<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   ----------

                                    FORM 10-Q

(Mark One)
/x/           QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended March 31, 2006

                                       OR

/ /           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

              For the transition period from        to

                        Commission File Number 000-06516

                                   ----------

                                 DATASCOPE CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                     13-2529596
--------------------------------------------------------------------------------
 (State of other jurisdiction of            (I.R.S. Employer Identification No.)
  incorporation or organization)

14 Philips Parkway, Montvale, New Jersey                07645-9998
--------------------------------------------------------------------------------
(Address of principal executive offices)                (Zip Code)

                                 (201) 391-8100
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

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 whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

(Check one)
Large Accelerated Filer___   Accelerated Filer x   Non-accelerated Filer __
                                              ---

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES      NO   x
                                    -----    ------

Number of Shares of Company's Common Stock outstanding as of April 28, 2006:
15,250,010.

<PAGE>

                                 Datascope Corp.

                                 Form 10-Q Index

<TABLE>
<CAPTION>
                                                                                              Page
<S>                 <C>                                                                      <C>
Part I.  FINANCIAL INFORMATION

     Item 1.    Financial Statements

                Condensed Consolidated Balance Sheets (Unaudited) at
                March 31, 2006 and June 30, 2005                                             1

                Condensed Consolidated Statements of Earnings (Unaudited)
                Three and Nine Months Ended
                March 31, 2006 and 2005                                                      2

                Condensed Consolidated Statements of Cash Flows (Unaudited)
                Nine Months Ended March 31, 2006 and 2005                                    3

                Notes to Condensed Consolidated Financial Statements (Unaudited)          4-12

     Item 2.    Management's Discussion and Analysis of Financial Condition
                and Results of Operations                                                13-21

     Item 3.    Quantitative and Qualitative Disclosures about Market Risk                  21

     Item 4.    Controls and Procedures                                                     21

Part II.  OTHER INFORMATION

     Item 1.    Legal Proceedings                                                           23

     Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                 24

     Item 5.    Other Information                                                           24

     Item 6.    Exhibits                                                                    24

Signatures                                                                                  25

Exhibit 31.1.   Certification of Principal Executive Officer Regarding Facts
                and Circumstances Relating to Quarterly Reports                             26

Exhibit 31.2.   Certification of Principal Financial Officer Regarding Facts
                and Circumstances Relating to Quarterly Reports                             26

Exhibit 32.1.   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
                Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                   28
</TABLE>


<PAGE>

PART I.  FINANCIAL INFORMATION
       ITEM 1. FINANCIAL STATEMENTS

                        DATASCOPE CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (In thousands, except per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                      MARCH 31,                  JUNE 30,
                                                                                         2006                      2005
                                                                                 ---------------------     ----------------------
                                                                                                                    (a)
<S>                                                                                     <C>                      <C>
       ASSETS
              Current assets:
                Cash and cash equivalents                                               $  23,140                $  12,188
                Short-term investments                                                     24,580                   30,384
                Accounts receivable less allowance for
                  doubtful accounts of $2,401 and $2,279                                   76,001                   74,145
                Inventories, net                                                           60,257                   54,626
                Prepaid income taxes                                                        2,117                      645
                Prepaid expenses and other current assets                                  14,123                   11,157
                Current deferred taxes                                                      6,572                    5,294
                                                                                        ---------                ---------
                    Total current assets                                                  206,790                  188,439

              Property, plant and equipment, net of accumulated
                 depreciation of $89,236 and $82,427                                       84,490                   87,648
              Long-term investments                                                        22,398                   22,813
              Intangible assets                                                            20,497                   20,908
              Goodwill                                                                      4,065                    4,065
              Other assets                                                                 31,786                   33,209
                                                                                        ---------                ---------
                                                                                        $ 370,026                $ 357,082
                                                                                        =========                =========

       LIABILITIES AND STOCKHOLDERS' EQUITY
              Current liabilities:
                Accounts payable                                                        $  18,332                $  18,850
                Dividends payable                                                           1,057                    1,036
                Accrued expenses                                                           15,250                   16,283
                Accrued compensation                                                       14,336                   15,335
                Short-term debt                                                             3,500                    4,000
                Deferred revenue                                                            3,361                    3,975
                                                                                        ---------                ---------
                    Total current liabilities                                              55,836                   59,479

              Other liabilities                                                            32,464                   31,738
              Commitments and contingencies
              Stockholders' equity:
                Preferred stock, par value $1.00 per share:
                  Authorized 5,000 shares; Issued, none                                        --                       --
                Common stock, par value $.01 per share:
                  Authorized, 45,000 shares;
                  Issued, 18,715 and 18,256 shares                                            187                      183
                Additional paid-in capital                                                103,392                   88,773
                Treasury stock at cost, 3,465 and 3,460 shares                           (105,319)                (105,175)
                Retained earnings                                                         294,056                  292,524
                Accumulated other comprehensive loss:
                  Cumulative translation adjustments                                       (2,789)                  (2,713)
                  Minimum pension liability adjustments                                    (7,503)                  (7,503)
                  Unrealized loss on available-for-sale securities                           (298)                    (224)
                                                                                        ---------                ---------
                    Total stockholders' equity                                            281,726                  265,865
                                                                                        ---------                ---------
                                                                                        $ 370,026                $ 357,082
                                                                                        =========                =========
</TABLE>

           (a) Derived from consolidated audited financial statements.
            See notes to condensed consolidated financial statements.

                                        1

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                    (In thousands, except per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       NINE MONTHS ENDED                             THREE MONTHS ENDED
                                                            MARCH 31,                                    MARCH 31,
                                                   ---------------------------               --------------------------------
                                                      2006              2005                   2006                    2005
                                                   ---------          --------               --------               ---------

<S>                                                <C>                <C>                    <C>                    <C>
NET SALES                                          $ 273,900          $ 259,100              $  93,100              $  96,100
Cost of sales                                        117,900            106,136                 40,235                 40,552
Cost of sales, special charge                          2,444                 --                     --                     --
                                                   ---------          ---------              ---------              ---------
    Gross profit                                     153,556            152,964                 52,865                 55,548

OPERATING EXPENSES:
  Research and development
    expenses                                          27,714             26,486                  9,568                  9,118
  Selling, general and
    administrative expenses                          105,008            103,587                 36,060                 34,993
  Special gain                                          (810)                --                     --                     --
                                                   ---------          ---------              ---------              ---------
                                                     131,912            130,073                 45,628                 44,111
                                                   ---------          ---------              ---------              ---------
OPERATING EARNINGS                                    21,644             22,891                  7,237                 11,437
Other (income) expense:
  Interest income                                     (1,656)            (1,620)                  (563)                  (650)
  Interest expense                                       263                158                    170                     74
  Dividend income                                     (4,523)                --                 (4,523)                    --
  Other, net                                           1,396                424                    325                    139
                                                   ---------          ---------              ---------              ---------
                                                      (4,520)            (1,038)                (4,591)                  (437)
                                                   ---------          ---------              ---------              ---------
EARNINGS BEFORE TAXES ON INCOME                       26,164             23,929                 11,828                 11,874
Taxes on income                                        6,589              6,700                  2,760                  3,083
                                                   ---------          ---------              ---------              ---------
NET EARNINGS                                       $  19,575          $  17,229              $   9,068              $   8,791
                                                   =========          =========              =========              =========

Earnings per share, basic                          $    1.32          $    1.16              $    0.60              $    0.59
                                                   =========          =========              =========              =========

Weighted average common
   shares outstanding, basic                          14,884             14,795                 15,011                 14,797
                                                   =========          =========              =========              =========

Earnings per share, diluted                        $    1.29          $    1.13              $    0.59              $    0.58
                                                   =========          =========              =========              =========

Weighted average common
   shares outstanding, diluted                        15,220             15,204                 15,377                 15,151
                                                   =========          =========              =========              =========
</TABLE>

            See notes to condensed consolidated financial statements.


                                        2

<PAGE>
                        DATASCOPE CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                            NINE MONTHS ENDED
                                                                                                MARCH 31,
                                                                                  ---------------------------------------
                                                                                       2006                  2005
                                                                                  ---------------     -------------------
<S>                                                                                    <C>                 <C>
OPERATING ACTIVITIES:
     Net Earnings                                                                      $ 19,575            $ 17,229
     Adjustments to reconcile net earnings to net
       cash provided by operating activities:
         Depreciation                                                                    11,274              11,044
         Amortization                                                                     3,933               3,393
         Provision for supplemental pension                                                 873                 811
         Provision for losses on accounts receivable                                        235                 214
         Provision for inventory obsolescence                                               783               1,828
         Cash surrender value of officers life insurance                                   (288)               (225)
         Gain on sale of Vaals facility                                                    (810)                 --
         Realized loss on sale of investments                                               853                  --
         Stock-based compensation expense                                                   417                  --
         Tax benefit of stock-based awards                                                   --               1,647
         Excess tax benefits                                                             (1,406)                 --
         Deferred income tax (benefit)                                                      (19)              1,845
         Special charges asset write-offs                                                 1,614                  --
     Changes in assets and liabilities:
         Accounts receivable                                                             (2,174)             (3,116)
         Inventories                                                                    (12,018)            (12,664)
         Prepaid expenses and other assets                                               (2,799)              8,071
         Accounts payable                                                                  (517)              2,706
         Accrued and other liabilities                                                   (2,797)             (3,109)
                                                                                       --------            --------
     Net cash provided by operating activities                                           16,729              29,674
                                                                                       --------            --------
INVESTING ACTIVITIES:
     Capital expenditures                                                                (4,482)             (5,175)
     Proceeds from sale of Vaals facility                                                 1,155                  --
     Purchases of investments                                                           (52,418)            (27,101)
     Maturities of investments                                                           29,583              19,552
     Sales of investments                                                                28,065              20,901
     Capitalized software                                                                (2,666)             (4,609)
     Purchased technology and licenses                                                     (241)             (2,323)
     Other                                                                                  (88)                (88)
                                                                                       --------            --------
     Net cash (used in) provided by investing activities                                 (1,092)              1,157
                                                                                       --------            --------
FINANCING ACTIVITIES:
     Short-term borrowings                                                               15,200              10,000
     Repayments of short-term borrowings                                                (15,700)             (2,000)
     Treasury shares acquired under repurchase programs                                    (144)             (7,944)
     Exercise of stock options                                                           12,561               5,359
     Excess tax benefits                                                                  1,406                  --
     Cash dividends paid                                                                (18,006)            (32,432)
                                                                                       --------            --------
     Net cash used in financing activities                                               (4,683)            (27,017)
                                                                                       --------            --------

     Effect of exchange rates on cash                                                        (2)               (480)
                                                                                       --------            --------

Increase in cash and cash equivalents                                                    10,952               3,334
Cash and cash equivalents, beginning of period                                           12,188               8,123
                                                                                       --------            --------

Cash and cash equivalents, end of period                                               $ 23,140            $ 11,457
                                                                                       ========            ========

SUPPLEMENTAL CASH FLOW INFORMATION
     Cash paid during the period for:
       Income taxes paid                                                               $  9,230            $  3,888
                                                                                       --------            --------
       Income taxes refunded                                                           ($ 2,935)           ($10,004)
                                                                                       --------            --------
     Non-cash investing and financing activities:
       Net transfers of inventory to fixed assets
         for use as demonstration equipment                                            $  4,527            $  7,021
                                                                                       --------            --------
       Dividends declared, not paid                                                    $  1,074            $  1,037
                                                                                       --------            --------
       Cancellation of treasury stock                                                  $    685            $    636
                                                                                       --------            --------
       Stock option proceeds due from broker                                           $    239            $     --
                                                                                       --------            --------
</TABLE>

            See notes to condensed consolidated financial statements.

                                        3


<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (Unaudited, in thousands except per share data)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include
the accounts of Datascope Corp. and its subsidiaries (the "Company" - which may
be referred to as "our", "us" or "we"). These statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim information, and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for interim periods are not necessarily indicative of results that may
be expected for the full year. The presentation of certain prior year
information has been reclassified to conform with the current year presentation.

Preparation of the Company's financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts in
the financial statements and accompanying notes. Actual results could differ
from those estimates. For further information, refer to the consolidated
financial statements and Notes included in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 2005.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2005, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position (FSP) No. FAS 123(R)-3, "Transition Election Related to
Accounting for the Tax Effects of Share-Based Payment Awards." This FSP provides
an elective alternative method that consists of: (1) a computation that creates
an additional paid-in-capital (APIC) pool related to previously recognized tax
benefits on equity-based employee compensation; and (2) a simplified method to
determine how awards that are fully vested and outstanding when Statement 123R
is adopted will subsequently affect the APIC pool. The guidance in this FSP is
effective after November 10, 2005. Entities may make a one-time election to
apply the transition method discussed in this FSP. That one-time election may be
made within one year of an entity's adoption of Statement 123R, or the FSP's
effective date, whichever is later. The Company is reviewing the issue and will
determine if it will adopt the alternative method by the end of fiscal year
2006.

2. INVENTORIES, NET

Inventories, net are stated at the lower of cost or market, with cost determined
on a first-in, first-out basis.

                                                  March 31,          June 30,
                                                     2006              2005
                                                --------------    --------------
        Materials                                 $26,006           $22,049
        Work in Process                            12,057            11,097
        Finished Goods                             22,194            21,480
                                                  -------           -------
                                                  $60,257           $54,626
                                                  =======           =======





                                        4

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (Unaudited, in thousands except per share data)


3.  STOCKHOLDERS' EQUITY

Changes in the components of stockholders' equity for the nine months ended
March 31, 2006 were as follows:

    Net earnings                                                    $19,575
    Foreign currency translation adjustments                            (76)
    Common stock and additional paid-in
          capital effects of stock option activity                   14,623
    Cash dividends declared on common stock                         (18,043)
    Purchases under stock repurchase programs                          (144)
    Unrealized loss on available-for-sale securities                    (74)
                                                                    --------
    Total increase in stockholders' equity                          $15,861
                                                                    ========

4.  EARNINGS PER SHARE

The computation of basic and diluted earnings per share for the three and nine
months ended March 31, 2006 and 2005 is shown below.

<TABLE>
<CAPTION>
                                                                   Nine Months Ended                  Three Months Ended
                                                              -----------------------------      -----------------------------
                                                                3/31/06         3/31/05            3/31/06         3/31/05
                                                              -------------   -------------      -------------   -------------
<S>                                                              <C>             <C>                <C>             <C>
Net earnings                                                     $19,575         $17,229            $ 9,068         $ 8,791
                                                                 =======         =======            =======         =======
Weighted average shares outstanding
for basic earnings per share                                      14,884          14,795             15,011          14,797
Effect of dilutive employee stock-based awards                       336             409                366             354
                                                                 -------         -------            -------         -------
Weighted average shares outstanding
for diluted earnings per share                                    15,220          15,204             15,377          15,151
                                                                 =======         =======            =======         =======
Basic earnings per share                                         $  1.32         $  1.16            $  0.60         $  0.59
                                                                 =======         =======            =======         =======
Diluted earnings per share                                       $  1.29         $  1.13            $  0.59         $  0.58
                                                                 =======         =======            =======         =======
</TABLE>

Stock-based awards outstanding amounting to 764 thousand and 621 thousand shares
for the nine months ended March 31, 2006 and 2005, respectively, and 646
thousand and 621 thousand shares for the three months ended March 31, 2006 and
2005, respectively, were excluded from the computation of diluted earnings per
share, as the effect of their inclusion would have been antidilutive.

5.  COMPREHENSIVE INCOME

Comprehensive income for the three and nine months ended March 31, 2006 and 2005
is shown below.

<TABLE>
<CAPTION>
                                                                   Nine Months Ended                  Three Months Ended
                                                              -----------------------------      -----------------------------
                                                                3/31/06         3/31/05            3/31/06         3/31/05
                                                              -------------   -------------      -------------   -------------
<S>                                                              <C>            <C>                <C>             <C>
        Net earnings                                             $ 19,575       $ 17,229           $  9,068        $  8,791
        Foreign currency translation (loss) gain                      (76)         1,690                790          (1,125)
        Unrealized loss on available-for-sale
           securities                                                 (74)          (150)               (99)           (540)
                                                                 --------       --------           --------        --------
        Total comprehensive income                               $ 19,425       $ 18,769           $  9,759        $  7,126
                                                                 ========       ========           ========        ========
</TABLE>


                                        5

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (Unaudited, in thousands except per share data)

6.  SEGMENT INFORMATION

We develop, manufacture and sell medical devices in two reportable segments,
Cardiac Assist / Monitoring Products and Interventional Products / Vascular
Grafts.

The Cardiac Assist / Monitoring Products segment includes electronic
intra-aortic balloon pumps and catheters that are used in the treatment of
cardiovascular disease, endoscopic vessel harvesting products that provide a
less-invasive alternative to surgical harvesting of blood vessels for use in
coronary bypass and electronic physiological monitors and central monitoring
systems that provide for patient safety and management of patient care.

The Interventional Products / Vascular Grafts segment includes vascular closure
devices, which are used to seal arterial puncture wounds after catheterization
procedures, interventional radiology products used in dialysis access and a
proprietary line of knitted and woven polyester vascular grafts and patches for
reconstructive vascular and cardiovascular surgery.

We aggregate our product lines into two segments based on similar manufacturing
processes, distribution channels, regulatory environments and customers.
Management evaluates the revenue and profitability performance of each of our
product lines to make operating and strategic decisions. We have no intersegment
revenue. Net sales and operating earnings are shown below.

<TABLE>
<CAPTION>
                                                    Cardiac           Interventional
                                                    Assist /             Products /             Corporate
                                                   Monitoring             Vascular                 and
                                                    Products               Grafts                 Other             Consolidated
---------------------------------------------   ------------------    ------------------    ------------------    ------------------
<S>                                                  <C>                    <C>                <C>                     <C>
Nine months ended March 31, 2006
---------------------------------------------
Net sales to external customers                      $233,506               $ 39,158           $  1,236                $273,900
                                                     --------               --------           --------                --------
Operating earnings (loss)                            $ 33,267               ($ 8,701)          ($ 2,922)               $ 21,644
                                                     --------               --------           --------                --------

---------------------------------------------
Nine months ended March 31, 2005
---------------------------------------------
Net sales to external customers                      $212,082               $ 45,884           $  1,134                $259,100
                                                     --------               --------           --------                --------
Operating earnings (loss)                            $ 29,559               ($ 8,297)          $  1,629                $ 22,891
                                                     --------               --------           --------                --------

---------------------------------------------
Three months ended March 31, 2006
---------------------------------------------
Net sales to external customers                      $ 79,995               $ 12,738           $    367                $ 93,100
                                                     --------               --------           --------                --------
Operating earnings (loss)                            $ 10,553               ($ 1,155)          ($ 2,161)               $  7,237
                                                     --------               --------           --------                --------

---------------------------------------------
Three months ended March 31, 2005
---------------------------------------------
Net sales to external customers                      $ 80,403               $ 15,258           $    439                $ 96,100
                                                     --------               --------           --------                --------
Operating earnings (loss)                            $ 13,635               ($ 3,670)          $  1,472                $ 11,437
                                                     --------               --------           --------                --------

---------------------------------------------   ----------------------------------------    ----------------------------------------
Reconciliation to consolidated earnings                    Nine Months Ended                          Three Months Ended
    before taxes on income:                          3/31/06               3/31/05               3/31/06               3/31/05
---------------------------------------------   ------------------    ------------------    ------------------    ------------------
Consolidated operating earnings                      $ 21,644              $ 22,891              $  7,237              $ 11,437
Interest income, net                                    1,393                 1,462                   393                   576
Dividend income                                         4,523                    --                 4,523                    --
Other (expense) income                                 (1,396)                 (424)                 (325)                 (139)
                                                     --------              --------              --------              --------
Consolidated earnings before taxes on income         $ 26,164              $ 23,929              $ 11,828              $ 11,874
                                                     ========              ========              ========              ========
</TABLE>

Net sales of life science products by Genisphere are included within Corporate
and Other. Segment SG&A expenses include fixed corporate G&A charges. Operating
loss within Corporate and Other in fiscal 2006 includes the gain on sale of an
unused facility of $0.8 million. Operating loss within Interventional
Products/Vascular Grafts in fiscal 2006 includes a special charge of $2.7
million related to the postponement of the market launch of the X-Site vascular
closure device (see Note 10).

                                        6
<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (Unaudited, in thousands except per share data)

7. STOCK-BASED COMPENSATION

In December 2004, the FASB issued Statement No. 123R (revised 2004) "Share-Based
Payment," (Statement 123R) that requires all share-based payments to employees,
including grants of employee stock options, to be recognized as an operating
expense in the income statement. The cost is recognized over the requisite
service period based on fair values measured on grant dates. We adopted
Statement 123R effective July 1, 2005 using the modified prospective method.
Accordingly, prior period amounts have not been restated. Under the modified
prospective method, all new stock option awards granted after July 1, 2005 and
stock options for which service has not been rendered that are outstanding
(unvested awards) at July 1, 2005, will be recognized as service is rendered
after the effective date. Prior to July 1, 2005, we accounted for stock-based
awards to employees using the intrinsic value method in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Stock-based compensation expense for the three and nine months ended
March 31, 2006, was $329 thousand and $417 thousand, $195 thousand and $247
thousand after tax, respectively.

The following table details the effect on net earnings and earnings per share
had we recorded stock-based compensation expense in fiscal year 2005 based on
the fair value method under Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation." The reported and pro forma net
earnings and earnings per share for the three and nine months ended March 31,
2006 are the same since stock-based compensation expense is calculated under the
provisions of Statement 123R. These amounts are included in the table below to
provide a comparative presentation to the three and nine months ended March 31,
2005.

<TABLE>
<CAPTION>
                                                                      Nine Months Ended                  Three Months Ended
                                                                          March 31,                           March 31,
                                                               --------------------------------    --------------------------------
                                                                   2006              2005               2006             2005
                                                               --------------   ---------------    ---------------   --------------
<S>                                                                <C>             <C>                 <C>            <C>
Net earnings - as reported                                         $19,575         $17,229             $9,068         $   8,791

Add: Total stock-based employee compensation
expense included in determination of net income
as reported, net of related tax effects                                247              --                195                --

Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects                            (247)         (2,592)              (195)             (938)
                                                                   -------         -------             ------         ---------
Net earnings - pro forma                                           $19,575         $14,637             $9,068         $   7,853
                                                                   =======         =======             ======         =========
Earnings per share:
        Basic - as reported                                        $  1.32         $  1.16             $ 0.60         $    0.59
                                                                   =======         =======             ======         =========
        Basic - pro forma                                          $  1.32         $  0.99             $ 0.60         $    0.53
                                                                   =======         =======             ======         =========
        Diluted - as reported                                      $  1.29         $  1.13             $ 0.59         $    0.58
                                                                   =======         =======             ======         =========
        Diluted - pro forma                                        $  1.29         $  0.96             $ 0.59         $    0.52
                                                                   =======         =======             ======         =========
</TABLE>

On May 17, 2005, the Board of Directors approved the accelerated vesting of all
stock options outstanding under the Company's Amended and Restated 1995 Stock
Option Plan that had exercise prices per share higher than $28.52, the average
of the high and low sales price of our stock on May 17, 2005. Options to
purchase 769 thousand shares of our common stock became exercisable immediately,
subject to an exercise price threshold requirement. As a result, stock-based
compensation expense in the three and nine month periods of fiscal 2006 was
significantly lower than the pro forma expense in the same period last year.

EQUITY INCENTIVE PLANS

We maintain the following equity incentive plans: the 2005 Equity Incentive
Plan, the Amended and Restated 1995 Employee Stock Option Plan, a stock option
plan for non-employee directors and option agreements with certain consultants.

The 2005 Equity Incentive Plan authorizes several different types of awards,
including stock options, performance shares, performance units, stock
appreciation rights, restricted shares and deferred shares. The number of common
shares available for award under this plan is 1.2 million. During the third
quarter of fiscal 2006, 13,937 shares of restricted stock were granted to an
officer, and outstanding, under the 2005 plan. The restricted stock award vests
at the end of three years from date of grant. Restrictions limit the sale or
transfer of shares during the vesting period. The restricted stock award was
recorded at its market value as deferred compensation and is being amortized to
expense over the vesting period. During the third quarter of fiscal 2006,
compensation expense related to this award was $42 thousand.

                                        7
<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (Unaudited, in thousands except per share data)

7. STOCK-BASED COMPENSATION (CONTINUED)

EQUITY INCENTIVE PLANS (CONTINUED)

The stock option plans provide that options may be granted at an exercise price
of 100% of fair market value of our common stock on the date of grant, may be
exercised in full or in installments, at the discretion of the Board of
Directors, and must be exercised within ten years from the date of grant. We
recognize compensation expense on a straight-line basis over the vesting period,
generally four years.

The fair value of the stock options granted was estimated on the date of grant
using a Black-Scholes option valuation model that uses the assumptions noted in
the following table. The risk-free rate is based on the U.S. Treasury yield
curve in effect at the time of grant. The expected life (estimated period of
time outstanding) of the stock options granted was estimated using the
historical exercise behavior of employees. Expected volatility was based on
historical volatility for a period equal to the stock option's expected life,
ending on the day of grant, and calculated on a daily basis.

<TABLE>
<CAPTION>
                                                                Nine Months Ended                      Three Months Ended
                                                                    March 31,                               March 31,
                                                        ----------------------------------     -----------------------------------
                                                             2006              2005                 2006               2005
                                                        ---------------   ----------------     ----------------   ----------------
<S>                                                          <C>               <C>                  <C>               <C>
                Risk-free interest rate                      4.52%             3.97%                4.80%             4.14%
                Expected life (in years)                      4.9               5.2                  4.8               5.3
                Expected volatility                            29%               31%                  29%               31%
                Expected dividend yield                      1.87%             0.73%                3.47%             0.73%
</TABLE>

Changes in our stock options for the nine months ended March 31, 2006 were as
follows:
<TABLE>
<CAPTION>
                                                                                     Weighted
                                                               Number of             Average
                                                                Options           Exercise Price
                                                             ---------------   -------------------
<S>                                                             <C>                 <C>
        Options outstanding, beginning of year                  2,477,153           $   31.73
        Granted                                                   140,600               36.19
        Exercised                                                (464,671)              29.02
        Forfeited                                                (120,907)              34.75
                                                               ----------           ---------
        Options outstanding, end of period                      2,032,175           $   32.48
                                                               ==========           =========
        Options exercisable, end of period                      1,903,158           $   32.27
                                                               ==========           =========
</TABLE>

The weighted average remaining contractual term was 6.5 years for stock options
outstanding and exercisable as of March 31, 2006 and the total intrinsic value
was approximately $14 million. The total intrinsic value for stock options
exercised during the three and nine months ended March 31, 2006 was
approximately $3.3 million and $3.9 million, respectively. The weighted average
fair value of options granted in the three and nine months ended March 31, 2006
was $8.57 and $10.08 per share, respectively.

The amount of cash received from the exercise of stock options for the three and
nine months ended March 31, 2006 was approximately $10.0 million and $12.6
million, respectively, and the related tax benefits were approximately $1.2
million and $1.4 million in the respective periods.

As of March 31, 2006, unrecognized compensation expense related to the unvested
portion of our employee stock options was approximately $1.4 million and is
expected to be recognized over a weighted average period of approximately 2
years.

We issue new shares to satisfy stock option exercises. We anticipate that shares
repurchased will reduce the dilutive impact of our share-based activity.
However, since the timing and amount of future repurchases is not known, we
cannot estimate the number of shares expected to be repurchased during the
remainder of fiscal 2006.

                                        8

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (Unaudited, in thousands except per share data)

8.  RETIREMENT BENEFIT PLANS

DEFINED BENEFIT PLANS - U.S. AND INTERNATIONAL

We have defined benefit pension plans designed to provide retirement benefits to
substantially all U.S. employees and certain international employees. U.S.
pension benefits are based on years of service, compensation and primary social
security benefit levels. Funding for the U.S. plan is within the range
prescribed under the Employee Retirement Income Security Act of 1974. Retirement
benefits under the international plan are based on years of service, final
average earnings and social security benefits. Funding policies for the
international plan are based on local statutes.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS (SERPS)

We have noncontributory, unfunded supplemental defined benefit retirement plans
(SERPs) for the Chairman and Chief Executive Officer, Mr. Lawrence Saper, and
certain current and former key officers. Life insurance has been purchased to
recover a portion of the net after tax cost for these SERPs. The assumptions
used to develop the supplemental pension cost and the actuarial present value of
the projected benefit obligation are reviewed annually.

The components of net pension expense of our U.S. and international defined
benefit pension plans and the SERPs include the following:

<TABLE>
<CAPTION>
                                                                                   Nine Months Ended March 31,
                                                             --------------------------------------------------------------------
                                                                 2006              2005               2006             2005
                                                             --------------   ---------------    ---------------   --------------
                                                                 U.S. and International                        SERPs
                                                             --------------------------------    --------------------------------
<S>                                                             <C>              <C>                <C>                <C>
      Service Cost                                              $ 2,318          $ 2,007            $   309            $   282
      Interest Cost                                               2,564            2,561                601                621
      Expected return on assets                                  (2,119)          (2,081)                --                 --
      Amortization of:
         net loss (gain)                                            949              103                 17                (91)
         unrecognized prior service cost                              9               10                (54)                (1)
                                                                -------          -------            -------            -------
            Net pension expense                                 $ 3,721          $ 2,600            $   873            $   811
                                                                =======          =======            =======            =======
      Employer contributions                                    $ 7,618          $ 2,243
                                                                =======          =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                     Three Months Ended March 31,
                                                             --------------------------------------------------------------------
                                                                 2006              2005               2006             2005
                                                             --------------   ---------------    ---------------   --------------
                                                                 U.S. and International                         SERPs
                                                             --------------------------------    --------------------------------
<S>                                                             <C>              <C>                 <C>              <C>
      Service Cost                                              $   612          $   549             $    95          $    89
      Interest Cost                                                 678              700                 185              195
      Expected return on assets                                    (570)            (569)                 --               --
      Amortization of:
         net loss (gain)                                            255               28                   6              (29)
         unrecognized prior service cost                              2                3                 (17)              --
                                                                -------          -------             -------          -------
            Net pension expense                                 $   977          $   711             $   269          $   255
                                                                =======          =======             =======          =======
      Employer contributions                                    $ 5,063          $    38
                                                                =======          =======
</TABLE>

9.  ACQUIRED INTANGIBLE ASSETS

The following is a summary of our intangible assets:
<TABLE>
<CAPTION>
                                                                    March 31,         June 30,
                                                                      2006              2005
                                                                  --------------   ---------------
<S>                                                                  <C>              <C>
      Purchased technology and licenses, gross                       $21,724          $21,482
      Accumulated amortization                                        (1,227)            (574)
                                                                     --------         --------
      Purchased technology and licenses, net                         $20,497          $20,908
                                                                     ========         ========
</TABLE>

Purchased technology and licenses primarily represent the acquisition of assets
and technology from X-Site Medical, LLC related to a suture-based vascular
closure device, the ProLumen thrombectomy device purchased from Rex Medical LP,
the ClearGlide(R) endoscopic vessel harvesting product line purchased from
Ethicon, Inc. and a license for the manufacture of our Anestar anesthesia
delivery system. Amortization expense for the nine months ended March 31, 2006
and 2005 was $653 thousand and $275 thousand, respectively, and for the three
months ended March 31, 2006 and 2005 was $229 thousand and $92 thousand,
respectively.

                                        9


<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (Unaudited, in thousands except per share data)

9.  ACQUIRED INTANGIBLE ASSETS (CONTINUED)

At March 31, 2006, estimated future amortization expense of intangible assets
subject to amortization is as follows: $0.2 million for the remaining three
months of fiscal 2006, and $0.9 million, $0.9 million, $1.0 million and $1.2
million for fiscal years 2007, 2008, 2009 and 2010, respectively.

ACQUISITION

In January 2006, we acquired assets and technology related to Ethicon's
ClearGlide(R) endoscopic vessel harvesting (EVH) product line. Ethicon is a
Johnson & Johnson company. Endoscopic vessel harvesting devices enable
less-invasive techniques for the harvesting of suitable vessels for use in
conjunction with coronary artery bypass grafting. The vessel harvesting product
line was integrated into the Cardiac Assist Division, which markets its
products to cardiac surgeons who perform coronary bypass graft surgery.

The purchase price was approximately $1.8 million in cash, including related
expenses, and was accounted for using the purchase method of accounting. The
aggregate purchase price for the EVH product line was allocated to tangible
assets and intangible assets (purchased technology), based on their fair values
as shown in the table below. The intangible assets will be amortized over seven
years.

                                                         (Millions)
                                                        ------------
                         Inventory                            $0.9
                         Tooling                               0.8
                         Purchased technology                  0.1
                                                           --------
                                                              $1.8
                                                           ========

GOODWILL

Goodwill as of March 31, 2006 and 2005 was $4.1 million. There was no acquired
goodwill and no change in the carrying value of existing goodwill during the
nine months ended March 31, 2006. Of the $4.1 million in goodwill, $1.8 million
is in the Interventional Products / Vascular Grafts segment and $2.3 million is
in Corporate and Other.

10. SPECIAL ITEMS

In the third quarter of fiscal 2006, we recorded dividend income totaling $4.5
million, $3.9 million after tax or $0.25 per diluted share, related to a special
dividend received from a preferred stock investment.

In the second quarter of fiscal 2006, we recorded a special charge totaling $2.7
million, $1.8 million after tax or $0.12 per diluted share, related to the
postponement of the launch of the X-Site vascular closure device in the United
States. The postponement is the result of market feedback from the limited
launch of X-Site, which revealed a strong market preference for a pre-tied knot
as an integral part of the device. The X-Site product currently provides a
suture knot-tier as an accessory.

On December 28, 2005, we approved a plan to reduce operating expenses in
conjunction with the decision to delay the launch of the X-Site device. As a
result, we eliminated 33 positions, or 20% of the workforce in the
Interventional Products Division at a cost of $400 thousand for severance and
other one-time termination benefits. Substantially all of the terminated
employees left the Company by the end of December. The severance payments will
be completed by the end of fiscal 2006. In addition, as a result of our decision
to redesign the X-Site device to incorporate a pre-tied knot, we wrote-off $1.6
million of existing X-Site inventory and tooling and recorded a liability of
$700 thousand for purchase commitments and contract termination costs. The
special charge is reflected in the Interventional Products / Vascular Grafts
segment ($2.4 million cost of sales, $100 thousand R&D and $200 thousand SG&A).

In the first quarter of fiscal 2006, we recorded a pretax gain of $810 thousand
related to the sale of an unused facility in Vaals, the Netherlands, that was
closed as part of a restructuring program at the end of fiscal 2002.

In the second half of fiscal 2005, we recorded special charges totaling $8.1
million. These charges consisted of:

      o Termination of certain R&D projects totaling $2.4 million.

      o Write-off of investments in two private medical technology companies of
        $4.3 million.

      o Severance expenses of $1.4 million for workforce reductions related to a
        companywide cost reduction program.

Payments related to these special charges were substantially complete as of
March 31, 2006.

                                       10

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (Unaudited, in thousands except per share data)

11.  COMMITMENTS AND CONTINGENCIES

LITIGATION

We are subject to certain legal actions, including product liability matters,
arising in the ordinary course of our business. We believe we have meritorious
defenses in all material pending lawsuits. We also believe that we maintain
adequate insurance against any potential liability for product liability
litigation. In accordance with generally accepted accounting principles we
accrue for legal matters if it is probable that a liability has been incurred
and an amount is reasonably estimable. In consideration of the cases described
in our Form 10-K for the fiscal year ended June 30, 2005, and as updated below,
we have recorded accruals as of March 31, 2006 which are not considered
significant.

As noted in our Form 10-K for the fiscal year ended June 30, 2005, on January
28, 2003, Sanmina-SCI, one of our former suppliers, filed a complaint in the
Superior Court of California, County of Santa Clara, claiming that we are
obligated to purchase excess inventory of Sanmina-SCI. Sanmina-SCI seeks damages
of $1.2 million, plus material markup, carrying costs and interest. In response,
we filed an answer denying the allegations of the complaint and counterclaimed
for damages we suffered in the amount of $2.3 million for Sanmina-SCI's breach
of its obligation to us. The matter was settled in April 2006 by each party
releasing the other without compensation.

As noted in our Form 10-K for the fiscal year ended June 30, 2005, on December
2, 2003, a former Datascope employee, Michael Barile, filed a complaint in the
Superior Court of New Jersey, Law Division, Bergen County, against Datascope
Corp. and various John Does seeking, inter alia, indemnification from the
Company of approximately $1 million in legal fees and expenses he allegedly
incurred in defending a criminal action brought against him by the United States
Attorney's Office for the District of Maryland, as well as additional damages
Mr. Barile alleges he suffered as a result of such prosecution. The matter was
settled in April 2006 by the Company agreeing to pay a portion of Mr. Barile's
legal fees.

As noted in our Form 10-K for the fiscal year ended June 30, 2005, on January
20, 2005, Rex Medical LP filed a complaint in the United States District Court
for the District of Delaware, seeking monetary damages for breach of three
thrombectomy technology transfer agreements between Rex and the Company, as well
as to have the technology under the agreements revert back to Rex. The Company
has answered the complaint denying the allegations and has counterclaimed for
Rex's breach of the contracts and seeks monetary damages for lost profits.
Mediation was conducted in August 2005 without success, however, the parties are
discussing the possibility of settlement. The Company believes it has a
meritorious counterclaim and meritorious defenses to Rex's claims and intends to
defend and prosecute this action vigorously.

As noted in our Form 10-Q for the quarterly period ended December 31, 2005, on
March 18, 2005, Johns Hopkins University and Arrow International, Inc.
("Plaintiffs") filed a complaint against Datascope in the United States District
Court for the District of Maryland seeking a permanent injunction and damages
for patent infringement. They allege that the Company's ProLumen Rotational
Thrombectomy System infringes the claims of their U.S. patents 5,766,191 and
6,824,551. We filed an answer denying such infringement. On September 1, 2005,
we filed a summary judgment motion to dismiss the Plaintiffs' complaint.
Plaintiffs filed an answer to the motion and the Court denied our motion on
January 18, 2006. Trial in this matter is anticipated by September 2006.

CREDIT ARRANGEMENTS

The credit lines disclosed in our annual report on Form 10-K for the fiscal year
ended June 30, 2005 that were scheduled to expire in October 2005, November 2005
and March 2006 were renewed. At March 31, 2006, we had available unsecured lines
of credit totaling $95.9 million, with interest payable at LIBOR-based rates,
determined by the borrowing period. Of the total available, $25.0 million
expires in October 2006, $24.0 million expires in November 2006 and $21.5
million expires in March 2007. These lines of credit are renewable annually at
the option of the banks, and we plan to seek renewal. We also have $25.4 million
in credit lines with no expiration date. We have approximately $1.0 million in
letters of credit outstanding as security for inventory purchases from an
overseas vendor.

OTHER CONTINGENCIES

Pursuant to the purchase agreements with X-Site Medical, LLC and Rex Medical LP,
we have contingent commitments to make additional payments, which would be
triggered by the achievement of certain milestones and sales performance levels
not currently estimable.

                                       11


<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (Unaudited, in thousands except per share data)

12.  SHORT-TERM DEBT

In January 2006, we borrowed $15.2 million for 90 days at an interest rate of
4.80% to assist with the funding of the January special and regular dividends of
$15.9 million, or $1.07 per share. The borrowing was done because the interest
expense was lower than the cost to retire long-term investments. During the
third quarter of fiscal 2006, we repaid $11.7 million of the short-term
borrowing. The $3.5 million outstanding balance was repaid in April 2006.

13.  REGULAR AND SPECIAL DIVIDENDS

The Board of Directors declared a special cash dividend of $1.00 per share, or
$14.9 million, on November 28, 2005. The dividend was paid on January 18, 2006
to shareholders of record on December 27, 2005. The regular quarterly dividends
of 7 cents per share were paid on October 6, 2005 to shareholders of record on
September 28, 2005, on January 18, 2006 to shareholders of record on December
27, 2005 and on April 6, 2006 to shareholders of record on March 6, 2006.

In September 2004, the Board of Directors declared a special dividend of $2.00
per share, or $29.6 million, and an increase in our regular quarterly dividend
to 7 cents per share from 5 cents per share. Both dividends were paid on October
8, 2004 to shareholders of record on September 30, 2004. The regular quarterly
dividends of 7 cents per share were paid on January 18, 2005 to shareholders of
record on December 27, 2004 and on April 5, 2005 to shareholders of record on
March 4, 2005.

14. INCOME TAXES

In the third quarter and first nine months of fiscal 2006, the consolidated
effective tax rate was 23.3% and 25.2%, respectively, compared to 26.0% and
28.0% in the third quarter and first nine months last year, respectively. The
lower tax rates in the fiscal 2006 periods were primarily attributable to an
increased benefit from foreign earnings taxed at a lower rate, the utilization
of a foreign tax loss carryforward (that had a valuation allowance) on the $0.8
million special gain, the $2.7 million special charges, which are deductible at
higher U.S. effective tax rates and the lower rate on the $4.5 million dividend
income due to the dividends received deduction. The above items were partially
offset by a reduced benefit for the U.S. Research Credit, which expired on
December 31, 2005, and an incremental phase-out of the extraterritorial income
exclusion. We currently estimate that our effective tax rate, excluding special
charges / gains, will approximate 29.5% for the full fiscal year 2006. However,
our effective tax rate could be impacted by changes in the geographic mix of
our earnings.







                                       12


<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

BUSINESS OVERVIEW

     We are a diversified medical device company that develops, manufactures and
     markets proprietary products for clinical health care markets in
     interventional cardiology and radiology, cardiovascular and vascular
     surgery, anesthesiology, emergency medicine and critical care. We have four
     product lines that are aggregated into two reportable segments, Cardiac
     Assist / Monitoring Products and Interventional Products / Vascular Grafts.
     Our products are sold principally by direct sales representatives in the
     United States and a combination of direct sales representatives and
     independent distributors in international markets. Our largest geographic
     markets are the United States, Europe and Japan.

     We believe that customers, primarily hospitals and other medical
     institutions, choose among competing products on the basis of product
     performance, features, price and service. In general, we believe price has
     become an important factor in hospital purchasing decisions because of
     pressure to cut costs. These pressures on hospitals result from federal and
     state regulations that limit reimbursement for services provided to
     Medicare and Medicaid patients. There are also cost containment pressures
     on healthcare systems outside the United States, particularly in certain
     European countries. Many companies, some of which are substantially larger
     than us, are engaged in manufacturing competing products. Our products are
     generally not affected by economic cycles.

     Our sales growth depends upon the successful development and marketing of
     new products. We have continued to increase our investment in research and
     development (R&D). Our growth strategy includes selective acquisitions of
     products and technologies from other companies. During the past two years
     we have made investments in new technologies, including the ProLumen(TM)
     thrombectomy device, the X-Site(R) vascular closure device and the
     ClearGlide(R) endovascular vessel harvesting product.

     Our financial position continued to be strong at the end of March 2006.
     Cash and investments were $70.1 million compared to $65.4 million at June
     30, 2005. We paid a special cash dividend of $1.00 per share, or $14.9
     million on January 18, 2006, along with the regular quarterly dividend of 7
     cents per share or $1.0 million.

RESULTS OF OPERATIONS

     NET SALES

     Net sales were $93.1 million in the third quarter and $273.9 million in the
     first nine months of fiscal 2006, compared to $96.1 million and $259.1
     million, respectively, for the corresponding periods last year. Sales in
     the third quarter last year included $6.1 million of Panorama(TM) central
     monitoring system sales shipped in the second quarter last year because
     validation of a new software release was not completed until the third
     quarter last year. Unfavorable foreign exchange translation, as a result of
     the strengthened United States dollar relative to the Euro and the British
     Pound, reduced sales growth by $1.8 million and $3.1 million in the third
     quarter and first nine months of fiscal 2006, respectively.


                                       13
<PAGE>

     Sales in the United States were $57.3 million and $171.2 million in the
     third quarter and first nine months of fiscal 2006, respectively, compared
     to $60.2 million and $162.2 million, respectively, for the corresponding
     periods last year. The decrease in the third quarter of fiscal 2006 was
     primarily attributable to the aforementioned $6.1 million Panorama sales
     last year. The increase in sales in the nine month period was attributable
     to higher sales in the Cardiac Assist / Monitoring Products segment.

     Sales in international markets of $35.8 million and $102.7 million, in the
     third quarter and first nine months of fiscal 2006, respectively, were
     essentially unchanged in the third quarter and 6% higher in the nine month
     period, respectively, ($1.7 million and $8.9 million higher, respectively,
     excluding unfavorable foreign exchange translation) compared to the
     corresponding periods last year due to increased sales in the Cardiac
     Assist / Monitoring Products segment.

         Sales of the Cardiac Assist / Monitoring Products segment were $80.0
         million in the third quarter of fiscal 2006 compared to $80.4 million,
         and $233.5 million in the first nine months of fiscal 2006 compared to
         $212.1 million last year.

              Sales of patient monitoring products were $36.7 million in the
              third quarter of fiscal 2006, compared to $44.7 million last year.
              Unfavorable foreign exchange translation reduced sales growth by
              $0.6 million. Excluding the aforementioned $6.1 million of
              Panorama sales in the third quarter last year, patient monitoring
              sales in the third quarter this year would have been $1.9 million
              below last year. Lower sales of patient monitoring products in the
              third quarter this year reflect increased competitive pressure on
              prices in the United States and market weakness in Europe, both in
              distributor markets and especially in the direct sales markets in
              France and the United Kingdom (U.K.). Market weakness in the U.K.
              was largely attributable to curtailed government spending. Sales
              of Panorama central monitoring systems grew 20%. Installations of
              Panorama systems set a record, continuing a trend of rising
              revenue and bringing the total number of Panorama installations to
              247 since its launch in the first quarter of fiscal 2005. Sales of
              patient monitoring products were $116.0 million in the first nine
              months of fiscal 2006, compared to $109.6 million last year,
              primarily due to increased sales of Panorama systems and Masimo
              sensors.

              Sales of cardiac assist products increased 21% to a record $43.3
              million due to record shipments of both balloon pumps and
              intra-aortic balloons, plus sales of the newly acquired ClearGlide
              endovascular vessel harvesting (EVH) product. Unfavorable foreign
              exchange translation reduced sales growth by $0.7 million. Sales
              of balloon pumps, principally the CS100(R) automatic pump, were
              fueled by continued increased demand in international markets and
              replacement of older pump models from the very large installed
              base of pumps in the United States. Sales of intra-aortic balloons
              increased due to continued strong international growth while sales
              in the United States remained steady. In the first nine months of
              fiscal 2006, sales of cardiac assist products were $117.5 million,
              a 15% increase compared to $102.5 million last year, with the
              increase due primarily to the record pump and balloon sales.

              The ClearGlide EVH product was launched by the Cardiac Assist
              Division in January 2006, after completion of the acquisition from
              Ethicon (a Johnson & Johnson company). Sales in the third fiscal
              quarter, the product's first selling quarter, proved to be better
              than expected with little loss from the selling rate under its
              prior owner. Based on an estimated current annual market for EVH
              products of $100 million and an estimated penetration of 50% of
              the 300,000 coronary bypass surgical procedures performed in the
              United States last year, the potential annual market for EVH is
              estimated at $200 million. We expect the ClearGlide product to
              make a significant contribution to the future growth of the
              Cardiac Assist business.

                                       14
<PAGE>

         Sales of the Interventional Products / Vascular Grafts segment were
         $12.7 million in the third quarter compared to $15.3 million, and $39.2
         million in the first nine months of fiscal 2006 compared to $45.9
         million last year.

              Sales of interventional products were $5.4 million in the third
              quarter of 2006, 19% below last year, as sales of VasoSeal(R), our
              principal vascular closure device, continued to decrease. As in
              prior periods, the decline was partially offset by sales of
              non-closure products, which grew 35% over last year. Non-closure
              products accounted for 36% of total interventional product sales
              in the third quarter of fiscal 2006 compared with 22% in the same
              period last year. In the first nine months of fiscal 2006, sales
              of interventional products were $17.3 million compared to $21.7
              million last year, with the decrease due to the continued
              reduction in sales of VasoSeal.

              On-Site(TM), our new collagen-based vascular closure device, was
              launched in the United States market in early March 2006 after the
              completion of beta testing at six hospital centers. The market
              response to On-Site is encouraging. Nearly one-third of the
              customers who placed initial orders for On-Site have already
              reordered and about 40% of those customers have adopted the device
              for regular use. If the early market response continues, we
              believe that the On-Site product would play a key role in the
              anticipated turn-around of the Interventional Products business.
              The launch of the X-Site suture-based vascular closure device is
              now projected for the third quarter of fiscal 2007, with the
              extended delay due to revised assumptions regarding the regulatory
              approval timetable for the redesigned device.

              InterVascular sales were $7.4 million in the third quarter of
              fiscal 2006, 14% lower than the comparable period last year. Sales
              last year were higher primarily because they included revenues
              from an OEM agreement that has since been terminated, and because
              our United States distribution strategy changed in the fourth
              quarter of fiscal 2005 from a direct sales model to an exclusive
              distributor relationship with W.L. Gore & Associates, Inc. (Gore),
              resulting in lower average United States selling prices in the
              third quarter this year compared to a year ago. Competitive
              pricing pressure in the European countries in which we sell
              directly and unfavorable foreign exchange translation of $0.4
              million also affected year-over-year growth in InterVascular
              sales. In the first nine months of fiscal 2006, sales of
              InterVascular products were $21.9 million compared to $24.2
              million last year due to the same reasons discussed above.

         Sales of Genisphere products were $0.4 million and $1.2 million in the
         third quarter and first nine months of fiscal 2006, compared to $0.4
         million and $1.1 million for the corresponding periods last year. The
         slight increase in sales in the nine-month period was primarily
         attributable to sales of new products.

     GROSS PROFIT

         Gross margin was 56.8% for the third quarter and 56.1% for the first
         nine months of fiscal 2006 compared to 57.8% and 59.0%, respectively,
         for the corresponding periods last year. The decrease in gross margin
         in the fiscal 2006 periods was primarily due to a less favorable sales
         mix as a result of lower sales of higher margin VasoSeal devices,
         increased sales of intra-aortic balloon pumps, sales of graft products
         to Gore, our exclusive United States distributor, at lower average
         selling prices, and lower gross margin in Patient Monitoring primarily
         as a result of competitive pressure on prices. Gross margin in the nine
         month period of fiscal 2006 was affected by the same factors noted
         above and the cost of sales special charge of $2.4 million related to
         the postponed market launch and redesign of the X-Site device (see
         Special Charges). The X-Site cost of sales special charge was
         equivalent to 0.9 points of gross margin in the first nine months of
         fiscal 2006.

                                       15
<PAGE>

     RESEARCH AND DEVELOPMENT EXPENSE (R&D)

         R&D expense includes new product development and improvements of
         existing products, as well as expenses for regulatory filings and
         clinical evaluations. R&D expense increased 5% to $9.6 million in the
         third quarter of fiscal 2006, equivalent to 10.3% of sales compared to
         $9.1 million, or 9.5% of sales for the same period last year. R&D
         expenses increased 5% to $27.7 million in the first nine months of
         fiscal 2006, equivalent to 10.1% of sales compared to $26.5 million or
         10.2% of sales for the same period last year.

         R&D expense for the Cardiac Assist / Monitoring Products segment
         increased $1.7 million or 33% to $6.8 million in the third quarter and
         $4.1 million or 27% to $18.8 million in the first nine months of fiscal
         2006 compared to $5.1 million and $14.8 million, respectively, in the
         corresponding periods last year. The increase was primarily due to
         expenses associated with increased new product development and reduced
         capitalization of software development costs for the Panorama as a new
         software release was launched in the third quarter last year.

         R&D expense for the Interventional Products / Vascular Grafts segment
         decreased $1.4 million or 41% to $2.0 million in the third quarter of
         fiscal 2006 and $3.0 million or 31% to $6.8 million in the first nine
         months of fiscal 2006 compared to $3.4 million and $9.8 million,
         respectively, in the corresponding periods last year. The decrease was
         attributable to the termination of an R&D project in fiscal 2005. R&D
         expense in the Interventional Products / Vascular Grafts segment in the
         first nine months of fiscal 2006 included X-Site special charge of $0.1
         million (see Special Charges).

         The balance of consolidated R&D is in Corporate and Other and amounted
         to $0.8 million in the third quarter and $2.1 million in the first nine
         months of fiscal 2006 compared to $0.6 million and $1.9 million,
         respectively, in the corresponding periods last year.

     SELLING, GENERAL & ADMINISTRATIVE EXPENSE (SG&A)

         SG&A expense increased 3% to $36.1 million in the third quarter of
         fiscal 2006, or 38.7% of sales, compared to $35.0 million, or 36.4% of
         sales, last year. In the first nine months of fiscal 2006, SG&A expense
         increased 1% to $105.0 million, or 38.3% of sales, compared to $103.6
         million, or 40.0% of sales, for the same period last year. Selling
         expenses, which comprise selling, marketing and clinical support costs,
         decreased 4% compared to the same quarter last year. Contributing to
         that decline was the elimination of direct selling in the United States
         commencing in May 2005 when we appointed Gore the exclusive United
         States distributor of our InterVascular products, and the expense
         reduction achieved as a result of the workforce reductions taken at the
         Interventional Products Division in the second fiscal quarter of this
         year. General and administrative expense increased 22%, principally
         legal costs, as certain of our legal proceedings approached trial, and
         in support of increased business development activities. Legal expenses
         are included in Corporate and Other.

                                       16
<PAGE>

         SG&A expense for the Cardiac Assist / Monitoring Products segment
         decreased $0.5 million or 2% to $26.3 million in the third quarter of
         fiscal 2006 attributable to lower labor benefits expense and favorable
         foreign exchange translation. SG&A expense was unchanged at $75.8
         million in the first nine months of fiscal 2006 compared to last year.

         SG&A expense for the Interventional Products / Vascular Grafts segment
         decreased 17% to $8.5 million in the third quarter of fiscal 2006 and
         13% to $27.3 million in the first nine months of fiscal 2006, due to
         the elimination of the InterVascular United States sales organization
         as a result of our appointment of Gore as exclusive United States
         distributor for InterVascular in the fourth quarter last year and the
         20% workforce reduction in the Interventional Products Division in the
         second quarter of fiscal 2006. SG&A expense in the Interventional
         Products / Vascular Grafts segment in the first nine months of fiscal
         2006 included X-Site special charge of $0.2 million (see Special
         Charges).

         Segment SG&A expense includes fixed corporate G&A charges that are
         offset in Corporate and Other.

     SPECIAL CHARGES

         In the second quarter of fiscal 2006, we recorded a special charge
         totaling $2.7 million related to the postponed launch of the X-Site
         vascular closure device in the United States. The delay is the result
         of market feedback from the limited launch of X-Site, which revealed a
         strong market preference for a pre-tied knot as an integral part of the
         device. The X-Site product currently provides a suture knot-tier as an
         accessory.

         On December 28, 2005, we approved a plan to reduce operating expenses
         in conjunction with the decision to delay the launch of the X-Site
         device. As a result, we eliminated 33 positions, or 20% of the
         workforce in the Interventional Products Division at a cost of $0.4
         million for severance and other one-time termination benefits.
         Substantially all of the terminated employees left the Company by the
         end of December. The severance payments will be completed by the end of
         fiscal 2006. The workforce reductions are expected to save
         approximately $4 million on an annualized basis. In addition, as a
         result of our decision to redesign the X-Site device to incorporate a
         pre-tied knot, we wrote-off $1.6 million of existing X-Site inventory
         and tooling and recorded a liability of $0.7 million for purchase
         commitments and contract termination costs. The special charge is
         reflected in the Interventional Products / Vascular Grafts segment
         ($2.4 million cost of sales, $0.1 million R&D and $0.2 million SG&A).

         In the first quarter of fiscal 2006, we recorded a pretax gain of $0.8
         million related to the sale of an unused facility in Vaals, the
         Netherlands, that was closed as part of a restructuring program at the
         end of fiscal 2002. The special gain is included in Corporate SG&A.

     INTEREST INCOME

         Interest income of $0.6 million in the third quarter of fiscal 2006 was
         essentially unchanged compared to the same period last year. Interest
         income was $1.7 million in the first nine months of fiscal 2006
         compared to the $1.6 million last year. The slight increase was due to
         an increase in the average yield, partially offset by a decrease in the
         average portfolio.


                                       17
<PAGE>

     DIVIDEND INCOME

         We have a preferred stock investment in Masimo Corporation, a key
         supplier to the Patient Monitoring business. In February 2006, Masimo's
         Board of Directors and stockholders approved a special dividend payment
         to all stockholders. In March 2006, we received $3.9 million of that
         special dividend, with the balance to be collected at a later date.

     OTHER, NET

         Other expense increased $0.2 million for the third quarter of fiscal
         2006 compared to the corresponding period last year attributable to
         increased foreign exchange losses. Other expense increased $1.0 million
         for the first nine months of fiscal 2006 compared to the corresponding
         period last year attributable to impairment losses of $0.8 million
         related to the write-down of marketable securities that were liquidated
         as part of our repatriation of foreign earnings of approximately $30
         million and higher foreign exchange losses.

     INCOME TAXES

         In the third quarter and first nine months of fiscal 2006, the
         consolidated effective tax rate was 23.3% and 25.2%, respectively,
         compared to 26.0% and 28.0% in the third quarter and first nine months,
         respectively, last year. The lower tax rate in the fiscal 2006 periods
         was primarily attributable to an increased benefit from foreign
         earnings taxed at a lower rate, the utilization of a foreign tax loss
         carryforward (that had a valuation allowance) on the $0.8 million
         special gain, the $2.7 million special charge, which is deductible at
         higher United States effective tax rates and the lower tax rate on the
         $4.5 million dividend income due to the dividends received deduction.
         The above items were partially offset by a reduced benefit for the
         United States Research Credit, due to its expiration on December 31,
         2005, and an incremental phase-out of the extraterritorial income
         exclusion. We currently estimate that our effective tax rate, excluding
         special charges/gains, will approximate 29.5% for the full fiscal 2006.
         However, our effective tax rate could be impacted by changes in the
         geographic mix of our earnings.

     NET EARNINGS

         Net earnings were $9.1 million or $0.59 per diluted share in the third
         quarter of fiscal 2006 compared to $8.8 million or $0.58 per diluted
         share last year. Higher earnings in the third quarter of fiscal 2006
         were primarily attributable to the dividend income ($3.9 million after
         tax or $0.25 per share) and lower losses in the Interventional Products
         / Vascular Graft segment. Earnings in the third quarter last year were
         affected by the $6.1 million Panorama sales ($2.6 million or $0.17 per
         share).

         Net earnings were $19.6 million or $1.29 per diluted share in the first
         nine months of fiscal 2006 compared to $17.2 million or $1.13 per
         diluted share for the same period last year. Higher earnings in the
         first nine months of fiscal 2006 were due to the dividend income,
         increased net earnings in the Cardiac Assist / Monitoring Products
         segment and the special gain of $0.8 million or $0.05 per diluted share
         recorded in the first quarter. Partially offsetting the increase in
         earnings was the $2.7 million X-Site special charge, $1.8 million after
         tax or $0.12 per diluted share, recorded in the second quarter.

     LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash equivalents and short-term investments at March 31, 2006
         were $47.7 million compared to $42.6 million at June 30, 2005.
         Long-term investments were $22.4 million and $22.8 million at March 31,
         2006 and June 30, 2005, respectively.

                                       18
<PAGE>

         In the first nine months of fiscal 2006, we provided $16.7 million of
         net cash from operating activities compared to $29.7 million last year.
         The decrease was primarily due to lower income taxes refunded of $7.1
         million, increased pension contribution of $6.5 million and a reduction
         of accounts payable of $3.2 million, partially offset by increased net
         earnings of $2.3 million.

         We used a net $1.1 million of cash from investing activities. Net sales
         and maturities of investments yielded $5.2 million of cash and proceeds
         from the sale of the Vaals facility added $1.2 million of cash. These
         $6.4 million of proceeds were spent on $4.7 million of capital and
         technology and $2.7 million of capitalized software.

         We used $4.7 million of net cash from financing activities. We paid $18
         million in dividends, comprising 3 quarterly dividends of $0.07 per
         share and a special dividend of $1.00 per share declared in our fiscal
         second quarter and paid in our third quarter. We also repaid $15.7
         million of short-term borrowings. Financing cash outlays were partially
         funded by $12.6 million of proceeds from the exercise of stock options
         and $1.4 million of excess tax benefits to be realized, generated from
         stock option exercises.

         In January 2006, we borrowed $15.2 million for 90 days at an interest
         rate of 4.80% to assist with the funding of the January special and
         regular dividends of $15.9 million, or $1.07 per share. The borrowing
         was done because the interest expense was lower than the cost to retire
         long-term investments. During the third quarter of fiscal 2006, we
         repaid $11.7 million of this short-term borrowing. The $3.5 million
         outstanding balance was repaid in April 2006.

         On November 28, 2005, the Board of Directors declared a special cash
         dividend of $1.00 per share payable on January 18, 2006 to shareholders
         of record on December 27, 2005.

         On December 6, 2005, the Board of Directors declared a quarterly cash
         dividend of $0.07 per share payable on January 18, 2006 to shareholders
         of record on December 27, 2005.

         On February 27, 2006, the Board of Directors declared a quarterly cash
         dividend of $0.07 per share payable on April 6, 2006 to stockholders of
         record as of March 6, 2006.

         During the third quarter of fiscal 2006, we substantially completed our
         one-time $30 million earnings repatriation program under the American
         Jobs Creation Act of 2004 (AJCA). The repatriation was primarily funded
         by the sale of investments held by our overseas subsidiaries and to a
         lesser extent by existing overseas cash balances. The funds received
         through the repatriation will be deployed under a qualified investment
         plan as defined by the AJCA. The primary uses of the repatriated funds,
         as defined in our approved reinvestment plan, will be to finance
         domestic research and development, qualified pension plan contributions
         and capital expenditures.

         At March 31, 2006, we had available unsecured lines of credit totaling
         $95.9 million, with interest payable at LIBOR-based rates, determined
         by the borrowing period. Of the total available, $25.0 million expires
         in October 2006, $24.0 million expires in November 2006 and $21.5
         million expires in March 2007. These lines of credit are renewable
         annually at the option of the banks, and we plan to seek renewal. We
         also have $25.4 million in credit lines with no expiration date. We
         have approximately $1.0 million in letters of credit outstanding as
         security for inventory purchases from an overseas vendor.

                                       19
<PAGE>

         On May 16, 2001, the Board of Directors authorized $40 million to buy
         shares of our common stock from time to time, subject to market
         conditions and other relevant factors affecting the Company. We
         purchased approximately 5 thousand of our common shares for
         approximately $144 thousand during the first nine months of fiscal
         2006. To date we have repurchased approximately 915 thousand shares at
         a cost of $35.3 million. The remaining balance under the existing share
         repurchase program is $4.7 million.

         We believe that our existing cash and investment balances, future cash
         generated from operations and existing credit facilities will be
         sufficient to meet our projected working capital, capital and
         investment needs. The moderate rate of current United States inflation
         has not significantly affected the Company.

     INFORMATION CONCERNING FORWARD LOOKING STATEMENTS

         This Management's Discussion and Analysis of Financial Condition and
         Results of Operations contains forward-looking statements that involve
         risks and uncertainties that could cause actual results to differ
         materially from those projected in the forward-looking statements as a
         result of many important factors. Many of these risks cannot be
         predicted or quantified and are at least partly outside our control,
         including the risk that the ClearGlide EVH product will not make a
         significant contribution to the future growth of the Cardiac Assist
         business, that the early response to the On-Site product will not
         continue and On-Site will not play a key role in the turn-around of the
         Interventional Products business and that the introduction of X-Site
         will be delayed and market conditions may change, particularly as the
         result of competitive activity in the markets served by the Company.
         Additional risks include the Company's dependence on certain
         unaffiliated suppliers (including single source manufacturers) for
         patient monitoring, cardiac assist and interventional products,
         continued demand for the Company's products, rapid and significant
         changes that generally characterize the medical device industry and the
         ability to continue to respond to such changes, the uncertain timing of
         regulatory approvals, as well as other risks detailed in documents
         filed by Datascope with the Securities and Exchange Commission.

     CRITICAL ACCOUNTING POLICIES

         Our financial statements have been prepared in accordance with
         accounting principles generally accepted in the United States of
         America. The preparation of these financial statements requires us to
         make estimates and assumptions that affect the reported amount of
         assets and liabilities and disclosure of contingent assets and
         liabilities at the date of the financial statements and the reported
         amount of revenues and expenses for each period. We regularly evaluate
         our estimates and assumptions on an on-going basis and adjust as
         necessary to accurately reflect current conditions. These estimates and
         assumptions are based on current and historical experience, on
         information from third party professionals and on various other factors
         that are believed to be reasonable under the circumstances. Actual
         results could differ from those estimates. Our critical accounting
         policies include Revenue Recognition, Allowance for Doubtful Accounts,
         Inventory Valuation, Income Taxes and Pension Plan Actuarial
         Assumptions, as disclosed in our Form 10-K for the fiscal year ended
         June 30, 2005.

     RECENT ACCOUNTING PRONOUNCEMENTS

         In November 2005 the Financial Accounting Standards Board (FASB) issued
         FASB Staff Position (FSP) 123(R)-3, "Transition Election Related to
         Accounting for the Tax Effects of Share-Based Payment Awards." This FSP
         provides an elective alternative transition method that consists of:
         (1) a computation that creates an additional paid-in-capital (APIC)
         pool related to previously recognized tax benefits on equity-based
         employee compensation; and (2) a simplified method to determine how
         awards that are fully vested and outstanding when Statement 123R is
         adopted will subsequently affect the APIC pool. The guidance in this
         FSP is effective after November 10, 2005. Entities may make a one-time
         election to apply the transition method discussed in this FSP. That
         one-time election may be made within one year of an entity's adoption
         of Statement 123R, or the FSP's effective date, whichever is later. The
         Company is reviewing the issue and will determine if it will adopt the
         alternative method by the end of fiscal year 2006.

                                       20
<PAGE>

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Due to the global nature of our operations, we are subject to the exposures
     that arise from foreign exchange rate fluctuations. Our objective in
     managing our exposure to foreign currency fluctuations is to minimize net
     earnings volatility associated with foreign exchange rate changes. We enter
     into foreign currency forward exchange contracts to hedge foreign currency
     transactions which are primarily related to certain intercompany
     receivables denominated in foreign currencies. Our hedging activities do
     not subject us to exchange rate risk because gains and losses on these
     contracts offset losses and gains on the intercompany receivables hedged.
     The net gains or losses on these foreign currency forward exchange
     contracts are included within Other, net, in our condensed consolidated
     statements of earnings. We do not use derivative financial instruments for
     trading purposes.

     None of our foreign currency forward exchange contracts are designated as
     economic hedges of our net investment in foreign subsidiaries. As a result,
     no foreign currency transaction gains or losses were recorded in
     accumulated other comprehensive loss for the three- and nine-month periods
     ended March 31, 2006 and 2005.

     As of March 31, 2006, we had a notional amount of $14.9 million of foreign
     exchange forward contracts outstanding, denominated in Euros and British
     pounds. The foreign exchange forward contracts generally have maturities
     that do not exceed 12 months and require us to exchange foreign currencies
     for United States dollars at maturity, at rates agreed to when the contract
     is signed.

Item 4. CONTROLS AND PROCEDURES

     We maintain disclosure controls and procedures that are designed to ensure
     that information required to be disclosed in our Exchange Act reports is
     recorded, processed, summarized and reported within the time periods
     specified in the Securities and Exchange Commission's rules and forms, and
     that such information is accumulated and communicated to the Disclosure
     Committee and Company's management, including our Chief Executive Officer
     and Chief Financial Officer, as appropriate, to allow timely decisions
     regarding required disclosure. In designing and evaluating the disclosure
     controls and procedures, management recognizes that any controls and
     procedures, no matter how well designed and operated, can provide only
     reasonable assurance of achieving the desired control objectives, and
     management necessarily is required to apply its judgment in evaluating the
     cost-benefit relationship of possible controls and procedures.

     We carried out an evaluation, under the supervision and with the
     participation of management, including the Company's Chief Executive
     Officer and the Chief Financial Officer, of the effectiveness of our
     disclosure controls and procedures as of the end of the period covered by
     this report. Based on the foregoing, the Chief Executive Officer and Chief
     Financial Officer concluded that our disclosure controls and procedures
     were effective.


                                       21
<PAGE>

     The review of internal controls periodically gives rise to modifications
     and improvements designed to enhance the efficacy of our controls and we
     implement changes from time to time to effectuate such changes. Subject to
     the forgoing, we do not believe that any changes we instituted constitute
     significant changes during the registrant's most recent fiscal quarter to
     our internal controls which would require disclosure.


                                       22
<PAGE>

Part II:  OTHER INFORMATION

Item 1.  Legal Proceedings

     We are subject, in the ordinary course of our business, to product
     liability litigation. We believe we have meritorious defenses in all
     material pending lawsuits. We also believe that we maintain adequate
     insurance against any potential liability for product liability litigation.

     As noted in our Form 10-K for the fiscal year ended June 30, 2005, on
     January 28, 2003, Sanmina-SCI, one of our former suppliers, filed a
     complaint in the Superior Court of California, County of Santa Clara,
     claiming that we are obligated to purchase excess inventory of Sanmina-SCI.
     Sanmina-SCI seeks damages of $1.2 million, plus material markup, carrying
     costs and interest. In response, we filed an answer denying the allegations
     of the complaint and counterclaimed for damages we suffered in the amount
     of $2.3 million for Sanmina-SCI's breach of its obligation to us. The
     matter was settled in April 2006 by each party releasing the other without
     compensation.

     As noted in our Form 10-K for the fiscal year ended June 30, 2005, on
     December 2, 2003, a former Datascope employee, Michael Barile, filed a
     complaint in the Superior Court of New Jersey, Law Division, Bergen County,
     against Datascope Corp. and various John Does seeking, inter alia,
     indemnification from the Company of approximately $1 million in legal fees
     and expenses he allegedly incurred in defending a criminal action brought
     against him by the United States Attorney's Office for the District of
     Maryland, as well as additional damages Mr. Barile alleges he suffered as a
     result of such prosecution. The matter was settled in April 2006 by the
     Company agreeing to pay a portion of Mr. Barile's legal fees.

     As noted in our Form 10-K for the fiscal year ended June 30, 2005, on
     January 20, 2005, Rex Medical LP filed a complaint in the United States
     District Court for the District of Delaware, seeking monetary damages for
     breach of three thrombectomy technology transfer agreements between Rex and
     the Company, as well as to have the technology under the agreements revert
     back to Rex. The Company has answered the complaint denying the allegations
     and has counterclaimed for Rex's breach of the contracts and seeks monetary
     damages for lost profits. Mediation was conducted in August 2005 without
     success, however, the parties are discussing the possibility of settlement.
     The Company believes it has a meritorious counterclaim and meritorious
     defenses to Rex's claims and intends to defend and prosecute this action
     vigorously.

     As noted in our Form 10-Q for the quarterly period ended December 31, 2005,
     on March 18, 2005, Johns Hopkins University and Arrow International, Inc.
     ("Plaintiffs") filed a complaint against Datascope in the United States
     District Court for the District of Maryland seeking a permanent injunction
     and damages for patent infringement. They allege that the Company's
     ProLumen Rotational Thrombectomy System infringes the claims of their
     United States patents 5,766,191 and 6,824,551. We filed an answer denying
     such infringement. On September 1, 2005, we filed a summary judgment motion
     to dismiss the Plaintiffs' complaint. Plaintiffs filed an answer to the
     motion and the Court denied our motion on January 18, 2006. Trial in this
     matter is anticipated by September 2006.


                                       23
<PAGE>


Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

     The following table sets forth information on repurchases by the Company of
     its common stock during the third quarter of fiscal year 2006.

<TABLE>
<CAPTION>

                                                                  Total Number of Shares    Total Value of Shares that
                                 Total Number       Average       Purchased as a Part of    May Yet Be Purchased Under
                                  of Shares          Price          Publicly Announced             the Programs
           Fiscal Period          Purchased        Per Share             Programs                    ($ 000's)
     -------------------------- ---------------  -------------- --------------------------- ----------------------------
     <S>                        <C>              <C>            <C>                         <C>
     01/01/06 - 01/31/06              -              $   -                  -                       $     4,681
     02/01/06 - 02/28/06              -                  -                  -                             4,681
     03/01/06 - 03/31/06              -                  -                  -                             4,681
                                ---------------  -------------- --------------------------- ----------------------------
     Total                             -             $   -                   -                      $     4,681
                                ===============  ============== =========================== ============================
</TABLE>

The current stock repurchase program was announced on May 16, 2001. Approval was
granted for up to $40 million in repurchases and there is no expiration date on
the current program.

Item 5.  Other Information

     Reports on Form 8-K.
         During the quarter for which this report on Form 10-Q is filed, the
         Registrant filed the following Forms 8-K:
         o        January 4, 2006, pertaining to the announcement of a plan,
                  approved on December 28, 2005, to reduce operating expenses
                  related to the previously announced strategy to postpone the
                  full market launch of its X-Site vascular closure device and
                  to record a special charge in the second quarter ended
                  December 31, 2005.
         o        January 18, 2006, pertaining to the retirement of Arno Nash, a
                  Director of the Corporation, on January 15, 2006.
         o        January 31, 2006 pertaining to the Earnings Release of
                  Datascope Corp. dated January 30, 2006.
         o        February 3, 2006 pertaining to the Corporation adopting a form
                  of Restricted Shares Award Agreement to be used in conjunction
                  with the Corporation's 2005 Equity Incentive Plan. It also
                  announced the retirement of Murray Pitkowsky, Senior Vice
                  president and former Chief Financial Officer, Secretary and
                  Treasurer of the Corporation, on January 31, 2006.
         o        February 27, 2006, pertaining to the approval of Masimo's
                  Board of Directors and stockholders to issue a special
                  dividend payment to all stockholders.
         o        March 13, 2006 pertaining to the $3.9 million of the special
                  dividend received from Masimo Corporation announced in the
                  Form 8-K dated February 27, 2006.

Item 6.  Exhibits

10.1     Form of Restricted Shares Award Agreement, incorporated by reference to
         Exhibit 10.1 to Current Report on Form 8-K filed on February 3, 2006

31.1     Certification of Principal Executive Officer Regarding Facts and
         Circumstances Relating to Quarterly Reports

31.2     Certification of Principal Financial Officer Regarding Facts and
         Circumstances Relating to Quarterly Reports

32.1     Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002


                                       24
<PAGE>

                                                                       Form 10-Q






                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.


                               DATASCOPE CORP.
                               Registrant



                               By:    /s/ Lawrence Saper
                                     -------------------
                                     Lawrence Saper
                                     Chairman of the Board and
                                     Chief Executive Officer



                               By:    /s/ Scott D. Kantor
                                     ------------------------------------------
                                     Scott D. Kantor
                                     Vice President, Finance and Administration,
                                     and Chief Financial Officer



   Dated:  May 10, 2006


                                       25