off of inventory increases, an
increase in accrued taxes due to an increase in our effective tax rate in
Q4 of fiscal 2003 together with a reduction in tax payments and an increase
in accrued expenses partly offset by an increase in accounts receivable.
Accrued expenses increased due to the increase in
<PAGE> 29
our accruals for other than income tax accounts and obligations associated
with the retirement of our past President and CEO. Accounts receivable
increased due to the increase in sales and in the days sales outstanding
year over year. The increase in days sales outstanding year over year is
due largely to the timing of payments.
Investing Activities
We generated $19.5 million from investing activities in fiscal 2003,
which represents an increase of $53.8 million from the $34.3 million in
cash utilized in fiscal 2002. The $53.8 million increase in cash was a
result of the liquidation of our available for sale investments in fiscal
2003, less cash spent on capital expenditures in fiscal 2003, and the
acquisition of Fifth Dimension in fiscal 2002. We liquidated our available
for sale investments because of changes in the interest rate environment.
Financing Activities
Our financing activities used $49.0 million in cash as compared to
$9.3 million used in fiscal 2002. This increase in cash utilized is
primarily a result of the $50.2 million spent in fiscal 2003 to repurchase
our stock, a decrease in the short-term debt borrowings in Japan and a
decline in proceeds from stock option exercises.
In fiscal 2003, we repurchased 1,850,000 shares of our stock at an
average price of $27.11 for a total of $50.2 million, of which 1,396,000
million shares were purchased under a 10b5-1 plan adopted in fiscal 2003.
Our 10b5-1 plan was terminated at the end of fiscal 2003. The Board's
authorization for additional buyback remains in effect with approximately
$26.0 million remaining of the original $50.0 million authorized. We keep
repurchased shares on hand for our employee benefit and incentive plans and
for other corporate purposes.
Inflation
We do not believe that inflation has had a significant impact on our
results of operations for the periods presented. Historically, we believe
we have been able to minimize the effects of inflation by improving our
manufacturing and purchasing efficiency, by increasing employee
productivity and by adjusting the selling prices of new products we
introduce.
Cautionary Statement Regarding Forward-Looking Information
Statements contained in this report, as well as oral statements we
make which are prefaced with the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," "designed," and
similar expressions, are intended to identify forward looking statements
regarding events, conditions, and financial trends that may affect our
future plans of operations, business strategy, results of operations, and
financial position. These statements are based on our current expectations
and estimates as to prospective events and circumstances about which we can
give no firm assurance. Further, any forward-looking statement speaks only
as of the date on which such statement is made, and we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made. As it is not
possible to predict every new factor that may emerge, forward-looking
statements should not be relied upon as a prediction of our actual future
financial condition or results. These forward-looking statements, like any
forward-looking statements, involve risks and uncertainties that could
cause actual results to differ materially from those projected or
anticipated. Such risks and uncertainties include technological advances in
the medical field and our standards for transfusion medicine and our
ability to successfully implement products that incorporate such advances
and standards, product demand and market acceptance of our products,
regulatory uncertainties, the effect of economic and political conditions,
the impact of competitive products and pricing, foreign currency exchange
rates, changes in customers' ordering patterns, and the effect of
uncertainties in markets outside the U.S. (including Europe and Asia) in
which we operate. The foregoing list should not be construed as exhaustive.
<PAGE> 30
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposures relative to market risk are due to foreign
exchange risk and interest rate risk.
FOREIGN EXCHANGE RISK
See the section entitled Foreign Exchange for a discussion of how
foreign currency affects our business. It is our policy to minimize for a
period of time, the unforeseen impact on our financial results of
fluctuations in foreign exchange rates by using derivative financial
instruments known as forward contracts to hedge anticipated cash flows from
forecasted foreign currency denominated sales. We do not use the financial
instruments for speculative or trading activities. At March 29, 2003, we
had the following significant foreign exchange contracts to hedge the
anticipated cash flows from forecasted foreign currency denominated sales
outstanding:
<TABLE>
<CAPTION>
Hedged (BUY)/SELL Weighted Spot Weighted Forward
Currency Local Currency Contract Rate Contract Rate Fair Value Maturity
- ------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Euro 8,450,000 $0.924 $0.913 $(1,275,044) Apr-Jun 2003
Euro 8,400,000 $0.980 $0.966 $ (783,302) Jul-Sep 2003
Euro 9,400,000 $1.017 $1.004 $ (499,683) Oct-Dec 2003
Euro 7,000,000 $1.083 $1.070 $ 85,379 Jan-Feb 2004
Japanese Yen 1,800,000,000 125.5 per US$ 122.7 per US$ $ (326,306) Apr-Jun 2003
Japanese Yen 1,775,000,000 120.7 per US$ 118.6 per US$ $ 133,127 Jul-Sep 2003
Japanese Yen 1,725,000,000 121.6 per US$ 119.8 per US$ $ (58,459) Oct-Dec 2003
Japanese Yen 1,050,000,000 118.8 per US$ 117.1 per US$ $ 132,931 Jan-Feb 2004
-----------
Total: $(2,591,358)
-----------
</TABLE>
We estimate the change in the fair value of all forward contracts
assuming both a 10% strengthening and weakening of the U.S. dollar relative
to all other major currencies. In the event of a 10% strengthening of the
U.S. dollar, the change in fair value of all forward contracts would result
in a $9.9 million increase in the fair value of the forward contracts;
whereas a 10% weakening of the U.S. dollar would result in a $10.9 million
decrease in the fair value of the forward contracts.
Interest Rate Risk
All of our long-term debt is at fixed rates. Accordingly, a change in
interest rates has an insignificant effect on our interest expense amounts.
The fair value of our long-term debt, however, does change in response to
interest rates movements due to its fixed rate nature. At March 29, 2003,
the fair value of our long-term debt was approximately $3.6 million higher
than the value of the debt reflected on our financial statements. This
higher fair market is entirely related to our $22.9 million, 7.05% fixed
rate senior notes and our $8.8 million, 8.41% real estate mortgage.
At March 30, 2002, the fair value of our long-term debt was
approximately $2.6 million higher than the value of the debt reflected on
our financial statements. This higher fair value is primarily related to
the $28.5 million, 7.05% fixed rate senior notes and the $9.2 million,
8.41% real estate mortgage.
Using scenario analysis, if we changed the interest rate on all long-
term maturities by 10% from the rate levels that existed at March 29, 2003
the fair value of our long-term debt would change by approximately $0.5
million.
Concentration of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents,
accounts receivable and investment in sales type lease receivables. Sales
to one unaffiliated Japanese customer, the Japanese Red Cross Society,
amounted to $79.0 million, $75.5 million and $86.3 million for 2003, 2002
and 2001, respectively. Concentration risk on our accounts receivable
attributable to this customer accounted for 23.6%, 20.0% and 22.7% of total
accounts receivable for 2003, 2002 and 2001, respectively. While the
accounts receivable related to the Japanese Red Cross Society may be
significant, we do not believe the credit loss risk to be significant given
the consistent payment history by this customer.
<PAGE> 31
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended
-------------------------------------
March 29, March 30, March 31,
2003 2002 2001
-------------------------------------
<s> <c> <c> <c>
Net revenues $336,956 $319,969 $293,860
Cost of goods sold 182,260 165,135 151,447
------------------------------------
Gross profit 154,696 154,834 142,413
------------------------------------
Operating expenses:
Research and development 19,512 19,512 19,039
Selling, general and administrative 97,705 88,874 86,734
Acquired research and development 10,000 18,606
Other unusual charge - - 4,614
------------------------------------
Total operating expenses 117,217 118,386 128,993
------------------------------------
Operating income 37,479 36,448 13,420
Interest expense (3,495) (3,908) (3,728)
Interest income 2,214 3,905 4,602
Other income, net 2,409 2,060 3,032
------------------------------------
Income from operations before provision
for income taxes 38,607 38,505 17,326
Provision for income taxes 10,228 10,782 10,090
------------------------------------
Income from operations before cumulative
effect of a change in accounting principle 28,379 27,723 7,236
Cumulative effect of a change in accounting
principle, net of tax - 2,304 -
------------------------------------
Net income $ 28,379 $ 30,027 $ 7,236
====================================
Basic income per common share
Income from operations before cumulative
effect of a change in accounting principle $ 1.15 $ 1.06 $ 0.29
Cumulative effect of a change in accounting
principle, net of tax $ - $ 0.09 $ -
Net income $ 1.15 $ 1.15 $ 0.29
Income per common share assuming dilution
Income from operations before cumulative
effect of a change in accounting principle $ 1.13 $ 1.02 $ 0.28
Cumulative effect of a change in accounting
principle, net of tax $ - $ 0.09 $ -
Net income $ 1.13 $ 1.11 $ 0.28
Weighted average shares outstanding
Basic 24,591 26,214 25,299
Diluted 25,048 27,155 26,005
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 32
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
March 29, 2003 March 30, 2002
----------------------------------
<s> <c> <c>
ASSETS
Current assets:
Cash and cash equivalents $ 49,885 $ 34,913
Available-for-sale investments - 32,636
Accounts receivable, less allowance of $1,449
in 2003 and $1,298 in 2002 77,913 63,743
Inventories 65,805 67,244
Current investment in sales-type leases, net 2,681 2,783
Deferred tax asset 17,307 18,943
Prepaid expenses and other current assets 9,664 12,573
----------------------------
Total current assets 223,255 232,835
Property, plant and equipment:
Land, building and building improvements 32,426 31,116
Plant equipment and machinery 59,009 54,596
Office equipment and information technology 36,011 29,520
Haemonetics equipment 117,053 103,587
----------------------------
Total property, plant and equipment 244,499 218,819
Less: accumulated depreciation 160,512 133,942
----------------------------
Net property, plant and equipment 83,987 84,877
Other assets:
Investment in sales-type leases, net (long-term) 2,968 3,234
Other intangibles, less amortization of $3,753
in 2003 and $1,977 in 2002 26,339 24,204
Goodwill, net 16,010 14,168
Deferred tax asset, net 2,954 2,275
Other long-term assets 3,695 3,328
----------------------------
Total other assets 51,966 47,209
----------------------------
Total assets $359,208 $364,921
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of
long-term debt $ 39,005 $ 31,356
Accounts payable 13,677 12,536
Accrued payroll and related costs 11,930 12,696
Accrued income taxes 12,093 11,355
Other accrued liabilities 23,670 16,155
----------------------------
Total current liabilities 100,375 84,098
Long-term debt, net of current maturities 31,612 40,787
Other long-term liabilities 3,984 3,212
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, $0.01 par value; Authorized-
80,000,000 shares; Issued-31,664,849 shares
in 2003 and 31,453,511 shares in 2002 317 315
Additional paid-in capital 108,770 104,261
Retained earnings 292,971 264,592
Accumulated other comprehensive loss (13,486) (16,395)
----------------------------
Stockholders' equity before treasury stock 388,572 352,773
Less: Treasury stock at cost-7,626,096 shares
in 2003 and 5,812,943 shares in 2002 165,335 115,949
----------------------------
Total stockholders' equity 223,237 236,824
----------------------------
Total liabilities and stockholders' equity $359,208 $364,921
============================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 33
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Other Total
------------- Paid-in Treasury Retained Comprehensive Stockholders' Comprehensive
Shares $'s Capital Stock Earnings Loss Equity Income
-------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Balance, April 1, 2000 30,005 $300 $ 73,662 $ (85,173) $227,104 $(13,078) $202,815
Employee stock
purchase plan - - - 446 (15) - 431
Exercise of stock
options and related
tax benefit 717 7 14,296 - - - 14,303
Purchase of treasury
stock - - - (4,729) - - (4,729)
Net income - - - - 7,236 - 7,236 $ 7,236
Foreign currency
translation adjustment - - - - - (4,540) (4,540) (4,540)
--------
Comprehensive income - - - - - - - $ 2,696
------------------------------------------------------------------------------- --------
Balance, March 31, 2001 30,722 $307 $ 87,958 $ (89,456) $234,325 $(17,618) $215,516
===============================================================================
Employee stock
purchase plan - - (105) 421 240 - 556
Exercise of stock
options and related
tax benefit 732 8 16,408 - - - 16,416
Purchase of treasury
stock - - - (26,914) - - (26,914)
Net income - - - - 30,027 - 30,027 $30,027
Unrealized loss on
available-for-sale
securities - - - - - (10) (10) (10)
Foreign currency
translation adjustment - - - - - (1,054) (1,054) (1,054)
Unrealized gain on
derivatives at adoption
of SFAS 133 (Note 2) - - - - - 4,608 4,608 4,608
Unrealized loss on
derivatives - - - - - (2,321) (2,321) (2,321)
-------
Comprehensive income - - - - - - - $31,250
------------------------------------------------------------------------------- -------
Balance, March 30, 2002 31,454 $315 $104,261 $(115,949) $264,592 $(16,395) $236,824
===============================================================================
Employee stock
purchase plan - - 16 780 - - 796
Exercise of stock
options and related
tax benefit 211 2 4,493 - - - 4,495
Purchase of treasury
stock - - - (50,166) - - (50,166)
Net income - - - - 28,379 - 28,379 $28,379
Net change in minimum
pension liability - - - - - (424) (424) (424)
Foreign currency
translation adjustment - - - - - 8,028 8,028 8,028
Unrealized gain on
derivatives - - - - - (4,695) (4,695) (4,695)
-------
Comprehensive income - - - - - - - $31,288
------------------------------------------------------------------------------- -------
Balance, March 29, 2003 31,665 $317 $108,770 $(165,335) $292,971 $(13,486) $223,237
===============================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 34
HAEMONETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended
-------------------------------------
March 29, March 30, March 31,
2003 2002 2001
--------- --------- ---------
<s> <c> <c> <c>
Cash Flows from Operating Activities:
Net income $ 28,379 $ 30,027 $ 7,236
Adjustments to reconcile net income to net cash provided
by operating activities:
Non cash items:
Depreciation and amortization 28,431 25,616 24,499
Deferred tax expense 4,030 5,629 2,112
In process research and development - - 18,606
Equity in losses of investment - - 1,353
Other unusual non-cash charges - - 1,282
Tax benefit related to exercise of stock options 539 3,429 1,900
Unrealized gain from hedging activities (2,762) (355) -
Change in operating assets and liabilities:
Increase in accounts receivable, net (7,696) (4,980) (1,551)
(Increase) decrease in inventories (5,486) (18,344) 323
Decrease in sales-type leases (current) 219 2,896 2,356
Increase in prepaid income taxes (1,315) (2,497) (216)
(Increase) decrease in other assets and other long-term
liabilities (2,456) (4,004) 522
(Increase) decrease in accounts payable and accrued payroll (585) 1,905 (4,674)
Increase (decrease) in accrued taxes 555 (3,319) (909)
Increase (decrease) in accrued expenses 1,814 (2,692) 3,977
------------------------------------
Net cash provided by operating activities 43,667 33,311 56,816
Cash Flows from Investing Activities:
Purchases of available-for-sale-investments (11,670) (69,852) (43,619)
Gross proceeds from sale of available-for-sale investments 44,306 66,525 49,726
Capital expenditures on property, plant and equipment,
net of disposals (13,535) (22,675) (16,146)
Acquisistion of Transfusion Technologies Corporation,
net of cash acquired - - (26,572)
Acquisition of plasma collection bottle plant - - (8,300)
Acquisition of software development company - (10,461) -
Net decrease in sales-type leases (long-term) 384 2,153 4,597
------------------------------------
Net cash provided by (used in) investing activities 19,485 (34,310) (40,314)
Cash Flows from Financing Activities:
Borrowings (payments) on long-term real estate mortgage (420) (386) 9,561
Net increase (decrease) in short-term revolving credit agreements 2,547 10,135 (10,883)
Net decrease in long-term credit agreements (5,714) (5,714) (3,675)
Employee stock purchase plan 796 556 431
Exercise of stock options 3,956 12,987 12,403
Purchase of treasury stock (50,166) (26,914) (4,729)
------------------------------------
Net cash provided by (used in) financing activities (49,001) (9,336) 3,108
Effect of Exchange Rates on Cash and Cash Equivalents 821 75 (348)
------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 14,972 (10,260) 19,262
Cash and Cash Equivalents at Beginning of Year 34,913 45,173 25,911
------------------------------------
Cash and Cash Equivalents at End of Year $ 49,885 $ 34,913 $ 45,173
====================================
Non-cash Investing and Financing Activities:
Transfers from inventory to fixed assets for placements
of Haemonetics equipment $ 10,699 $ 4,385 $ 6,094
====================================
Reclassifications from long-term credit agreements to
short-term credit agreements $ 2,455 - -
====================================
Supplemental Disclosures of Cash Flow Information:
Net increase (decreases) in cash and cash equivalents,
continuing operations $ 14,972 $(10,260) $ 19,262
====================================
Interest paid $ 3,227 $ 3,689 $ 3,487
====================================
Income taxes paid $ 6,625 $ 8,813 $ 6,941
====================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 35
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS
We design, manufacture and market automated systems for the
collection, processing and surgical salvage of blood.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year
Our fiscal year ends on the Saturday closest to the last day in
March. Fiscal year 2003, fiscal year 2002 and fiscal year 2001 each
included 52 weeks. Fiscal year 2004 will include 53 weeks.
Principles of Consolidation
The accompanying consolidated financial statements include all
accounts including those of our 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 us 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 vary from the amounts
derived from our estimates and assumptions.
Translation of Foreign Currencies
All assets and liabilities of foreign subsidiaries are translated at
the rate of exchange at year-end while sales and expenses are translated at
an average rate in effect during the year. The net effect of these
translation adjustments is shown in the accompanying financial statements
as a component of stockholders' equity referred to as "Foreign currency
translation adjustment."
Cash and Cash Equivalents
Cash equivalents include various short-term instruments such as money
market funds, U.S. government agency notes, certificates of deposit and
commercial paper with maturities of three months or less at date of
acquisition. Cash and cash equivalents are recorded at cost, which
approximates fair market value.
Available-for-Sale Investments
As of March 29, 2003, we held no available-for-sale investments. As
of March 30, 2002 all of our short-term investments had maturities greater
than three months but equal to or less than 12 months. All our investments
were classified as available-for-sale and carried at fair value, with
unrealized gains and losses, for fiscal year 2002, recorded as a separate
component of accumulated comprehensive loss, net of tax until realized.
Realized gains and losses are calculated based on the specific
identification method and are included in other income, net on our
consolidated statements of operations. During 2003, proceeds from these
investment securities sales totaled approximately $44.3 million with
realized gains of approximately $30,300. There were no
<PAGE> 36
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
realized losses during 2003. During 2002, proceeds from these investment
securities sales totaled approximately $66.5 million with realized gains
and losses of approximately $176,000 and $14,000, respectively.
The following table summarizes, by major security type, the Company's
short-term investments. The Company's U.S. corporate securities include
U.S. government agency notes, certificates of deposit, corporate debt
securities and commercial paper.
<TABLE>
<CAPTION>
March 30, 2002
--------------
<s> <c>
U.S. treasuries $ 9,418
U.S. corporate securities 23,218
-------
Total included in available-for-sale
investments (short-term) $32,636
=======
</TABLE>
Concentration of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents,
accounts receivable and investment in sales type lease receivables. Sales
to one unaffiliated Japanese customer, the Japanese Red Cross Society,
amounted to $79.0 million, $75.5 million and $86.3 million for 2003, 2002
and 2001, respectively. Concentration risk on our accounts receivable
attributable to this customer accounted for 23.6%, 20.0% and 22.7% of total
accounts receivable for 2003, 2002 and 2001, respectively. While the
accounts receivable related to the Japanese Red Cross Society may be
significant, we do not believe the credit loss risk to be significant given
the consistent payment history by this customer.
Net Income per Share
The following table provides a reconciliation of the numerators and
denominators reflected in the basic and diluted earnings per share
computations, as required by Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share," ("EPS").
Basic EPS is computed by dividing reported earnings available to
stockholders by the weighted average shares outstanding. Diluted EPS also
includes the effect of dilutive potential common shares.
<PAGE> 37
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
<TABLE>
<CAPTION>
Years Ended
------------------------------------------------------
March 29, 2003 March 30, 2002 March 31, 2001
-------------- -------------- --------------
(Dollars and shares in thousands except per share amounts)
<s> <c> <c> <c>
Basic EPS
Net income $28,379 $30,027 $ 7,236
Weighted average shares 24,591 26,214 25,299
-----------------------------------------------
Basic income per share $ 1.15 $ 1.15 $ 0.29
Diluted EPS
Net income $28,379 $30,027 $ 7,236
Basic weighted average shares 24,591 26,214 25,299
Dilutive effect of stock options 457 941 706
-----------------------------------------------
Diluted weighted average shares 25,048 27,155 26,005
Diluted income per share $ 1.13 $ 1.11 $ 0.28
===============================================
</TABLE>
The diluted weighted average shares do not include the effect of
anti-dilutive options that totaled approximately 2.1 million, 0.6 million
and 0.3 million for 2003, 2002 and 2001, respectively.
Foreign Currency
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" as amended, establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet
as either an asset or liability measured at its fair value. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, to the
extent effective, and requires that we formally document, designate and
assess the effectiveness of transactions that qualify for hedge accounting.
SFAS No. 133, as amended, in part, allows special hedge accounting for fair
value and cash flow hedges. The statement provides that the gain or loss on
a derivative instrument designated and qualifying as a fair value hedging
instrument, as well as the offsetting changes in the fair value of the
hedged item attributable to the hedged risk, be recognized currently in
earnings in the same accounting period. SFAS No. 133, as amended, provides
that the effective portion of the gain or loss on a derivative instrument
designated and qualifying as a cash flow hedging instrument be reported as
a component of other comprehensive income and be reclassified into earnings
in the same period or periods during which the hedged forecasted
transaction affects earnings. The ineffective portion of a derivative's
change in fair value is recognized currently through earnings regardless of
whether the instrument is designated as a hedge.
We enter into forward exchange contracts to hedge the anticipated
cash flows from forecasted foreign currency denominated revenues. The
purpose of our foreign hedging activities is to minimize, for a period of
time, the unforeseen impact on our results of operations of fluctuations in
foreign exchange rates. We also enter
<PAGE> 38
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
into short-term forward contracts to hedge certain inter-company
receivables denominated in foreign currencies. These derivative financial
instruments are not used for trading purposes. The cash flows related to
the gains and losses on these foreign currency hedges are classified in the
consolidated statements of cash flows as part of cash flows from operating
activities.
At March 29, 2003 we had 28 forward contracts outstanding, all
maturing in less than twelve months, to exchange the Euro and the Japanese
yen primarily for U.S. dollars totaling $113.2 million. Of these contracts,
six, totaling $27.4 million, represented contracts with zero fair value
relating to inter-company receivables established at year-end, that settle
within 35 days after year-end. We have designated the remainder of these
contracts as cash flow hedges intended to lock-in the expected cash flows
of forecasted foreign currency denominated revenues at the available spot
rate. The fair value of the forward contracts associated with changes in
points on forward contracts is excluded from our assessment of hedge
effectiveness.
A summary of the accounting discussed above is as follows (in thousands):
<TABLE>
<CAPTION>
(Income)/Expense Cash Flow Hedges - Debit (Credit)
Cumulative
Asset Accumulated Effect of Change
(Liability)- Comprehensive in Accounting
Forward (Income) Loss, Other (Income) Principle,
Contracts net of tax Expense, net net of tax
--------------------------------------------------------------------
<s> <c> <c> <c> <c>
At adoption, April 1, 2001, of
SFAS No. 133, net of tax $ 9,200 $(4,608) - $(2,304)
Change in fair value $(5,217) $ 2,321 $(2,412) -
------------------------------------------------------------
Balance as of March 30, 2002 $ 3,983 $(2,287) - -
Change in fair value $(6,574) $ 4,695 $(1,045) -
------------------------------------------------------------
Balance as of March 29, 2003 $(2,591) $ 2,408 - -
</TABLE>
Prior to the adoption of SFAS No. 133 as amended, we recorded points
associated with forward contracts as other income when the transactions
being hedged were recognized. Under SFAS No. 133 as amended, these points
are recorded on a fair value basis over the life of the contracts. For
fiscal year ended March 29, 2003, income from points on forward contracts
was $1.0 million or $0.5 million less than if recorded under the provisions
of SFAS No. 52 ("Foreign Currency Translation."). For fiscal year ended
March 30, 2002, income from points on forward contracts was $5.6 million or
$1.0 million higher than if recorded under the provisions of SFAS No. 52,
("Foreign Currency Translation.")
Financial Instruments
The carrying values for certain of our financial instruments,
including cash and cash equivalents, available-for-sale investments and
notes payable were either at or approximated their fair market values at
March 29, 2003, March 30, 2002 and March 31, 2001.
<PAGE> 39
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
At March 29, 2003, the fair value of our long-term debt was $3.6
million higher than the value of the debt reflected on our financial
statements. This higher fair market is primarily related to our $22.9
million, 7.05% fixed rate senior notes and our $8.8 million, 8.41% real
estate mortgage. At March 30, 2002, the fair value of our long-term debt
was $2.6 million higher than the value of the debt reflected on our
financial statements. Fair values have been determined through information
obtained from market sources and management estimates.
Inventories, net
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:
<TABLE>
<CAPTION>
March 29, 2003 March 30, 2002
----------------------------------
(in thousands)
<s> <c> <c>
Raw materials $17,037 $16,808
Work-in-process 4,597 4,700
Finished goods 44,171 45,736
---------------------------
$65,805 $67,244
===========================
</TABLE>
Property, Plant and Equipment
We provide 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:
<TABLE>
<CAPTION>
Estimated
Asset Classification Useful Lives
-----------------------------------------------------------------
<s> <c>
Building 30 Years
Building and leasehold improvements 5-25 Years
Plant equipment and machinery 3-10 Years
Office equipment and information technology 4-8 Years
Haemonetics equipment 2-8 Years
</TABLE>
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.
Haemonetics Equipment
Our equipment is comprised of machines installed at customer sites
under use plan or rental agreements and machines utilized by our sales
personnel as demonstration units. Under each of these arrangements,
<PAGE> 40
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
the equipment remains our property. Contracts for use plan and rental
arrangements vary in length from two to eight years.
Use plan contracts commit the customer to purchase certain minimum
amounts of disposables at a stated price over a defined contract term. The
equipment remains our property and as such, we have the right to either
remove the equipment or increase the price per disposable if the customer
does not consume at least the number of disposables agreed to in the
contract. Our U.S. Commercial Plasma and worldwide Red Blood Cell
Businesses employ the use plan arrangement almost exclusively and account
for the most significant portion of the value of our equipment.
Equipment under rental agreements may or may not commit the customer
to use a minimum number of disposables. Rental charges are billed monthly
and the equipment remains our property.
Equipment given to salespeople for demonstration remains our property
and is depreciated over estimated useful lives of two to five years.
Revenue Recognition
Our revenue recognition policy is to recognize revenues from product
sales and services when earned as required by generally accepted accounting
principles and in accordance with SAB No. 101, "Revenue Recognition in
Financial Statements." Revenues are recognized when persuasive evidence of
an arrangement exists, product delivery, including customer acceptance, has
occurred or services have been rendered, the price is fixed or determinable
and collectibility is reasonably assured. For product sales, revenue is not
recognized until title and risk of loss have transferred and all provisions
agreed to in the arrangement necessary for customer acceptance have been
fulfilled.
There are principally four arrangements under which our products are
shipped to a customer: a use plan, a rental agreement, a sales-type lease
and a cash sale not under contract.
Under use plan and rental agreements, no equipment revenue is
recognized as in each of these arrangements, the equipment remains our
property and title does not pass to the customer.
Equipment revenues under sales-type lease agreements are recognized
either at shipment or delivery in accordance with the agreed upon contract
terms with interest income recognized over the life of the lease.
Revenues from Software Sales
Since January of fiscal year 2002 with our acquisition of Fifth
Dimension Information Systems, Inc. ("Fifth Dimension"), we have recorded
software sales in accordance with Statement of Position ("SOP") 97-2,
"Software Revenue Recognition," as amended and, in instances where services
are essential to the functionality of the software, which represents the
majority of Fifth Dimensions software sales, revenue is recognized in
accordance with SOP 81-1, "Accounting for Performance of Construction-Type
and Certain Production-Type Contracts."
In accordance with SOP 97-2, when the services are essential to the
functionality of the software, or payment of the license fees are dependent
upon the performance of the services, the software license, configu-
<PAGE> 41
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
ration, training and implementation fees are recognized under the contract
method of accounting using labor hours to measure the completion
percentage. In order to apply the contract method of accounting, we are
required to estimate the number of hours needed to complete a particular
project. As a result, recognized revenues and profits are subject to
revisions as the contract progresses to completion. We recorded $5.0
million and $1.1 million of software revenue in fiscal 2003 and 2002,
respectively.
Revenues from Distributor Sales
We recognize revenue for both equipment and disposables revenue upon
shipment of these products to our distributors. Our standard contracts with
our distributors state that title of the equipment passes to the
distributors at point of shipment to a distributor's location. The
distributors are responsible for shipment to the end customer along with
installation, training and acceptance of the equipment by the end customer.
All shipments to distributors are at contract prices and payment is not
contingent upon resale of the product.
Service Revenues and Warranty
Service revenues are recognized ratably over the contractual periods
or as the services are provided. We provide for warranty costs in the same
period the associated revenue is recognized.
We provide a warranty on parts and labor for one year after the sale
and installation of one of our devices. We also warrant our disposable
products through their use or expiration. We estimate our potential
warranty expense based on our historical warranty experience, and we
periodically assess the adequacy of our warranty accrual and make
adjustments as necessary. The table provides the detail of the change in
our product warranty accrual, which is a component of other accrued
liabilities on the consolidated balance sheet for the fiscal years ending
March 29, 2003.
<TABLE>
<CAPTION>
<s> <c>
Total
-----
Warranty accrual as of March 30, 2002 $ 800
Provision related to preexisting warranties 375
Warranty Provision 1,260
Warranty Spending (1,379)
-------
Warranty accrual as of March 29, 2003 $ 1,056
=======
</TABLE>
Research and Development Expenses
All research and development costs, for which no alternate future use
exists, are expensed as incurred. Research and development expense for
continuing operations was $19.5 million for both fiscal 2003 and 2002 and
$19.0 million for fiscal 2001.
<PAGE> 42
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
Income Taxes
We utilize the asset and liability method of accounting for income
taxes, as set forth in SFAS No. 109, "Accounting for Income Taxes" (SFAS
No. 109). 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 basis for assets and
liabilities, utilizing currently enacted tax rates. The effect of any
change in tax rates is recognized in the period in which the change occurs.
We do not provide for U.S. income taxes on our foreign subsidiaries'
undistributed earnings as they are deemed to be permanently reinvested.
Non-U.S. income taxes are, however, provided on these earnings. If
repatriated to the U.S., we provide the appropriate U.S. income tax on
repatriated earnings.
Goodwill
As of the fiscal quarter ended June 30, 2001, we elected early
adoption of SFAS No. 142, "Goodwill and Other Intangible Assets." Under
this statement goodwill as well as certain other intangible assets,
determined to have an indefinite life, are no longer amortized. Instead
these assets are reviewed for impairment at least annually or more
frequently if an event occurs or circumstances change that would more
likely than not reduce the carrying value of the reporting unit below its
fair value.
We have performed our annual impairment test based on a fair value
approach which used our market capitalization as the basis reduced by the
excess of the fair market value of our long-term debt over its carrying
value as identified in our assessment of interest rate risk. The test
showed no evidence of impairment to our goodwill and other indefinite lived
assets for fiscal 2003 or fiscal 2002.
<PAGE> 43
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
The changes in the carrying amount of Goodwill for fiscal year 2003
and 2002 are as follows (in thousands):
<TABLE>
<s> <c>
Carrying amount as of March 31, 2001 $14,426
Adjustment due to a change in the valuation of net operating losses
acquired in September, 2000 as part of the Transfusion Technologies
acquisition ($2,821 gross, less $84 in accumulated amortization). (2,737)
Adjustment due to a change in the valuation of the liabilities
associated with the January, 2001 acquisition of the Alpha Therapeutic
Corporation plasma collection bottle plant 1,141
Goodwill aquired during the year in the Fifth Dimension acquisition 1,932
Effect of change in rates used for translation (594)
-------
Carrying amount as of March 30, 2002 $14,168
=======
Fifth Dimension earn-out payment 1,020(a)
Effect of change in rates used for translation 822
-------
Carrying amount as of March 29, 2003 $16,010
=======
<FN>
(a) The acquisition of Fifth Dimension, which occurred on January 1,
2002, involved the potential for earn-out payments of up to $4.1
million based on Fifth Dimension reaching certain performance
milestones prior to fiscal 2008. The first milestone, in the amount
of $1.0 million, was earned as of the end of the fiscal year 2003.
This payment has been accrued as of year-end and will be made in the
first quarter of fiscal year 2004.
</FN>
</TABLE>
The proforma effect on fiscal year 2001 earnings of excluding
amortization expense, net of tax, is as follows (in thousands except per
share data):
<TABLE>
<CAPTION>
Years Ended: March 31, 2001
----------------------------------------------------------
<s> <c>
Reported net income $7,236
Add: goodwill amortization 870
------
Adjusted net income $8,106
======
Basic income per common share:
Reported net income $ 0.29
Goodwill amortization 0.03
------
Adjusted net income $ 0.32
------
Income per common share assuming full
dilution:
Reported net income $ 0.28
Goodwill amortization 0.03
------
Adjusted net income $ 0.31
------
</TABLE>
<PAGE> 44
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
Other Intangibles
Other intangibles represent the value assigned to patents and the
OrthoPAT(R) core technology purchased in conjunction with the Transfusion
Technologies Corporation acquisition, the value assigned to a customer base
purchased in conjunction with the acquisition of a plasma collection bottle
plant and the value assigned to the software technology, customer contracts
and trade name purchased in conjunction with the acquisition of Fifth
Dimension (see Note 11 to the consolidated financial statements for a more
detailed discussion of our acquisitions). The estimated useful lives for
all of these intangible assets, excluding the Fifth Dimension trade name as
it is considered to have an indefinite life, are 6 to 20 years.
The patents we purchased as part of our acquisition of Transfusion
Technologies Corporation cover various processes, systems and components of
the blood collection and separation processes utilized in both the existing
OrthoPAT(R) product and the Chairside Separator(R) and Red Cell Collector
that are currently under development. Core technology consists of the
OrthoPAT(R) orthopedic perioperative autotransfusion system and other
already developed and working theory and know how that is shared by all
three products purchased in the acquisition. An independent valuation was
performed to assess and allocate value to the intangible assets purchased.
The bottling plant customer base intangible asset represents the
value allocated to the acquired customer base and certain customer
contracts purchased in the acquisition of Alpha Therapeutic's Compton,
California, plasma collection bottle plant. An independent valuation was
also performed to assess and allocate value to the intangible assets
purchased in this transaction.
The technology purchased as part of the acquisition of Fifth
Dimension consists primarily of data management software that automates the
data collection and data tracking for plasma centers and fractionators. The
customer contracts intangible represents the value allocated to the
acquired contracts. The useful life assigned to the technology and the
contracts was 6 years and 15 years respectively. In addition, we purchased
the trade name, Fifth Dimension, which is deemed to have an indefinite
useful life because it is expected to generate cash flows indefinitely. An
independent valuation was also performed to assess and allocate value to
the intangible assets purchased in this transaction.
In the third quarter of fiscal 2002, we paid Baxter $10.0 million to
acquire the right to integrate a new pathogen reduction technology into our
platelet collection devices after the technology receives regulatory
approvals (see note 11). The $10.0 million was expensed in our consolidated
statement of operations as acquired research and development. In the third
quarter of our fiscal year 2003, Baxter acquired its initial regulatory
approval in the European market. In connection with this approval, we made
an initial $3.8 million milestone payment to Baxter during the fourth
quarter of our fiscal year 2003. This payment was recorded as other
technology, an intangible asset, and it will be amortized over its useful
life.
<PAGE> 45
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
<TABLE>
<CAPTION>
As of March 29, 2003
Weighted
Gross Carrying Accumulated Average
Amount Amortization Useful Life
(in thousands) (in thousands) (in years)
-----------------------------------------------
<s> <c> <c> <c>
Amortized Intangibles
Patents $ 6,371 $ 1,119 14
Other technology 11,746 1,274 15
Customer contracts and related relationships 11,498 1,360 15
-------------------------
Subtotal $29,615 $ 3,753 15
Indefinite Life Intangibles
Trade name 477 - Indefinite
-------------------------
Total Intangibles $30,092 $ 3,753
<CAPTION>
As of March 30, 2002
Weighted
Gross Carrying Accumulated Average
Amount Amortization Useful Life
(in thousands) (in thousands) (in years)
-----------------------------------------------
<s> <c> <c> <c>
Amortized Intangibles
Patents $ 6,370 $ 647 14
Other technology 7,991 741 17
Customer contracts and related relationships 11,350 589 15
-------------------------
Subtotal $25,711 $ 1,977 15
Indefinite Life Intangibles
Trade name 470 - Indefinite
-------------------------
Total Intangibles $26,181 $ 1,977
</TABLE>
The only other changes to the net carrying value of our intangible
assets from March 30, 2002 to March 29, 2003 was amortization expense and
the effect of rate changes in the translation of the intangibles contained
in the financial statement of our Canadian subsidiary.
<PAGE> 46
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
Aggregate amortization expense for amortized other intangible assets
for fiscal years 2003 and 2002 is $1.8 million and $1.4 million,
respectively. Additionally, future amortization expense on other intangible
assets for each of the succeeding five fiscal years approximates $2.1
million.
With the adoption of SFAS No. 142, there were no changes to
amortization expense on acquired other intangible assets.
Accounting for Long-lived Assets
We account for long-lived assets in accordance with SFAS No. 144.
"Accounting for the Impairment or Disposal of Long-Lived Assets." This
statement requires that one accounting model be used for long-lived assets
to be disposed of by sale, whether previously held and used or newly
acquired. This statement is not applicable to goodwill or intangible assets
that are not being amortized, and certain other long-lived assets. We
periodically review our long-lived assets for any potential impairment. We
assess the future useful life of these assets; primarily our intangibles,
property, plant, equipment and investment in sales-type leases, whenever
events or changes in circumstances indicate that the current useful lives
have diminished or the carrying value of the asset may not be recoverable.
If the sum of the expected cash flows, undiscounted and without interest,
is less than the carrying amount of the asset, an impairment loss is then
calculated by comparing the carrying value of the assets to the weighted
average discounted cash flows, which consider various possible outcomes for
the disposition of the assets.
Accounting for Stock-Based Compensation
We have adopted the new disclosure provision for employee stock-based
compensation under Statement of Financial Accounting Standards (SFAS) No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure,"
issued by FASB in December 2002. We will continue to account for employee
stock-based compensation under Accounting Principles Board Opinion No. 25
("APB No. 25").
SFAS No. 148 provides alternative methods of transition to the fair
value method of accounting proposed in SFAS No. 123 for stock-based
employee compensation, and also amends the disclosure provision of SFAS No.
123 to require disclosure in the summary of significant accounting policies
of the effects of an entity's accounting policy with respect to stock-based
employee compensation on reported net income and earnings per share in
annual and interim financial statements. The disclosure provision is
required for all companies with stock-based employee compensation,
regardless of whether the company utilizes the fair value method of
accounting described in SFAS No. 123 or the intrinsic value method
described in APB Opinion No. 25, "Accounting for Stock Issued to
Employees."
Under APB No. 25, no accounting recognition is given to options
granted to employees and directors at fair market value until they are
exercised. Upon exercise, net proceeds, including tax benefits realized,
are credited to equity. The compensation cost for options granted to
consultants is recorded at fair value in accordance with Emerging Issues
Task Force, "EITF" issue 96-18, "Accounting for Equity Instruments That are
Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services." Had compensation costs under our stock-based
compensation plans been determined based on the fair value model of FAS
123, the effect on our earnings per share would have been as follows:
<PAGE> 47
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
<TABLE>
<CAPTION>
Years Ended
--------------------------------------------------
March 29, 2003 March 30, 2002 March 31, 2001
-------------- -------------- --------------
(in thousands except per share amounts)
<s> <c> <c> <c>
Net income (as reported): $28,379 $30,027 $ 7,236
Deduct: Total stock-based employee compensation expense
determined under the fair value method for all awards,
net of tax $(6,805) $(7,466) $(6,588)
-------------------------------------------
Pro Forma Net Income: $21,574 $22,561 $ 648
===========================================
Earnings per share:
Basic
As Reported $ 1.15 $ 1.15 $ 0.29
Pro forma $ 0.88 $ 0.86 $ 0.03
Diluted
As Reported $ 1.13 $ 1.11 $ 0.28
Pro forma $ 0.86 $ 0.83 $ 0.03
</TABLE>
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:
<TABLE>
<CAPTION>
March 29, 2003 March 30, 2002 March 31, 2001
----------------------------------------------------
<s> <c> <c> <c>
Volatility 28.3% 29.1% 30.9%
Risk-Free Interest Rate 5.0% 5.1% 6.3%
Expected Life of Options 7 yrs. 7 yrs. 7 yrs.
</TABLE>
The weighted average grant date fair value of options granted during
2003, 2002 and 2001 was approximately $13.13, $13.48 and $11.07,
respectively.
The fair values of shares purchased under the Employee Stock Purchase
Plan are estimated using the Black-Scholes option-pricing model with the
following weighted average assumptions:
<TABLE>
<CAPTION>
March 29, 2003 March 30, 2002 March 31, 2001
----------------------------------------------------
<s> <c> <c> <c>
Volatility 32.7% 30.5% 31.9%
Risk-Free Interest Rate 1.5% 5.1% 6.1%
Expected Life of Options 6 mos. 6 mos. 6 mos.
</TABLE>
The weighted average grant date fair value of the six-month option
inherent in the Purchase Plan was $7.11 in 2003, $6.77 in 2002 and $5.14 in
2001.
<PAGE> 48
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
Comprehensive Income
Comprehensive income is the total of net income and all other non-
owner changes in stockholders' equity. For us, all other non-owner changes
are primarily foreign currency translation, the change in our net minimum
pension liability and the changes in fair value of the effective portion of
our outstanding cash flow hedge contracts.
<TABLE>
<CAPTION>
Years Ended
----------------------------------------------------
March 29, 2003 March 30, 2002 March 31, 2001
----------------------------------------------------
(In thousands)
<s> <c> <c> <c>
Net income $28,379 $30,027 $ 7,236
---------------------------------------------
Other comprehensive income:
Foreign currency translation 8,028 (1,054) (4,540)
Unrealized loss on available for sale securities - (10) -
Unrealized gain (loss) on cash flow hedges, net of tax (7,519) 7,414 -
Reclassifications into earnings of cash flow hedge (gains)
and losses, net of tax 2,824 (5,127) -
Minimum pension liabilities adjustment, net of tax (424)
---------------------------------------------
Comprehensive income $31,288 $31,250 $ 2,696
=============================================
</TABLE>
Accounting for Shipping and Handling Costs
Shipping and handling costs are included in costs of goods sold with
the exception of $5.1 million, $4.5 million and $4.0 million for fiscal
year 2003, 2002 and 2001, respectively that are included in selling,
general and administrative expenses.
New Pronouncements
In May 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections". Among other things, SFAS
145 rescinds No. 4, "Reporting Gains and Losses from Extinguishment of
Debt" and eliminates the requirement that gains and losses from the
extinguishment of debt be classified as an extraordinary item, net of
related income tax effects, unless the criteria in Accounting Principles
Board Opinion No. 30, "Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions" are met. Adoption of
this statement is generally required in fiscal years beginning after May
15, 2002. We do not expect the adoption of this statement to have a
material impact on our consolidated financial statements.
In January 2003, the FASB issued Interpretation No. 46,
"Consolidation of Variable Interest Entities", to clarify the conditions
under which the assets and liabilities and activities of another entity
should be consolidated into the financial statements of a company.
Interpretation No. 46 requires the consolidation of a variable interest
entity by a company that bears the majority of the risk of loss from the
variable interest entity's residual returns. The provisions of
Interpretation No. 46 are required to be adopted during fiscal 2004. We do
not feel the adop-
<PAGE> 49
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)
tion of Interpretation No. 46 will have an impact our consolidated
financial statements as we do not currently have any interest in any
Variable Interest Entities.
Reclassifications
Certain amounts in the prior year financial statements have been
reclassified to conform to the fiscal 2003 presentation.
3. INVESTMENT IN SALES-TYPE LEASES
We lease equipment to customers under sales-type leases. As sales-
type leases, the lease payments to be received over the term of the leases
are recorded as a receivable at the inception of the new lease. Finance
income attributable to the lease contracts is initially recorded as
unearned income and subsequently recognized as interest income under the
interest method over the term of the leases.
There are generally two forms of sales-type lease arrangements. The
first is unrelated to purchases of future disposable products, and simply
calls for a stated monthly payment for each piece of equipment under lease.
The second is an arrangement under which we commit to providing a customer
specified pricing for the purchase of equipment and disposables over a
fixed period of time, and the customer commits to purchasing a certain
minimum number of disposables over the contract's term. Thus, leases are
billed monthly, or alternatively with the disposables purchased. Contract
terms vary but are generally three to five years. Under both sales-type
lease arrangements, title to the equipment transfers at the completion of
the lease commitment.
The components of our net investment in sales-type leases are as
follows:
<TABLE>
<CAPTION>
March 29, 2003 March 30, 2002
---------------------------------
(in thousands)
<s> <c> <c>
Total minimum lease payments receivable $6,568 $7,428
Less-Unearned interest 919 1,411
-------------------------
Net investment in sales-type leases 5,649 6,017
Less-Current portion 2,681 2,783
-------------------------
Net investment, long-term $2,968 $3,234
=========================
</TABLE>
<PAGE> 50
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
3. INVESTMENT IN SALES TYPE LEASES-(continued)
Future minimum lease payments receivable under non-cancelable sales-
type leases as of March 29, 2003, are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ending (in thousands)
------------------------------------------
<s> <c>
2004 $3,271
2005 1,728
2006 688
2007 380
2008 289
and thereafter 212
------
$6,568
======
</TABLE>
4. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consist of the following:
<TABLE>
<CAPTION>
March 29, 2003 March 30, 2002
---------------------------------
(in thousands)
<s> <c> <c>
Real estate mortgage $ 9,175 $ 9,561
Senior notes 28,571 34,285
Haemonetics Japan Co. Ltd. 32,780 27,515
Other non-U.S. borrowings 91 782
--------------------------
70,617 72,143
Less-Current portion 39,005 31,356
--------------------------
$31,612 $40,787
==========================
</TABLE>
Real Estate Mortgage Agreement
In December 2000 we entered into a $10.0 million real estate mortgage
agreement (the "Mortgage Agreement") with an investment firm. The Mortgage
Agreement requires principal and interest payments of $0.1 million per
month for a period of 180 months, commencing February 1, 2001. The entire
balance of the loan may be repaid at any time after February 1, 2006,
subject to a prepayment premium, which is calculated based upon the change
in the current weekly average yield of Ten (10)-year U.S. Treasury Constant
Maturities, 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 8.41% per annum. Borrowings under the Mortgage
Agreement are secured by the land, building and improvements at our
headquarters and manufacturing facility with a collective carrying value of
approximately $10.5 million and $10.2 million as of March 29, 2003 and
March 30, 2002, respectively. There are no financial covenants in the terms
and conditions of this agreement.
<PAGE> 51
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
4. NOTES PAYABLE AND LONG-TERM DEBT-(continued)
Senior Notes
We have $28.6 million of 7.05% Senior Notes due in 2007 (the "Senior
Notes"). We are required to make annual prepayments of principal each year
in the amount $5.7 million, which began October 15, 2001 and conclude 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
including but not limited to minimum stockholders' equity and ratio
requirements of consolidated funded indebtedness to consolidated total
capitalization and priority indebtedness to consolidated stockholders
equity. At March 29, 2003, we are in compliance with all debt covenants.
Haemonetics Japan Co. Ltd.
At March 29, 2003, Haemonetics Japan Co. Ltd. had 3.9 billion
Japanese yen, equivalent to U.S. $32.8 million, in unsecured debt
outstanding. All of this debt is short term, maturing in less than 12
months.
Other Non-U.S. Borrowings
Non-U.S. borrowings represent the financing arranged by our
subsidiaries with local banks, which we may guarantee. All of the amounts
outstanding as of March 29, 2003 are short-term in nature.
The weighted average short-term rates for U.S. and non-U.S.
borrowings were 1.62%, 1.83%, and 2.75% as of March 29, 2003, March 30,
2002 and March 31, 2001, respectively.
As of March 29, 2003, notes payable and long-term debt mature as
follows:
<TABLE>
<CAPTION>
Fiscal Year Ending (in thousands)
--------------------------------------
<s> <c>
2004 $39,005
2005 6,171
2006 6,211
2007 6,254
2008 6,301
2009 and thereafter 6,675
-------
$70,617
=======
</TABLE>
<PAGE> 52
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
5. INCOME TAXES
Domestic and foreign income from continuing operations before the
cumulative effect of a change in accounting principle is as follows:
<TABLE>
<CAPTION>
Years Ended
----------------------------------------------------
March 29, 2003 March 30, 2002 March 31, 2001
----------------------------------------------------
(In thousands)
<s> <c> <c> <c>
Domestic $28,310 $29,286 $ 7,635
Foreign 10,297 9,219 9,691
---------------------------------------------
$38,607 $38,505 $17,326
=============================================
</TABLE>
The income tax provision attributable to continuing operations before
the cumulative effect of a change in accounting principle contains the
following components:
<TABLE>
<CAPTION>
Years Ended
----------------------------------------------------
March 29, 2003 March 30, 2002 March 31, 2001
----------------------------------------------------
(In thousands)
<s> <c> <c> <c>
Current
Federal $ 1,092 $10,838 $ 2,956
State 981 824 435
Foreign 4,125 (133) 4,587
---------------------------------------------
Total current $ 6,198 $11,529 7,978
---------------------------------------------
Deferred
Federal 4,171 (3,832) 3,308
State (193) (77) 49
Foreign 52 3,162 (1,245)
---------------------------------------------
Total deferred 4,030 (747) 2,112
---------------------------------------------
Total tax expense $10,228 $10,782 $10,090
=============================================
</TABLE>
Included in the federal income tax provisions for fiscal years 2003,
2002 and 2001 are approximately $0.9 million, $0.2 million and $0.2
million, respectively, provided on foreign source income of approximately
$0.4 million, $0.4 million and $0.7 million in 2003, 2002 and 2001,
respectively for taxes which are payable in the United States.
The total income tax provision included in the consolidated financial
statements is as follows:
<TABLE>
<CAPTION>
Years Ended
----------------------------------------------------
March 29, 2003 March 30, 2002 March 31, 2001
----------------------------------------------------
(In thousands)
<s> <c> <c> <c>
Continuing operations $10,228 $10,782 $10,090
Cumulative effect of a change in accounting principle - 896 -
---------------------------------------------
$10,228 $11,678 $10,090
=============================================
</TABLE>
<PAGE> 53
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
5. INCOME TAXES-(continued)
Tax effected, significant temporary differences comprising the net
deferred tax asset (liability) are as follows:
<TABLE>
<CAPTION>
Years Ended
---------------------------------
March 29, 2003 March 30, 2002
---------------------------------
(in thousands)
<s> <c> <c>
Depreciation $(4,297) $(7,692)
Amortization (2,174) (559)
Inventory 13,000 10,518
Hedging 1,288 (1,343)
Accruals and reserves 2,359 4,816
Net operating loss carryforward 10,086 10,994
Foreign tax credits - 4,484
--------------------------
Total net deferred taxes $20,262 $21,218
==========================
</TABLE>
At March 29, 2003, we have approximately $28.7 million in U.S.
acquisition related net operating loss carryforwards, subject to separate
limitations expiring beginning in 2010. In fiscal 2002, as part of our
ongoing analysis of the purchase price allocation of the Transfusion
acquisition, it was determined that a tax valuation allowance was not
necessary. Accordingly, we wrote down the goodwill by $2.8 million, other
acquired intangibles by $2.6 million and the value of other acquired assets
related to this transaction by $1.0 million.
We do not provide U.S. taxes on our foreign subsidiaries'
undistributed earnings as they are deemed to be permanently reinvested
outside the U.S. Non-US income taxes are, however, provided on these
foreign subsidiaries' undistributed earnings. Upon repatriation, we provide
the appropriate U.S. income taxes on these earnings.
The income tax provision from continuing operations before the
cumulative effect of a change in accounting principle differs from the
amount computed by applying the 35% U.S. federal statutory income tax rate
in 2003, 2002 and 2001, due to the following:
<TABLE>
<CAPTION>
Years Ended
----------------------------------------------------
March 29, 2003 March 30, 2002 March 31, 2001
----------------------------------------------------
(In thousands)
<s> <c> <c> <c>
Tax at federal statutory rate $13,512 $13,477 $ 6,064
Foreign Sales Corporation and Extraterritorial Income Exclusion (1,961) (2,155) (1,634)
Difference between U.S. tax and foreign statutory rates (1,522) (923) (1,709)
State taxes, net of federal income tax benefits 512 486 314
Non-deductible acquisition costs - 155 7,105
Other, net (313) (258) (50)
---------------------------------------------
Tax at effective tax rate $10,228 $10,782 $10,090
=============================================
</TABLE>
<PAGE> 54
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
6. COMMITMENTS AND CONTINGENCIES
We lease facilities and certain equipment under operating leases
expiring at various dates through fiscal year 2008. Facility leases require
us to pay certain insurance expenses, maintenance costs and real estate
taxes.
Approximate future basic rental commitments under operating leases as
of March 29, 2003 are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ending (in thousands)
------------------------------------------
<s> <c>
2004 $ 5,107
2005 4,630
2006 4,054
2007 2,659
2008 1,727
Thereafter 1,028
-------
$19,205
=======
</TABLE>
Rent expense in fiscal 2003, 2002 and 2001 was $4.0 million, $3.7
million and $4.1 million, respectively.
We are presently engaged in various legal actions, and although
ultimate liability cannot be determined at the present time, we believe,
based on consultation with counsel, that any such liability will not
materially affect our consolidated financial position and results of
operations.
Through our acquisition of Fifth Dimension Information Systems, Inc.
(Fifth Dimension), as well as our agreement with Baxter Healthcare
Corporation (Baxter) related to pathogen reduction technology, we are
contingently obligated to make certain payments. The Fifth Dimension
acquisition involves certain earn-out payments of up to $4.1 million based
upon Fifth Dimension reaching certain performance milestones prior to
fiscal 2008. The Baxter agreement calls for us to make milestone payments
over the next several years of up to $14.5 million as regulatory approvals
are received in various markets. In the fourth calendar quarter of 2002,
Baxter acquired its initial regulatory approval in the European market. In
connection with this approval, we made an initial $3.8 million milestone
payment to Baxter during the fourth quarter of fiscal 2003. We expect that
the remaining European approvals will be obtained during our fiscal 2004
and we anticipate making an additional milestone payment of $3.8 million to
Baxter at that time. These payments will be recorded as other technology,
an intangible asset, and amortized over their useful lives.
7. CAPITAL STOCK
Treasury Stock
During fiscal 2003, we repurchased 1,850,150 shares of our
outstanding common stock at an average prevailing price of $27.11. This
includes 829,700 shares repurchased under a 10b5-1 Plan, adopted March 29,
2002; 100,050 shares repurchased under a 10b5-1 Plan adopted July 29, 2002;
and 427,600 shares repurchased under a 10b5-1 Plan adopted October 28,
2002. During fiscal 2002, we repurchased 895,800 shares of our outstanding
common stock at an average prevailing price of $30.04. We expect any
repurchased shares to be made available for issuance pursuant to our
employee benefit and incentive plans and for other corporate purposes.
<PAGE> 55
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
7. CAPITAL STOCK-(continued)
Stock Plans
We have a long-term incentive stock option plan under which a maximum
of 3,500,000 shares of our common stock may be issued pursuant to incentive
and non-qualified stock options granted to our key employees, officers and
directors (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 independent members of our Board of
Directors. The exercise price, for both incentive and 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 the fair market value
of the common stock at the time the option is granted. Options become
exercisable in a manner determined by the Committee, generally between two
and seven years, and all options expire not more than 10 years from the
date of the grant. At March 29, 2003, there were 1,892,224 options
outstanding under this plan and 1,607,776 shares available for future
grant.
We had a non-qualified stock option plan under which options were
granted to non-employee directors and two previous plans under which
options were granted to key employees, consultants and advisors. During
2003, we recorded approximately $22,000 as stock option compensation
expense related to grants to consultants and advisors. At March 29, 2003,
there were 2,862,954 options outstanding related to these plans. No further
options will be granted under these plans.
We have an Employee Stock Purchase Plan (the "Purchase Plan") under
which a maximum of 375,000 shares (subject to adjustment for stock splits
and similar changes) of common stock may be purchased by eligible
employees. Substantially all of our full-time employees are eligible to
participate in the Purchase Plan.
The Purchase Plan provides for two "purchase periods" within each of
our fiscal years, the first commencing on November 1 of each year and
continuing through April 30 of the next calendar year, and the second
commencing on May 1 of each year and continuing through October 31 of such
year. Shares are purchased through an 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 is 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 fiscal 2003, there were 36,997 shares purchased at a range of
$18.03 to $28.17 per share under the Purchase Plan. During fiscal 2002,
there were 23,247 shares purchased at a range of $20.40 to $27.52 per share
under the Purchase Plan.
<PAGE> 56
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
7. CAPITAL STOCK-(continued)
A summary of stock option activity for the three years ended March
29, 2003 is as follows:
<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price per Share
--------------------------------------
<s> <c> <c>
Outstanding at April 1, 2000 3,718,889 $17.60
============================
Exercisable at April 1, 2000 1,705,625 $17.34
============================
Granted 1,255,099 $23.60
Exercised (716,912) $17.18
Terminated (119,361) $17.23
----------------------------
Outstanding at March 31, 2001 4,137,715 $19.51
============================
Exercisable at March 31, 2001 1,842,814 $18.44
============================
Granted 1,044,289 $31.60
Exercised (731,788) $17.68
Terminated (92,416) $23.03
----------------------------
Outstanding at March 30, 2002 4,357,800 $22.64
============================
Exercisable at March 30, 2002 2,100,147 $19.32
============================
Granted 843,670 $31.41
Exercised (211,338) $18.62
Terminated (234,954) $27.39
----------------------------
Outstanding at March 29, 2003 4,755,178 $24.14
============================
Exercisable at March 29, 2003 2,841,486 $20.83
============================
</TABLE>
<PAGE> 57
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
7. CAPITAL STOCK-(continued)
The following table summarizes information about stock options
outstanding at March 29, 2003:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------- ---------------------------
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Outstanding Average Exercisable Average
Exercise At Contractual Exercise At Exercise
Prices March 29, 2003 Life Price March 29, 2003 Price
- -------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
$14.4375-$18.9375 1,597,535 4.98 $16.3821 1,454,551 $16.4294
$18.9688-$30.1875 1,650,343 6.90 $24.1754 1,102,277 $23.5500
$30.3850-$35.5750 1,507,300 8.62 $32.3235 284,658 $32.7582
-------------------------------------------------------------------------
Total 4,755,178 6.80 $24.1400 2,841,486 $20.8275
=========================================================================
</TABLE>
8. RETIREMENT PLANS
Defined Contribution Plans
We have a Savings Plus Plan that is a 401(k) plan that allows our
U.S. employees to accumulate savings on a pre-tax basis. In addition,
matching contributions are made to the Plan based upon pre-established
rates. Our matching contributions amounted to approximately $1.7 million in
both 2003 and 2002, and $1.5 million in 2001. Upon Board approval,
additional discretionary contributions can also be made. No discretionary
contributions were made for the Savings Plan in 2003, 2002 or 2001.
One of our subsidiaries also has a defined contribution plan. Both
the employee and the employer make contributions to the plan. The employer
contributions to this plan were $0.6 million in 2003, 2002 and 2001.
We have no material obligation for post-retirement or post-employment
benefits.
Defined Benefit Plans
Two of our subsidiaries have defined benefit pension plans covering
substantially all full time employees at those subsidiaries. Net periodic
benefit costs for the plans in the aggregate include the following
components
<TABLE>
<CAPTION>
March 29, 2003 March 30, 2002
---------------------------------
(in thousands)
<s> <c> <c>
Service Cost $ 436 $ 350
Interest cost on benefit obligation 125 112
Expected return on plan assets 155 109
Recognized net actuarial (gain) loss (173) (172)
Amortization of unrecognized prior service cost (66) -
Amortization of unrecognized gain 20 -
Amortization of Unrecognized Initial Obligation 20 20
------------------------
$ 518 $ 419
========================
</TABLE>
<PAGE> 58
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
8. RETIREMENT PLANS-(continued)
The activity under those defined benefit plans is as follows:
<TABLE>
<CAPTION>
March 29, 2003 March 30, 2002
---------------------------------
(in thousands)
<s> <c> <c>
Change in Benefit Obligation:
Benefit Obligation, beginning of year $(3,260) $(2,867)
Service cost (436) (350)
Interest cost (125) (112)
Benefits paid 37 209
Actuarial (gain) loss (238) (240)
Currency translation (511) 101
Benefit obligation, end of year $(4,533) $(3,260)
Change in Plan Assets:
Fair value of plan assets, beginning of year $ 1,600 $ 1,619
Company contributions 419 417
Benefits paid (18) (192)
Actual loss on plan assets (155) (109)
Currency translation 171 (136)
Fair value of Plan Assets, end of year $ 2,017 $ 1,600
Funded Status $(2,516) $(1,660)
Unrecognized net actuarial loss 1,091 627
Unrecognized initial obligation 284 276
Unrecognized prior service cost (324) (355)
Net amount recognized $(1,465) $(1,112)
Amounts recognized on the balance sheet:
Prepaid pension asset $ 188 $ 34
Accrued pension liability (2,373) (1,146)
Accumulated other comprehensive items 719 -
Net amount recognized $(1,465) $(1,112)
</TABLE>
One of the benefit plans is funded through assets of the Company,
accordingly that plan has no assets included in the information presented
above. The assets of the other plan are less than the accumulated benefit
obligation.
<PAGE> 59
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
8. RETIREMENT PLANS-(continued)
The weighted average rates used to determine the net periodic benefit
costs were as follows:
<TABLE>
<CAPTION>
March 29, 2003 March 30, 2002
---------------------------------
<s> <c> <c>
Discount Rate 3.2% 3.5%
Rate of increased salary levels 1.0% 1.0%
Expected long-term rate of return on assets 1.0% 1.0%
</TABLE>
9. TRANSACTIONS WITH RELATED PARTIES
Money is lent to employees for relocation costs and other personal
purposes. The amount of these loans, which are included in other assets,
amounted to approximately $0.7 million and $0.8 million as of March 29,
2003 and March 30, 2002, respectively. These loans are payable within five
years. Certain loans are interest bearing, and interest income is recorded
on these loans when collected. Certain loans have forgiveness provisions
based upon continued service or compliance with various guidelines. The
outstanding loan balance is amortized as a charge to operating expense as
such amounts are forgiven.
10. SEGMENT, GEOGRAPHIC AND CUSTOMER INFORMATION
Segment Definition Criteria
We manage our business on the basis of one operating segment: the
design, manufacture and marketing of automated blood processing systems.
Our chief operating decision-maker uses consolidated results to make
operating and strategic decisions. Manufacturing processes, as well as the
regulatory environment in which we operate, are largely the same for all
product lines.
Product and Service Segmentation
Our principal product offerings include blood bank, red cell,
surgical and plasma collection products.
The blood bank products include machines, single use disposables and
solutions that perform "apheresis," (the separation of whole blood into its
components and subsequent collection of certain components, including
platelets and plasma), as well as the washing of red blood cells for
certain procedures. In addition, the blood bank product line includes
solutions used in non-apheresis applications. The main devices used for
these blood component therapies are the MCS(R)+ mobile collection system and
the ACP(R) 215 automated cell processing system.
Red cell products include machines and single use disposables and
solutions that perform apheresis for the collection of red blood cells.
Devices used for the collection of red blood cells are the MCS(R)+ 8150
mobile collection systems.
Surgical products include machines and single use disposables that
perform surgical blood salvage in orthopedic and cardiovascular surgical
applications. Surgical blood salvage is a procedure whereby shed blood is
collected, cleansed and made available to be transfused back to the
patient. The devices used in the surgical area are the OrthoPAT(R) and the
Cell Saver(R) autologous blood recovery systems.
<PAGE> 60
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
10. SEGMENT, GEOGRAPHIC AND CUSTOMER INFORMATION-(continued)
Plasma collection products are machines, disposables and solutions
that perform apheresis for the separation of whole blood components and
subsequent collection of plasma. The devices used in automated plasma
collection are the PCS(R)2 plasma collection system and the Superlite(TM).
Other includes revenue generated from equipment repairs performed
under preventative maintenance contracts or emergency service billings and
miscellaneous sales, including revenue from our software division, Fifth
Dimension, acquired on January 1, 2002. Fifth Dimension provides collection
and data management systems to plasma collectors.
<TABLE>
<CAPTION>
Blood Bank Red Cells Surgical Plasma Other Total
---------------------------------------------------------------------------
Years ended (in thousands)
<s> <c> <c> <c> <c> <c> <c>
March 29,2003
Revenues from external customers $110,608 $16,048 $73,255 $118,690 $18,355 $336,956
March 30, 2002
Revenues from external customers $112,186 $10,884 $72,131 $112,662 $12,106 $319,969
March 31, 2001
Revenues from external customers $113,221 $ 8,175 $68,104 $ 91,535 $12,825 $293,860
</TABLE>
<PAGE> 61
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
10. SEGMENT, GEOGRAPHIC AND CUSTOMER INFORMATION-(continued)
Geographic Segmentation
Years ended (in thousands)
<TABLE>
<CAPTION>
March 29, 2003
Other Total
United North North Other Total
States America America Japan Asia Asia Germany
----------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
Sales $127,241 $ 2,746 $129,987 $94,215 $24,654 $118,869 $30,125
Total Assets 218,704 13,245 231,949 48,343 6,866 55,209 14,028
Long-Lived
Assets 89,801 9,713 99,514 17,060 2,594 19,654 5,244
<CAPTION>
Total
United Other Total Consol-
France Kingdom Italy Austria Europe Europe idated
--------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
Sales $18,065 $3,221 $10,376 $7,000 $19,313 $88,100 $336,956
Total Assets 15,067 4,689 16,697 2,474 19,096 72,050 359,208
Long-Lived
Assets 1,699 2,377 1,846 905 4,713 16,784 135,953
<CAPTION>
March 30, 2002
Other Total
United North North Other Total
States America America Japan Asia Asia Germany
----------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
Sales $121,558 $ 2,697 $124,255 $96,559 $19,903 $116,462 $23,941
Total Assets 258,925 3,022 261,947 38,465 5,658 44,123 9,592
Long-Lived
Assets 102,465 2,599 105,064 11,553 1,574 13,127 3,451
<CAPTION>
Total
United Other Total Consol-
France Kingdom Italy Austria Europe Europe idated
--------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
Sales $ 6,517 $4,183 $ 8,763 $6,929 $18,918 $79,252 $319,969
Total Assets 11,901 5,004 11,531 2,475 18,348 58,851 364,921
Long-Lived
Assets 1,469 249 1,124 820 6,782 13,895 132,086
<CAPTION>
March 31, 2001
Other Total
United North North Other Total
States America America Japan Asia Asia Germany
----------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
Sales $ 96,555 $2,688 $99,243 $93,311 $17,865 $111,176 $23,996
Total Assets 254,455 - 254,455 31,262 5,851 37,113 9,256
Long-Lived
Assets 101,984 - 101,984 8,039 2,053 10,092 3,106
<CAPTION>
Total
United Other Total Consol-
France Kingdom Italy Austria Europe Europe idated
--------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
Sales $18,281 $7,353 $ 8,643 $6,583 $18,585 $83,441 $293,860
Total Assets 11,214 2,663 8,841 1,895 19,877 53,746 345,314
Long-Lived
Assets 1,376 - 902 596 8,094 14,074 126,150
</TABLE>
<PAGE> 62
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
11. ACQUISITIONS
Fifth Dimension
Effective January 1, 2002 we acquired Fifth Dimension Information
Systems, Inc. ("Fifth Dimension") of Edmonton Canada, for $10.4 million.
Fifth Dimension develops and markets data management software for plasma
collection centers and fractionators. The acquisition was accounted for
under the purchase method of accounting in accordance with Statement of
Financial Accounting Standards No. 141 ("SFAS No. 141"), "Business
Combinations" which requires all business combinations initiated after June
30, 2001 to be accounted for using the purchase method. Under the purchase
method, the results of operations of acquired companies are included
prospectively from the date of acquisition and the acquisition cost is
allocated to the acquirees' assets and liabilities based upon their fair
market value at the date of acquisition.
The purchase price was allocated to the net assets acquired based on
estimates of fair value at the acquisition date. An independent valuation
was performed to assess and allocate value to certain purchased tangible
assets including property, plant and equipment. The fair market value of
liabilities included in the net assets purchased was $0.4 million. No cash
was purchased. The excess of the purchase price over the fair market value
of the net assets acquired was recorded as goodwill. At March 29, 2003, the
amount of recorded goodwill is $3.0 million. Pro forma results of Fifth
Dimension's operations have not been presented because the effect of this
acquisition is not material.
A separate independent valuation was performed to assess and allocate
value to the technology and customer contracts with the acquisition. The
useful life assigned to the technology and the contracts was 6 years and 15
years respectively.
This acquisition involves potential earn-out payments based on the
acquired company reaching certain performance milestones. These payments,
if made, will be allocated to goodwill. The first milestone, in the amount
of $1.0 million, was earned as of the end of the fiscal year 2003. This
payment has been accrued as of year-end and will be made in the first
quarter of fiscal year 2004.
Pathogen Reduction Technology
In the third quarter of fiscal 2002, we paid Baxter $10.0 million to
acquire the right to integrate a new pathogen reduction technology into our
platelet collection devices after the technology receives regulatory
approvals (see note 2). The $10.0 million was expensed in our consolidated
statement of operations as acquired research and development.
Transfusion Technologies
On September 18, 2000, we acquired Transfusion Technologies
Corporation. Transfusion designs, develops and markets systems for the
processing of human blood for transfusion to patients. Its systems are
based on centrifuge technology called the Dynamic Disk TM and consist of
sterile, single-use disposable sets and computer controlled
electromechanical devices that control the blood processing procedure. The
systems have applications in both autotransfusion and blood component
collection technologies.
The aggregate purchase price, before transaction costs and cash
acquired, of approximately $50.1 million was comprised of $36.5 million to
Transfusion's common and preferred stockholders, and warrant and
<PAGE> 63
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
11. ACQUISITIONS-(continued)
option holders, and $13.6 million, representing the economic value of the
Company's 19.8% preferred stock investment in Transfusion made in November
1999. The cash required to purchase the remaining 80.2% interest in
Transfusion, was $26.6 million, net of cash acquired.
The Transfusion merger was accounted for using the purchase method of
accounting for business combinations. Accordingly, the accompanying
consolidated statement of operations includes Transfusion's results of
operations commencing on the date of acquisition. The purchase price was
allocated to the net assets acquired based on the Company's estimates of
fair value at the acquisition date. The fair market value of liabilities
included in the net assets purchased was $6.3 million. The excess of the
purchase price over the fair market value of the net assets acquired was
recorded as goodwill in the amount of $2.8 million. During the year
following the acquisition, certain adjustments were made relative to the
fair value assigned to net operating losses at the time of acquisition
resulting in goodwill being reduced to zero, and a $1.0 million reduction
of other acquired assets related to this transaction.
The final allocation of the purchase price over the fair market value
of the assets acquired is as follows:
<TABLE>
<s> <c>
Consideration Paid for 80.2% $45,046
Plus other estimated transaction costs 1,607(i)
Total estimated purchase price 46,653
Less: estimated fair value of Transfusion's identifiable
net assets on September 15, 2000 43,832
Total estimated goodwill due to acquisition $ 2,821
Gross adjustment due to a change in the valuation of
acquired net operating losses associated with the
acquisition of Transfusion recorded in September 2000 (2,821)
-------
Balance as of March 30, 2002 $ -
=======
<FN>
(i) Transaction costs primarily include professional fees, costs to close
down Transfusion's facility and severance costs.
</FN>
</TABLE>
Acquired Research and Development
Included in the purchase price allocation for the acquisition of
Transfusion was an aggregate amount of purchased in-process research and
development ("IPR&D") of $21.5 million, $18.6 million of which is reflected
in the 12 months ended March 31, 2001 consolidated statement of operations.
The values represent purchased in-process technology that had not yet
reached technical feasibility and had no alternative future use.
Accordingly, the amounts were immediately expensed in the consolidated
statement of operations.
An independent valuation was performed to assess and allocate a value
to the purchased IPR&D. The value represents the estimated fair market
value based on risk-adjusted future cash flows generated by the products
employing the in-process technology over a ten-year period. Estimated
future after-tax cash flows for
<PAGE> 64
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
11. ACQUISITIONS-(continued)
each product were based on estimates of revenue from Transfusion and
Haemonetics relative to revenue, operating expenses, income taxes, and
charges for the use of contributory assets. Additionally, these cash flows
were adjusted to compensate for the existence of any core technology and
development efforts that were to be completed post-acquisition.
Revenues were estimated based on relevant market size and growth
factors, expected industry trends, individual product sales cycles, and the
estimated life of each product's underlying technology. Estimated operating
expenses include cost of goods sold, selling, general and administrative,
and research and development ("R&D") expenses. The estimated R&D expenses
include only those costs needed to maintain the products once they have
been introduced into the market. Operating expense estimates were
consistent with expense levels for similar products.
The discount rates used to present-value the projected cash flows
were based on a weighted average cost of capital relative to Transfusion
and its industry adjusted for the product-specific risk associated with the
purchased IPR&D projects. Product-specific risk includes such factors as:
the stage of completion of each project, the complexity of the development
work completed to date, the likelihood of achieving technological
feasibility, and market acceptance.
The forecast data employed in the valuation were based upon
projections of future performance of the business by both our management
team and that of Transfusion. The inputs used in valuing the purchased
IPR&D were based on assumptions that management believes to be reasonable
but which are inherently uncertain and unpredictable. These assumptions may
be incomplete or inaccurate, and no assurance can be given that
unanticipated events or circumstances will not occur. Accordingly, actual
results may vary from the forecasted results. While we believe that all of
the development projects will be successfully completed, failure of any of
these projects to achieve technological feasibility, and/or any variance
from forecasted results, may result in a material adverse effect on our
financial condition and results of operations.
A brief description of the IPR&D projects related to the acquisition
of Transfusion, including their estimated stage of completion and
associated discount rates used in the accounting for them is outlined
below.
Chairside Separator(R). The Chairside Separator(R) is a portable,
automated device used for the donor-side collection and processing of a
single unit of whole blood into a unit of red cell concentrate and plasma.
Unlike our other red cell collection systems, the Chairside Separator(R)
does not return any blood components to the donor during a donation. The
system is designed for use in a blood center, hospital, or mobile blood
drive location and can be powered either through a standard AC outlet or by
DC battery packs. At the time of the acquisition, we estimated that the
Chairside Separator(R) project was 95% complete and that product sales
would commence by the fourth quarter of fiscal 2002. The IPR&D value
assigned to the Chairside Separator(R) was $17.6 million. A discount rate
of 33% was employed in the analysis.
We completed the clinical safety study on July 13, 2001 and submitted
the 510(k) to the Food and Drug Administration ("FDA") on September 21,
2001. The FDA has not yet approved the Chairside Separator(R) and we have
reallocated resources to speed the development of the Red Cell Collector
discussed below. We estimate the remaining cost to obtain marketing
clearance from the FDA at approximately $100,000.
<PAGE> 65
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
11. ACQUISITIONS-(continued)
Red Cell Collector ("RCC"). The RCC is a portable, automated device
used for the collection and processing of two units of red blood cells from
donors. The system collects and automatically anticoagulates a donor's
whole blood while separating it into red blood cells and plasma. The plasma
and 500 ml of saline is then re-infused back to the donor. The system is
designed for use in a blood center, hospital, or mobile blood drive
location and can be powered either through a standard AC outlet or by DC
battery packs. At the time of the acquisition, we estimated that the RCC
project was 65% complete and that product sales would commence by the
second quarter 2003. The IPR&D value assigned to the RCC was $3.9 million.
A discount rate of 33% was employed in the analysis.
As of March 29, 2003, the estimated percent completion of the RCC
project is 85%. Product sales are expected to commence in Europe during
fiscal year 2004. Estimates for cost of sales, SG&A expenses and income tax
rates relative to the RCC project remain unchanged. The majority of design,
software programming, disposable set development, and sourcing requirements
are complete. In addition, clinical trials will be conducted prior to
submission of a 510(k) to the FDA. The estimated cost to be incurred to
develop the purchased in-process RCC technology into a commercially viable
product is $1.5 million in fiscal 2004.
The following unaudited pro forma summary combines the consolidated
results of operations of Haemonetics Corporation and Transfusion as if the
acquisition had occurred as of the beginning of the fiscal year presented
after giving effect to certain adjustments including adjustments to reflect
reductions in depreciation expense, increases in intangible and goodwill
amortization expense and lost interest income. This pro forma summary is
not necessarily indicative of the results of operations that would have
occurred if Haemonetics and Transfusion had been combined during such
periods. Moreover, the pro forma summary is not intended to be indicative
of the results of operations to be attained in the future.
<TABLE>
<CAPTION>
Twelve Months Ended March 31, 2001
----------------------------------------------------------------------------
<s> <c>
Net revenues $295,236
Operating income 26,457
Income from continuing operations 21,680
Basic and diluted income per common share from continuing
operations:
Basic $ 0.857
Diluted $ 0.834
Weighted average number of common shares outstanding:
Basic 25,299
Diluted 26,005
</TABLE>
Unusual charges expensed in the 12 months ended March 31, 2001
resulting from the acquisition of Transfusion amounted to $4.6 million.
Included in the unusual charges were $2.8 million in bonuses paid to key
Transfusion executives hired by Haemonetics and severance to Haemonetics
employees laid off due to overlaps created by the merger, a $0.5 million
write-off of an investment in a technology which we decided not to pursue
<PAGE> 66
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
11. ACQUISITIONS-(continued)
in lieu of the technologies acquired in the merger, and the adjustment
required to modify our 19.8% investment of Transfusion in November 1999
from the cost method to the equity method of accounting as required by
generally accepted accounting principles.
Plasma collection bottle plant
In January 2001, we purchased the assets of Alpha Therapeutic
Corporation's ("Alpha") Compton, California plasma collection bottle plant
for $8.3 million. Cash of $7.5 million was paid to Alpha with $0.8 million
held in escrow. The disposable plastic bottles made at the plant are used
by many of the Company's existing U.S. Commercial Plasma customers. As part
of the transaction, a long-term, exclusive supply agreement was signed for
us to supply to Alpha plasma collection bottles and 4% Sodium Citrate
anticoagulant solutions that are used in each plasma collection. The asset
purchase was accounted for using the purchase method of accounting for
business combinations. Accordingly, the purchase price was allocated to the
net assets acquired based on the estimates of fair value at the acquisition
date. An independent valuation was performed to assess and allocate value
to certain purchased tangible assets including property, plant and
equipment. A separate independent valuation was performed to assess and
allocate value to the customer base purchased in conjunction with the
acquisition. This intangible asset is being amortized over 15 years. At
March 31, 2001, the excess of the purchase price over the fair market value
of the net assets acquired was recorded as goodwill in the amount of $0.7
million. During the year ended March 30, 2002, an adjustment was recorded
to accrue costs associated with the shutdown of the Compton, California
manufacturing facility. The impact was an increase to goodwill of $1.1
million. The goodwill is no longer being amortized in accordance with SFAS
No. 142.
<PAGE> 67
HAEMONETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
12. SUMMARY OF QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------------------------------------------
<s> <c> <c> <c> <c>
Fiscal year ended March 29, 2003:
Net revenues $81,935 $87,025 $87,115 $80,881
Gross profit 38,647 38,890 40,941 36,218
Operating income 9,692 9,826 11,822 6,139
Net income 6,775 6,780 10,347 4,477
Share data:
Net Income:
Basic $ 0.27 $ 0.28 $ 0.43 $ 0.19
Diluted $ 0.26 $ 0.27 $ 0.42 $ 0.18
Fiscal year ended March 30, 2002:
Net revenues $75,801 $80,704 $84,411 $79,053
Gross profit 36,311 39,801 41,235 37,487
Operating income 9,532 12,954 2,806 11,156
Income before cumulative effect of change in accounting
principle 7,640 9,948 2,432 7,693
Cumulative effect of change in accounting principle, net of tax (a) 2,304 - - -
Net income 9,944 9,948 2,432 7,693
Share data:
Income before cumulative effect of change in accounting principle
Basic $ 0.29 $ 0.38 $ 0.09 $ 0.29
Diluted $ 0.28 $ 0.37 $ 0.09 $ 0.29
Net Income:
Basic $ 0.38 $ 0.38 $ 0.09 $ 0.30
Diluted $ 0.37 $ 0.37 $ 0.09 $ 0.29
<FN>
a) Effective April 1, 2001, the Company adopted SFAS 133, as amended,
which resulted in the recognition of $2.3 million as a cumulative
effect of a change in accounting principle, net of tax. This amount
is the change in the fair value of forward contracts related to
forward points, which the Company excludes from its assessment of
hedge effectiveness (see Note 2 to the consolidated financial
statements for further discussion).
</FN>
</TABLE>
<PAGE> 68
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Haemonetics Corporation:
We have audited the accompanying consolidated balance sheet of Haemonetics
Corporation (a Massachusetts corporation) and its subsidiaries as of March
29, 2003, and the related consolidated statements of operations,
stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits. The consolidated financial statements of Haemonetics
Corporation as of March 30, 2002 and for the years ended March 30, 2002 and
March 31, 2001 were audited by other auditors who have ceased operations
and whose report dated April 22, 2002 expressed an unqualified opinion on
those statements.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Haemonetics
Corporation and its subsidiaries as of March 29, 2003, and the results of
their operations and their cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United States.
S/ERNST & YOUNG, LLP
Boston, Massachusetts
April 22, 2003
<PAGE> 69
THE FOLLOWING REPORT IS A COPY OF THE REPORT PREVIOUSLY ISSUED BY ARTHUR
ANDERSEN LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.
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 its subsidiaries as of March
30, 2002 and March 31, 2001, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years
in the period ended March 30, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 its subsidiaries as of March 30, 2002 and March 31, 2001, and the
results of their operations and their cash flows for each of the three
years in the period ended March 30, 2002, in conformity with accounting
principles generally accepted in the United States.
As explained in Note 2 to the financial statements, effective April 1,
2001, the Company changed its method of accounting for derivative
instruments and hedging activities in accordance with Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities."
S/ARTHUR ANDERSEN
Boston, Massachusetts
April 22, 2002
<PAGE> 70
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
In April 2002, we changed our independent accountants as reported in
our Current Report on Form 8-K dated June 18, 2002.
Our consolidated financial statements for each of the two fiscal
years ended March 30, 2002 and March 31, 2001, were audited by Arthur
Andersen, LLP, independent accountants. On August 31, 2002, Arthur Andersen
ceased practicing before the SEC. Therefore, Arthur Andersen did not
participate in the preparation of this Form 10-K, did not reissue its audit
report with respect to the financial statements included in this Form 10-K,
and did not consent to the inclusion of its audit report in the Form 10-K.
As a result holders of our securities may have no effective remedy against
Arthur Andersen in connection with a material misstatement or omission in
the financial statements to which its audit report relates. In addition,
even if such holders were able to assert such a claim, because it has
ceased operations, Arthur Andersen may fail or otherwise have insufficient
assets to satisfy claims made by holders of our securities that might arise
under federal securities laws or otherwise with respect to Arthur
Andersen's audit report.
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, 2003.
(b) The information concerning the Executive Officers of the
Company is set forth at the end of Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference in
our Proxy Statement for the Annual Meeting to be held July 22, 2003.
<PAGE> 71
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item concerning security ownership
of certain beneficial owners and management is incorporated by reference to
the Company's Proxy Statement for the Annual Meeting to be held July 22,
2003.
Stock Plans
The following table below sets forth information as of March 29, 2003
with respect to compensation plans under which equity securities of the
Company are authorized for issuance.
<TABLE>
<CAPTION>
(a) (b) (c)
Number of securities
Number of securities Weighted average available for future
to be issued upon exercise price of issuance under equity
exercise of outstanding compensation plans
outstanding options, options, warrants (excluding securities
Plan Category warrants and rights and rights reflected in column (a)) (1)
- ----------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Equity Compensation Plans approved by
security holders 4,755,178 $24.14 1,869,653
Equity compensation plans not approved
by security holders - - -
Total 4,755,178 $24.14 1,869,653
<FN>
(1) Includes 261,877 shares available for purchase under the Employee
Stock Purchase Plan.
</FN>
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
ITEM 14. CONTROLS AND PROCEDURES
Within the ninety day period prior to the date of this report, we
conducted an evaluation under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial
Officer (our principal executive officer and principal financial officer,
respectively) regarding the effectiveness of the design and operation of
our disclosure controls and procedures as defined in Rule 13a-14 of the
Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective to
ensure that material information relating to our Company, including our
consolidated subsidiaries, is made known to them by others within those
entities.
There were no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent
to the date we carried out our evaluation.
<PAGE. 72
PART IV
ITEM 15. 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 Statements of Operations 32
Consolidated Balance Sheets 33
Consolidated Statements of Stockholders' Equity 34
Consolidated Statements of Cash Flows 35
Notes to Consolidated Financial Statements 36
Report of Independent Public Accountants 69
Schedules required by Article 12 of Regulation S-X
II Valuation and Qualifying Accounts 81
All other schedules have been omitted because they are not applicable
or not required.
(b) Reports on Form 8-K
Registrant filed a Report on Form 8-K dated June 18, 2002 reporting a
change in the Company's certifying accountant.
Registrant filed a Report on Form 8-K dated October 22, 2002
announcing the retirement of the current Chairman of the Board of Directors
and the selection of his successor.
(c) Exhibits required by Item 601 of Regulation S-K are listed in the
Exhibit Index at page 77, which is incorporated herein by reference.
<PAGE> 73
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/ Brad Nutter
-------------------------------
Brad Nutter, President
and Chief Executive Officer
Date: June 6, 2003
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.
<TABLE<
<CAPTION>
Signature Title Date
- --------------------------------------------------------------------------------------------
<s> <c> <c>
/s/ Ronald Matricaria Chairman of the Board June 6, 2003
- -------------------------------
Ronald Matricaria
/s/ Sir Stuart Burgess Director June 6, 2003
- -------------------------------
Sir Stuart Burgess
/s/ Brad Nutter President and Chief Executive Officer, June 6, 2003
- ------------------------------- Director (Principal Executive Officer)
Brad Nutter
/s/ Ronald J. Ryan Sr. Vice President June 6, 2003
- ------------------------------- and Chief Financial Officer,
Ronald J. Ryan (Principal Financial Officer)
/s/ Susan M. Hanlon Vice President and Corporate Controller June 6, 2003
- ------------------------------- (Principal Accounting Officer)
Susan M. Hanlon
/s/ Yutaka Sakurada Vice President Haemonetics Corp. June 6, 2003
- ------------------------------- and President, Haemonetics Japan
Yutaka Sakurada Director
/s/ Benjamin L. Holmes Director June 6, 2003
- -------------------------------
Benjamin L. Holmes
/s/ Donna C. E. Williamson Director June 6, 2003
- -------------------------------
Donna C. E. Williamson
/s/ N. Colin Lind Director June 6, 2003
- -------------------------------
N. Colin Lind
/s/ Harvey G. Klein M.D. Director June 6, 2003
- -------------------------------
Harvey G. Klein M.D.
/s/ Ronald G. Gelbman Director June 6, 2003
- -------------------------------
Ronald G. Gelbman
</TABLE>
<PAGE> 74
CERTIFICATION
I, Brad Nutter, President and Chief Executive Officer of Haemonetics
Corporation, certify that:
1. I have reviewed this annual report on Form 10-K of Haemonetics
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: June 6, 2003
s/Brad Nutter
------------------------------------
Brad Nutter, President and
Chief Executive Officer (Principal
Executive Officer)
<PAGE. 75
CERTIFICATION
I, Ronald J. Ryan, Senior Vice President and Chief Financial Officer of
Haemonetics Corporation, certify that:
1. I have reviewed this annual report on Form 10-K of Haemonetics
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: June 6, 2003
s/Ronald J. Ryan
------------------------------------
Ronald J. Ryan, Senior Vice
President and Chief Financial
Officer (Principal Financial
Officer)
<PAGE> 76
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* 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).
3D By-Laws of the Company, as amended May 1, 2001.
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* 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).
10D* 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).
10E* 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).
10F* 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).
10G* 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).
10H* 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).
10I* 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).
10J* 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).
10K* 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).
<PAGE> 77
10L* 1992 Long-Term Incentive Plan (filed as Exhibit 10V to the
Company's Form 10-K No. 1-10730 for the year ended April 3,
1993 and incorporated herein by reference).
10M* 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).
10N* 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).
10O* 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).
10P* 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 April 3, 1993 and incorporated
herein by reference).
10Q* Note Purchase agreement 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).
10R* 1998 Employee Stock Purchase Plan (filed as Exhibit 10Z to the
Company's Form 10-K No. 1-10730 for the year ended March 28,
1998 and incorporated herein by reference).
10S* 1998 Stock Option Plan for Non-Employee Directors. (filed as
Exhibit 10AA to the Company's Form 10-K No. 1-10730 for the
year ended March 28, 1998 and incorporated herein by
reference).
10T* Lease, dated July 29, 1997 between New Avon Limited Partnership
and the Company for the property in Avon, Massachusetts (filed
as Exhibit 10AB to the Company's Form 10-K No. 1-10730 for the
year ended March 28, 1998 and incorporated herein by
reference).
10U* Agreement on Bank Transactions between Haemonetics Corporation
and the Bank of Tokyo-Mitsubishi, Ltd. dated February 14, 1985
(filed as Exhibit 10AA to the Company's Form 10-K No. 1-10730
for the year ended April 3, 1999 and incorporated herein by
reference).
10V* Agreement and Plan of Merger dated September 4, 2000 between
Haemonetics Corporation and Transfusion Technologies
Corporation (filed as Exhibit 2.1 to the Company's Form 8-K No.
1-14041 dated September 29, 2000 and incorporated herein by
reference).
10W* Amendment dated September 29, 2000 to the 7.05% Senior Notes
Plan (filed as Exhibit 10A to the Company's Form 10-Q No. 1-
10730 for the quarter ended September 30, 2000).
10X* Haemonetics Corporation 2000 Long-term Incentive Plan (filed as
Exhibit 10A to the Company's Form 10-Q No. 1-10730 for the
quarter ended December 30, 2000).
10Y* Note and Mortgage dated December 12, 2000 between the Company
and General Electric Capital Business Asset Funding Corporation
relating to the Braintree facility (filed as Exhibit 10B to the
Company's Form 10-Q No. 1-10730 for the quarter ended December
30, 2000).
10Z* Amendment No. 3 to Lease dated July 3, 1991 between Wood Road
Associates II Limited Partnership and the Company, dated April
1, 1997 (filed as Exhibit 10AA to the Company's Form 10-K No.
1-10730 for the year ended March 30, 2002.)
10AA* Amendment No. 4 to Lease dated July 3, 1991 between Wood Road
Associates II Limited Partnership, as assigned to Trinet
Essential Facilities XXIX, Inc., effective June 18, 1998, and
the Company, dated February 25, 2002. (filed as Exhibit 10AB to
the Company's Form 10-K No. 1-10730 for the year ended March
30, 2002.)
10AB* Employment Agreement between the Company and Ronald J. Ryan.
(filed as Exhibit 10.2 to the Company's Form 10-Q No. 1-10730
for the quarter ended June 29, 2002.)
10AC* Employment Agreement between the Company and Stephen C. Swenson
(filed as Exhibit 10.3 to the Company's Form 10-Q No. 1-10730
for the quarter ended June 29, 2002.)
10AD* Employment Agreement between the Company and Thomas D. Headley
(filed as Exhibit 10.5 to the Company's Form 10-Q No. 1-10730
for the quarter ended June 29, 2002.)
10AE Employment agreement between Brad Nutter and Haemonetics
Corporation dated April 1, 2003.
<PAGE> 78
10AF First Amendment of lease dated July 29, 1997 between New Avon
Limited Partnership and the Company for the property in Avon,
Massachusetts.
10AG Second Amendment to lease dated July 17, 1990 between Buncher
Company and the Company for the property in Pittsburgh,
Pennsylvania.
10AH Form of Option Agreements for Non-Qualified stock options for
the 1992 Long-Term Incentive Plan for Employees.
10AI Form of Option Agreements for Non-Qualified stock options for
the 1998 Stock Option Plan for Non-Employee Directors.
10AJ Form of Option Agreement for Non-Qualified stock options for
the 2000 Long Term-Incentive Plan for Employees.
10AK Form of Option Agreements for Non-Qualified stock options for
the 2000 Long-Term Incentive Plan for Non-Employee Directors.
10AL Employment Agreement between the Company and Robert Ebbeling.
21 Subsidiaries of the Company.
23.1 Consent of the Independent Public Accountants, Ernst &
Young LLP.
23.2 Consent of the Independent Public Accountants, Arthur
Andersen LLP.
99.1 Certification Pursuant to 18 United States Code Section 1350,
as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, of Brad Nutter, President and Chief Executive Officer of
the Company.
99.2 Certification Pursuant to 18 United States Code Section 1350,
as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, of Ronald J. Ryan, Senior Vice President and Chief
Financial Officer of the Company.
(All other exhibits are inapplicable.)
* Incorporated by reference.
<PAGE> 79
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
SUPPLEMENTAL SCHEDULE TO THE CONSOLIDATED FINANCIAL STATEMENTS
Our audit was conducted for the purpose of forming an opinion on the
financial statements taken as a whole. Financial statements for the years
ended March 30, 2002 and March 31, 2001 were audited by other auditors who
have ceased operations. The schedule listed in the index in item 15(a) is
the responsibility of Company's management and is presented for purposes of
complying with disclosures required by the Securities and Exchange
Commission's rules and is not a required part of the financial statements.
Such information, except for that pertaining to the years ended March 30,
2002 and March 31, 2001, on which other auditors have expressed an
unqualified opinion, has been subjected to the auditing procedures applied
to our audit of the basic financial statements for the year ended March 29,
2003 and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
S/ERNST & YOUNG, LLP
Boston, Massachusetts
April 22, 2003
<PAGE> 80
SCHEDULE II
HAEMONETICS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
<TABLE>
<CAPTION>
Balance at Charged to Charged to Write-Offs Balance
Beginning of Costs and Other (Net of at End
Period Expenses Accounts Recoveries) of Period
------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
For Year Ended March 29, 2003
Allowance for Doubtful Accounts $1,298 $149 $ - $ 2 $1,449
Purchase Accounting Reserves $ 44 $ 44 $ - - -
For Year Ended March 30, 2002
Allowance for Doubtful Accounts $1,233 $198 $ - $ (133) $1,298
Purchase Accounting Reserves $ 601 $ - $1,139 $(1,696) $ 44
For the Year Ended March 31, 2001
Allowance for Doubtful Accounts $1,149 $279 $ - $ (195) $1,233
Purchase Accounting Reserves $ - $ - $2,661 $(2,060) $ 601
</TABLE>
<PAGE> 81
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>3
<FILENAME>hae-3d.txt
<DESCRIPTION>EXHIBIT 3
<TEXT>
EXHIBIT 3D
As amended through 5/1/01
BY-LAWS
-------
of
--
HAEMONETICS CORPORATION
-----------------------
ARTICLE I
---------
Articles of Organization
------------------------
The name and purposes of the Corporation shall be as set forth in the
Articles of Organization. These By-Laws, the powers of the Corporation and
of its Directors and stockholders, and all matters concerning the conduct
and regulation of the business of the Corporation shall be subject to such
provisions in regard thereto, if any, as are set forth in the Articles of
Organization; and the Articles of Organization, as from time to time
amended, are hereby made a part of these By-Laws. All references in these
By-Laws to the Articles of Organization shall be construed to mean the
Articles of Organization of the Corporation as from time to time amended.
ARTICLE II
----------
Annual Meeting of Stockholders
------------------------------
The annual meeting of the stockholders shall be held at 10:00 A.M. on
the fourth Friday in July in each year, if not a legal holiday, and, if a
legal holiday, then on the next secular day following, or at such other
date and time within six months after the end of the Corporation's fiscal
year as shall be designated from time to time by the Board of Directors,
the Chairman of the Board or the President and stated in the notice of the
meeting. Purposes for which an Annual Meeting is to be held, additional to
those prescribed by law and these By-Laws, may be specified by the
President or by the Directors.
If such Annual Meeting has not been held as herein provided, a
Special Meeting of the Stockholders in Lieu of the Annual Meeting may be
held, and any business transacted or elections held at such Special Meeting
shall have the same effect as if transacted or held at the Annual Meeting,
and in such case all references to these By-Laws, except in this Article
II, to the Annual Meeting of the Stockholders shall be deemed to refer to
such Special Meeting. Any such Special Meeting shall be called, and the
purposes thereof shall be specified in the Call, as provided in Article III
of these By-Laws.
<PAGE>
To be properly brought before the meeting, business must be of a
nature that is appropriate for consideration at an Annual Meeting and must
be (i) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors, (ii) otherwise properly
brought before the meeting by or at the direction of the Board of
Directors, or (iii) otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for
business to be properly brought before the Annual Meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Clerk of the Corporation. To be timely, each such notice must be given
either by personal delivery or by United States mail, postage prepaid, to
the Clerk of the Corporation not later than (1) with respect to a matter to
be brought before an Annual Meeting of Stockholders or a Special Meeting in
Lieu of an Annual Meeting, sixty (60) days prior to the date set forth in
the By-Laws for the Annual Meeting and (2) with respect to a matter to be
brought before a Special Meeting of the Stockholders not in lieu of an
Annual Meeting, the close of business on the tenth day following the date
on which notice of such meeting is first given to stockholders. The notice
shall set forth (i) information concerning the stockholder, including his
or her name and address, (ii) a representation that the stockholder is
entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to present the matter specified in the notice, and
(iii) such other information as would be required to be included in a proxy
statement soliciting proxies for the presentation of such matter to the
meeting.
Notwithstanding anything in these By-Laws to the contrary, no
business shall be transacted at the Annual Meeting except in accordance
with the procedures set forth in this section; provided, however, that
nothing in this section shall be deemed to preclude discussion by any
stockholder of any business properly brought before the Annual Meeting in
accordance with these By-Laws.
ARTICLE III
-----------
Special Meetings of Stockholders
--------------------------------
A Special Meeting of the Stockholders may be called at any time by
the President, or by a majority of the Directors acting by vote or by
written instrument or instruments signed by them. A Special Meeting of
Stockholders shall be called by the Clerk, or in the case of the death,
absence, incapacity or refusal of the Clerk, by any other officer, upon
written application of one or more stockholders who hold in the aggregate
at least forty percent (40%) in interest of the stock entitled to vote at
the meeting. Such Call shall state the time, place, and purposes of the
meeting.
ARTICLE IV
----------
Place of Stockholders' Meetings
-------------------------------
All meetings of the stockholders shall be held at the principal
office of the Corporation in Massachusetts, unless a different place within
Massachusetts or, if permitted by the Articles of Organization, elsewhere
within the United States is designated by the Chairman of the Board of
Directors, the President, or by a majority of the Directors acting by vote
or by written instrument
<PAGE> 2
or instruments signed by them. Any adjourned session of any meeting of the
stockholders shall be held at such place within Massachusetts or, if
permitted by the Articles of Organization, elsewhere within the United
States as is designated in the vote of adjournment.
ARTICLE V
---------
Notice of Stockholders' Meetings
--------------------------------
A written Notice of the place, date and hour of all meetings of
stockholders stating the purposes of the meeting shall be given at least
seven (7) days before the meeting to each stockholder entitled to vote
thereat, by leaving such Notice with him or at his residence or usual place
of business, or by mailing, postage prepaid, and addressed to such
stockholder at his address as it appears in the records of the Corporation.
Such Notice shall be given by the Clerk, or in the case of the death,
absence, incapacity or refusal of the Clerk, by any other officer or by a
person designated either by the Clerk, by the person or persons calling the
meeting or by the Board of Directors. Whenever Notice of a meeting is
required to be given a stockholder under any provision of law, of the
Articles of Organization, or of these By-Laws, a written Waiver thereof,
executed before or after the meeting by such stockholder or his attorney
thereunto authorized, and filed with the records of the meeting, shall be
deemed equivalent to such Notice.
ARTICLE VI
----------
Quorum of Stockholders
----------------------
At any meeting of the stockholders, a quorum for the election of any
Director or for the consideration of any question shall consist of a
majority in interest of all stock issued, outstanding and entitled to vote
at such election or upon such question, respectively, except that if two or
more classes of stock are entitled to vote as separate classes for the
election of any Director or upon any question, then in the case of each
such class a quorum for the election of any Director or for the
consideration of such question shall consist of a majority in interest of
all stock of that class issued, outstanding and entitled to vote thereon.
Stock owned by the Corporation, if any, except stock held directly or
indirectly by it in a fiduciary capacity, shall be disregarded in
determining any quorum. Whether or not a quorum is present, any meeting may
be adjourned from time to time by a majority of the votes properly cast
upon the question, and the meeting may be held as adjourned without further
notice.
When a quorum for an election is present at any meeting, a plurality
of the votes properly cast for any office shall elect such office. When a
quorum for the consideration of a question is present at any meeting, a
majority of the votes properly cast upon the question shall decide the
question; except that if two or more classes of stock are entitled to vote
as separate classes upon such question, then in the case of each such class
a majority of the votes of such class properly cast upon the question shall
decide the vote of that class upon the question; and except in any case
where a larger vote is required by law, by the Articles of Organization or
by these By-Laws.
<PAGE> 3
ARTICLE VII
-----------
Proxies and Voting
------------------
Except as may otherwise be provided in the Articles of Organization,
stockholders entitled to vote shall have one vote for each share of stock
entitled to vote owned by them. Stockholders entitled to vote may vote in
person or by proxy. Except as otherwise provided by law, no proxy dated
more than six (6) months before the meeting named therein shall be valid
and no proxy shall be valid after the final adjournment of such meeting. A
proxy with respect to stock held in the name of two or more persons shall
be valid if executed by any one of them unless at or prior to the exercise
of the proxy the Corporation receives specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a stockholder shall be deemed valid unless challenged at or prior
to its exercise and the burden of proving invalidity shall rest on the
challenger. Proxies shall be filed with the Clerk, or person performing the
duties of clerk, at the meeting, or any adjournment thereof, before being
voted.
The Corporation shall not, directly or indirectly, vote upon any
share of its own stock; but nothing herein shall be construed as limiting
the right of the Corporation to vote shares of stock held directly or
indirectly by it in a fiduciary capacity.
Any action required or permitted to be taken at any meeting of the
stockholders may be taken without a meeting if all stockholders entitled to
vote on the matter consent to the action in writing and the written
Consents are filed with the records of the meetings of stockholders. Such
Consents shall be treated for all purposes as a vote at a meeting.
The Chairman of the Board, or in his absence the President, or in
absence of both the Chairman of the Board and the President, a Vice-
President shall call meetings of the stockholders to order and shall act as
chairman thereof. The Clerk of the Corporation, if present, shall record
the proceedings of all meetings of stockholders and, in the absence of the
Clerk, the presiding officer may appoint a clerk pro tempore of the
meeting.
ARTICLE VIII
------------
Board of Directors
------------------
The business and affairs of this Corporation shall be managed under
the direction of a Board of Directors consisting of not fewer than three
(3) nor more than eight (8) Directors, the exact number to be determined
from time to time by resolution adopted by the affirmative vote of a
majority of the entire Board of Directors, such Board of Directors to be
divided into such classes and elected by such stockholders as have the
right to vote thereon, for such terms as are provided in the Articles of
Organization. Each Director shall hold office until his successor shall
have been elected and qualified subject to Article XVIII of these By-Laws.
Whenever used in these By-Laws, the phrase "entire Board of Directors"
shall mean that number of Directors fixed by the most recent resolution
adopted pursuant to the preceding sentence prior to the date as of which a
determination of the number of Directors then constituting the entire Board
of Directors shall be relevant for any purpose under these By-Laws.
Subject to the foregoing limitations and
<PAGE> 4
the requirements of the Articles of Organization, the Board of Directors
may be enlarged by the stockholders at any meeting or by the affirmative
vote of a majority of the entire Board of Directors then in office.
Nominations for the election of Directors may be made by the Board of
Directors or a committee appointed by the Board of Directors or by any
stockholder entitled to vote generally in the election of Directors.
However, any stockholder entitled to vote generally in the election of
Directors may nominate one or more persons for election as Directors at a
meeting only if written notice of such stockholder's intent to make such
nomination or nominations has been given, either by personal delivery or by
United States mail, postage prepaid, to the Clerk of the Corporation not
later than (1) with respect to an election to be held at an Annual Meeting
of Stockholders or at a Special Meeting in Lieu of an Annual Meeting, sixty
(60) days prior to the date for the Annual Meeting set forth in the By-Laws
and (2) with respect to an election to be held at a Special Meeting of
Stockholders not in lieu of an Annual Meeting, the close of business on the
tenth (10th) day following the date on which notice of such meeting is
first given to stockholders. Each such notice to the Clerk shall set forth
(i) the names and addresses of the stockholder and his or her nominees;
(ii) a representation that the stockholder is entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (iii) a description
of all arrangements or understandings between the stockholder and each such
nominee; (iv) such other information as would be required to be included in
a proxy statement soliciting proxies for the election of the nominees of
such stockholder; and (v) the consent of each nominee to serve as a
Director of the Corporation if so elected. The Corporation may require any
proposed nominee to furnish such other information as may reasonably be
required by the Corporation to determine the eligibility of such proposed
nominee to serve as a Director of the Corporation. The presiding officer of
the meeting may, if the facts warrant, determine that a nomination was not
made in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective nomination
shall be disregarded.
No Director need be a stockholder. Any election of Directors by the
stockholders shall be by ballot if so requested by any stockholder entitled
to vote thereon.
ARTICLE IX
----------
Powers of Directors
-------------------
The business of the Corporation shall be managed by the Board of
Directors, which shall exercise all the powers of the Corporation except as
otherwise required by law, by the Articles of Organization or by these By-
Laws. In the event of one or more vacancies in the Board of Directors, the
remaining Directors, if at least two (2) Directors still remain in office,
may exercise the powers of the full Board until such vacancy or vacancies
are filled.
Any unissued capital stock from time to time authorized under the
Articles of Organization and Amendments thereto may be issued, and any
shares of capital stock restored to the status of authorized but unissued
stock may be reissued, by vote of the Directors. No stock shall be issued
unless the cash, so far as due, or the property, services or expenses for
which it
<PAGE> 5
was authorized to be issued, has been actually received or incurred by, or
conveyed or rendered to, the Corporation, or is in its possession as
surplus.
ARTICLE X
---------
Committees of Directors
-----------------------
By vote of a majority of the Directors then in office, the Directors
may elect from their own number an Executive Committee or other Committees
and may by like vote delegate to any such Committee some or all of their
powers except those which by law may not be delegated.
ARTICLE XI
----------
Meetings of the Board of Directors;
-----------------------------------
Action without a Meeting
------------------------
Regular meetings of the Board of Directors may be held without call
or notice at such places and at such times as the Board may from time to
time determine; provided, however, that reasonable notice of such
determination and of any changes therein is given to each member of the
Board then in office. A regular meeting of the Board of Directors may be
held without call or notice immediately after and at the same place as the
Annual Meeting of Stockholders, or any Special Meeting held in lieu
thereof.
Special meetings of the Board of Directors may be held at any time
and at any place when called by the President, the Treasurer, the Chairman
of the Board, or two or more Directors, reasonable notice thereof being
given to each Director by the Secretary, or, if there be no Secretary, by
the Clerk, or in the case of death, absence, incapacity or refusal of the
Secretary (or the Clerk, as the case may be), by the officer or Directors
calling the meeting. In any case, it shall be deemed sufficient notice to a
Director to send notice by mail at least forty-eight (48) hours, or by
telegram or by facsimile transmission at least twenty-four (24) hours,
before the meeting, addressed to him at his usual or last known business or
residence address; or to give notice to him in person, either by telephone
or by handing him a written notice, at least twenty-four (24) hours before
the meeting.
Notwithstanding the foregoing, notice of a meeting need not be given
to any Director if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any
Director who attends the meeting without protesting prior thereto, or at
its commencement, the lack of notice to him. A notice of a meeting or a
waiver of notice need not specify the purposes of the meeting.
Any action required or permitted to be taken at any meeting of the
Directors may be taken without a meeting if a written consent thereto is
signed by all the Directors and such written consent is filed with the
records of the meetings of the Directors. Such consent shall be treated as
a vote at a meeting for all purposes. Such consents may be executed in one
or more counterparts and not every Director need sign the same counterpart.
<PAGE> 6
Members of the Board of Directors or any committee designated thereby
may participate in a meeting of such Board or committee by means of a
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at the same
time and participation by such means shall constitute presence in person at
a meeting.
ARTICLE XII
-----------
Quorum of Directors
-------------------
At any meeting of the Board of Directors, a quorum for any election,
or for the consideration of any question, shall consist of a majority of
the Directors then in office, but any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice. When a quorum is present at any meeting, the votes of a majority of
the Directors present shall be requisite and sufficient for election to any
office, and a majority of the Directors present shall decide any question
brought before such meeting, except in any case where a larger vote is
required by law, by the Articles of Organization or by these By-Laws.
ARTICLE XIII
------------
Officers and Agents
-------------------
The officers of the Corporation shall be a President, a Chairman of
the Board, a Treasurer, a Clerk, and such other officers, which may include
a Secretary, a Controller, one or more Vice Presidents, Assistant
Treasurers, Assistant Clerks, or Assistant Controllers, as the Board of
Directors may, in its discretion, elect or appoint. The Corporation may
also have such agents, if any, as the Board of Directors may, in its
discretion, appoint. The President need not be a Director. The Clerk shall
be a resident of Massachusetts unless the Corporation has a resident agent
appointed for the purpose of receiving service of process. So far as is
permitted by law, any two or more offices may be held by the same person.
Subject to law, to the Articles of Organization and the other
provisions of these By-Laws, each officer shall have, in addition to the
duties and powers herein set forth, such duties and powers as are commonly
incident to his office and as the Board of Directors may from time to time
designate.
The President, Chairman of the Board, Treasurer and Clerk (and the
Secretary, if, as the case may be, there be one) shall be elected annually
by the Board of Directors at its first meeting following the Annual Meeting
of Stockholders, by vote of a majority of the full Board of Directors.
Such other officers of the Corporation as may be created in accordance with
these By-Laws may be filled at such meeting by vote of a majority of the
full Board of Directors or any other time by vote of a majority of the
Directors then in office.
Each officer shall (subject to Article XVIII of these By-Laws) hold
office until the first meeting of the Board of Directors following the next
Annual Meeting of Stockholders and until his successor is elected or
appointed and qualified, or until he sooner dies, resigns, is removed, or
<PAGE> 7
becomes disqualified. Each agent shall retain his authority at the pleasure
of the Board of Directors.
Any officer, employee, or agent of the Corporation may be required,
as and if determined by the Board of Directors, to give bond for the
faithful performance of his duties.
Notwithstanding the foregoing, and without limiting the powers of the
Board of Directors set forth above, the President shall have the authority
to appoint from time to time one or more Vice Presidents. Any Vice
President appointed by the President shall hold office until his successor
is appointed or until he sooner dies, resigns, is removed or becomes
disqualified. The President or the Directors may remove from office any
Vice President appointed by the President, with or without assignment of
cause.
ARTICLE XIV
-----------
President and Vice Presidents; Chairman of the Board
----------------------------------------------------
The Chairman of the Board shall be a member of the Board of Directors
and shall preside at its meetings and at the meetings of the stockholders.
He shall advise and counsel with the President. The Chairman of the Board
shall be the Chief Executive Officer of the Corporation and shall have
general charge and supervision of the business, property and affairs of the
Corporation and such other powers and duties as the Board of Directors may
prescribe, subject to the control of the Board of Directors, unless
otherwise provided by law, the Articles of Organization, these By-Laws or
by specific vote of the Board of Directors.
The President shall have such duties and powers as shall be
designated from time to time by the Board of Directors or by the Chairman,
and, in any case, shall be responsible to and shall report to the Board of
Directors. In the absence or disability of the Chairman, the President
shall have the powers and duties of the Chairman.
Any Vice President shall have such duties and powers as shall be
designated from time to time by the Board of Directors or by the President,
and, in any case, shall be responsible to and shall report to the
President. In the absence or disability of the President, the Vice
President or, if there be more than one, the Vice Presidents in the order
of their seniority or as otherwise designated by the Board of Directors,
shall have the powers and duties of the President.
ARTICLE XV
----------
Treasurer and Assistant Treasurer
---------------------------------
The Treasurer may be the Chief Financial Officer of the Corporation
or any other person elected by the Board of Directors, and shall be in
charge of its funds and the disbursements thereof, subject to the President
and the Board of Directors, and shall have such duties and powers as are
commonly incident to the office of a corporate treasurer and such other
duties and powers as may be prescribed from time to time by the Board of
Directors or the President, or if the Treasurer is other than the Chief
Financial Officer, then by the Chief Financial Officer. If no
<PAGE> 8
Controller is elected, the Treasurer shall also have the duties and powers
of the Controller as provided in these By-Laws. The Treasurer shall be
responsible to and shall report to the Board of Directors, but in the
ordinary conduct of the Corporation's business, shall be under the
supervision of the President, or if the Treasurer is not the Chief
Financial Officer, shall be under the supervision of the Chief Financial
Officer.
Any Assistant Treasurer shall have such duties and powers as shall be
prescribed from time to time by the Board of Directors or by the Treasurer,
and shall be responsible to and shall report to the Treasurer. In the
absence or disability of the Treasurer, the Assistant Treasurer or, if
there be more than one, the Assistant Treasurers, in their order of
seniority or as otherwise designated by the Board of Directors shall have
the powers and duties of the Treasurer. If no Assistant Treasurer is
elected, the Vice President, Finance shall have the powers and duties of
the Treasurer in the absence or disability of the Treasurer.
ARTICLE XVI
-----------
Controller
----------
If a Controller is elected, he shall be the chief accounting officer
of the Corporation and shall be in charge of its books of account and
accounting records and of its accounting procedures, and shall have such
duties and powers as are commonly incident to the office of a corporate
controller and such other duties and powers as may be prescribed from time
to time by the Board of Directors or by the President. The Controller shall
be responsible to and shall report to the Board of Directors, but in the
ordinary conduct of the Corporation's business, shall be under the
supervision of the President.
Any Assistant Controller shall have duties and powers as shall be
prescribed from time to time by the Board of Directors or by the
Controller, and shall be responsible to and shall report to the Controller.
If the absence or disability of the Controller, the Assistant Controller
or, if there be more than one, Assistant Controllers in their order of
seniority or as otherwise designated by the Board of Directors, shall have
the powers and duties of the Controller.
ARTICLE XVII
------------
Clerk; Secretary; Assistant Clerk and Assistant Secretary
---------------------------------------------------------
The Clerk shall record all proceedings of the stockholders in books
to be kept therefor, and shall have custody of the Corporation's records,
documents and valuable papers. In the absence of the Clerk from any such
meeting, the Secretary, if any, may act as temporary clerk, and shall
record the proceedings thereof in the aforesaid books, or a temporary clerk
may be chosen by vote of the meeting.
The Clerk shall also keep, or cause to be kept, the stock transfer
records of the Corporation which shall contain a complete list of the names
and addresses of all stockholders and the amount of stock held by each.
<PAGE> 9
Unless the Board of Directors shall otherwise designate, the Clerk
or, in his absence, the Assistant Clerk, if any, shall have custody of the
corporate seal and be responsible for affixing it to such documents as may
be required to be sealed.
The Clerk shall have such other duties and powers as are commonly
incident to the office of a corporate clerk, and such other duties and
powers as may be prescribed from time to time by the Board of Directors or
by the President.
If no Secretary is elected, the Clerk shall also record all
proceedings of the Board of Directors and of any meetings of any committees
of the Board, and, in his absence from any such meeting, a temporary clerk
shall be chosen who shall record the proceedings thereof.
The Secretary shall attend all meetings of the Board of Directors and
shall record the proceedings thereat in books provided for that purpose
which shall be open during business hours to the inspection of any
Director. He shall notify the Directors of the meetings in accordance with
these By-Laws and shall have and may exercise such other powers and duties
as the Board of Directors may prescribe. In the absence of the Secretary at
a meeting of the Board of Directors, a temporary secretary shall be chosen.
Any Assistant Clerk and any Assistant Secretary shall have such
duties and powers as shall from time to time be designated by the Board of
Directors or the Clerk or the Secretary, respectively, and shall be
responsible to and shall report to the Clerk and the Secretary,
respectively.
ARTICLE XVIII
-------------
Resignations and Removals
-------------------------
Any Director or officer may resign at any time by delivering his
resignation in writing to the President or the Clerk or to a meeting of the
Directors. Such resignations shall take effect at such time as is
specified therein, or if no such time is so specified, then upon delivery
thereof to the President or the Clerk or to a meeting of the Directors.
Directors, including Directors elected by the Directors to fill
vacancies in the Board, may be removed from office (a) with cause by vote
of the holders of a majority of the shares issued and outstanding and
entitled to vote generally in the election of Directors; (b) with or
without cause by vote of the holders of at least eighty percent (80%) of
the votes entitled to be cast by the holders of all shares of the
Corporation entitled to vote generally in the election of Directors, voting
together as a single class; (c) with cause by vote of a majority of the
Directors then in office or (d) without cause by vote of at least eighty
percent (80%) of the Directors then in office (including the Director to be
removed in calculating said percentage) ; provided that the Directors of a
class elected by a particular class of stockholders may be removed only by
vote of the holders of a majority of the shares of such class.
<PAGE> 10
The Directors may terminate or modify the authority of any agent or
employee. The Directors may remove any officer from office with or without
assignment of cause by vote of a majority of the Directors then in office.
If cause is assigned for removal of any Director or officer, such
Director or officer may be removed only after a reasonable notice and
opportunity to be heard before the body proposing to remove him.
No Director or officer who resigns or is removed shall have any right
to any compensation as such Director or officer for any period following
his resignation or removal, or any right to damages on account of such
removal whether his compensation be by the month or by the year or
otherwise; provided, however, that the foregoing provision shall not
prevent such Director or officer from obtaining damages for breach of any
contract of employment legally binding upon the Corporation.
ARTICLE XIX
-----------
Vacancies
---------
Any vacancy in the Board of Directors, including a vacancy resulting
from an enlargement of the Board, may be filled by the Directors by vote of
a majority of the remaining Directors then in office, though less than a
quorum, or by the stockholders at a meeting called for the purpose provided
that any vacancy created by the stockholders may be filled by the
stockholders at the same meeting. Any Director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term
of the class of Directors in which the new Directorship was created or the
vacancy occurred and until such Directors' successor shall have been
elected and qualified or until he sooner dies, resigns, is removed or
becomes disqualified.
If the office of any officer becomes vacant, the Directors may choose
or appoint a successor by vote of a majority of the Directors present at
the meeting at which such choice or appointment is made.
Each such successor shall hold office for the unexpired term of his
predecessor and until his successor shall be chosen or appointed and
qualified, or until he sooner dies, resigns, is removed or becomes
disqualified.
ARTICLE XX
----------
Capital Stock
-------------
The authorized amount of the capital stock and the par value, if any,
of the shares shall be as fixed in the Articles of Organization. At all
times when there are two or more classes of stock, the several classes of
stock shall conform to the description and terms, and have the respective
preferences, voting powers, restrictions and qualifications set forth in
the Articles of Organization.
<PAGE> 11
ARTICLE XXI
-----------
Certificate of Stock
--------------------
Each stockholder shall be entitled to a certificate of the capital
stock of the Corporation owned by him, in such form as shall, in conformity
to law, be prescribed from time to time by the Board of Directors. Such
certificate shall be signed by either the President or a Vice President,
and by either the Treasurer or an Assistant Treasurer, and may, but need
not be, sealed with the corporate seal; but when any such certificate is
signed by a transfer agent or by a registrar other then a Director,
officer, or employee of the Corporation, the signature of the President or
a Vice President and of the Treasurer or an Assistant Treasurer of the
Corporation, or either or both such signatures and such seal upon such
certificate, may be facsimile. If any officer who has signed, or whose
facsimile signature has been placed on, any such certificate shall have
ceased to be such officer before such certificate is issued, the
certificate may be issued by the Corporation with the same effect as if he
were such officer at the time of issue.
Every certificate for shares of stock which are subject to any
restriction on transfer pursuant to law, the Articles of Organization,
these By-Laws or any agreement to which the Corporation is a party shall
have the restriction noted conspicuously on the certificate, and shall also
set forth, on the face or back, either the full text of the restriction or
a statement of the existence of such restriction and (except if such
restriction is imposed by law) a statement that the Corporation will
furnish a copy thereof to the holder of such certificate upon written
request and without charge. Every certificate issued when the Corporation
is authorized to issue more than one class or series of stock shall set
forth on its face or back either the full text of the preferences, voting
powers, qualifications and special and relative rights of the shares of
each class and series authorized to be issued, or a statement of the
existence of such preferences, powers, qualifications and rights and a
statement that the Corporation will furnish a copy thereof to the holder of
such certificate upon written request and without charge.
ARTICLE XXII
------------
Transfer of Shares of Stock
---------------------------
Subject to the restrictions, if any, stated or noted on the stock
certificates, shares of stock may be transferred on the books of the
Corporation only by the surrender to the Corporation, or its transfer
agent, of the certificate therefor properly endorsed or accompanied by a
written assignment or power of attorney properly executed, with all
requisite stock transfer stamps affixed, and with such proof of the
authenticity and effectiveness of the signature as the Corporation or its
transfer agent shall reasonably require. Except as may otherwise be
required by law, the Articles of Organization, or these By-Laws, the
Corporation shall have the right to treat the person registered on the
stock transfer books as the owner of any shares of the Corporation's stock
as the owner-in-fact thereof for all purposes , including the payment of
dividends, liability for assessments, the right to vote with respect
thereto and otherwise, and accordingly shall not be bound to recognize any
attempted transfer, pledge or other disposition thereof, or any equitable
or other claim with respect thereto, whether or not it shall have actual or
<PAGE> 12
other notice thereof, until such shares shall have been transferred on the
Corporation's books in accordance with these By-Laws. It shall be the duty
of each stockholder to notify the Corporation of his post office address.
ARTICLE XXIII
-------------
Transfer Agents and Registrars; Further Regulations
---------------------------------------------------
The Board of Directors may appoint one or more banks, trust companies
or corporations doing a corporate trust business, in good standing under
the laws of the United States or any state therein, to act as the
Corporation's transfer agent and/or registrar for shares of capital stock,
and the Board may make such other and further regulations, not inconsistent
with applicable law, as it may deem expedient concerning the issue,
transfer and registration of capital stock and stock certificates of the
Corporation.
ARTICLE XXIV
------------
Loss of Certificates
--------------------
In the case of the alleged loss, destruction, or wrongful taking of a
certificate of stock, a duplicate certificate may be issued in place
thereof upon receipt by the Corporation of such evidence of loss and such
indemnity bond, with or without surety, as shall be satisfactory to the
President and the Treasurer, or otherwise upon such terms, consistent with
law, as the Board of Directors may prescribe.
ARTICLE XXV
-----------
Record Date
-----------
The Directors may fix in advance a time, which shall not be more than
sixty (60) days before the date of any meeting of stockholders or the date
for the payment of any dividend or the making of any distribution to
stockholders, or the last day on which the consent or dissent of
stockholders may be effectively expressed for any purpose, as the record
date for determining the stockholders having the right to notice of and to
vote at, such meeting and any adjournment thereof, or the right to receive
such dividend or distribution, or the right to give such consent or
dissent, and in such case, only stockholders of record on such record date
shall have such right, notwithstanding any transfer of stock on the books
of the Corporation after the record date; or, without fixing such record
date, the Directors may, for any such purposes, close the transfer books
for all or any part of such period.
ARTICLE XXVI
------------
Seal
----
The seal of the Corporation shall, subject to alteration by the Board
of Directors, consist of a flat-faced circular die with the word
"Massachusetts", together with the name of the
<PAGE> 13
Corporation and the year of its incorporation, cut or engraved thereon. An
impression of the seal impressed upon the original copy of these By-Laws
shall be deemed conclusively to be the seal adopted by the Board of
Directors.
ARTICLE XXVII
-------------
Execution of Papers
-------------------
Except as the Board of Directors may generally or in particular cases
otherwise authorize or direct, all deeds, leases, transfers, contracts,
proposals, bonds, notes, checks, drafts and other obligations made,
accepted or endorsed by the Corporation shall be signed or endorsed on
behalf of the Corporation by its Chairman, its President or by one of its
Vice Presidents or by its Treasurer.
ARTICLE XXVIII
--------------
Fiscal Year
-----------
Except as from time to time provided by the Board of Directors, the
fiscal year of the Corporation shall end on the Saturday closest to the
last day of March.
ARTICLE XXIX
------------
Indemnification of Directors and Others
---------------------------------------
Section 29.1 Definitions
--------------------------
For purposes of this Article XXIX:
(a) "Director/officer" means any person who is serving or has served
as a Director, officer or employee of the Corporation appointed or elected
by the Board of Directors or the stockholders of the Corporation, or any
Director, officer or employee of the Corporation who is serving or has
served at the request of the Corporation as a Director, officer, trustee,
principal, partner, member of a committee, employee or other agent of any
other organization, or in any capacity with respect to any employee benefit
plan of the Corporation or any of its subsidiaries.
(b) "Proceeding" means any action, suit or proceeding, whether civil,
criminal, administrative or investigative, brought or threatened in or
before any court, tribunal, administrative or legislative body or agency,
and any claim which could be the subject of a Proceeding.
(c) "Expense" means any fine or penalty, and any liability fixed by a
judgment, order, decree or award in a Proceeding, any amount reasonably
paid in settlement of a Proceeding and any professional fees and other
disbursements reasonably incurred in connection with a Proceeding. The term
"Expense" shall include any taxes or penalties imposed on a
Director/officer with respect to any employee benefit plan of the
Corporation or any of its subsidiaries.
<PAGE> 14
Section 29.2 Right to Indemnification
---------------------------------------
Except as limited by law or as provided in Sections 29.3 and 29.4 of
this Article XXIX, each Director/officer (and his heirs and personal
representatives) shall be indemnified by the Corporation against any
Expense incurred by him in connection with each Proceeding in which he is
involved as a result of his serving or having served as a Director/officer.
Section 29.3 Indemnification not Available
--------------------------------------------
No indemnification shall be provided to a Director/officer with
respect to a Proceeding as to which it shall have been adjudicated that he
did not act in good faith in the reasonable belief that his action was in
the best interests of the Corporation, or, to the extent that such
Proceeding relates to service with respect to an employee benefit plan, in
the best interests of the participants or beneficiaries of such employee
benefit plan.
Section 29.4 Compromise or Settlement
---------------------------------------
In the event that a Proceeding is compromised or settled so as to
impose any liability or obligation on a Director/officer or upon the
Corporation, no indemnification shall be provided as to said
Director/officer with respect to such Proceeding if such Director/officer
shall have been adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interests of the
Corporation, or, to the extent that such Proceeding relates to service with
respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan.
Section 29.5 Advances
-----------------------
The Corporation shall pay sums on account of indemnification in
advance of a final disposition of a Proceeding upon receipt of an
undertaking by the Director/officer to repay such sums if it is
subsequently established that he is not entitled to indemnification
pursuant to Sections 29.3 and 29.4 hereof, which undertaking may be
accepted without reference to the financial ability of such person to make
repayment.
Section 29.6 Not Exclusive
----------------------------
Nothing in this Article XXIX shall limit any lawful rights to
indemnification existing independently of this Article 29.
Section 29.7 Insurance
------------------------
The provisions of this Article XXIX shall not limit the power of the
Board of Directors to authorize the purchase and maintenance of insurance
on behalf of any Director/officer against any liability incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability
under this Article XXIX.
ARTICLE XXX
-----------
Voting Stock in Other Corporations
----------------------------------
Unless otherwise ordered by the Board of Directors, the President or,
in the case of his absence or failure to act, the Treasurer, shall have
full power and authority on behalf of the
<PAGE> 15
Corporation to attend and to act and to vote at any meetings of
stockholders of any corporation in which this Corporation may hold stock,
and at any such meeting shall possess and may exercise any and all rights
and powers incident to the ownership of such stock and which, as the owner
thereof, the Corporation might have possessed and exercised if present. The
Board of Directors, by resolution from time to time, or, in the absence
thereof, the President, may confer like powers upon any other person or
persons as attorneys and proxies of the Corporation.
ARTICLE XXXI
------------
Corporate Records
-----------------
The original or attested copies of the Articles of Organization, By-
Laws, and records of all meetings of the incorporators and stockholders,
and the stock and transfer records which shall contain the names of all
stockholders and the record address and the amount of stock held by each,
shall be kept in Massachusetts either at the principal office of the
Corporation or at an office of its transfer agent or of the Clerk. Said
copies and records need not all be kept in the same office. They shall be
available at all reasonable times for inspection by any stockholder for any
proper purpose, but not to secure a list of the stockholders for the
purpose of selling said list, or copies thereof, or of using the same for a
purpose other than in the present interest of the applicant, as a
stockholder, relative to the affairs of the Corporation.
ARTICLE XXXII
-------------
Amendments
----------
These By-Laws may at any time be altered, amended or repealed or new
By-Laws enacted by the affirmative vote of a majority of the entire Board
of Directors (if notice of the proposed alteration or amendment is
contained in the notice of the meeting at which such vote is taken or if
all Directors are present) or at any regular meeting of the stockholders
(or at any special meeting thereof duly called for that purpose) by the
affirmative vote of a majority of the shares represented and entitled to
vote at such meeting (if notice of the proposed alteration or amendment is
contained in the notice of such meeting).
Notwithstanding anything contained in the preceding paragraph of this
Article XXXII to the contrary, either (i) the affirmative vote of the
holders of at least eighty percent (80%) of the votes entitled to be cast
by the holders of all shares of the Corporation entitled to vote generally
in election of Directors, voting together as a single class, or (ii) the
affirmative vote of the majority of the entire Board of Directors with the
concurring vote of a majority of the Continuing Directors, voting
separately and as a subclass of Directors, shall be required to alter,
amend, or repeal or adopt any provision inconsistent with Article II,
Article VIII, Article XVIII, and this paragraph of this Article XXXII. For
purposes of this Article XXXII, the term "Continuing Director" shall have
the meaning ascribed to it in Article 6 of the Articles of Organization of
the Corporation.
<PAGE> 16
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>hae-10ae.txt
<DESCRIPTION>EXHIBIT 10AE
<TEXT>
EXHIBIT 10AE
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is entered into
effective as of April 1, 2003 (the "Effective Date") between Brad Nutter
(the "Executive") a resident at 65 Blue Heron Lane, Greenwood Village, CO
80121 and Haemonetics Corporation (the "Company"), a Massachusetts
corporation with its principal executive offices at 400 Wood Road,
Braintree, Massachusetts 02184.
ARTICLE 1. EMPLOYMENT OF EXECUTIVE
1.1 Employment. Subject to the terms and conditions of this Agreement,
the Company agrees to employ Executive in a full time capacity to serve as
President and Chief Executive Officer, based at the Company's corporate
offices in Braintree, Massachusetts, and to perform such specific duties
commensurate with such position as may reasonably be assigned to Executive
from time to time by the Company's Board of Directors for the period
commencing on the Effective Date and continuing until terminated as herein
provided. Subject to the terms and conditions of this Agreement, Executive
hereby accepts such employment for the term hereof.
1.2 Full Time Commitment. During the period of Executive's employment
with the Company, Executive will, unless prevented by ill health, devote
his whole attention and business time to the performance of his duties
hereunder for the business of the Company.
ARTICLE 2. COMPENSATION
For all services to be rendered by Executive to the Company pursuant
to this Agreement, the Company shall pay to Executive the compensation and
provide for Executive the benefits set forth below:
2.1 Base Salary and Bonus. The Company shall pay to Executive a base
salary at the rate of $500,000, per annum. Beginning May 2004, and
annually thereafter, the Executive's base salary will be reviewed for a
potential increase. In addition, the Executive will be eligible to receive
bonus payments based on
<PAGE>
performance against objectives mutually agreed between Executive and the
Board of Directors. For 100% performance, the bonus payout is set at
$250,000 annually.
2.2 Fringe Benefits. During the term of Executive's employment hereunder
the Company shall provide Executive with such benefits as are generally
made available by the Company to its other full time employees including
reasonable travel expenses incurred while engaged in Company business, all
in accordance with the Company's benefit plans, policies and procedures
from time to time in effect. The Executive will be eligible for four weeks
vacation per annum.
2.3 Option Plan. Executive shall be entitled to participate in the
Company's stock option plans (the "Plans"), as approved from time to time
by the Company's Board of Directors and stockholders.
2.4 Option Grant. Executive shall be granted 300,000 non-qualified
stock options for common stock of the Company at the NYSE average of the
high and low price on Executive's first day of employment, subject to the
terms of the Company's 2000 Long Term Incentive Plan and a Stock Option
Agreement. All such options shall vest twenty five percent (25%) per year
beginning one year after the date of grant.
ARTICLE 3. TERMINATION
3.1 Term. Unless earlier terminated as herein provided, Executive's
employment pursuant to this Employment Agreement shall commence on April 1,
2003 and shall continue for a period ending on March 31, 2008.
3.2 Termination for Cause - by the Company. The Company may terminate
Executive's employment for "Cause" upon the occurrence of any of the
following events:
(i) Executive shall have engaged in (A) any misappropriation of
funds, properties or assets of the Company, (B) any malicious damage
or destruction of any property or assets of the Company, whether
resulting from Executive's willful action or omissions or negligence,
or (C) any falsification of any books, records, documents or systems
of the Company, or (D) any deliberate violation of Company policy.
<PAGE>
(ii) Executive shall (A) have been convicted of a crime involving
moral turpitude or constituting a felony, or (B) commit or knowingly
allow to be committed any illegal action on any premises of, or
involving any property or assets of, the Company.
3.3 Termination for Cause - by Executive. Executive may terminate his
employment with the Company for "Cause" upon the occurrence of any of the
following events.
(i) the Company shall breach any of the material provisions of the
Agreement and such breach shall not have been cured by or on behalf
of the Company within thirty (30) days following its receipt of
notice from the Executive, which specifically identifies the manner
in which it is alleged that Company committed such breach;
(ii) the Company shall fail to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement, as
contemplated in Section 3.4;
(iii) a materially adverse change in Executive's title, or in the
responsibilities assigned to Executive by the Company or in the
compensation and benefits paid by Company to the Executive shall have
occurred and such material adverse change shall not have been cured
by or on behalf of the Company within thirty (30) days following its
receipt of notice from Executive specifically identifying such
material adverse change.
Executive's continued employment shall not constitute consent to, or waiver
of rights with respect to, any circumstance constituting a Cause for
termination by the Executive or the Company.
3.4 Change in Control. If, following a "Change in Control" (as defined
below) Executive's full time position with the Company is eliminated and
following such elimination, the Company does not offer to employ Executive
in a comparable or better position in his then current location, on a full-
time basis, at a comparable or better rate of pay, then, Executive shall be
entitled to severance payments and benefits in accordance with Article 4
below provided, however, that severance payment shall be made in lump sum,
payable within thirty (30) days, and in an amount which is equal to 2.99
times the amount identified in Section 4.1, and provided further that in no
event shall the total of all payments and benefits to the Executive, under
this Agreement or otherwise, that are contingent on a change in ownership
or control within the meaning of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code") and any proposed or final regulations
promulgated thereunder, exceed 2.99 times the "base amount" described in
Section 280G(b)(3) of the Code ("Maximum Amount"). If the total of such
payments and benefits to the Executive would exceed the Maximum Amount,
then the payments and benefits to the Executive shall be reduced to the
Maximum Amount. The determination of the Maximum Amount and the amount of
such reduction shall be made by an accounting firm of the Company or the
Company's successor and such
<PAGE>
determination shall be final and binding on all parties. The Company or
its successor will then determine what payments and benefits, from whatever
source, will be reduced based on the accounting firm's analysis. For
purposes of this Agreement, a "Change in Control" shall mean a change in
control of the Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not the Company is, in fact, required to comply therewith;
provided that, without limitation, such a change in control for purposes of
this Agreement shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 51% or more of
the combined voting power of the Company's then outstanding
securities;
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least
50% of the combined voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which
no "person" (as herein above defined) acquires 50% or more of the
combined voting power of the Company's then outstanding securities;
or
(iii) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
3.5 Death. In the event of the death of Executive, Executive's
employment by the Company shall automatically terminate as of the date of
his death.
3.6 Disability. In the event of the Disability of the Executive, as
defined herein, the Company may terminate Executive's employment hereunder
upon written notice to Executive. The term "Disability" shall
<PAGE>
mean the inability of Executive to perform substantially his material
duties hereunder due to physical or mental disablement which continues for
a period of one hundred eighty (180) consecutive days, as determined by an
independent qualified physician mutually acceptable to the Company and
Executive (or his personal representative) or, if the Company and Executive
(or such representative) are unable to agree on an independent qualified
physician, as determined by a panel of three physicians, one designated by
the Company, one designated by Executive (or his personal representative)
and one designated by the two physicians so designated.
ARTICLE 4. SEVERANCE PAYMENTS AND BENEFITS
4.1 Termination Events Resulting in Severance Payments. In the event of
the termination of the Executive's employment prior to the expiration of
the term of this Agreement:
(i) by the Company without "Cause," or
(ii) under Section 3.3 ,
then the Company shall pay Executive, as a severance payment, an amount
equal to Executive's annual base salary, such payment to be made in twelve
(12) equal monthly payments during the period commencing on the date such
termination occurs (the "Termination Date") and ending one (1) year
thereafter (the "Severance Period").
4.2 Benefits. If Section 4.1 is applicable, the Company shall also
provide to Executive during the Severance Period, at the Company's expense,
such benefits as are in effect and applicable to Executive as of the
Termination Date, except to the extent expressly prohibited by law or by
the terms of any plan, program or policy which govern any such benefits.
4.3 Comparable Benefits: Continuation of Benefits. If by operation of law
or under the terms of the relevant plan, program or policy, Executive is
not eligible to receive continued life insurance coverage, health insurance
coverage, long term disability coverage or the Company's matching
contribution, if any, under its 401(k) Plan , then the Company shall
provide to Executive substantially equivalent benefits or, at Executive's
election, the cash value of equivalent benefits within thirty (30) days of
any determination of ineligibility by the Company.
<PAGE>
4.4 Exclusivity. Except as otherwise provided in the foregoing sections
of this Article 4 and in Section 3.4 (if applicable), Executive shall not
be entitled to compensation from the Company for any period following
termination of his employment.
ARTICLE 5. PROPRIETARY INFORMATION AND NON-COMPETITION
5.1 For the purposes of this Article, the following shall have the
designated meanings.
5.1.1. Proprietary Information: Information of value to the Company
and not generally available to the public of whatever kind or nature
disclosed to the Executive or known by the Executive (whether or not
invented, discovered or developed by the Executive) as a consequence
of or through the Executive's employment with the Company.
Proprietary Information shall include information relating to the
design, manufacture, application, know-how, research and development
relating to the Company's products, sources of supply and materials,
operating and other cost data, lists of present, past, or prospective
customers, customer proposals, price lists and data relating to
pricing of the Company's products or services, and shall specifically
include all information contained in manuals, memoranda, formulae,
plans, drawings and designs, specifications, supply sources, and
records of the Company legended or otherwise identified by the
Company as Proprietary Information, whether learned by the Executive
prior to or after the date hereof.
5.1.2. Concepts and Ideas: Those concepts and ideas known to the
Executive relating to the Company's present and prospective
activities and products.
5.1.3. Inventions: Discoveries and developments, whether or not
patentable. Such terms shall not be limited to the meaning of
"invention" under the United States Patent Laws.
5.2 All Inventions which are at any time "made" i.e., conceived or
reduced to practice by the Executive, acting alone or in conjunction with
others, during or in connection with the Executive's employment (or, if
based on or related to Proprietary Information, "made" by the Executive
within twelve (12) months after the termination of such employment) and all
Concepts and Ideas held by the Executive
<PAGE>
shall be the property of the Company, free of any reserved or other rights
of any kind on the Executive's part in respect thereof.
5.3 The Executive will promptly make full disclosure to the Company in
writing any such Inventions and Concepts and Ideas. Further, the
Executive will, at the Company's costs and expense, promptly execute formal
applications for patents and also do all other acts and things (including,
among other, the execution and delivery of instruments of further assurance
or confirmation) deemed by the Company to be necessary or desirable at any
time or times in order to effect the full assignment to the Company of all
right and title to such Inventions and Concepts and Ideas, without, during
the term of this Agreement, further compensation. The absence of a request
by the Company for information, or for the making of an oath, or for the
execution of any document, shall in no way be construed to constitute a
waiver of the Company's rights under this Agreement.
5.4 Except in connection with the Executive's duties hereunder, the
Executive will not, directly or indirectly, use, publish, disseminate, or
otherwise disclose any Proprietary Information, Concepts and Ideas or
Inventions without the prior written consent of the Company.
5.5. All documents, procedural manuals, guides, specifications, plans,
drawings, designs and similar materials, lists of present, past or
prospective customers, customer proposals, invitations to submit proposals,
price lists and data relating to pricing of the Company's products and
services, records, notebooks and similar repositories of or containing
Proprietary Information and Inventions, including all copies thereof, that
come into the Executive's possession or control by reason of the
Executive's employment, whether prepared by the Executive or others, are
the property of the Company, will not be used by the Executive in any way
adverse to the Company, will not be removed from the Company's premises
except in connection with the Executive's normal duties and, at the
termination of the Executive's employment with the Company, will be left
with or forthwith returned by the Executive to the Company.
5.6 During the time the Executive is an employee of the Company and for a
period of one (1) year thereafter, the Executive will not, on his own
behalf or on the behalf of another (i) engage in any activity which is in
the field of medical devices or solutions similar to those then marketed,
or planned to be marketed, by the Company, or (ii) solicit or endeavor to
entice away from the Company any employee.
<PAGE>
ARTICLE 6. MISCELLANEOUS
6.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
6.2 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, successors and
assigns. If Executive should die while any amount due to him at such time
remains unpaid, such amount, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to his devisee, legatee
or other designee or if there is no such designee, to his estate.
6.3 Assignment. Except as otherwise provided in Section 6.4 below,
neither this Agreement nor any rights or obligations hereunder shall be
assignable by either party hereto without the prior written consent of the
other party.
6.4 Obligation of the Company's Successors. Any successor to the
business of the Company, whether directly or indirectly by merger,
consolidation, recapitalization, combination, purchase of stock, purchase
of assets or otherwise, shall succeed to the rights and obligations of the
Company hereunder. The Company will require any such successor to
expressly assume and agree to perform this Agreement in the same a manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place.
6.5 Notices. All notices, requests, demands and other communications to
be given pursuant to this Agreement shall be in writing and shall be deemed
to have been duly given if delivered by hand or mailed by registered or
certified mail, return receipt requested, postage prepaid, as follows:
If to the Company, to:
Haemonetics Corporation
400 Wood Road
Braintree, MA 02184
Attention: Ron Matricaria, Chairman of the Board
<PAGE>
With a copy to: Lisa Lopez, General Counsel
Haemonetics Corporation
400 Wood Road, Braintree MA 02184
If to Executive, to: 65 Blue Heron Lane
Greenwood Village, CO 80121
or such other address as either party hereto shall have designated by
notice in writing to the other party.
6.6 Amendments. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Executive and the Chairman of the Board of Directors.
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of the
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
6.7 Governing Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
6.8 Dispute Resolution. Any dispute, controversy or claim arising out of
or relating to the Agreement or the performance by the parties of its
terms, shall be settled by binding arbitration held in Boston,
Massachusetts in accordance with the Employment Arbitration Rules of the
American Arbitration Association then in effect. The arbitrator shall have
the authority to award relief under legal or equitable principles,
including interim or preliminary relief. Each party shall bear its/his own
attorneys fees and expenses.
6.9 Severability. In case any provision hereof shall, for any reason, be
held to be invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid or unenforceable provision
had not been included herein. If any provision hereof shall, for any
reason, be held by a court to be excessively broad as to
<PAGE>
duration, geographical scope, activity or subject matter, it shall be
construed by limiting and reducing it to make it enforceable to the extent
compatible with applicable law then in effect.
6.10 Withholding. Any payments provided for hereunder shall be paid after
deducting any applicable withholding required under federal, state or local
or foreign law.
6.11 Entire Agreement. This Agreement sets for the entire agreement of
the parties hereto in respect of the subject matter contained herein, and
supersedes the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of any party hereto
with respect to the subject matter hereof. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not
expressly set forth in this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement under seal as of the date first above written.
Haemonetics Corporation
/s/ Brad Nutter By: /s/ Ronald A. Matricaria
- ----------------------------------- ------------------------------------
Brad Nutter Ronald A. Matricaria, Chairman of
the Board
Date: March 30, 2003
-----------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>hae-10af.txt
<DESCRIPTION>EXHIBIT 10AF
<TEXT>
EXHIBIT 10AF
FIRST AMENDMENT TO LEASE
BETWEEN
NEW AVON LIMITED PARTNERSHIP
AND
HAEMONETICS CORPORATION
New Avon Limited Partnership ("Landlord") and Haemonetics Corporation
("Tenant") hereby amend the Lease between the Landlord and Tenant, dated as
of July 29, 1997 (the "Lease").
Whereas, Tenant wishes to exercise its option to renew the Lease, as
set forth in Section 29 of the Lease, conditioned upon Tenant being able to
expand into adjacent premises on or about April 1, 2004; and
Whereas, said adjacent premises are currently under lease with
another tenant, such lease expiring on or about January 15, 2005; and
Whereas, Landlord and Tenant have reached agreement with respect to a
short term extension of the Lease and with respect to a longer term
extension of the lease if the adjacent space is available to Tenant as
aforesaid, as well as the base rental to be charged during the short term
renewal and long term extension; and
Now Therefor, for good, lawful and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and
notwithstanding anything in the Lease to the contrary, the Landlord and
Tenant hereby agree as follows:
1. The Lease Term under the Lease is hereby extended for one (1)
year terminating on November 30, 2003 (the "Short Extended Term"), and the
Lease Termination Date, as set forth in the Lease Information Page shall be
November 30, 2003.
3. Annual Rent for the Demised Premises for the Short Extended Term,
effective December 1, 2002, and terminating on November 30, 2003 shall be
as follows:
Calendar Period Annual Rent Monthly Rent
--------------- ----------- ------------
12/1/02-11/30/03 $235,200 $19,600
<PAGE>
4. If Landlord gives Tenant written notice, on or before December 1,
2002, that Landlord has secured an early termination of the adjacent space
currently occupied by J.N, Muldoon Co., Inc. (shown as the "Additional
Space" on the attached Exhibit "A"), such that Tenant can take occupancy of
the Additional Space as of April 1, 2004, from and after said April 1,
2004, the Demised Premises shall include the Additional Space.
5. If Landlord gives such notice to Tenant, as aforesaid, the Lease
Term under the Lease is hereby extended from December 1, 2003 to November
30, 2007 (the "Extended Term")and the Lease Termination Date, as set forth
in the Lease Information Page shall be November 30, 2007.
6. If Landlord gives such notice to Tenant, as aforesaid, Annual
Rent for the Demised Premises for the Extended Term, effective December 1,
2002, and terminating on November 30, 2007, shall be as follows:
Calendar Period Annual Rent Monthly Rent
--------------- ----------- ------------
12/1/02-2/28/03 $208,800 $17,400
3/1/03-2/29/04 $218,400 $18,200
3/1/04-3/31/04 $228,000 $19,000
4/1/04-2/28/05 $289,750 $24,146
3/1/05-2/28/06 $301,950 $25,163
3/1/06-2/28/07 $317,200 $26,433
3/1/07-11/30/07 $329,400 $27,450
Rent is due and payable on the first day of the month without notice or
demand.
7. Tenant's Share of the Real Estate Taxes and Operation Cost (as
set forth in the Lease Information Page), shall remain at 31.47% through
March 31, 2004, and thereafter shall be 40.09%.
8. Tenant's Initial Estimated Monthly Payment on Account (as set
forth in the Lease Information Page) shall be $2,282 for Real Estate Taxes
and $2,675 for Operating Cost through March 31, 2004, which amounts will
increase as of March 1, 2004 (currently estimated to be $2,907 and $3,408,
respectively).
9. If, as and when the Additional Space becomes part of the Demised
Premises, the Additional Space shall be delivered to Tenant, in "as is,
where is" condition, and broom clean.
<PAGE> 2
10. In the event that Landlord fails to deliver the Additional Space
to Tenant by April 1, 2004, the parties agree to a ratable adjustment of
all amounts due hereunder by Tenant until the Additional Space has been
delivered to Tenant by Landlord.
11. In all other respects the Lease is ratified and confirmed and in
full force and effect.
Executed as a second amendment of lease under seal on this day
of August, 2002.
LANDLORD: TENANT:
New Avon Limited Partnership Haemonetics Corporation
by New Avon Development Corp.
it general partner
By: /s/ Lawrence J. Rothschild By: /S/ James L. Peterson
------------------------------- --------------------------------
Lawrence J. Rothschild, Pres. James L. Peterson, President
duly authorized duly authorized
<PAGE> 3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>hae-10ag.txt
<DESCRIPTION>EXHIBIT 10AG
<TEXT>
EXHIBIT 10AG
SECOND AMENDMENT TO AGREEMENT OF LEASE
MADE THIS 18th DAY OF October , 2000
BY AND BETWEEN
THE BUNCHER COMPANY (hereinafter called "Landlord"), a Pennsylvania
corporation having its principal place of business in Allegheny County,
Pennsylvania
AND
HAEMONETICS CORPORATION, (hereinafter called "Tenant"), a
Massachusetts corporation having its principal place of business in the
City of Braintree, Norfolk County, Massachusetts.
WHEREAS, the parties hereto have entered into a certain Agreement of
Lease dated July 17, 1990 as amended by First Amendment to Agreement of
Lease dated April 30, 1991 (said Agreement of Lease as amended is
hereinafter collectively called the "Lease") covering certain property
located in the Buncher Commerce Park, Leetsdale, Allegheny County,
Pennsylvania and herein and therein called the Lease Premises; and
WHEREAS, all terms defined in the Lease and used herein shall have
the same meaning herein as in the Lease unless otherwise provided herein;
and
WHEREAS, the parties hereto desire to amend the Lease to (i) extend
the existing Renewal Term of the Lease for five (5) additional years (the
"New Extended Term"), (ii) to provide for the monthly rental for the New
Extended Term, (iii) provide for an additional extension of the Lease (the
"Roll Over Term"), and (iv) supplement the insurance provisions of the
Lease.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound the parties hereto promise, covenant and agree that the Lease
be and is hereby amended as follows:
1. TERM: The Renewal Term of the Lease is hereby extended to expire
at the end of the New Extended Term on June 30, 2006.
2. RENT: A. Tenant shall continue to pay to Landlord as monthly
rental for the Leased Premises the amount of $23,258.26 until July 1, 2001.
B. Beginning July 1, 2001 and on the first day of each calendar
month thereafter during the New Extended Term, Tenant shall pay to Landlord
as monthly rental for the Leased Premises the amount of $25,944.18.
<PAGE>
All rentals payable hereunder shall be payable in advance without
demand, deduction or setoff. Remittance for rental and any additional
rentals payable hereunder shall be paid to Landlord's agent, Buncher
Management Agency, Inc., 5600 Forward Avenue, P. O. Box #81930, Pittsburgh,
Pennsylvania 15217-0930 or at such other place or to such other person as
may be designated by Landlord in writing.
3. INSURANCE: In additional to the insurance requirements set
forth in section 8 of the printed portion of the Agreement of Lease dated
July 17, 1990, Tenant shall maintain during any period of occupancy by
Tenant of any portion of the Leased Premises and throughout the term of the
Lease or any extension thereof workers compensation and employers liability
insurance or a qualified self-insurance plan at the statutory limits on its
employees at the Leased Premises. Tenant or those holding under it shall
not pursue any claim for subrogation, indemnity or otherwise against
Landlord that arises out of any loss by Tenant or those holding under it on
account of any injury to Tenant's employees incurred on or about the Leased
Premises.
4. BROKERAGE: Landlord and Tenant each hereby warrants to the other
that no real estate broker has been involved in the extension of the term
of the Lease on its behalf and that no finder's fee or real estate
commission have been earned by any third party. Each party hereto agrees
to indemnify the other for any liability or claims for commissions of fees
arising from a breach of this warranty by the indemnifying party.
5. ROLL OVER TERM: Unless Tenant notifies Landlord in writing one
(1) year prior to the expiration of the New Extended Term that Tenant does
not desire to extend the term of the Lease for the Roll Over Term as
defined herein, the Lease and the term thereof shall further be extended
for one (1) additional term of five (5) years (the "Roll Over Term") to
commence immediately following the expiration of the New Extended Term.
The Roll Over Term shall be on the same terms and conditions as exists
under the Lease, as amended except that the monthly rental for the Leased
Premises shall be determined by the following formula:
Monthly Rental = $25, 944.18 X (CPI in effect for June, 2001
for Roll Over plus 75% of the amount by which the
Term CPI in effect for June, 2006
exceeds the
divided by CPI in effect for June, 2001)
--------------------------------
the CPI in effect for June, 2001
Notwithstanding the result of the above calculation, the monthly
rental for the Roll Over Term shall not be less than $25,944.18.
<PAGE> 2
The CPI, as referred to herein, means the Consumer Price Index for
all Urban Consumers items 1982-84 = 100 relating to the United States City
Average, as issued by the Bureau of Labor Statistics of the United States
Department of Labor, or any successor to the function thereof. In the
event of the conversion of the CPI to a different standard reference base
or any other revision thereof, the determination hereunder shall be made
with the use of such Bureau of Labor Statistics or successor to the
functions thereof or in the absence of the publication of such conversion
factor, such formula or table as Landlord shall in good faith designate.
The extension of the term of the Lease for the Roll Over Term as
provided herein is subject to Haemonetics Corporation itself or its
affiliate, being in full possession of the Leased Premises continuously
during the last twelve (12) months of the New Extended Term of the Lease
and at the commencement of the Roll Over Term. If the above condition is
not satisfied, Landlord may, at its option, terminate the Lease as of the
day preceding the Roll Over Term.
6. Except as amended hereby all terms and conditions of the Lease
shall remain in full force and effect.
WITNESS the due execution hereof.
ATTEST: THE BUNCHER COMPANY
By s/ Bernita Buncher By s/ TJ Balestrieri
-------------------------- ---------------------------
Title Secretary Title President
----------------------- ------------------------
(Corporate Seal)
ATTEST: HAEMONETICS CORPORATION
By s/ Alicia Lopez By s/ Ron Ryan
-------------------------- ---------------------------
Title Clerk Title CFO
----------------------- ------------------------
<PAGE> 3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>hae-10ah.txt
<DESCRIPTION>EXHIBIT 10AH
<TEXT>
EXHIBIT 10AH
HAEMONETICS CORPORATION
-----------------------
1992 LONG-TERM INCENTIVE PLAN
-----------------------------
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
WITH
----
Name
----
<PAGE>
HAEMONETICS CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER 1992 LONG-TERM INCENTIVE PLAN
-----------------------------------
AGREEMENT entered into this Date day of Month, 2000 by and between
Haemonetics Corporation, a Massachusetts corporation with a principal place
of business in Braintree, Massachusetts, (the "Company"), and the
undersigned employee of the Company (or one of its subsidiaries) (the
Company and its subsidiaries herein together referred to as the "Company")
(the "Employee").
1. The Company desires to grant the Employee a non-qualified stock
option under the Company's 1992 Long-Term Incentive Plan (the "Plan") to
acquire shares of the Company's common stock, $ .01 par value per share (the
"Common Stock").
2. Section 4 of the Plan provides that each option is to be evidenced
by an option agreement, setting forth the terms and conditions of the
option.
ACCORDINGLY, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Employee
hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to the
Employee a non-qualified stock option (the "Option") to purchase all or any
part of an aggregate of X,000 shares of Common Stock (the "Shares") on the
terms and conditions hereinafter set forth. This option shall not be
treated as an incentive stock option under Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price ("Purchase Price") for the
Shares covered by the Option shall be $XX.XXXX per Share.
3. Time of Exercise of Option; Exercisability.
(a) The Option shall not be exercisable prior to Month Day,
Year. Thereafter, the Option shall be exercisable as follows:
Percentage of
Shares Becoming Cumulative
Available for Percentage
On or After Exercise Available
----------- --------------- ----------
Month Day, Year 25% 25%
Month Day, Year 25% 50%
Month Day, Year 25% 75%
Month Day, Year 25% 100%
<PAGE>
(b) This option shall be exercisable to the full amount of the
shares covered hereby in the event that (i) the Company is merged into
or consolidated with another corporation under circumstances where the
Company is not the surviving corporation (ii) the Company is
liquidated or sells or otherwise disposes of all or substantially all
of its assets to another corporation, or (iii) a Change of Control
occurs before this option has been exercised in full. For purposes
hereof a "Change in Control" shall be deemed to have occurred if any
persons, who prior to such time owned less than thirty-five percent
(35%) of the then outstanding 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.
4. Term of Options; Exercisability.
(a) Term.
(1) Each Option shall expire not more than ten (10) years
from the date of the granting thereof, but shall be subject to
earlier termination as herein provided.
(2) Except as otherwise provided in this Section 4, if
the Employee ceases to be an employee of the Company, the Option
granted to the Employee hereunder shall terminate three months
after the date such Employee ceases to be an employee of the
Company, or on the date on which the Option expires by its
terms, whichever occurs first.
(3) If such termination of employment is because of
dismissal for cause or because the Employee is in breach of any
employment agreement, such Option will terminate on the date the
Employee ceases to be an employee of the Company.
(4) If such termination of employment is because the
Employee has become permanently disabled (within the meaning of
Section 22(e)(3) of the Code), such Option shall terminate one
year from the date such Employee ceases to be an employee, or on
the date on which the Option expires by its terms, whichever
occurs first.
(5) If such termination of employment is because the
Employee has retired in good standing for reasons of age under
then established rules of the Company, such Option shall
terminate two years from the date such Employee ceases to be an
employee, or on the date on which the Option expires by its
terms, whichever occurs first.
(6) In the event of the death of the Employee while in
the employ of the Company, the Option granted to such Employee
shall terminate one year following such death, or on the date on
which the Option expires by its terms, whichever occurs first.
<PAGE>
(b) Exercisability.
If the Employee ceases to be an employee of the Company,
the Option granted to the Employee hereunder shall be
exercisable only to the extent that the right to purchase Shares
under such Option has accrued and is in effect on the date such
Employee ceases to be an employee of the Company.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has
accrued and is in effect, the Option may be exercised in full or in
part by giving written notice to the Company stating the number of
Shares exercised and accompanied by payment in full for such Shares.
Payment may be either wholly in cash or, with the consent of the
Committee, in whole or in part in Shares of the common stock of the
Company already owned by the person exercising the Option, valued at
fair market value. 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 the Company to the person
exercising the Option.
(b) The Company shall at all times during the term of the
Option reserve and keep available such number of Shares of its common
stock as will be sufficient to satisfy the requirements of the Option.
The Employee shall not have any of the rights of a stockholder of the
Company in respect of the Shares until one or more certificates for
such Shares shall be delivered to him or her upon the due exercise of
the Option.
6. Non-Transferability. The right of the Employee to exercise the
Option shall not be assignable or transferable by the Employee 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, and the
Option may be exercised during the lifetime of the Employee only by him or
her. The Option shall be null and void and without effect upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by
operation of law, pledge, hypothecation or other disposition contrary to the
provisions hereof, or levy of execution, attachment, trustee process or
similar process, whether legal or equitable, upon the Option.
7. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued
upon exercise of the Option shall not be effectively registered under
the Securities Act of 1933 (the "1933 Act"), upon any date on which
the Option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in a form
satisfactory to the Company and the Company shall place an "investment
legend," so-called upon any certificate for the Shares issued by
reason of such exercise.
(b) The Company shall be under no obligation to qualify Shares
or to cause a registration statement or a post-effective amendment to
any registration statement to be prepared for the purposes of covering
the issue of Shares.
<PAGE>
8. Adjustments on Changes in Capitalization. Adjustments on Changes
in Capitalization and the like shall be made in accordance with Section 6 of
the Plan, as in effect on the date of this Agreement.
9. No Special Employment Rights. Nothing contained in the Plan or
this Agreement shall be construed or deemed by any person under any
circumstances to bind the Company to continue the employment of the Employee
for the period within which this Option may be exercised. However, during
the period of the Employee's employment, the Employee shall render
diligently and faithfully the services which are assigned to the Employee
from time to time by the Board of Directors or by the executive officers of
the Company and shall at no time take any action which directly or
indirectly would be inconsistent with the best interests of the Company.
10. Rights as a Shareholder. The Employee shall have no rights as a
shareholder with respect to any Shares which may be purchased by exercise of
this Option unless and until a certificate or certificates representing such
Shares are duly issued and delivered to the Employee. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
11. Withholding Taxes. Whenever Shares are to be issued upon
exercise of this Option, the Company shall have the right to require the
Employee to remit to the Company an amount sufficient to satisfy all
Federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such Shares.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal to be hereto affixed by its officer
thereunto duly authorized, and the Employee has hereunto set his or her hand
and seal, all as of the day and year first above written.
HAEMONETICS CORPORATION
By:____________________________
Title: President
EMPLOYEE
Name:__________________________
Address:_______________________
_______________________
Social Security
No:____________________________
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>hae-10ai.txt
<DESCRIPTION>EXHIBIT 10AI
<TEXT>
EXHIBIT 10AI
HAEMONETICS CORPORATION
-----------------------
1998 STOCK OPTION PLAN FOR
--------------------------
NON-EMPLOYEE DIRECTORS
----------------------
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
WITH
----
Name
----
<PAGE>
HAEMONETICS CORPORATION
-----------------------
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
UNDER 1998 STOCK OPTION PLAN
----------------------------
FOR NON-EMPLOYEE DIRECTORS
--------------------------
AGREEMENT entered into this date spelled out by and between
Haemonetics Corporation, a Massachusetts corporation with a principal place
of business in Braintree, Massachusetts (the "Co.mpany"), and the
undersigned director of the Company (the "Director").
1. The Company desires to grant the Director a non-qualified stock
option under the Company's 1998 Stock Option Plan for Non-Employee Directors
(the "Plan") to acquire shares of the Company's common stock, $ .01 par
value per share (the "Shares").
2. Section 5 of the Plan provides that each option is to be evidenced
by an option agreement, setting forth the terms and conditions of the
option.
ACCORDINGLY, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Director
hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to the
Director a non-qualified stock option (the "Option") to purchase all or any
part of an aggregate of # of shares of Options Shares on the terms and
conditions hereinafter set forth and subject to the terms and conditions of
the Plan. This option shall not be treated as an incentive stock option
under Section 422(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Director agrees to continue to serve as a director of the
Company during the term for which such Director was elected.
2. Purchase Price. The purchase price ("Purchase Price") for the
Shares covered by the Option shall be $share price per Share.
3. Time of Exercise of Option.
(a) The Option shall only be exercisable as follows:
Percentage Cumulative
of Shares Percentages
Becoming of Shares
On or After Exercisable Exercisable
-------------------------------------------
Date 25% 25%
Date 25% 50%
Date 25% 75%
Date 25% 100%
This option shall be exercisable to the full amount of the shares covered
hereby in the event that (i) the Company is merged into or consolidated with
another corporation under circumstances where the Company is not the
surviving corporation (ii) the
<PAGE>
Company is liquidated or sells or otherwise disposes of all or substantially
all of its assets to another corporation, or (iii) a Change of Control
occurs before this option has been exercised in full. For purposes hereof 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.
4. Term of Options; Exercisability.
(a) Term.
(1) The Option shall expire ten (10) years from the date
of the granting thereof, but shall be subject to earlier
termination as herein provided.
(2) Except as otherwise provided in this Section 4, if
the Director ceases to be a director of the Company, the Option
granted to the director hereunder shall terminate three (3)
months after the date such Director ceases to be a director of
the Company, or on the date on which the Option expires by its
terms, whichever occurs first, unless termination as a Director
was by the Company for cause, in which case the Option shall
terminate immediately.
(3) In the event of the death of the Director, the Option
granted to such Director shall terminate one (1) year from the
date of death, or on the date on which the Option expires by its
terms, whichever occurs first.
(4) In the event the Director ceases to be a Director of
the Company on account of disability (within the meaning of
Section 22(e) (3) of the Code), the Option shall terminate one
year from the date of termination of such directorship or on the
date on which the Option expires by its terms, whichever occurs
first.
(b) Exercisability.
If the Director ceases to be a director of the Company,
the Option granted to the Director hereunder shall be
exercisable only to the extent that the right to purchase Shares
under such Option has accrued and is in effect on the date such
Director ceases to be a director of the Company.
<PAGE>
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has
accrued and is in effect, the Option may be exercised in full or in
part by giving written notice to the Company, substantially in the
form of Attachment A herein, stating the number of Shares exercised
and accompanied by payment in full for such Shares. Payment may be
either wholly in cash or in whole or in part in Shares of the common
stock of the Company already owned for a period of at least six months
by the person exercising the Option, valued at fair market value.
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 the Company to the person exercising the Option.
(b) The Company shall at all times during the term of the
Option reserve and keep available such number of Shares of its common
stock as will be sufficient to satisfy the requirements of the Option.
The Director shall not have any of the rights of a stockholder of the
Company in respect of the Shares until one or more certificates for
such Shares shall be delivered to him or her upon the due exercise of
the Option.
6. Non-Transferability. The right of the Director to exercise the
Option shall not be assignable or transferable by the Director 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. The
Option may be exercised during the lifetime of the Director only by him or
her. The Option shall be null and void and without effect upon any
attempted assignment or transfer, except as hereinabove 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 the
Option. Notwithstanding the general prohibition on the transfer, sale, or
other disposition of options under the terms of the Plan and this Agreement,
the options granted under this Agreement may be transferred by gift to one
or more "family members" (as defined in the instructions to Form S-8), or
for value to any entity in which more than fifty percent (50%) of the voting
interests are owned by family members (or the director) in exchange for an
interest in that entity. The directors, family members, and any such
entities shall execute an deliver such documents, and shall adhere to any
procedures, as the Committee shall require in order to accommodate any
request by the director to transfer the options.
7. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued
upon exercise of the Option shall not be effectively registered under
the Securities Act of 1933 (the "1933 Act"), upon any date on which
the Option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in the form
attached hereto as Exhibit 1 and the Company shall place an
"investment legend", so-called, as described in Exhibit 1, upon any
certificate for the Shares issued by reason of such exercise.
<PAGE>
(b) The Company shall be under no obligation to qualify Shares
or to cause a registration statement or a post-effective amendment to
any registration statement to be prepared for the purposes of covering
the issue of Shares.
8. Adjustments on Changes in Capitalization. Adjustments on Changes
in Capitalization and the like shall be made in accordance with Section 10
of the Plan, as in effect on the date of this Agreement.
9. Rights as a Shareholder. The Director shall have no rights as a
shareholder with respect to any Shares which may be purchased by exercise of
this Option unless and until a certificate or certificates representing such
Shares are duly issued and delivered to the Director. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
10. Withholding Taxes. Whenever Shares are to be issued upon
exercise of this Option, the Company shall have the right to require the
Director to remit to the Company an amount sufficient to satisfy all
Federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares.
IN WITNESS WHEREOF, the Company has caused this agreement to be
executed and its corporate seal to be hereto affixed by its officer
thereunto duly authorized, and the Director has hereunto set his or her hand
and seal, all as of the day and year first above written.
HAEMONETICS CORPORATION
By: ___________________________
Title: Chairman, Board of Directors
DIRECTOR
___________________________
Address: ______________________
______________________
Social Security
No.: __________________________
<PAGE>
EXHIBIT 1
TO STOCK OPTION AGREEMENT
_________________________
Gentlemen:
In connection with the exercise by me as to ( ) shares of common
stock, par value $ .01 per share, of Haemonetics Corporation (the "Company")
under the non-qualified stock option dated ___________________________,
granted to me under the 1998 Non-Employee Directors Stock Option Plan, I
hereby acknowledge that I have been informed as follows:
1. The shares of common stock of the Company to be issued to me
pursuant to the exercise of said option have not been registered under the
Securities Act of 1933, as amended (the "Act"), and accordingly, must be
held indefinitely unless such shares are subsequently registered under the
Act, or an exemption from such registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under
the Act can be made only after the holding period and in limited amounts in
accordance with the terms and conditions provided by that Rule, and in any
sale to which that Rule is not applicable, registration or compliance with
some other exemption under the Act will be required.
3. The Company is under no obligation to me to register the shares or
to comply with any such exemptions under the Act.
4. The availability of Rule 144 is dependent upon adequate current
public information with respect to the Company being available and, at the
time that I may desire to make a sale pursuant to the Rule, the Company may
neither wish nor be able to comply with such requirement.
In consideration of the issuance of certificates for the shares to me,
I hereby represent and warrant that I am acquiring such shares for my own
account for investment, and that I will not sell, pledge or transfer such
shares in the absence of an effective registration statement covering the
same, except as permitted by the provisions of Rule 144, if applicable, or
some other applicable exemption under the Act. In view of this
representation and warranty, I agree that there may be affixed to the
certificates for the shares to be issued to me, and to all certificates
issued hereafter representing such shares (until in the opinion of counsel,
which opinion must be reasonable satisfactory in form and substance to
counsel for the Company, it is no longer necessary or required) a legend as
follows:
<PAGE>
"The shares of common stock represented by this certificate have not
been registered under the Federal Securities Act of 1933, as amended,
and were acquired by the registered holder, pursuant to a
representation and warranty that such holder was acquiring such shares
for his own account and for investment, with no intention to transfer
or dispose of the same, in violation of the registration requirements
of that Act. These shares may not be sold, pledged, or transferred in
the absence of an effective registration statement under the
Securities Act of 1933, as amended, or an opinion of counsel, which
opinion is reasonably satisfactory to counsel to the Company, to the
effect that registration is not required under said Act."
I further agree that the Company may place a stop order with its
Transfer Agent, prohibiting the transfer of such shares, so long as the
legend remains on the certificates representing the shares.
Very truly yours,
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<FILENAME>hae-10aj.txt
<DESCRIPTION>EXHIBIT 10AJ
<TEXT>
EXHIBIT 10AJ
HAEMONETICS CORPORATION
-----------------------
2000 LONG-TERM INCENTIVE PLAN
-----------------------------
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
WITH
----
Name
----
<PAGE>
HAEMONETICS CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER 2000 LONG-TERM INCENTIVE PLAN
-----------------------------------
AGREEMENT entered into this Twenty-third day of January, 2001 by and
between Haemonetics Corporation, a Massachusetts corporation with a
principal place of business in Braintree, Massachusetts, (the "Company"),
and the undersigned employee of the Company (or one of its subsidiaries)
(the Company and its subsidiaries herein together referred to as the
"Company") (the "Employee").
1. The Company desires to grant the Employee a non-qualified stock
option under the Company's 2000 Long-Term Incentive Plan (the "Plan") to
acquire shares of the Company's common stock, $ .01 par value per share (the
"Common Stock").
2. Section 4 of the Plan provides that each option is to be evidenced
by an option agreement, setting forth the terms and conditions of the
option.
ACCORDINGLY, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Employee
hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to the
Employee a non-qualified stock option (the "Option") to purchase all or any
part of an aggregate of XX,XXX shares of Common Stock (the "Shares") on the
terms and conditions hereinafter set forth. This option shall not be
treated as an incentive stock option under Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price ("Purchase Price") for the
Shares covered by the Option shall be $XX.XXXX per Share.
3. Time of Exercise of Option; Exercisability.
(a) The Option shall not be exercisable prior to January 23,
2002. Thereafter, the Option shall be exercisable as follows:
Percentage of
Shares Becoming Cumulative
Available for Percentage
On or After Exercise Available
----------- --------------- ----------
January 23, 2002 25% 25%
January 23, 2003 25% 50%
January 23, 2004 25% 75%
January 23, 2005 25% 100%
<PAGE>
(b) This option shall be exercisable to the full amount of the
shares covered hereby in the event that (i) the Company is merged into
or consolidated with another corporation under circumstances where the
Company is not the surviving corporation (ii) the Company is
liquidated or sells or otherwise disposes of all or substantially all
of its assets to another corporation, or (iii) a Change of Control
occurs before this option has been exercised in full. For purposes
hereof a "Change in Control" shall be deemed to have occurred if any
persons, who prior to such time owned less than thirty-five percent
(35%) of the then outstanding 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.
4. Term of Options; Exercisability.
(a) Term.
(1) Each Option shall expire not more than ten (10) years
from the date of the granting thereof, but shall be subject to
earlier termination as herein provided.
(2) Except as otherwise provided in this Section 4, if
the Employee ceases to be an employee of the Company, the Option
granted to the Employee hereunder shall terminate three months
after the date such Employee ceases to be an employee of the
Company, or on the date on which the Option expires by its
terms, whichever occurs first.
(3) If such termination of employment is because of
dismissal for cause or because the Employee is in breach of any
employment agreement, such Option will terminate on the date the
Employee ceases to be an employee of the Company.
(4) If such termination of employment is because the
Employee has become permanently disabled (within the meaning of
Section 22(e)(3) of the Code), such Option shall terminate one
year from the date such Employee ceases to be an employee, or on
the date on which the Option expires by its terms, whichever
occurs first.
(5) If such termination of employment is because the
Employee has retired from the Company in good standing for
reasons of age under then established pension, social security
or other retirement benefit rules and regulations of the
Employee's payroll home country, such Option shall terminate two
years from the date such Employee ceases to be an employee, or
on the date on which the Option expires by its terms, whichever
occurs first.
(6) In the event of the death of the Employee while in
the employ of the Company, the Option granted to such Employee
shall terminate one year following such death, or on the date on
which the Option expires by its terms, whichever occurs first.
<PAGE>
(b) Exercisability.
If the Employee ceases to be an employee of the Company,
the Option granted to the Employee hereunder shall be
exercisable only to the extent that the right to purchase Shares
under such Option has accrued and is in effect on the date such
Employee ceases to be an employee of the Company.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has
accrued and is in effect, the Option may be exercised in full or in
part by giving written notice to the Company stating the number of
Shares exercised and accompanied by payment in full for such Shares.
Payment may be either wholly in cash or, with the consent of the
Committee, in whole or in part in Shares of the common stock of the
Company already owned by the person exercising the Option, valued at
fair market value. 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 the Company to the person
exercising the Option.
(b) The Company shall at all times during the term of the
Option reserve and keep available such number of Shares of its common
stock as will be sufficient to satisfy the requirements of the Option.
The Employee shall not have any of the rights of a stockholder of the
Company in respect of the Shares until one or more certificates for
such Shares shall be delivered to him or her upon the due exercise of
the Option.
6. Non-Transferability. The right of the Employee to exercise the
Option shall not be assignable or transferable by the Employee 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, and the
Option may be exercised during the lifetime of the Employee only by him or
her. The Option shall be null and void and without effect upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by
operation of law, pledge, hypothecation or other disposition contrary to the
provisions hereof, or levy of execution, attachment, trustee process or
similar process, whether legal or equitable, upon the Option.
7. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued
upon exercise of the Option shall not be effectively registered under
the Securities Act of 1933 (the "1933 Act"), upon any date on which
the Option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in a form
satisfactory to the Company and the Company shall place an "investment
legend," so-called upon any certificate for the Shares issued by
reason of such exercise.
(b) The Company shall be under no obligation to qualify Shares
or to cause a registration statement or a post-effective amendment to
any registration statement to be prepared for the purposes of covering
the issue of Shares.
<PAGE>
8. Adjustments on Changes in Capitalization. Adjustments on Changes
in Capitalization and the like shall be made in accordance with Section 5 of
the Plan, as in effect on the date of this Agreement.
9. No Special Employment Rights. Nothing contained in the Plan or
this Agreement shall be construed or deemed by any person under any
circumstances to bind the Company to continue the employment of the Employee
for the period within which this Option may be exercised. However, during
the period of the Employee's employment, the Employee shall render
diligently and faithfully the services which are assigned to the Employee
from time to time by the Board of Directors or by the executive officers of
the Company and shall at no time take any action which directly or
indirectly would be inconsistent with the best interests of the Company.
10. Rights as a Shareholder. The Employee shall have no rights as a
shareholder with respect to any Shares which may be purchased by exercise of
this Option unless and until a certificate or certificates representing such
Shares are duly issued and delivered to the Employee. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
11. Withholding Taxes. Whenever Shares are to be issued upon
exercise of this Option, the Company shall have the right to require the
Employee to remit to the Company an amount sufficient to satisfy all
Federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such Shares.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal to be hereto affixed by its officer
thereunto duly authorized, and the Employee has hereunto set his or her hand
and seal, all as of the day and year first above written.
HAEMONETICS CORPORATION
By:_____________________________
Title: President
EMPLOYEE
Name:___________________________
Address:________________________
________________________
Social Security
No:_____________________________
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>10
<FILENAME>hae-10ak.txt
<DESCRIPTION>EXHIBIT 10AK
<TEXT>
EXHIBIT 10AK
HAEMONETICS CORPORATION
-----------------------
2000 LONG-TERM INCENTIVE PLAN
-----------------------------
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
WITH
----
Name
----
<PAGE>
HAEMONETICS CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER 2000 LONG-TERM INCENTIVE PLAN
-----------------------------------
AGREEMENT entered into this first day of May, 2001 by and between
Haemonetics Corporation, a Massachusetts corporation with a principal place
of business in Braintree, Massachusetts, (the "Company"), and the
undersigned director of the Company (the "Director").
1. The Company desires to grant the Director a non-qualified stock
option under the Company's 2000 Long-Term Incentive Plan (the "Plan") to
acquire shares of the Company's common stock, $ .01 par value per share (the
"Common Stock").
2. Section 4 of the Plan provides that each option is to be evidenced
by an option agreement, setting forth the terms and conditions of the
option.
ACCORDINGLY, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Director
hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to the
Director a non-qualified stock option (the "Option") to purchase all or any
part of an aggregate of XX,XXX shares of Common Stock (the "Shares") on the
terms and conditions hereinafter set forth. This option shall not be
treated as an incentive stock option under Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price ("Purchase Price") for the
Shares covered by the Option shall be $XX.XXXX per Share.
3. Time of Exercise of Option; Exercisability.
(a) The Option shall not be exercisable prior to May 1, 2001.
Thereafter, the Option shall be exercisable as follows:
Percentage of
Shares Becoming Cumulative
Available for Percentage
On or After Exercise Available
----------- --------------- ----------
May 1, 2001 100% 100%
<PAGE>
(b) This option shall be exercisable to the full amount of the
shares covered hereby in the event that (i) the Company is merged into
or consolidated with another corporation under circumstances where the
Company is not the surviving corporation (ii) the Company is
liquidated or sells or otherwise disposes of all or substantially all
of its assets to another corporation, or (iii) a Change of Control
occurs before this option has been exercised in full. For purposes
hereof a "Change in Control" shall be deemed to have occurred if any
persons, who prior to such time owned less than thirty-five percent
(35%) of the then outstanding 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.
4. Term of Options; Exercisability.
(a) Term.
(1) Each Option shall expire not more than ten (10) years
from the date of the granting thereof, but shall be subject to
earlier termination as herein provided.
(2) If the Director ceases to be a director of the
Company for any reason, the Option granted to the Director
hereunder shall terminate two years after the date such Director
ceases to be a director of the Company, or on the date on which
the Option expires by its terms, whichever occurs first,
provided however that if termination as a Director was by the
Company for cause, the Option shall terminate immediately.
(b) Exercisability.
If the Director ceases to be a director of the Company,
the Option granted to the Director hereunder shall be
exercisable only to the extent that the right to purchase Shares
under such Option has accrued and is in effect on the date such
Director ceases to be a director of the Company.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has
accrued and is in effect, the Option may be exercised in full or in
part by giving written notice to the Company stating the number of
Shares exercised and accompanied by payment in full for such Shares.
Payment may be either wholly in cash or, with the consent of the
Committee, in whole or in part in Shares of the common stock of the
Company already owned by the person exercising the Option, valued at
fair market value. 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 the Company to the person
exercising the Option.
(b) The Company shall at all times during the term of the
Option reserve and keep available such number of Shares of its common
stock as will be sufficient to satisfy the requirements of the Option.
The Director shall not have any of the rights of a stockholder of the
Company in respect of the Shares until one or more certificates for
such Shares shall be delivered to him or her upon the due exercise of
the Option.
<PAGE>
6. Non-Transferability. The right of the Director to exercise the
Option shall not be assignable or transferable by the Director 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. The
Option may be exercised during the lifetime of the Director only by him or
her. The Option shall be null and void and without effect upon any
attempted assignment or transfer, except as hereinabove 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 the
Option. Notwithstanding the general prohibition on the transfer, sale, or
other disposition of options under the terms of the Plan and this Agreement,
the options granted under this Agreement may be transferred by gift to one
or more "family members" (as defined in the instructions to Form S-8), or
for value to any entity in which more than fifty percent (50%) of the voting
interests are owned by family members (or the director) in exchange for an
interest in that entity. The directors, family members, and any such
entities shall execute and deliver such documents, and shall adhere to any
procedures, as the Committee shall require in order to accommodate any
request by the director to transfer the options.
7. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued
upon exercise of the Option shall not be effectively registered under
the Securities Act of 1933 (the "1933 Act"), upon any date on which
the Option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in a form
satisfactory to the Company and the Company shall place an "investment
legend," so-called upon any certificate for the Shares issued by
reason of such exercise.
(b) The Company shall be under no obligation to qualify Shares
or to cause a registration statement or a post-effective amendment to
any registration statement to be prepared for the purposes of covering
the issue of Shares.
8. Adjustments on Changes in Capitalization. Adjustments on Changes
in Capitalization and the like shall be made in accordance with Section 5 of
the Plan, as in effect on the date of this Agreement.
9. Rights as a Shareholder. The Director shall have no rights as a
shareholder with respect to any Shares, which may be purchased by exercise
of this Option unless and until a certificate or certificates representing
such Shares are duly issued and delivered to the Director. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date
such stock certificate is issued.
10. Withholding Taxes. Whenever Shares are to be issued upon
exercise of this Option, the Company shall have the right to require the
Director to remit to the Company an amount sufficient to satisfy all
Federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such Shares.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal to be hereto affixed by its officer
thereunto duly authorized, and the Director has hereunto set his or her hand
and seal, all as of the day and year first above written.
HAEMONETICS CORPORATION
By:_____________________________
Title: President & CEO
DIRECTOR
Name:___________________________
Address:________________________
________________________
Social Security
No:_____________________________
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>11
<FILENAME>hae-10al.txt
<DESCRIPTION>EXHIBIT 10AL
<TEXT>
EXHIBIT 10AL
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is entered into
effective as of October 23, 1998 (the "Effective Date"), and amended as of
September 27, 2000, between Bob Ebbeling (the "Executive") resident at 135
Pimlico Pond Road, Mashpee, MA 02649 and Haemonetics Corporation (the
"Company"), a Massachusetts corporation with its principal executive offices
at 400 Wood Road, Braintree, Massachusetts 02184.
ARTICLE 1. EMPLOYMENT OF EXECUTIVE
1.1 Employment. Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive in a full time capacity to serve as Sr.
Vice President, Manufacturing of the Company and to perform such specific
duties as any reasonably be assigned to Executive from time to time by the
Company's President for the period commencing on the Effective Date and
continuing until terminated as herein provided. Executive hereby accepts
such employment for the term hereof.
1.2 Full Time Commitment. During the period of Executive's employment with
the Company, Executive will, unless prevented by ill health, devote his
whole attention and business time to the performance of his duties hereunder
for the business of the Company.
<PAGE> 1
ARTICLE 2. COMPENSATION
For all services to be rendered by Executive to the Company pursuant
to this Agreement, the company shall pay to Executive the compensation and
provide for Executive the benefits set forth below:
2.1 Base Salary. The Company shall pay to Executive a base salary at the
rate of $210,000 per annum until May 1, 1999 and at that time will be
reviewed for a potential change. In addition, the Executive will have a
bonus plan. For FY99, the 100% performance and payout is set at $90,000.
This will also be reviewed annually to correspond with the date of the base
salary review.
2.2 Fringe Benefits. During the term of Executive's employment hereunder
the Company shall provide Executive with such benefits as are generally made
available by the Company to its other full time executive employees,
including reasonable travel expenses incurred while engaged in Company
business.
2.3 Participation In Share Option Plan. Executive shall be entitled to
participate in the Company's Non-Qualified Stock Option Plan (the "Plan") as
approved from time to time by the Board of Directors.
2.4 Option Grant. Upon execution of this Agreement, Executive shall
receive 10,000 non-qualified stock options for common stock of the Company
at the price which is the N.Y.S.E. close price on October 23, 1998. All such
options shall vest 25% per year over four years, with the first 25% to vest
12 months after the date of grant, and additional 25% vesting to occur on
each of the next three 12 month anniversaries of the date of grant.
<PAGE> 2
ARTICLE 3. TERMINATION
3.1 Term. Unless earlier terminated as herein provided, Executive's
employment shall commence on the effective date and continue for an initial
period ending on January 30, 2001. Executive's employment with the Company
shall automatically be renewed on a year-to-year basis unless either party
notifies the other party otherwise at least ninety (90) days prior to
termination of the initial term or of any renewal term.
3.2 Termination for Cause - by the Company. The Company may terminate
Executive's employment for "Cause" upon the occurrence of any of the
following events:
(i) Executive shall have willfully failed or continued to fail
substantially to perform his duties hereunder (other than any failure
resulting from Executive's incapacity due to physical or mental
illness) for 30 days after a written demand for performance is
delivered to Executive on behalf of the Company which specifically
identifies the manner in which it is alleged that Executive has not
substantially performed his duties; provided that the Company's
economic performance or failure to meet any specific projection shall
not, in and of itself, constitute "Cause."
(ii) Executive shall have engaged in (A) any misappropriation of
funds, properties or assets of the Company, (B) any malicious damage
or destruction of any property or assets of the Company, whether
resulting from Executive's willful action or omissions or negligence,
or (C) any falsification of any books, records, documents or systems
of the Company.
(iii) Executive shall (A) have been convicted of a crime involving
moral turpitude or constituting a felony, or (B) commit or knowingly
allow to be committed any illegal action on any premises of, or
involving any property or assets of, the Company.
<PAGE> 3
3.3 Termination for Cause - by Executive. Executive may terminate his
employment with the Company for "Cause" upon the occurrence of any of the
following events:
(i) the Company shall breach any of the material provisions of this
Agreement and such breach shall remain uncured by or on behalf of the
company within thirty (30) days following its receipt of notice from
Executive which specifically identifies the manner in which it is
alleged that Company committed such breach;
(ii) the Company shall fail to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement, as
contemplated in Section 5.4;
(iii) a materially adverse change in the responsibilities assigned to
Executive by the Company or in the compensation and benefits paid by
Company to the Executive shall have occurred such material adverse
change shall remain uncured by or on behalf of the Company within
thirty (30) days following its receipt of notice from Executive
specifically identifying such material adverse change; or
(iv) a materially adverse change in Executive's title shall have
occurred. Executive's right to terminate his employment pursuant to
this section shall not be affected by his incapacity due to physical
or mental illness. Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting a Cause for termination by the Executive of
the Company.
3.4 Change in Control. If, following a "Change in Control" (as defined
below), Executive's full time position with the Company is eliminated or
permanently transferred to a location other than its present location, and
following such elimination or transfer, the Company does not offer to employ
Executive in a comparable or better position in his current location, on a
full-time basis, at a
<PAGE> 4
comparable or better rate of pay, then Executive shall be entitled to
severance payments and benefits in accordance with Article 4 below, provided
however that severance payments shall be made in lump sum, and in an amount
which equals one and one-half (1.5) times then current Base Salary. For
purposes of this Agreement, a "Change in Control" shall mean a change in
control of the Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not the Company is, in fact, required to comply therewith;
provided that, without limitation, such a change in control for purposes of
this Agreement shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the company representing 51% or more of
the combined voting power of the Company's then outstanding
securities;
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 50%
of the combined voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or
(B) a merger or consolidation effected to implement a recapitalization
of the company (or similar
<PAGE> 5
transaction) in which no "person" (as herein above defined) acquires
50% or more of the combined voting power of the Company's then
outstanding securities; or
(iii) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
3.5 Death. In the event of the death of Executive, Executive's employment
by the Company shall automatically terminate as of the date of his death.
3.6 Disability. In the event of the Disability of the Executive, as
defined herein, the Company may terminate Executive's employment hereunder
upon written notice to Executive. The term "Disability" shall mean the
inability of Executive to perform substantially his material duties
hereunder due to physical or mental disablement which continues for a period
of one hundred eighty (180) consecutive days, as determined by an
independent qualified physician mutually acceptable to the Company and
Executive (or his personal representative) or, if the Company and Executive
(or such representative) are unable to agree on an independent qualified
physician, as determined by a panel of three physicians, one designated by
the Company, one designated by Executive (or his personal representative)
and one designated by the two physicians so designated.
ARTICLE 4. SEVERANCE PAYMENTS AND BENEFITS
4.1 Termination Events Resulting in Severance Payments. In the event of
the termination of the Executive's employment:
(i) by the company without "Cause," or
(ii) under Section 3.3 or 3.4,
<PAGE> 6
then the Company shall pay Executive, as a severance payment, an amount
equal to Executive's annual base salary as set forth in section 2.1 and such
payment shall be made in twelve (12) equal monthly payments during the
period commencing on the date such termination occurs (the "Termination
Date") and ending one (1) year thereafter (the "Severance Period"),.
4.2 Benefits. If Section 4.1 is applicable, the Company shall also provide
to Executive during the Severance Period, at the Company's expense, such
benefits as are in effect and applicable to Executive as of the Termination
Date, except to the extent expressly prohibited by the terms of such
benefits.
4.3 Comparable Benefits: Continuation of Benefits . If by operation of law
or under the terms of the relevant plan, program or policy, Executive is not
eligible to receive any of the payments or benefits described in the
foregoing Section 4.2 during the Severance Period, then the Company shall
provide to Executive substantially equivalent benefits or, at Executive's
election, the cash value of equivalent benefits.
ARTICLE 5. PROPRIETARY INFORMATION AND NON-COMPETITION
5.1 For the purposes of this Article 5, the following shall have the
designated meanings.
5.1.1. Proprietary Information: Information of value to the Company
and not generally available to the public of whatever kind of nature
disclosed to the Executive or known by the Executive (whether or not
invented, discovered or developed by the Executive) as a consequence
of or through the Executive's employment with the Company. Proprietary
Information shall include information relating to the design,
manufacture, application, know-how, research and development relating
to the Company's products, sources of supply and
<PAGE> 7
material, operating and other cost data, lists of present, past, or
prospective customers, customer proposals, price lists and data
relating to pricing of the Company's products or services, and shall
specifically include all information contained in manuals, memoranda,
formulae, plans, drawings and designs, specifications, supply sources,
and records of the Company legended or otherwise identified by the
company as Proprietary Information, whether learned by the Executive
prior to or after the date hereof.
5.1.2 Concepts and Ideas: Those concepts and ideas known to the
Executive relating to the Company's present and prospective activities
and products.
5.1.3 Inventions: Discoveries and developments, whether or not
patentable. Such terms shall not be limited to the meaning of
"invention" under the United States Patent Laws.
5.2 All Inventions which are at any time "made" i.e., conceived or reduced
to practice by the Executive, and all Concepts and Ideas held by Executive,
acting alone or in conjunction with others, during or in connection with the
Executive's employment (or, if based on or related to Proprietary
Information, "made" by the Executive within twelve (12) months after the
termination of such employment) and all Concepts and Ideas held by the
Executive shall be the property of the Company, free of any reserved or
other rights of any kind on the Executive's part in respect thereof.
5.3 The Executive will promptly make full disclosure to the Company in
writing to the Manager of Engineering or the Manager of Research and
Development of any such Inventions and Concepts and Ideas. Further, the
Executive will, at the Company's costs and expense, promptly execute formal
applications for patents and also do all other acts and things (including,
among other, the execution and delivery of instruments of further assurance
or confirmation) deemed by the Company to be necessary or desirable at any
time or times in order to effect the full assignment to the Company of all
right and title to
<PAGE> 8
such Inventions and Concepts and Ideas, without, during the term of this
Agreement, further compensation. The absence of a request by the Company for
information, or for the making of an oath, or for the execution of any
document, shall in no way be construed to constitute a waiver of the
Company's rights under this Agreement.
5.4 Except as required by the Executive's duties hereunder, the Executive
will not, directly or indirectly, use, publish, disseminate, or otherwise
disclose any Proprietary Information, Concepts and Ideas or Inventions
without the prior written consent of the Company.
5.5. All documents, procedural manuals, guides, specifications, plans,
drawings, designs and similar materials, lists of present, past or
prospective customers, customer proposals, invitations to submit proposals,
price lists and data relating to pricing of the Company's products and
services, records, notebooks and similar repositories of or containing
Proprietary Information and Inventions, including all copies thereof, that
come into the Executive's possession or control by reasons of the
Executive's employment, whether prepared by the Executive or others, are the
property of the Company, will not be used by the Executive in any way
adverse to the Company, will not be removed from the Company's premises
except as the Executive's normal duties require and, at the termination of
the Executive's employment with the company, will be left with or forthwith
returned by the Executive to the Company.
5.6 During the time the Executive is an employee of the Company and for a
period of one (1) year thereafter, the Executive will not engage in any
activity, on his own behalf or on behalf of any competitor of the Company,
which is in the field of blood processing and involves activities similar to
those performed at the Company, nor will the Executive endeavor to entice
away from the Company any employee whether on the Executive's behalf or on
the behalf of another while the Executive is an employee and for a period of
one (1) year thereafter.
<PAGE> 9
ARTICLE 6. MISCELLANEOUS
6.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
6.2 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, successors and
assigns. If Executive should die while any amount due to him at such time
remains unpaid, such amount, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to his devisee, legatee or
other designee or if there is no such designee, to his estate.
6.3 Assignment. Except as otherwise provided in Section 5.4, neither this
Agreement nor any rights or obligations hereunder shall be assignable by
either party hereto without the prior written consent of the other party.
6.4 Obligation of the Company's Successors. Any successor to the business
of the Company, whether directly or indirectly by merger, consolidation,
recapitalization, combination, purchase of stock, purchase of assets or
otherwise, shall succeed to the rights and obligations of the Company
hereunder. The Company will require any such successor to expressly assume
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place.
6.5 Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration conducted
before a panel of three arbitrators in the Commonwealth of Massachusetts in
accordance with the rules of the
<PAGE> 10
American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction.
6.6 Notices. All notices, requests, demand and other communications to be
given pursuant to this Agreement shall be in writing and shall be deemed to
have been duly given if delivered by hand or mailed by registered or
certified mail, return receipt requested, postage prepaid, as follows:
If to the Company, to:
Haemonetics Corporation
400 Wood Road
Braintree, MA 02184
If to Executive, to: 135 Pimlico Pond Road
Mashpee, MA 02649
or such other address as either party hereto shall have designated by notice
in writing to the other party.
6.7 Amendments. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of the Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time.
<PAGE> 11
6.8 Governing Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
6.9 Severability. In case of any provision hereof shall, for any reason,
be held to be invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid or unenforceable provision
had not been included herein. If any provision hereof shall, for any reason,
be held by a court to be excessively broad as to duration, geographical
scope, activity or subject matter, it shall be construed by limiting and
reducing it to make it enforceable to the extent compatible with applicable
law then in effect.
6.10 Withholding. Any payments provided for hereunder shall be paid after
deducting any applicable withholding required under federal, state or local
law.
6.11 Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto with
respect to the subject matter hereof. A certain Patent, Trade Secrets and
Confidential Information Agreement between the Company and the Executive
dated October 1, 1979 is hereby terminated and canceled in its entirety. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement.
6.12 Confidentiality. This Agreement, including the terms thereof, shall
not be disclosed by Executive other than to Executive's a) spouse, b) legal
counsel or c) financial advisor, or d) if required by law or court order,
but only if Company is first
<PAGE> 12
notified or Executive's reasonable belief that such disclosure is necessary
and given an opportunity to secure a protective order prohibiting or
limiting disclosure.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement under seal as of the date first above written.
/s/ Bob Ebbeling /s/ James Peterson
- ----------------------------- ------------------------------
Date: October 23, 1998
----------------
September 27, 2000
------------------
<PAGE> 13
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>12
<FILENAME>haek-x21.txt
<DESCRIPTION>EXHIBIT 21
<TEXT>
EXHIBIT 21
SUBSIDIARIES OF HAEMONETICS CORPORATION
Jurisdiction of
Name Incorporation
---- ---------------
Haemonetics S.A. Switzerland
Haemonetics Scandinavia, AB Sweden
Haemonetics GmbH Germany
Haemonetics France S.A.R.L. France
Haemonetics Limited England
Haemonetics (U.K.) Limited Scotland
Haemonetics Japan K.K. Japan
Haemonetics Foreign Sales Corp. U.S. Virgin Islands
Haemonetics Belgium N.V. Belgium
Haemonetics B.V. Netherlands
Haemonetics Italia S.R.L. Italy
Haemonetics GesmbH Austria
Haemonetics Asia Inc., with branch in Taiwan Delaware
Haemonetics Hong Kong Ltd. Hong Kong
Haemonetics CZ, s.p.o.l., S.r.o. Czech Republic
Haemonetics Medical Devices (Shanghai) People's Republic of
Trading Co. Ltd. China
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>13
<FILENAME>haek-231.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC AUDITORS
We consent to the incorporation by reference in the Registration Statements
(33-42005, 33-42006, 33-70932, 33-70934, 33-80652, 333-61453, 333-61455,
333-60020 and 333-62598) of Haemonetics Corporation and in the related
Prospectus of our report dated April 22, 2003, with respect to the
consolidated financial statements and schedule of Haemonetics Corporation
included in this Annual Report (Form 10-K) for the year ended March 29,
2003.
S/ERNST & YOUNG LLP
Boston, Massachusetts
June 6, 2003
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>14
<FILENAME>haek-232.txt
<DESCRIPTION>EXHIBIT 23.2
<TEXT>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
THE FOLLOWING IS A COPY OF THE CONSENT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP. THIS CONSENT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.
As independent public accountants, we hereby consent to the
incorporation of our report dated April 22, 2002, included in this Form 10-
K, into the Company's previously filed Registration Statement File Nos. 33-
42005, 33-42006, 33-70932, 33-70934, 33-80652, 333-61453,333-61455, 333-
60020 and 333-62598. It should be noted that we have not audited any
financial statements of the Company subsequent to March 30, 2002 or
performed any audit procedures subsequent to the date of our report.
S/ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 6, 2002
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>15
<FILENAME>haek-991.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
EXHIBIT 99.1
Certification Pursuant To
18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of the Sarbanes/Oxley Act of 2002
In connection with the Annual Report of Haemonetics Corporation (the
"Company") on Form 10-K for the period ended March 29, 2003 as filed with
the Securities and Exchange Commission (the "Report"), I, Brad Nutter,
President and Chief Executive Officer of the Company, certify, pursuant to
Section 1350 of Chapter 63 of Title 18, United States Code, that this
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and that the information contained in
this Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: June 6, 2003
s/Brad Nutter
---------------------
Brad Nutter
President and Chief Executive Officer
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>16
<FILENAME>haek-992.txt
<DESCRIPTION>EXHIBIT 99.2
<TEXT>
EXHIBIT 99.2
Certification Pursuant To
18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of the Sarbanes/Oxley Act of 2002
In connection with the Annual Report of Haemonetics Corporation (the
"Company") on Form 10-K for the period ended March 29, 2003 as filed with
the Securities and Exchange Commission (the "Report"), I, Ronald J. Ryan,
Senior Vice President and Chief Financial Officer of the Company, certify,
pursuant to Section 1350 of Chapter 63 of Title 18, United States Code,
that this Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 and that the information
contained in this Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
Date: June 6, 2003
s/Ronald J. Ryan
---------------------
Ronald J. Ryan
Senior Vice President and Chief
Financial Officer
<PAGE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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