Haemonetics
Annual Report 2002

Plain-text annual report

H A E M O N E T I C S ® L e a d e r s h i p a n d I n n o v a t i o n T o I m p r o v e l B o o d S a f e t y a n d A v a i l a b i l i t y A N N U A L R E P O R T 2 0 0 2 HAEMONETICS® 400 Wood Road Braintree, Massachusetts, USA 02184-9114 781-848-7100 www.haemonetics.com HAEMONETICS® A N N U A L R E P O R T 2 0 0 2 Leadership and Innovation To Improve Blood Safety and Availability HAEMONETICS is a worldwide supplier of automated systems used in the collection of blood from donors and in the recovery of blood lost during surgery. The Company has an unparalleled reputation for product innovation, technical expertise, and operational excellence. For thirty years, Haemonetics’ marketing and product development have reflected the Company’s unwavering focus on helping to meet the need for a safe and available blood supply. The Company’s automated blood collection systems can improve efficiency, cost effective- ness, regulatory compliance, blood supply management, and often even the donation experience. Most importantly, though, these systems can increase blood inventories or reduce the need for donor blood. With a shrinking global blood supply, market demand for Haemonetics’ products is greater than ever. Haemonetics employs more than 1,500 people worldwide and markets its products in more than 50 countries. H A E M O N E T I C S ® L e a d e r s h i p a n d I n n o v a t i o n T o I m p r o v e l B o o d S a f e t y a n d A v a i l a b i l i t y A N N U A L R E P O R T 2 0 0 2 HAEMONETICS® 400 Wood Road Braintree, Massachusetts, USA 02184-9114 781-848-7100 www.haemonetics.com HAEMONETICS® A N N U A L R E P O R T 2 0 0 2 Leadership and Innovation To Improve Blood Safety and Availability HAEMONETICS is a worldwide supplier of automated systems used in the collection of blood from donors and in the recovery of blood lost during surgery. The Company has an unparalleled reputation for product innovation, technical expertise, and operational excellence. For thirty years, Haemonetics’ marketing and product development have reflected the Company’s unwavering focus on helping to meet the need for a safe and available blood supply. The Company’s automated blood collection systems can improve efficiency, cost effective- ness, regulatory compliance, blood supply management, and often even the donation experience. Most importantly, though, these systems can increase blood inventories or reduce the need for donor blood. With a shrinking global blood supply, market demand for Haemonetics’ products is greater than ever. Haemonetics employs more than 1,500 people worldwide and markets its products in more than 50 countries. Financial Highlights1 Haemonetics has a strong financial position and cash flow. Ninety percent of sales are from single-use disposable kits. Sixty percent of sales are international. FY02 Growth at Constant Currency Disposable Sales by Product Line Letter to Shareholders G L O B A L M A R K E T TA B L E O F C O N T E N T S Net Sales Operating Income (adjusted) Net Income (adjusted) Earnings per Share (adjusted) $320 million $46 million $37 million $1.37 13% 41% 36% 30% Operating Income % of Sales Net Income % of Sales Operating Cash Flow Adjusted 14.5% 12.5% 12.0% Adjusted Dollars in millions 11.6% 10.1% 9.1% $43 $40 $25 FY: 00 01 02 FY: 00 01 02 FY: 00 01 02 1 The financial highlights above are adjusted and exclude unusual charges. In fiscal year 2002, Haemonetics paid $10 million for access to platelet pathogen inactivation technology. In 2001, the Company purchased Transfusion Technologies, representing $23 million of in-process R&D and unusual charges. In 2000, reported numbers were affected by $13 million of in-process R&D and unusual charges. In these highlights, operating cash flow is net income adjusted for depreciation, amortization and other non-cash items; capital expenditures for property, plant and equipment together with the investment in Haemonetics equipment, including sales-type leases; and the change in operating working capital. For more detailed financial information, please see the Company’s Form 10-K, included in this book. Red Cell $10.5 million Surgical $66 million Blood Bank $102 million Plasma $109 million Supporting a Dynamic Industry Blood Safety through Surgical Salvage Platelet Collection to Advance Cancer Treatment Plasma for Pharmaceutical Manufacturing Total Sales by Geography Tremendous Opportunity in Red Cell Market North America $124 million Asia $116 million Europe $79 million Board of Directors Form 10-K Executive Officers and Management 2 4 6 12 18 24 30 31 74 Corporate Directory and Investor Information Inside Back Cover C O R P O R AT E D I R E C T O RY Haemonetics Corporation (Corporate Headquarters) 400 Wood Road Braintree, MA 02184 USA Phone: 781-848-7100 Fax: 781-356-3558 http://www.haemonetics.com Building 18, Avenue C Buncher Industrial Park Leetsdale, PA 15056 USA Phone: 412-741-7399 Fax: 412-741-7458 155 Medical Sciences Drive Union, SC 29379 USA Phone: 864-427-6293 Fax: 864-427-1668 Haemonetics GesmbH Handelsges.m.b.H Berlagasse 45/B2-02 A-1210 Wien Austria Phone: +43-1-294-2900 Fax: +43-1-294-2905 Haemonetics Belgium N.V. Leuvensesteenweg 542, B.P. 14 Planet II Complex 1930 Zaventum Belgium Phone: +32-2-720-7484 Fax: +32-2-720-7155 http://www.haemonetics.be Fifth Dimension Information Systems A Haemonetics Company Suite 500, Merrill Lynch Tower Edmonton Centre Edmonton, Alberta T5J 2Z2 Canada Phone: 780-425-6560 Fax: 780-420-6562 http://www.fifthd.ca Haemonetics Medical Devices (Shanghai) Trading Co., Ltd. Room 032.28F.HSBC Tower 101 Yin Cheng Rd. (E) Shanghai 200120 People’s Republic of China Phone: 86-21-5066-3366 Fax: 86-21-6841-3688 Haemonetics CZ, spol. S.r.o. Ptaˇsínského 8 602 00 Brno Czech Republic Phone: +42-054121-2400 Fax: +42-054121-2399 Haemonetics France S.A.R.L. 46 bis, rue Pierre Curie Z.I. Les Gâtines 78370 Plaisir France Phone: +33-1-308-141-41 Fax: +33-1-308-141-30 Haemonetics GmbH Rohrauerstrasse 72 D-81477 Munich Germany Phone: +49-89-785-8070 Fax: +49-89-780-9779 http://www.haemonetics.de Haemonetics Hong Kong Ltd. Suite 1314, 13/Floor Two Pacific Place 88 Queensway Hong Kong Phone: +852-2868-9218 Fax: +852-2801-4380 Haemonetics Italia S.R.L. Via Donizetti, 30 20020 Lainate - Milan Italy Phone: +39-02-935-70113 Fax: +39-02-935-72132 Haemonetics Japan K.K. Kyodo Building 16-banchi, Ichiban-cho Chiyoda-ku, Tokyo 102-0082 Japan Phone: +81-3-3237-7260 Fax: +81-3-3237-7330 http://www.haemonetics.co.j Haemonetics BV Citco-WTO P/O 7241 Strawinskylaan 1725 1007 JE Amsterdam Netherlands Phone: 31-35-602-3425 Fax: 31-35-602-4198 http://www.haemonetics.nl Haemonetics AB Retahuset Ideon S-223 70 Lund Sweden Phone: +46-46286-2320 Fax: +46-46286-2321 http://www.haemonetics.se Haemonetics S.A. Signy Center P.O. Box 262 1274 Signy 2 Switzerland Phone: +41-22-363-9011 Fax: +41-22-363-9054 Haemonetics Asia Inc. Taiwan Branch 26F-1, No. 102 Roosevelt Road Section 2 Taipei Taiwan Phone: +886-2-2369-0722 Fax: +886-2-2364-3698 Haemonetics U.K. Ltd. Beechwood House Beechwood Estate Elmete Lane Roundhay Leeds LS8 2LQ United Kingdom Phone: +44-113-273-7711 Fax: +44-113-273-4055 Design: MediaConcepts Corporation, Assonet, MA www.mediaconceptscorp.com 5 Ashley Drive Bothwell, Stratheclyde G71 8B5 Scotland Phone: 44-1698-819700 Fax: 44-1698-811811 I N V E S T O R I N F O R M AT I O N Stock Listing The Company’s stock is traded on the New York Stock Exchange under the symbol HAE. Transfer Agent and Registrar Inquiries concerning the transfer of shares, lost stock certificates, duplicate mailings or change of address should be directed to: Registrar and Transfer Company 10 Commerce Drive Cranford, NJ 07016 USA 800-368-5948 Auditors Arthur Andersen LLP Boston, Massachusetts, USA Annual Meeting The Annual Meeting of the Stockholders will be held at State Street Bank Building, Boston, MA, USA on July 23, 2002. Investor Relations Alicia Lopez Clerk, Senior Vice President and General Counsel investor@haemonetics.com 781-356-9517 Form 10-K The Company files a form 10-K with the Securities and Exchange Commission. It is available on request from investor relations or at http://www.haemonetics.com. Haemonetics’ Trademarks Haemonetics, Cell Saver, HaemoLite, MCS, PCS, Haemonetics PCS, Ultralite, Haemonetics Ultralite, Plasma Saver, Haemonetics Plasma Saver, R.I.S., CollectFirst, Haemonetics Cell Saver, Haemonetics MCS, Haemonet, Total Apheresis, Chairside Separator, OrthoPAT, ACP, MCS Pro, Dynamic Disk, and Fifth Dimension. Financial Highlights1 Haemonetics has a strong financial position and cash flow. Ninety percent of sales are from single-use disposable kits. Sixty percent of sales are international. FY02 Growth at Constant Currency Disposable Sales by Product Line Letter to Shareholders G L O B A L M A R K E T TA B L E O F C O N T E N T S Net Sales Operating Income (adjusted) Net Income (adjusted) Earnings per Share (adjusted) $320 million $46 million $37 million $1.37 13% 41% 36% 30% Operating Income % of Sales Net Income % of Sales Operating Cash Flow Adjusted 14.5% 12.5% 12.0% Adjusted Dollars in millions 11.6% 10.1% 9.1% $43 $40 $25 FY: 00 01 02 FY: 00 01 02 FY: 00 01 02 1 The financial highlights above are adjusted and exclude unusual charges. In fiscal year 2002, Haemonetics paid $10 million for access to platelet pathogen inactivation technology. In 2001, the Company purchased Transfusion Technologies, representing $23 million of in-process R&D and unusual charges. In 2000, reported numbers were affected by $13 million of in-process R&D and unusual charges. In these highlights, operating cash flow is net income adjusted for depreciation, amortization and other non-cash items; capital expenditures for property, plant and equipment together with the investment in Haemonetics equipment, including sales-type leases; and the change in operating working capital. For more detailed financial information, please see the Company’s Form 10-K, included in this book. Red Cell $10.5 million Surgical $66 million Blood Bank $102 million Plasma $109 million Supporting a Dynamic Industry Blood Safety through Surgical Salvage Platelet Collection to Advance Cancer Treatment Plasma for Pharmaceutical Manufacturing Total Sales by Geography Tremendous Opportunity in Red Cell Market North America $124 million Asia $116 million Europe $79 million Board of Directors Form 10-K Executive Officers and Management 2 4 6 12 18 24 30 31 74 Corporate Directory and Investor Information Inside Back Cover C O R P O R AT E D I R E C T O RY Haemonetics Corporation (Corporate Headquarters) 400 Wood Road Braintree, MA 02184 USA Phone: 781-848-7100 Fax: 781-356-3558 http://www.haemonetics.com Building 18, Avenue C Buncher Industrial Park Leetsdale, PA 15056 USA Phone: 412-741-7399 Fax: 412-741-7458 155 Medical Sciences Drive Union, SC 29379 USA Phone: 864-427-6293 Fax: 864-427-1668 Haemonetics GesmbH Handelsges.m.b.H Berlagasse 45/B2-02 A-1210 Wien Austria Phone: +43-1-294-2900 Fax: +43-1-294-2905 Haemonetics Belgium N.V. Leuvensesteenweg 542, B.P. 14 Planet II Complex 1930 Zaventum Belgium Phone: +32-2-720-7484 Fax: +32-2-720-7155 http://www.haemonetics.be Fifth Dimension Information Systems A Haemonetics Company Suite 500, Merrill Lynch Tower Edmonton Centre Edmonton, Alberta T5J 2Z2 Canada Phone: 780-425-6560 Fax: 780-420-6562 http://www.fifthd.ca Haemonetics Medical Devices (Shanghai) Trading Co., Ltd. Room 032.28F.HSBC Tower 101 Yin Cheng Rd. (E) Shanghai 200120 People’s Republic of China Phone: 86-21-5066-3366 Fax: 86-21-6841-3688 Haemonetics CZ, spol. S.r.o. Ptaˇsínského 8 602 00 Brno Czech Republic Phone: +42-054121-2400 Fax: +42-054121-2399 Haemonetics France S.A.R.L. 46 bis, rue Pierre Curie Z.I. Les Gâtines 78370 Plaisir France Phone: +33-1-308-141-41 Fax: +33-1-308-141-30 Haemonetics GmbH Rohrauerstrasse 72 D-81477 Munich Germany Phone: +49-89-785-8070 Fax: +49-89-780-9779 http://www.haemonetics.de Haemonetics Hong Kong Ltd. Suite 1314, 13/Floor Two Pacific Place 88 Queensway Hong Kong Phone: +852-2868-9218 Fax: +852-2801-4380 Haemonetics Italia S.R.L. Via Donizetti, 30 20020 Lainate - Milan Italy Phone: +39-02-935-70113 Fax: +39-02-935-72132 Haemonetics Japan K.K. Kyodo Building 16-banchi, Ichiban-cho Chiyoda-ku, Tokyo 102-0082 Japan Phone: +81-3-3237-7260 Fax: +81-3-3237-7330 http://www.haemonetics.co.j Haemonetics BV Citco-WTO P/O 7241 Strawinskylaan 1725 1007 JE Amsterdam Netherlands Phone: 31-35-602-3425 Fax: 31-35-602-4198 http://www.haemonetics.nl Haemonetics AB Retahuset Ideon S-223 70 Lund Sweden Phone: +46-46286-2320 Fax: +46-46286-2321 http://www.haemonetics.se Haemonetics S.A. Signy Center P.O. Box 262 1274 Signy 2 Switzerland Phone: +41-22-363-9011 Fax: +41-22-363-9054 Haemonetics Asia Inc. Taiwan Branch 26F-1, No. 102 Roosevelt Road Section 2 Taipei Taiwan Phone: +886-2-2369-0722 Fax: +886-2-2364-3698 Haemonetics U.K. Ltd. Beechwood House Beechwood Estate Elmete Lane Roundhay Leeds LS8 2LQ United Kingdom Phone: +44-113-273-7711 Fax: +44-113-273-4055 Design: MediaConcepts Corporation, Assonet, MA www.mediaconceptscorp.com 5 Ashley Drive Bothwell, Stratheclyde G71 8B5 Scotland Phone: 44-1698-819700 Fax: 44-1698-811811 I N V E S T O R I N F O R M AT I O N Stock Listing The Company’s stock is traded on the New York Stock Exchange under the symbol HAE. Transfer Agent and Registrar Inquiries concerning the transfer of shares, lost stock certificates, duplicate mailings or change of address should be directed to: Registrar and Transfer Company 10 Commerce Drive Cranford, NJ 07016 USA 800-368-5948 Auditors Arthur Andersen LLP Boston, Massachusetts, USA Annual Meeting The Annual Meeting of the Stockholders will be held at State Street Bank Building, Boston, MA, USA on July 23, 2002. Investor Relations Alicia Lopez Clerk, Senior Vice President and General Counsel investor@haemonetics.com 781-356-9517 Form 10-K The Company files a form 10-K with the Securities and Exchange Commission. It is available on request from investor relations or at http://www.haemonetics.com. Haemonetics’ Trademarks Haemonetics, Cell Saver, HaemoLite, MCS, PCS, Haemonetics PCS, Ultralite, Haemonetics Ultralite, Plasma Saver, Haemonetics Plasma Saver, R.I.S., CollectFirst, Haemonetics Cell Saver, Haemonetics MCS, Haemonet, Total Apheresis, Chairside Separator, OrthoPAT, ACP, MCS Pro, Dynamic Disk, and Fifth Dimension. 1 An Industry Leader Meeting Market Needs Haemonetics’ mission is to provide innovative medical devices to advance the safety, quality, and availability of blood components for transfusion worldwide. With this goal in mind, the Company markets systems for use in five important medical areas. Customer Systems End Product Surgical Hospital Collect and “recycle” blood during surgery Red cells for reinfusion to the patient Plasma Plasma Collector Collect plasma Plasma to make pharmaceuticals Platelet Blood Collector Collect platelets Platelets for transfusion Red Cell Blood Collector Collect red cells Red cells for transfusion Cell Processing Blood Collector Freeze and later thaw red cells Frozen blood inventory management and reserves The Company was an innovator in driving automation in each of these markets, and continues to lead in advancements. To support double-digit revenue growth over the next several years, Haemonetics has made major investments in product development and acquisitions. The Company’s new product pipeline is full and it plans to introduce significant new products in FY03 and beyond. Haemonetics also plans to aggressively pursue strategic acquisitions and alliances, working to further advance its market leadership position and meet the needs of this dynamic industry. 2 To Our Shareholders We are happy to report that Haemonetics Corporation had another strong year, with sales gaining momentum and moving into double-digit growth territory. Revenue grew 9% as reported and 13% without the effects of adverse currency exchange rate movements. New products contributed over 10% of sales, and we expect that percentage to double next year. Excluding unusual items, earnings per share grew 20% (30% at constant currency). Our balance sheet remains strong. We are fortunate that ours is not a cyclical business, and Haemonetics has remained largely unaffected by the geopolitical and economical turbulence of the last twelve months. Our role is to provide a solution to one of healthcare’s most pressing problems, the availability of life-saving blood and its components. New products provide new solutions — Despite the well-publicized spikes in donations last fall in the United States and greater awareness of the need for blood worldwide, shortages continue to grow. As the population ages, the need for surgery increases, resulting in a growing demand for blood. Meanwhile, fewer of us can and do donate, leading to a widening gap between supply and demand. Haemonetics’ technologies are an important part of the answer to this problem, as illustrated by the following examples: Haemonetics’ OrthoPAT ® system is a small device that collects and washes red blood cells during and after surgery. It is specifically designed to handle the lower volume, slower blood loss of orthopedic surgical patients, and we expect it to become the product of choice for artificial hip and knee replacements — a large and rapidly growing market. The OrthoPAT system is unique to Haemonetics and is spearheading our penetration into this exciting market. The Haemonetics ACP™ 215 automated cell processing system makes it possible to extend the usable life of frozen blood, after thawing, to 14 days instead of 24 hours (previous usable life). This represents a significant breakthrough. The system is being used by the United States military and major civilian blood collectors to address the need for consistent and adequate blood inventories. Our MCS®+double red cell collection technology is being widely adopted by blood collectors because the process yields twice as much usable blood as manual collection. The procedure has benefits for donors as well, in that they can give more blood with each donation and often feel better than after a manual donation. Acquisitions and alliances present new opportunities — The Company continues to make strategic acquisitions and alliances to strengthen the business. Early in the calendar year 2001 we purchased a bottling plant that manufactures disposable plastic bottles used by our customers to collect plasma, and in January 2002, we acquired Fifth Dimension Information Systems Inc., the leading provider of software products and services for plasma collectors and fractionators. These additions enable us to offer “one-stop shopping” to our plasma collection customers and help them manage their center operations more efficiently. The Fifth Dimension acquisition is particularly important because its products are also applicable outside the plasma collection arena. In the last quarter, the information systems division signed an agreement with the American Red Cross to provide data management systems which will track the collection and disposition of plasma and will support the Red Cross quality control protocols. 3 Last December, we signed an agreement with Baxter International, Inc. that will enable us to integrate our platelet collection devices with the INTERCEPT™ Platelet System, jointly developed by Baxter and Cerus Corporation. The agreement will allow Haemonetics’ customers to collect platelets in the Baxter solution that prepares them for pathogen inactivation and so provides a seamless, cost-effective process for enhanced platelet safety. We are excited about the opportunities represented by these activites and are confident they will be important contributors to our future growth. Further gains in operating efficiency — Now in its fourth successful year, the Company’s Customer Oriented Redesign for Excellence (“CORE”) program has continued to deliver increased productivity, higher product quality, better customer service, and higher operating margins. This year, more than 100 employees were involved in a wide range of programs targeted at raising operational effectiveness. CORE continues to be an important contributor to the sustained improvement in our operating performance and consistent profit growth. Earnings Per Share Adjusted $1.37 $1.14 $0.96 A good investment in a volatile economy — Haemonetics remains a good investment, even during periods of economic uncertainty. The Company is well positioned to respond to the escalating demand for blood. Each of our market segments has its own story to tell and we invite you to read these stories — as well as details about our strong pipeline of new products — in this annual report. Our business is global with substantial sales overseas, and our reported results are inevitably subject to the effect of exchange rate movements — in either direction. Our committed goal is to maintain our underlying annual earnings growth at the 20% level, driven by double-digit sales growth. We offer our sincere thanks to Haemonetics employees for their commitment to our mission, to our customers for selecting us as their vendor, and to you, our shareholders, for your continued support. Yours sincerely, James L. Peterson President and CEO Sir Stuart Burgess Chairman of the Board FY: 00 01 02 New Product Revenue Contribution 20% 10% 4% 01 FY: 02 03 (PROJECTED) 4 Supporting a Dynamic Industry The blood transfusion industry is heavily regulated, with safety and availability of utmost importance. Industry drivers are unique given these contrasting priorities, and Haemonetics has developed technology to address each driver creatively and cost-effectively. Blood Shortages: • Demand continues to outpace supply. • An aging population and advanced medical treatments contribute to increased demand. • Younger generations donate less; people are busier and don’t have time to donate. • Stricter regulations and increased safety prohibit an increasing number of people from donating. • The tragedy of September 11th resulted in a short-term excess supply, but donations have returned to traditional levels and blood shortages are once again a problem. Increased Safety Measures: • To limit the theoretical risk of transmitting “mad cow” disease through blood, the U.S. Food and Drug Administration (“FDA”) recently regulated that donors who have spent a significant amount of time in Europe will be prohibited from donating, reducing the donor pool by up to 8%. • Filtration, or “leukoreduction,” the removal of potentially harmful white cells from blood, is increasingly prevalent in the U.S. and abroad. Fourteen countries currently mandate filtration, and more than 70% of the U.S. blood supply is now filtered. Rising Blood Costs: • Increased safety measures come with costs that increase the price for blood. Filtration alone adds approximately $20 to the cost of collecting a unit of red cells. • While blood is voluntarily donated, blood collectors incur high costs to recruit willing, eligible donors. • As the donor pool contracts with more stringent FDA donor eligibility criteria, recruitment costs increase. Haemonetics provides blood collectors with cost-effective answers that enable them to most efficiently manage their donorbase. Industry trends are driving blood collectors toward automation, and Haemonetics is proud to be proactively helping to ensure the adequacy and stability of the world’s blood supply. 5 Blood component therapy treats patients with the specific components they require, as opposed to using whole blood. It is now integral to the treatment of a wide variety of cancers, blood disorders, surgeries, and more. Below are examples of the blood components used in the treatment of various medical conditions: COMPONENTS OF BLOOD Blood has three key components — plasma, red cells, and platelets — each with a specific therapeutic benefit. Components have traditionally been derived from manual laboratory processing of whole blood. However, all components can also be derived through the automated collection processes pioneered by Haemonetics. Liver transplant: 6-10 units of red cells 20 units of plasma 10 units of platelets Adult open heart surgery: 2-6 units of red cells P L A S M A 2-4 units of plasma 1-10 units of platelets Automobile accident: 4-40 units of red cells Leukemia: 2-6 units of red cells 6-8 units of platelets daily R ED BLOOD CELLS for 2-4 weeks Sickle cell disease: 10-15 units of red cells Plasma is the fluid portion of blood. It can be transfused to patients, but is most often used in the manufacture of protein- based pharmaceuticals. Red Blood Cells carry oxygen throughout the body. They are transfused to surgical or trauma patients to replace red cells they have lost. Platelets aid in clotting. They are transfused to cancer patients when their body’s ability to make platelets is limited by chemotherapy. Source: Jeffrey McCullough, M.D., Center for Molecular and Cellular Therapy, University of Minnesota. P L AT E L E T S 7 Surgical Blood Salvage — For the Safest Possible Blood Surgical blood salvage is a process in which blood lost by a patient during surgery is collected, cleaned, and made available for reinfusion to the patient. It gives a patient and his family peace of mind that he will receive the highest quality and safest blood possible . . . his own. S U R G I C A L D I S P O S A B L E S B U S I N E S S Haemonetics $66 million Competitors $44 million Traditional Cardiovascular Market Range: $110 million 800,000 procedures annually Competitors: Medtronic, COBE Cardiovascular, Fresenius FY02 disposable sales = $66 million +11% at constant currency Blood Flow Through the Cell Saver ® System 8 < FROM PATIENT WHOLE BLOOD RESERVOIR RED BLOOD CELLS BOWL WASTE 1. Blood is suctioned from the wound and stored in a reservoir. 2. Waste is separated from red cells in a centrifuge bowl and sent to a bag. 3. Red cells are stored in a bag until reinfusion to the patient. 10 Innovative Devices Drive Growth in Surgical Product Line As the industry pioneer in surgical blood salvage, Haemonetics has developed a full line of products that are marketed to cardiovascular, orthopedic, and trauma surgeons. The Company’s flagship surgical blood salvage product, the Cell Saver® autologous blood recovery system, collects and cleans a patient’s own blood, making it ready for reinfusion to that patient and thereby minimizing the need for donor blood. The device is used primarily in “open” cardiovascular or trauma procedures characterized by rapid bleeding or high blood volume loss. The benefits of the device, combined with the exemplary quality of Haemonetics’ technology and customer service, have made the Cell Saver system a product of choice within operating rooms throughout the world, and Haemonetics the worldwide leader in surgical blood salvage. Orthopedic medicine is growing rapidly due to recent surgical and technological advances as well as to the increasing orthopedic implant needs of our aging and physically active population. Haemonetics’ new OrthoPAT ® system was designed specifically for surgical blood salvage in orthopedic surgeries and is equipped with the Dynamic Disk™ blood collection chamber. (See photo on previous page.) The system is perfectly suited for orthopedic surgery where blood loss is of lower volume and occurs over a longer period of time. The OrthoPAT system is revolutionary in that orthopedic surgical patients, who historically had to depend on donated blood, can now utilize their own blood, which is the safest and highest quality. Haemonetics’ reputation for reliability, service, and product excellence has already earned it market share of more than half the traditional surgical blood salvage space. The Company’s strategy is to continue to increase market share in the cardiovascular segment and to capitalize on the vast growth potential of new products, led by the OrthoPAT system. Haemonetics is well positioned for continued success in surgical blood salvage. 11 SURGICAL GROWTH OPPORTUNITY HIGHLIGHTS O RT H O PAT S Y S T E M • No competition • First mover advantage • Strong distribution channel in U.S. through Zimmer, Inc. • Rapid sales growth • Untapped market H A E M O N E T I C S ’ E X PA N D E D M A R K E T P O T E N T I A L (Number of procedures in thousands) 2,500 2,000 1,500 1,000 500 0 1,400 Additional Orthopedic Market Potential This chart shows the expanded market available to Haemonetics with the addition of the OrthoPAT system. Surgical blood salvage has traditionally been targeted at cardiovascular surgeries, which represent 800,000 procedures per year. Because the OrthoPAT system was specifically designed for orthopedic surgeries, an additional 1.4 million 800 Cardiovascular Procedures procedures per year are now appropriate for surgical blood salvage. This largely untapped market is growing at approximately 6% per year. 13 Platelet Collection — Helping to Advance Cancer Treatment Platelets aid in clotting and are most often transfused to cancer patients whose ability to make platelets has been limited by chemotherapy. Haemonetics’ platelet collection technology allows blood collectors to obtain one to two transfusable doses of platelets from a single donor. P L AT E L E T ( B L O O D B A N K ) D I S P O S A B L E S B U S I N E S S Haemonetics $102 million Competitors $198 million Market Range: $300 million 3 million automated procedures annually Competitors: Baxter, Gambro BCT, Fresenius FY02 disposable sales = $102 million +1% at constant currency Blood Flow Through the MCS®+ System 14 OTHER COMPONENTS PLATELETS OTHER COMPONENTS < FROM DONOR TO DONOR > WHOLE BLOOD BOWL 1. Blood is collected from a donor and flows into a centrifuge bowl. 2. Blood is separated in the bowl into its components and platelets are collected in a bag. 3. Remaining blood components are returned to the donor. 16 New Technology Will Further Improve Platelet Safety Platelets have traditionally been collected through the manual separation of platelets from whole blood; however, because platelets constitute only a very small portion of total blood volume, blood collectors were forced to rely on pooling — the combining of platelets from multiple donors — to obtain the volume necessary to transfuse to a patient. Exposing a patient to platelets from multiple donors can increase her risk of receiving a blood-borne disease via transmission. Because cancer patients require multiple transfusions, risks from receiving pooled platelets are exponentially larger over the course of the illness. The Haemonetics MCS ®+ 9000 system addresses the traditional drawbacks of platelet therapy, allowing the collection of one to two transfusable doses of platelets from a single donor and enhancing patient safety by reducing the need for pooled platelets. (Previous page features the disposable plastic “Latham” bowl used to process blood on the MCS+ system.) Although demand for platelets and the use of automation in platelet collection are increasing, paradoxically, the automated platelet market is one of slow growth. Collectors have increasingly utilized their ability to collect two platelet units from single donors, thus filling demand while using fewer collection disposables. Safety is another critical issue. Platelets must be stored at room temperature, which can result in bacteria growth that is harmful to the compromised immune system of transfusion recipients. Platelets can also harbor viruses and other harmful pathogens. In December 2001, Haemonetics signed an agreement with Baxter International, Inc. that will enable Haemonetics’ customers to more easily implement pathogen inactivation. Haemonetics will be able to seamlessly integrate Baxter’s INTERSOL™ solution into the platelet collection process rather than forcing customers to perform secondary connection, docking, and processing of the platelets into the INTERSOL solution. INTERSOL is the fluid in which platelets must be stored prior to pathogen inactivation. It is part of the INTERCEPT™ Platelet System for pathogen inactivation, currently under development by Baxter and Cerus Corporation. The agreement represents an important technology partnership of market leaders. When coupled with Haemonetics’ large share of the worldwide platelet collection market, this pathogen inactivation solution creates an important opportunity for the Company to expand revenues and margin and strengthen its competitive position. 17 PLATELET GROWTH OPPORTUNITY HIGHLIGHTS PLATELET PATHOGEN INACTIVATION • New product offering within core sales area • Partnership with Baxter to incorporate Baxter/Cerus storage medium into Haemonetics’ disposable kits • European regulatory clearance expected in calendar year 2002 • Late stage clinical trials in U.S. • Seamless integration of pathogen inactivation process into customer operations M C S + S Y S T E M “ T I M E S AV E R ” P R O T O C O L • Released in Europe • Pending 510(k) approval in U.S. • Enhances competitive position • Reduces time required for platelet donation 19 Plasma Collection — For Manufacture into Pharmaceuticals Plasma is the fluid portion of blood and is most commonly used by pharmaceutical companies to make drugs. Haemonetics’ automated plasma collection technology allows the collection of a large volume of plasma from a single donor. P L A S M A D I S P O S A B L E S B U S I N E S S Haemonetics $109 million Competitors $121 million Market Range: $230 million 20 million procedures annually Key Competitor: Baxter FY02 disposable sales = $109 million +25% at constant currency Blood Flow Through the PCS®2 System 20 BOWL PLASMA RED BLOOD CELLS WHOLE BLOOD < FROM DONOR TO DONOR > 1. Blood is collected from a donor and 2. Blood is separated in the bowl into 3. Remaining blood components are flows into a centrifuge bowl. its components and plasma is collected in a bag. returned to the donor. 22 One-Stop Shopping for Customers The current demand for plasma is enormous and stems from 1) an increase in use of plasma-derived pharmaceuticals and 2) curtailed production of recombinant products because of greater FDA scrutiny. Facing such demand, Haemonetics’ customers have worked diligently to increase plasma collections dramatically. Haemonetics participated in that recent growth and increased plasma disposable sales by 25% (at constant currency) in fiscal 2002. During fiscal 2002, the Company also bolstered its “one-stop shopping” strategy for plasma customers. In January 2002, Haemonetics acquired Fifth Dimension Information Systems, Inc., the world’s leading provider of information management products for plasma collectors. This acquisition enables Haemonetics to offer the most comprehensive suite of computer software applications to automate plasma center operations. Software applications simplify the highly manual, labor-intensive operations of plasma collection centers by documenting the collection process from the time a donor arrives through the final disposition of plasma. The software also supports an interface with testing laboratories and pharmaceutical manufacturing plants. Automation and quality control are increasingly important in this industry. Haemonetics expects Fifth Dimension to contribute to growth in its plasma business for years to come. Another important event early in calendar 2001 was Haemonetics’ acquisition of manufacturing operations for the bottles in which plasma is collected (pictured on previous page). In September 2001, the Company relocated these operations to a Haemonetics facility in Pennsylvania to maximize manufacturing efficiency. Haemonetics has a 50% share of the plasma collection market. Acquisition of smaller plasma collection centers by large plasma manufacturing companies, including Baxter (Haemonetics’ competitor in the sale of automated plasma collection systems) has altered the market’s competitive landscape; however, by enabling one-stop shopping for customers, Haemonetics is better positioned than ever to grow with this market. 23 PLASMA GROWTH OPPORTUNITY HIGHLIGHTS P C S 2 S Y S T E M • Filtered protocol to reduce white cell content, in Europe mid FY03 and in U.S. late FY03 • Improves competitive position SOFTWARE APPLICATIONS • New product offering within core sales area • Leading software product • Possible product applications in blood banking M A R K E T O P P O RT U N I T Y F O R S O F T WA R E A P P L I C AT I O N S Fifth Dimension / Haemonetics 5 million Untapped Market — 15 million This chart shows the market opportunity for Haemonetics data management software applications in plasma collection. Currently, most data management in plasma centers is done on manual or “home grown” systems. Software applications can help plasma collectors meet more stringent regulatory guidelines and increase donor management efficiency. There are only a few competitors in this largely untapped market. 25 Red Cell Collection — A Growing Market with Tremendous Potential Red blood cells are used in the treatment of surgical, trauma, and other patients. Haemonetics’ automated red cell collection technology allows blood collectors to obtain one to two transfusable doses of red cells from a single donor. R E D C E L L D I S P O S A B L E S B U S I N E S S Haemonetics $10.5 million Competitor Untapped Market $689 million Market Range: $700 million 10 million procedures annually (an estimated 25% of 40 million whole blood collections) Competitor: Gambro BCT FY02 disposable sales = $10.5 million +40% at constant currency Blood Flow Through the MCS®+ System 26 BOWL PLASMA RED BLOOD CELLS WHOLE BLOOD < FROM DONOR TO DONOR > 1. Blood is collected from a donor and flows into a centrifuge bowl. 2. Blood is separated in the bowl into its components and red blood cells are collected in a bag. 3. Remaining blood components are returned to the donor. 28 The Gold Standard in Red Cell Collection and Processing With 40 million manual collections per year, the opportunity to automate red cell collections is tremendous. Haemonetics invented automated red cell collection technology, was first to market with its MCS®+ 8150 system, and maintains a strong competitive advantage. Double red cell collection enables the collection of up to two units of red cells from one donor. Although this technology has been incorporated into the operations of many blood collectors, there remains tremendous growth potential for the product. Haemonetics’ revolutionary double red cell collection technology: • increases availability of red cells, despite a shrinking donor pool; • improves economics of blood collection by yielding more blood at lower cost; and • helps blood collectors streamline operations. Last year, Haemonetics received FDA clearance to incorporate a filtration protocol into its double red cell collections. The filtration process allows blood centers to remove potentially harmful white blood cells before transfusion to a patient; Haemonetics makes filtration easy and cost-effective. Frozen blood inventories are becoming more common in the U.S. and abroad. Red cells stored in a liquid state have a shelf life of 42 days; frozen red cells can be stored for 10 years. Until Haemonetics introduced its ACP™ 215 automated cell processing system this year, previously frozen red cells had to be used within 24 hours of thawing. The ACP 215 system extends post-thaw shelf life to 14 days. It has been adopted by the U.S. military and large blood collection agencies to better manage frozen blood inventories. Haemonetics continued its collaboration with V.I. Technologies, Inc. (“Vitex”), which is developing a pathogen inactivation system for red cells. The Vitex INACTINE™ system will improve transfusion safety by killing bacteria and viruses in red blood cells. Haemonetics has developed a procedure to remove the INACTINE compound from red cells after treatment. This system is expected to commence late stage clinical trials soon. Haemonetics’ existing products and those in development underscore the Company’s commitment to increasing the availability and safety of blood. Given the continued need to accomplish this, the Company expects its red cell product line to be a key growth driver over the coming years. 29 RED CELL AND CELL PROCESSING GROWTH OPPORTUNITY HIGHLIGHTS M C S + 8 1 5 0 SYSTEM • Targets at least 25% of 40 million whole blood collections per year • $700 million market • First mover advantage • Economic advantage to customers • Increases blood supplies • Filtration protocol drives revenue and margin while providing improved safety • Agreement with large U.S. group purchasing organization • Rapid sales growth ACP 215 SYSTEM • Improves logistics of frozen blood inventory management • Contracts with U.S. military agencies and large U.S. blood collector • No competition PATHOGEN INACTIVATION • Large market opportunity • Improves safety of red cell transfusions 30 Our Board of Directors Sir Stuart Burgess Chairman of the Board since 1998 and Member since 1992. Previously Regional Chairman of the British National Health Service and Chief Executive Officer of Amersham International plc. James L. Peterson Board Member since 1985. Since 1998, President and Chief Executive Officer. In 1994, President, International Operations and previously Vice President responsible for all international operations. Donna C.E.Williamson Board Member since 1993. Previously Managing Director and Senior Vice President, ABN Amro Private Equity and Corporate Vice President of Baxter International. N. Colin Lind Board Member since 1998. Currently Managing Director of Blum Capital Partners, L.P., a strategic investment firm. Ronald Gelbman Board Member since 2000. Previously Johnson and Johnson (“J& J”) Executive Committee Member and J& J Worldwide Chairman, Health Systems & Diagnostics. Benjamin L. Holmes Board Member since 1998. Previously General Manager and Vice President, Hewlett-Packard Medical Products Group. Dr. Harvey Klein Board Member since 1998. Currently Chief of the Dept. of Transfusion Medicine at the Warren Magnuson Clinical Center of the NIH and Past President, American Association of Blood Banks. Dr. Yutaka Sakurada Board Member since 1991. Currently Chairman and Chief Executive Officer of Haemonetics Japan. Alicia R. Lopez Clerk to the Board of Directors since 1990. General Counsel since 1988 and Senior Vice President since 1999. (left to right — back row) James L. Peterson, Sir Stuart Burgess, Ronald Gelbman, N. Colin Lind, (left to right — front row) Dr. Yutaka Sakurada, Alicia R. Lopez, Dr. Harvey Klein, Donna C. E. Williamson. Benjamin L. Holmes is pictured below. Financial Highlights1 Haemonetics has a strong financial position and cash flow. Ninety percent of sales are from single-use disposable kits. Sixty percent of sales are international. FY02 Growth at Constant Currency Disposable Sales by Product Line Letter to Shareholders G L O B A L M A R K E T TA B L E O F C O N T E N T S Net Sales Operating Income (adjusted) Net Income (adjusted) Earnings per Share (adjusted) $320 million $46 million $37 million $1.37 13% 41% 36% 30% Operating Income % of Sales Net Income % of Sales Operating Cash Flow Adjusted 14.5% 12.5% 12.0% Adjusted Dollars in millions 11.6% 10.1% 9.1% $43 $40 $25 FY: 00 01 02 FY: 00 01 02 FY: 00 01 02 1 The financial highlights above are adjusted and exclude unusual charges. In fiscal year 2002, Haemonetics paid $10 million for access to platelet pathogen inactivation technology. In 2001, the Company purchased Transfusion Technologies, representing $23 million of in-process R&D and unusual charges. In 2000, reported numbers were affected by $13 million of in-process R&D and unusual charges. In these highlights, operating cash flow is net income adjusted for depreciation, amortization and other non-cash items; capital expenditures for property, plant and equipment together with the investment in Haemonetics equipment, including sales-type leases; and the change in operating working capital. For more detailed financial information, please see the Company’s Form 10-K, included in this book. Red Cell $10.5 million Surgical $66 million Blood Bank $102 million Plasma $109 million Supporting a Dynamic Industry Blood Safety through Surgical Salvage Platelet Collection to Advance Cancer Treatment Plasma for Pharmaceutical Manufacturing Total Sales by Geography Tremendous Opportunity in Red Cell Market North America $124 million Asia $116 million Europe $79 million Board of Directors Form 10-K Executive Officers and Management 2 4 6 12 18 24 30 31 74 Corporate Directory and Investor Information Inside Back Cover C O R P O R AT E D I R E C T O RY Haemonetics Corporation (Corporate Headquarters) 400 Wood Road Braintree, MA 02184 USA Phone: 781-848-7100 Fax: 781-356-3558 http://www.haemonetics.com Building 18, Avenue C Buncher Industrial Park Leetsdale, PA 15056 USA Phone: 412-741-7399 Fax: 412-741-7458 155 Medical Sciences Drive Union, SC 29379 USA Phone: 864-427-6293 Fax: 864-427-1668 Haemonetics GesmbH Handelsges.m.b.H Berlagasse 45/B2-02 A-1210 Wien Austria Phone: +43-1-294-2900 Fax: +43-1-294-2905 Haemonetics Belgium N.V. Leuvensesteenweg 542, B.P. 14 Planet II Complex 1930 Zaventum Belgium Phone: +32-2-720-7484 Fax: +32-2-720-7155 http://www.haemonetics.be Fifth Dimension Information Systems A Haemonetics Company Suite 500, Merrill Lynch Tower Edmonton Centre Edmonton, Alberta T5J 2Z2 Canada Phone: 780-425-6560 Fax: 780-420-6562 http://www.fifthd.ca Haemonetics Medical Devices (Shanghai) Trading Co., Ltd. Room 032.28F.HSBC Tower 101 Yin Cheng Rd. (E) Shanghai 200120 People’s Republic of China Phone: 86-21-5066-3366 Fax: 86-21-6841-3688 Haemonetics CZ, spol. S.r.o. Ptaˇsínského 8 602 00 Brno Czech Republic Phone: +42-054121-2400 Fax: +42-054121-2399 Haemonetics France S.A.R.L. 46 bis, rue Pierre Curie Z.I. Les Gâtines 78370 Plaisir France Phone: +33-1-308-141-41 Fax: +33-1-308-141-30 Haemonetics GmbH Rohrauerstrasse 72 D-81477 Munich Germany Phone: +49-89-785-8070 Fax: +49-89-780-9779 http://www.haemonetics.de Haemonetics Hong Kong Ltd. Suite 1314, 13/Floor Two Pacific Place 88 Queensway Hong Kong Phone: +852-2868-9218 Fax: +852-2801-4380 Haemonetics Italia S.R.L. Via Donizetti, 30 20020 Lainate - Milan Italy Phone: +39-02-935-70113 Fax: +39-02-935-72132 Haemonetics Japan K.K. Kyodo Building 16-banchi, Ichiban-cho Chiyoda-ku, Tokyo 102-0082 Japan Phone: +81-3-3237-7260 Fax: +81-3-3237-7330 http://www.haemonetics.co.j Haemonetics BV Citco-WTO P/O 7241 Strawinskylaan 1725 1007 JE Amsterdam Netherlands Phone: 31-35-602-3425 Fax: 31-35-602-4198 http://www.haemonetics.nl Haemonetics AB Retahuset Ideon S-223 70 Lund Sweden Phone: +46-46286-2320 Fax: +46-46286-2321 http://www.haemonetics.se Haemonetics S.A. Signy Center P.O. Box 262 1274 Signy 2 Switzerland Phone: +41-22-363-9011 Fax: +41-22-363-9054 Haemonetics Asia Inc. Taiwan Branch 26F-1, No. 102 Roosevelt Road Section 2 Taipei Taiwan Phone: +886-2-2369-0722 Fax: +886-2-2364-3698 Haemonetics U.K. Ltd. Beechwood House Beechwood Estate Elmete Lane Roundhay Leeds LS8 2LQ United Kingdom Phone: +44-113-273-7711 Fax: +44-113-273-4055 Design: MediaConcepts Corporation, Assonet, MA www.mediaconceptscorp.com 5 Ashley Drive Bothwell, Stratheclyde G71 8B5 Scotland Phone: 44-1698-819700 Fax: 44-1698-811811 I N V E S T O R I N F O R M AT I O N Stock Listing The Company’s stock is traded on the New York Stock Exchange under the symbol HAE. Transfer Agent and Registrar Inquiries concerning the transfer of shares, lost stock certificates, duplicate mailings or change of address should be directed to: Registrar and Transfer Company 10 Commerce Drive Cranford, NJ 07016 USA 800-368-5948 Auditors Arthur Andersen LLP Boston, Massachusetts, USA Annual Meeting The Annual Meeting of the Stockholders will be held at State Street Bank Building, Boston, MA, USA on July 23, 2002. Investor Relations Alicia Lopez Clerk, Senior Vice President and General Counsel investor@haemonetics.com 781-356-9517 Form 10-K The Company files a form 10-K with the Securities and Exchange Commission. It is available on request from investor relations or at http://www.haemonetics.com. Haemonetics’ Trademarks Haemonetics, Cell Saver, HaemoLite, MCS, PCS, Haemonetics PCS, Ultralite, Haemonetics Ultralite, Plasma Saver, Haemonetics Plasma Saver, R.I.S., CollectFirst, Haemonetics Cell Saver, Haemonetics MCS, Haemonet, Total Apheresis, Chairside Separator, OrthoPAT, ACP, MCS Pro, Dynamic Disk, and Fifth Dimension. H A E M O N E T I C S ® L e a d e r s h i p a n d I n n o v a t i o n T o I m p r o v e l B o o d S a f e t y a n d A v a i l a b i l i t y A N N U A L R E P O R T 2 0 0 2 HAEMONETICS® 400 Wood Road Braintree, Massachusetts, USA 02184-9114 781-848-7100 www.haemonetics.com HAEMONETICS® A N N U A L R E P O R T 2 0 0 2 Leadership and Innovation To Improve Blood Safety and Availability HAEMONETICS is a worldwide supplier of automated systems used in the collection of blood from donors and in the recovery of blood lost during surgery. The Company has an unparalleled reputation for product innovation, technical expertise, and operational excellence. For thirty years, Haemonetics’ marketing and product development have reflected the Company’s unwavering focus on helping to meet the need for a safe and available blood supply. The Company’s automated blood collection systems can improve efficiency, cost effective- ness, regulatory compliance, blood supply management, and often even the donation experience. Most importantly, though, these systems can increase blood inventories or reduce the need for donor blood. With a shrinking global blood supply, market demand for Haemonetics’ products is greater than ever. Haemonetics employs more than 1,500 people worldwide and markets its products in more than 50 countries. 

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