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UNITED
  STATES

SECURITIES
  AND EXCHANGE COMMISSION

WASHINGTON,
  DC 20549



---

FORM
  10-Q

(Mark
  One)

| | QUARTERLY
        REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
        OF 1934
| | -------------------------------------------------------------------------------------------------------

For
  the quarterly period ended September 30, 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



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DATASCOPE
  CORP.

(Exact name of registrant as specified in its charter)



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

| | 14
      Philips Parkway, Montvale, New Jersey(Address of principal executive offices) |  | 07645-9998(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. YESNO

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 FilerAccelerated FilerNon-accelerated Filer

Indicate
  by check mark whether the registrant is a shell company (as defined in Rule
  12b-2 of the Exchange Act). YESNO

Number
  of Shares of Companys Common Stock outstanding as of October 31, 2006:
  15,208,818.






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Datascope
  Corp.

Form
  10-Q Index



PagePART
          I. FINANCIAL INFORMATIONItem
          1.
      
      Financial
          StatementsCondensed
          Consolidated Balance Sheets (Unaudited) at September 30, 2006 and June
          30, 2006
      1Condensed
          Consolidated Statements of Earnings (Unaudited) Three Months Ended September
          30, 2006 and 2005
      2Condensed
          Consolidated Statements of Cash Flows (Unaudited) Three Months Ended
          September 30, 2006 and 2005
      3Notes
          to Condensed Consolidated Financial Statements (Unaudited)
      4-11Item
          2.
      
      Managements
          Discussion and Analysis of Financial Condition and Results of Operations
      12-19Item
          3.
      
      Quantitative
          and Qualitative Disclosures about Market Risk
      20Item
          4.
      
      Controls
          and Procedures
      20PART
          II. OTHER INFORMATIONItem
          1.
      
      Legal
          Proceedings
      21Item
          2.
      
      Unregistered
          Sales of Equity Securities and Use of Proceeds
      21Item
          5.
      
      Other
          Information
      22Item
          6.
      
      Exhibits
      22Signatures
      
      
      23Exhibit
          31.1.
      
      Certification
          of Principal Executive Officer Regarding Facts and Circumstances Relating
          to Quarterly ReportsExhibit
          31.2.
      
      Certification
          of Principal Financial Officer Regarding Facts and Circumstances Relating
          to Quarterly ReportsExhibit
          32.1.
      
      Certification
          Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002




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PART
  I. FINANCIAL INFORMATION

Item
  1. Financial Statements

Datascope
  Corp. and Subsidiaries

Condensed
  Consolidated Balance Sheets

(In
  thousands, except per share amounts)

(Unaudited)



Sept
          30,2006
      
      June
          30,2006Assets
      
      
      
      
      
      (a)Current
          assets:Cash
          and cash equivalents
      
      $
      12,427
      
      $
      9,479Short-term
          investments
      
      
      42,684
      
      
      43,147Accounts
          receivable less allowance for doubtful accounts of $2,293 and $2,301
      
      
      72,697
      
      
      78,133Inventories
      
      
      62,060
      
      
      58,759Prepaid
          income taxes
      
      
      
      
      
      3,233Prepaid
          expenses and other current assets
      
      
      14,525
      
      
      13,907Current
          deferred taxes
      
      
      5,904
      
      
      6,522Total
          current assets
      
      
      210,297
      
      
      213,180Property,
          plant and equipment, net of accumulated depreciation of $93,382 and
          $90,928
      
      
      84,503
      
      
      85,460Long-term
          investments
      
      
      22,567
      
      
      22,297Intangible
          assets, net
      
      
      20,289
      
      
      20,465Goodwill
      
      
      4,065
      
      
      4,065Other
          assets
      
      
      30,920
      
      
      30,213$
      372,641
      
      $
      375,680Liabilities
          and Stockholders EquityCurrent
          Liabilities:Accounts
          payable
      
      $
      16,993
      
      $
      20,071Dividends
          payable
      
      
      16,331
      
      
      1,069Accrued
          expenses
      
      
      13,657
      
      
      14,584Accrued
          compensation
      
      
      13,112
      
      
      16,234Deferred
          revenue
      
      
      3,661
      
      
      3,675Income
          taxes payable
      
      
      1,178
      
      
      Total
          current liabilities
      
      
      64,932
      
      
      55,633Other
          liabilities
      
      
      27,070
      
      
      26,309Commitments
          and contingencies (Note 10)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,
          18,730 and 18,721 shares
      
      
      187
      
      
      187Additional
          paid-in capital
      
      
      104,087
      
      
      103,728Treasury
          stock at cost, 3,521 and 3,465 shares
      
      
      (107,037
      )
      
      (105,319
      )Retained
          earnings
      
      
      287,434
      
      
      299,255Accumulated
          other comprehensive loss:Cumulative
          translation adjustments
      
      
      (1,485
      )
      
      (1,300
      )Minimum
          pension liability adjustments
      
      
      (2,437
      )
      
      (2,437
      )Unrealized
          loss on available-for-sale securities
      
      
      (110
      )
      
      (376
      )Total
          stockholders equity
      
      
      280,639
      
      
      293,738$
      372,641
      
      $
      375,680


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

1

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Datascope
  Corp. and Subsidiaries

Condensed
  Consolidated Statements of Earnings

(In
  thousands, except per share amounts)

(Unaudited)



Three
          Months EndedSeptember 30,2006
      
      2005Net
          sales
      
      $
      87,200
      
      $
      88,300Cost
          of sales
      
      
      37,342
      
      
      37,620Gross
          profit
      
      
      49,858
      
      
      50,680Operating
          expenses:Research
          and development expenses
      
      
      8,654
      
      
      8,765Selling,
          general and administrative expenses
      
      
      35,064
      
      
      34,292Gain
          on sale of realty
      
      
      
      
      
      (810
      )43,718
      
      
      42,247Operating
          earnings
      
      
      6,140
      
      
      8,433Other
          (income) expense:Interest
          income
      
      
      (728
      )
      
      (545
      )Interest
          expense
      
      
      29
      
      
      58Other,
          net
      
      
      93
      
      
      669(606
      )
      
      182Earnings
          before income taxes
      
      
      6,746
      
      
      8,251Income
          taxes
      
      
      2,213
      
      
      2,195Net
          earnings
      
      $
      4,533
      
      $
      6,056Earnings
          per share, basic
      
      $
      0.30
      
      $
      0.41Weighted
          average number of common shares outstanding, basic
      
      
      15,235
      
      
      14,798Earnings
          per share, diluted
      
      $
      0.29
      
      $
      0.40Weighted
          average number of common shares outstanding, diluted
      
      
      15,423
      
      
      15,080


See
     notes to unaudited condensed consolidated financial statements

2

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Datascope
  Corp. and Subsidiaries

Condensed
  Consolidated Statements of Cash Flows

(Dollars
  in thousands)

(Unaudited)

Three
          Months EndedSeptember 302006
      
      2005Operating
          Activities:Net
          earnings
      
      $
      4,533
      
      $
      6,056Adjustments
          to reconcile net earnings to net cash provided by operating activities:Depreciation
      
      
      3,811
      
      
      3,880Amortization
      
      
      1,446
      
      
      1,256Provision
          for supplemental pension
      
      
      321
      
      
      302Provision
          for losses on accounts receivable
      
      
      38
      
      
      100Cash
          surrender value of officers life insurance
      
      
      (96
      )
      
      (96
      )Gain
          on sale of realty
      
      
      
      
      
      (810
      )Impairment
          of marketable investments
      
      
      
      
      
      557Stock-based
          compensation expense
      
      
      141
      
      
      42Excess
          tax benefits on stock-based compensation
      
      
      (35
      )
      
      (24
      )Deferred
          income tax (benefit)
      
      
      1,180
      
      
      (36
      )Changes
          in assets and liabilities:Accounts
          receivable
      
      
      5,322
      
      
      3,095Inventories
      
      
      (4,794
      )
      
      (4,059
      )Prepaid
          expenses and other assets
      
      
      2,583
      
      
      1,328Accounts
          payable
      
      
      (3,064
      )
      
      (557
      )Income
          taxes payable
      
      
      1,178
      
      
      3,674Accrued
          and other liabilities
      
      
      (4,288
      )
      
      (5,454
      )Net
          cash provided by operating activities
      
      
      8,276
      
      
      9,254Investing
          Activities:Capital
          expenditures
      
      
      (1,544
      )
      
      (1,395
      )Proceeds
          from asset sales
      
      
      
      
      
      1,155Purchases
          of investments
      
      
      (26,845
      )
      
      Proceeds
          from investment maturities
      
      
      25,427
      
      
      Proceeds
          from investment sales
      
      
      2,013
      
      
      344Capitalized
          software
      
      
      (1,853
      )
      
      (860
      )Purchased
          technology and licenses
      
      
      (59
      )
      
      (28
      )Net
          cash used in investing activities
      
      
      (2,861
      )
      
      (784
      )Financing
          Activities:Repayments
          of short-term borrowings
      
      
      
      
      
      (4,000
      )Exercise
          of stock options
      
      
      182
      
      
      197Treasury
          shares acquired under repurchase programs
      
      
      (1,717
      )
      
      (144
      )Excess
          tax benefits on stock-based compensation
      
      
      35
      
      
      24Cash
          dividends paid
      
      
      (1,069
      )
      
      (1,037
      )Net
          cash used in financing activities
      
      
      (2,569
      )
      
      (4,960
      )Effect
          of exchange rates on cash
      
      
      102
      
      
      (6
      )Increase
          in cash and cash equivalents
      
      
      2,948
      
      
      3,504Cash
          and cash equivalents, beginning of period
      
      
      9,479
      
      
      12,188Cash
          and cash equivalents, end of period
      
      $
      12,427
      
      $
      15,692Supplemental
          Cash Flow InformationCash
          paid during the period for:Income
          taxes paid
      
      $
      13
      
      $
      382Income
          taxes refunded
      
      
      ($3,519
      )
      
      ($2,935
      )Non-cash
          investing and financing activities:Net
          transfers of inventory to fixed assets for use as demonstration equipment
      
      $
      1,624
      
      $
      1,858Dividends
          declared, not paid
      
      $
      16,355
      
      $
      1,038


See
     notes to unaudited condensed consolidated financial statements.

3

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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, 2006.

Recent
  Accounting Pronouncements

In
  July 2006, the Financial Accounting Standards Board (FASB) issued
  FASB Interpretation (FIN) 48,Accounting
  for Uncertainty in Income Taxes, an
  interpretation of SFAS No. 109,Accounting
  for Income Taxes. This statement creates
  a single model to address uncertainty in tax positions which utilizes a two-step
  approach for evaluating such tax positions. Recognition (step one) occurs when
  a enterprise concludes that a tax position, based solely on its technical merits,
  is more likely than not to be sustained upon examination. Measurement (step
  two) is only addressed if step one has been satisfied. In addition, expanded
  disclosures are required. FIN 48 is effective for fiscal years beginning after
  December 15, 2006 (our fiscal year 2008 beginning July 1, 2007). We are currently
  evaluating the impact of adopting FIN 48.

In
     September 2006, FASB issued Statement of Financial Accounting Standards
    (SFAS)
  No. 157,Fair Value
   Measurements. SFAS 157 defines fair
    value as: the price that would be received to sell an asset or paid
    to  transfer a liability in an orderly transaction between market participants
    at
  the measurement date. In addition, SFAS 157 establishes a fair value hierarchy
     to be used to classify the source of information used in fair value measurements,

  new disclosures of assets and liabilities measured at fair value based on their
     level in the hierarchy and a modification of the long-standing accounting
    presumption
  that the transaction price of an asset or liability equals its initial fair
     value. SFAS 157 is effective in fiscal years beginning after November 15,
    2007
  (effective for our fiscal year beginning July 1, 2008). We are currently evaluating
    the impact of adopting SFAS 157.

In
  September 2006, FASB issued SFAS No. 158,Employers
  Accounting for Defined Benefit Pension and Other Postretirement Plans(SFAS 158) an amendment to SFAS 87, 88, 106 and 132(R). SFAS 158 requires an
  employer to fully recognize an asset or liability for the overfunded or the
  underfunded status of their benefit plans in financial statements. The pension
  asset or liability equals the difference between the fair value of the plans
  assets and its benefit obligation. The benefit obligation is measured as the
  projected benefit obligation (PBO) for pension plans and as the accumulated
  postretirement benefit obligation (APBO) for other postretirement benefit plans.
  SFAS 158 does not affect how an entity computes its benefit expense recognized
  in the income statement. SFAS 158 postpones until our fiscal year ending June
  30, 2009 the requirement that the measurement date for plan assets and liabilities
  must coincide with the sponsors year end. The standard provides two ways
  for companies to make the measurement-date transition. SFAS
  158 also includes additional disclosures in an entitys annual financial
  statements. SFAS 158 is effective for years ending after December 15, 2006 (effective
  for our fiscal year ending June 30, 2007). At June 30, 2006, we had a PBO that
  was approximately $6 million higher than the fair value of the U.S. and International
  defined pension plan assets. The SERP plans had a PBO of approximately $16 million
  at June 30, 2006. There are no assets in the SERP plans. We cannot project the
  impact to our balance sheet at the adoption date of June 30, 2007 because the
  PBO and plan assets are dependent on a number of factors that cannot be accurately
  predicted at this time.

4

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Datascope
  Corp. and Subsidiaries

Notes
  to Condensed Consolidated Financial Statements

(Unaudited,
  in thousands except per share data)

1.
  Summary of Significant Accounting Policies (Continued)

Recent
  Accounting Pronouncements (Continued)

In
  September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108, Quantifying
  Misstatements. SAB 108 requires registrants to use both a balance sheet approach
  and an income statement approach when quantifying and evaluating the materiality
  of a misstatement and to adjust the financial statements if either approach
  results in quantifying a misstatement that is material. SAB 108 also contains
  guidance on correcting errors under the dual approach and provides transition
  guidance for correcting errors existing in prior years. If prior year errors
  that had been previously considered immaterial (based on the appropriate use
  of the registrants prior approach) now are considered material based on
  the approach in SAB 108, the registrant need not restate prior period financial
  statements. SAB 108 is effective for financial statements for fiscal years ending
  after November 15, 2006 (our fiscal year 2007). We are currently evaluating
  the impact of SAB 108, but do not expect that its adoption will have a material
  effect on our financial statements.

2.
  Inventories

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



Sept
          30,2006
      
      June
          30,2006Materials
      
      $
      24,854
      
      $
      24,408Work
          in Process
      
      
      12,216
      
      
      12,582Finished
          Goods
      
      
      24,990
      
      
      21,769$
      62,060
      
      $
      58,759


3.
  Stockholders Equity

Changes
  in the components of stockholders equity for the three months ended September
  30, 2006 were as follows:



Net
          earnings
      
      $
      4,533Foreign
          currency translation adjustments
      
      
      (185
      )Common
          stock and additional paid-in capital effects of stock option activity
      
      
      359Cash
          dividends declared on common stock
      
      
      (16,355
      )Purchases
          under stock repurchase plans
      
      
      (1,717
      )Unrealized
          gain on available-for-sale securities
      
      
      266Total
          decrease in stockholders equity
      
      
      ($13,099
      )


4.
  Earnings Per Share

The
  computation of basic and diluted earnings per share for the three months ended
  September 30, 2006 and 2005 is shown below.



Three
          Months Ended9/30/06
      
      9/30/05Net
          earnings
      
      $
      4,533
      
      $
      6,056Weighted
          average shares outstanding for basic earnings per share
      
      
      15,235
      
      
      14,798Effect
          of dilutive employee stock awards
      
      
      188
      
      
      282Weighted
          average shares outstanding for diluted earnings per share
      
      
      15,423
      
      
      15,080Basic
          earnings per share
      
      $
      0.30
      
      $
      0.41Diluted
          earnings per share
      
      $
      0.29
      
      $
      0.40


Common
  shares related to options outstanding under the Companys stock option
  plans amounting to 1.03 million shares for the three months ended September
  30, 2006 were excluded from the computation of diluted earnings per share, as
  the effect would have been antidilutive. For the three months ended September
  30, 2005, 1.02 million shares were excluded from the calculation for the same
  reason.

5

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Datascope
  Corp. and Subsidiaries

Notes
  to Condensed Consolidated Financial Statements

(Unaudited,
  in thousands except per share data)

5.
  Comprehensive Income

Our
  comprehensive income for the three months ended September 30, 2006 and 2005
  is shown below.



Three
          Months Ended9/30/06
      
      9/30/05Net
          earnings
      
      $
      4,533
      
      $
      6,056Foreign
          currency translation loss
      
      
      (185
      )
      
      (334
      )Unrealized
          gain on available-for-sale securities, net of tax
      
      
      266
      
      
      2Total
          comprehensive income
      
      $
      4,614
      
      $
      5,724


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 cardiovascular
  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
  have aggregated 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.



CardiacAssist /MonitoringProducts
      
      InterventionalProducts /VascularGrafts
      
      CorporateandOther (a)
      
      ConsolidatedThree
	          months ended September 30, 2006Net
          sales to external customers
      
      $
      75,285
      
      $
      11,586
      
      $
      329
      
      $
      87,200Operating
          earnings (loss)
      
      $
      8,849
      
      
      ($3,130
      )
      $
      421
      
      $
      6,140Three
          months ended September 30, 2005Net
          sales to external customers
      
      $
      74,178
      
      $
      13,662
      
      $
      460
      
      $
      88,300Operating
          earnings (loss)
      
      $
      10,604
      
      
      ($2,032
      )
      
      ($139
      )
      $
      8,433


Reconciliation
  to consolidated earnings before income taxes :



ThreeMonthsEnded9/30/2006
      
      9/30/2005Consolidated
          operating earnings
      
      $
      6,140
      
      $
      8,433Interest
          income, net
      
      
      (699
      )
      
      (487
      )Other,
          net
      
      
      93
      
      
      669Consolidated
          earnings before income taxes
      
      $
      6,746
      
      $
      8,251


(a)
  Net sales of life science products by Genisphere are included within Corporate
  and Other. Operating loss within Corporate and Other in the first quarter of
  fiscal 2006 includes the gain on sale of an unused facility of $810 thousand.
  Segment SG&A expenses include fixed corporate G&A charges.

6

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Datascope
  Corp. and Subsidiaries

Notes
  to Condensed Consolidated Financial Statements

(Unaudited,
  in thousands except per share data)

7.
  Stock-Based Awards

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 ("2005 Plan") approved by stockholders in December
  2005, authorized 1,200,000 shares covering several different types of awards,
  including stock options, performance shares, performance units, stock appreciation
  rights, restricted shares, and deferred shares.

In
     December 2004, the FASB issued SFAS No. 123(R),Share-Based
      Payment, that requires all share-based
       payments to employees, including grants of employee stock options, to
      be recognized
  as an expense in the statement of earnings. The compensation expense
       is recognized over the requisite service period based on fair values measured

  on grant dates.

At
     the beginning of fiscal 2006, we adopted SFAS 123(R) using the modified
    prospective
  method, as permitted under SFAS 123(R), and as such, prior periods 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, are recognized as service is rendered after the effective
    date.
  In accordance with SFAS 123(R), we recorded stock-based compensation expense
     for the cost of stock options and restricted stock (together, "stock-based
     awards").
  Stock-based compensation expense for the three months ended September 30, 2006
      and 2005 was $141 thousand and $42 thousand ($83 thousand and $18 thousand
     after
  tax), respectively. The expense for the three months ended September 30, 2006
      was recorded in the statement of earnings as follows: $100 thousand in
     SG&A,
  $34 thousand in R&D and $7 thousand in cost of sales.

Stock
  Options

We
  have one employee stock compensation plan covering 4,150,000 shares of common
  stock, a stock option plan for members of the Board of Directors covering 150,000
  shares of common stock, and option agreements with certain consultants. Stock
  options have generally been granted with a 4-year vesting period and 10-year
  term. The stock options vest in equal annual installments over the vesting period.

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 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 stock options granted was estimated using the historical
    exercise
  behavior of employees for grants with a 10-year contractual term. Expected
    volatility was based on historical volatility for a period equal to the stock
    option's
    expected
  life and calculated on a daily basis.



Three
          Months EndedSeptember 30,2006
      
      2005Expected
          dividend yield
      
      4.04
      %
      3.91
      %Expected
          volatility
      
      28
      %
      30
      %Risk-free
          interest rate
      
      4.55
      %
      4.07
      %Expected
          life (in years)
      
      4.8
      
      4.9




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Datascope
  Corp. and Subsidiaries

Notes
  to Condensed Consolidated Financial Statements

(Unaudited,
  in thousands except per share data)

7.
  Stock-Based Awards (Continued)

Changes
  in our stock options for the three months ended September 30, 2006 were as follows:



Number
          ofOptions
      
      WeightedAverageExercise PriceOptions
          outstanding, beginning of year
      
      2,040,626
      
      $
      32.47Granted
      
      74,000
      
      
      32.77Exercised
      
      (8,550
      )
      
      21.35Forfeited/Expired
      
      (52,300
      )
      
      36.05Options
          outstanding, end of period
      
      2,053,776
      
      $
      32.43Options
          exercisable, end of period
      
      1,841,576
      
      $
      32.19


We
  generally issue shares for the exercise of stock options from unissued reserved
  shares.

The
     weighted average remaining contractual term was approximately 6.2 years
    for
  stock options outstanding and approximately 5.8 years for stock options exercisable
     as of September 30, 2006. The weighted average fair value of options granted

  was $6.78 per share in the three months ended September 30, 2006.

The
  total intrinsic value (the excess of the market price over the exercise price)
  was approximately $5.9 million for stock options outstanding and $5.7 million
  for stock options exercisable as of September 30, 2006. The total intrinsic
  value for stock options exercised in the three months ended September 30, 2006
  was approximately $0.1 million.

As
  of September 30, 2006, unrecognized compensation expense related to the unvested
  portion of our stock-based awards was approximately $1.7 million and is expected
  to be recognized over a weighted-average period of approximately 3 years.

The
  amount of cash received from the exercise of stock options was approximately
  $182 thousand and the related tax benefit was approximately $35 thousand in
  the three months ended September 30, 2006.

Restricted
  Stock

The
  2005 Equity Incentive Plan ("2005 Plan") also provides for grants of restricted
  stock. We granted 13,937 shares of restricted stock to an officer during the
  third quarter of fiscal 2006, which remained outstanding at September 30, 2006.
  The restricted stock award vests three years from the date of grant. The fair
  value of the restricted stock award of $0.5 million is being amortized to expense
  over the vesting period. The total fair value of the restricted stock award
  was based on the average market price of our common stock at the date of grant.
  Stock-based compensation expense related to this award in the three months ended
  September 30, 2006 was $44 thousand. The weighted average remaining contractual
  life for the grant of 13,937 restricted shares is approximately 2.2 years.

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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 a defined benefit pension plan designed to provide retirement benefits
  to substantially all U.S. employees. U.S. pension benefits are based on years
  of service, compensation and the primary social security benefits. 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 and the assets
  are invested in guaranteed insurance contracts.

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:



|                                        |  | Three
        Months Ended September 30, |      
|--------------------------------------- |  | ---------------------------------------- | -----
|                                        |  |                                          |      
|                                        |  | 2006                                     |      
|                                        |  |                                          |      
|                                        |  | U.S.
        and International           |      
|                                        |  |                                          |      
|Service
        cost                    |  | $                                        | 720  
|Interest
        cost                   |  |                                          | 1,034
|Expected
        return on assets       |  |                                          | (923 
|Amortization
        of:                |  |                                          |      
|Net
        loss                        |  |                                          | 95   
|Unrecognized
        prior service cost |  |                                          | 3    
|                                        |  |                                          |      
|Net
        pension expense             |  | $                                        | 929  
|                                        |  |                                          |      
|Employer
        contributions          |  | $                                        | 1,100
|                                        |  |                                          |      

9.
  Acquired Intangible Assets

The
  following is a summary of our intangible assets.



|                                                 |  | Sept
        30,2006 |        | June
        30,2006 |  
|------------------------------------------------ |  | -------------------- | ------ | -------------------- | -
|                                                 |  |                      |        |                      |  
|Purchased
        technology and licenses, gross |  | $                    | 22,001 |                      | $
|Accumulated
        amortization                 |  |                      | (1,712 | )                    |  
|                                                 |  |                      |        |                      |  
|Purchased
        technology and licenses, net   |  | $                    | 20,289 |                      | $
|                                                 |  |                      |        |                      |  

The
  balances in 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, Rex Medical, LP for the ProLumen thrombectomy
  device, Ethicon for the ClearGlide endoscopic vessel harvesting device and a
  license for the manufacture of our Anestar anesthesia delivery systems.

Amortization
  expense for the three months ended September 30, 2006 and 2005 was $236 thousand
  and $205 thousand, respectively.

At
     September 30, 2006, estimated future amortization expense of intangible
    assets
  subject to amortization is as follows: $0.7 million for the remaining nine
    months  of fiscal 2007, and $1.0 million, $1.1 million, $1.8 million and
    $2.2 million
  for fiscal years 2008, 2009, 2010 and 2011, respectively. The weighted average
    amortization period for these intangible assets is approximately 11 years.

Goodwill

Goodwill
     as of September 30, 2006 and 2005 was $4.1 million. There was no acquired
    goodwill
  and no change in the carrying value of existing goodwill during the three months
     ended September 30, 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
     Genisphere in Corporate and Other.

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Datascope
  Corp. and Subsidiaries

Notes
  to Condensed Consolidated Financial Statements

(Unaudited,
  in thousands except per share data)

10.
  Commitments and Contingencies

Legal
  Proceedings

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 accounting principles generally accepted in the United States
  of America we accrue for legal matters if it is probable that a liability has
  been incurred and an amount is reasonably estimable.

As
  noted in our Form 10-K for the fiscal year ended June 30, 2006, on March 18,
  2005, Johns Hopkins University and Arrow International, Inc. filed a complaint
  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. The Company has filed an answer denying
  such infringement and discovery has begun. On October 13, 2006, Johns Hopkins
  and Arrow filed a second complaint based upon their newly issued U.S. patent
  7,108,704 claiming the Companys ProLumen device infringes the claims of
  this patent. The parties have agreed that this matter should be consolidated
  with the first case and are preparing the necessary document to accomplish this.
  As with the first two patents, the Company believes that it has meritorious
  defenses to such claims and intends to defend this action vigorously.

Credit
  Arrangements

At
  September 30, 2006, we had available unsecured lines of credit totaling $99.4
  million, with interest payable at LIBOR-based rates, determined by the borrowing
  period. Of the total available, $24.0 million expires in November 2006, $25.0
  million expires in January 2007 and $25.0 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 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.
  Dividends and Stock Repurchase Program

On
  September 12, 2006, the Board of Directors of the Company declared a regular
  quarterly cash dividend of $0.07 per share and a special dividend of $1.00 per
  share, both paid on October 6, 2006 to stockholders of record as of September
  28, 2006. In addition, the Board approved a stock repurchase program for $40
  million of our common stock. Purchases under this program may be made from time
  to time on the open market and in privately negotiated transactions, and may
  be discontinued at any time at the discretion of the Company. During the quarter
  ended September 30, 2006, we purchased approximately 56 thousand shares at a
  cost of $1.7 million. The regular quarterly dividend of $0.07 per share for
  the first quarter of fiscal 2006 was paid on October 6, 2005 to shareholders
  of record as of September 28, 2005.

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Datascope
  Corp. and Subsidiaries

Notes
  to Condensed Consolidated Financial Statements

(Unaudited,
  in thousands except per share data)

12.
  Income Taxes

In
  the first quarter of fiscal 2007, the consolidated effective tax rate was 32.8%
  compared to 26.6% in the first quarter last year. The higher tax rate in fiscal
  2007 is primarily attributable to the incremental phase-out of the extraterritorial
  income exclusion, and the expiration of the U.S. Research Credit which expired
  on December 31, 2005. In addition, last years first quarter included
  the utilization of a foreign tax loss carryforward (that had a valuation allowance)
  on the $0.8 million gain on sale of realty. Our effective tax rate could be
  impacted by changes
  in the geographic mix of our earnings.

13.
  Subsequent Events

On
  October 19, 2006, we announced a plan to exit the vascular closure market and
  phase out the Interventional Products (IP) business by the end of fiscal 2007.

We
  will continue to fill customer orders and provide clinical support for our vascular
  closure devices, VasoSeal® and On-Site, until the close of fiscal
  year 2007. Our Cardiac Assist direct sales force, augmented by a portion of
  the IP sales force, will sell the Safeguard manual compression assist
  device. We will continue to supply the ProLumen and ProGuide products
  for the interventional radiology market while we explore opportunities for the
  sale or independent distribution of these products. We expect to complete the
  redesign and Pre-market Approval Supplement submission of the X-Site® vascular
  closure device and seek the sale or independent distribution of this device
  as well. We also plan to seek a buyer for the On-Site and VasoSeal product lines.

Most
    of the IP employees will leave the Company by the end of the second quarter
    of fiscal 2007. We expect to record a pretax charge in the second quarter
    of
  fiscal 2007 in the range of $3.7 to $4.0 million for severance and other employee-related
    termination benefits. We are still in the process of determining what write-offs,
    if any, would be applicable to the IP assets comprising purchased
  technology, inventory, and property and equipment. We are also assessing any
    potential charge for purchase commitments and contract termination costs
    related
  to the IP business.

We
    also announced a plan to reduce operating expenses in our Patient Monitoring
    division through the elimination of approximately 26 positions. As a consequence,
    we expect to record a pretax charge for severance and other employee-related
    termination benefits in the second quarter of fiscal 2007 of approximately
    $0.5
  million.

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Datascope
  Corp. and Subsidiaries

Item
  2.Managements Discussion and Analysis of Financial
  Condition and Results of Operations

Business
  Overview

Datascope
  Corp. is 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. We have aggregated our product lines into two reportable
  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.
  The Cardiac Assist / Monitoring Products segment accounted for 86% of total
  sales in fiscal 2006 and in the first quarter of fiscal 2007. Our products are
  sold worldwide by direct sales representatives and independent distributors.
  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, primarily
  in the Patient Monitoring business. 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 in part upon the successful development and marketing of
  new products. We have continued to invest 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
  several new technologies, including the ClearGlide® endoscopic vessel harvesting
  (EVH) product. We are committed to improving our operating margins
  through increasing the efficiency of our manufacturing operations and cost containment
  programs.

In
  January 2006, we acquired the assets and technology of Ethicons ClearGlide
  endoscopic vessel harvesting 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 coronary artery bypass grafting.
  The vessel harvesting product line was integrated into the Cardiac Assist business,
  which markets its products to cardiac surgeons who perform coronary bypass graft
  surgery.

On
  October 19, 2006, we announced a plan to exit the vascular closure market and
  phase out the Interventional Products (IP) business by the end of fiscal
  2007. Although our On-Site next generation vascular closure device had
  gained some traction in the market with a relatively small sales force, we were
  not prepared to accept the current level of expenses of the IP business, nor
  make the additional investment in distribution needed to move the business ahead
  more quickly.

Under
  the IP exit plan, we will continue to fill customer orders and provide clinical
  support for our vascular closure devices, VasoSeal® and On-Site, until the
  close of fiscal year 2007. The Cardiac Assist direct sales force, augmented
  by a portion of the IP sales force, will sell

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the
  Safeguard manual compression assist device. We will continue to supply
  the ProLumen and ProGuide products for the interventional radiology
  market while we explore opportunities for the sale or independent distribution
  of these products. We expect to complete the redesign and Pre-market Approval
  (PMA) Supplement submission of the X-Site® vascular closure device and
  seek the sale or independent distribution of this device as well. We also plan
  to
  seek a buyer for the On-Site and VasoSeal product lines. Most of the IP employees
  will leave the Company by the end of the second quarter of fiscal 2007 and
  we
  expect to record a pretax charge in the second quarter of fiscal 2007 in the
  range of $3.7 to $4.0 million for severance and other employee-related
  termination benefits.

Additionally,
    management approved a plan to reduce expenses in the Patient Monitoring Division
    through the reduction of approximately 26 positions in the second quarter
    of
  fiscal 2007. As a consequence, we expect to record a pretax charge for severance
    and other employee-related termination benefits in the second quarter
  of fiscal 2007 of approximately $0.5 million.

Our
  financial position continued strong at the end of September 2006. Cash and marketable
  investments were $72.7 million compared to $69.9 million at June 30, 2006.

Results
  of Operations

Net
  Sales

Net
  sales were $87.2 million in the first quarter of fiscal 2007, a decrease of
  1% compared to $88.3 million last year. Favorable foreign exchange translation,
  as a result of the weaker United States dollar relative to the Euro and the
  British Pound, increased sales by $0.7 million in the first quarter of fiscal
  2007.

Sales
  in the United States were $53.9 million in the first quarter of fiscal 2007,
  compared to $56.0 million for the corresponding period last year, with
  the decrease attributable to reduced sales in all businesses except Cardiac
  Assist.

Sales
  in international markets grew to $33.3 million in the first quarter of fiscal
  2007 compared to $32.3 million last year with the increase in Cardiac Assist.

Sales
  of the Cardiac Assist / Monitoring Products segment were $75.3 million in the
  first quarter of fiscal 2007 compared to $74.2 million last year.

Sales
  of Cardiac Assist products in the first quarter of fiscal 2007 increased 12%
  year-over-year to $41.0 million. The increase was due to higher sales of balloon
  pumps and ClearGlide endoscopic vessel harvesting products, acquired in January
  2006. Increased sales of balloon pumps, principally the CS100® automatic
  pump, reflect continued strong international demand and the combination of slightly
  higher average selling prices and a favorable product mix in the United States.
  Unit shipments of balloon pumps outside of the United States grew 23% in the
  first quarter of fiscal 2007 compared to last year. Worldwide sales of intra-aortic
  balloons were flat in the first quarter. Favorable foreign exchange translation
  contributed $0.3 million to Cardiac Assist sales in the first quarter of fiscal
  2007.

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Sales
     of Patient Monitoring (PM) products were $34.3 million, 9% below the first
    quarter
  of fiscal 2006. The decrease reflects the inclusion
     in last years first quarter of approximately $2.0 million of Panorama
  system sales that were planned to ship in the fourth quarter of fiscal 2005, lower shipments of

  Panorama systems and bedside monitors (11%) and continued competitive
  pressure on pricing (6%), partially offset by higher sales of reconditioned
  equipment and favorable foreign exchange translation of $0.2 million.

Lower
  sales of Panorama systems resulted primarily from fewer conversions by hospitals
  to the Wireless Medical Telemetry Service (WMTS) bands from older VHF and UHF
  telemetry bands dedicated to medical use. These bands became available for non-medical
  use at the start of calendar 2006, accelerating demand for WMTS systems to replace
  the older systems. We believe that replacement demand for Panorama WMTS systems
  is likely to continue soft near-term. However, quote volume for Panorama systems
  with hard-wired bedside monitors, particularly in the first quarter of fiscal
  2007, suggests that this market segment is likely to strengthen.

During
  the first fiscal quarter of fiscal 2007, we launched our Panorama Gateway in
  the United States. The Panorama Gateway interfaces our Panorama central monitoring
  system, as well as stand-alone bedside monitors, to a Hospital Information System/Clinical
  Information System (HIS/CIS). Our current and potential customers have been
  seeking an HIS/CIS interface, and the Panorama Gateway provides a new opportunity
  for increased sales to our installed customer base.

Sales
  of the Interventional Products / Vascular Grafts segment were $11.6 million
  in the first quarter compared to $13.7 million last year.

Sales
  of Interventional Products in the first quarter of fiscal 2007 were $4.7 million,
  down 26% from last year. The decline was due to a 33% decline in sales of vascular
  closure products, comprising principally VasoSeal and On-Site. Non-closure product
  sales declined 11% compared to last year, as sales of our Safeguard manual compression
  assist device grew 10%, offset by reduced sales of the ProLumen and ProGuide
  interventional radiology products.

As
  noted above, on October 19, 2006, management announced a plan to exit the vascular
  closure market and phase out the interventional products business by the end
  of fiscal 2007 (see Subsequent Events below).

Sales
    of InterVascular products in the first quarter of fiscal 2007 declined 6%
    year-over-year
  to $6.9 million.
  Sales in the first quarter last year included large stocking shipments to InterVasculars
   exclusive distributor in the United States. Unit sales to hospitals in the
  United
  States continued to show a favorable trend compared to last year, and absent
   the large stocking shipments last year, InterVasculars sales grew in
  the United States. International sales increased 1%, attributable to favorable
   foreign exchange translation of $0.2 million, partially offset by lower sales
   attributable to the emergence of less-invasive therapies and
   competitive
  pricing pressure in the European markets.

Sales
  of Genisphere products were $0.3 million in the first quarter of fiscal 2007,
  compared to $0.4 million last year.

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Gross
  Profit (Net Sales Less Cost of Sales)

Gross
     profit decreased $0.8 million or 2% in the first quarter of 2007, as a result

  of decreased sales in all businesses except Cardiac Assist. Gross margin was
     57.2% compared to 57.4% in the same period last year, with the decrease
    of 0.2
  percentage points largely due to a lower gross margin in Patient Monitoring
     primarily as a result of competitive pressure on prices, and a less favorable

  sales mix as a result of lower sales of higher margin VasoSeal devices ($2.2
    million) and lower sales of intra-aortic balloons (7
    percentage points) as
    a percentage of total Cardiac Assist
    sales.

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 was $8.7 million in the first quarter of fiscal 2007, equivalent to
  9.9% of sales compared to $8.8 million, or 9.9% of sales for the same period
  last year. R&D including software capitalization increased to 11.4% of sales
  in the first quarter of fiscal 2007 compared to 10.6% for the same period last
  year. We anticipate this upward trend in total R&D spending throughout fiscal
  2007 as we continue to support our healthy product pipeline and existing products.

R&D
    expense for the Cardiac Assist / Monitoring Products segment increased $0.2
    million or 3% to $6.0 million in the first quarter compared to $5.8 million
    last year. The increase was primarily due to increased expenses associated
    with
  new product development projects ($0.9 million), partially offset by higher
     software development costs capitalized for patient monitors in the first
    quarter
  this year, which reduced R&D expenses compared to the prior year ($0.7
  million).

R&D
  expense for the Interventional Products / Vascular Grafts segment decreased
  $0.2 million or 10% to $2.0 million in the first quarter of fiscal 2007 compared
  to $2.2 million last year. The decrease was attributable to higher expense incurred
  last year for development of the On-Site and X-Site vascular closure devices.

The
  balance of consolidated R&D is in Corporate and Other and amounted to $0.7
  million in the first quarter of fiscal 2007 unchanged from the first quarter
  last year. Corporate and Other R&D includes corporate design and regulatory
  and Genisphere R&D expenses.

Selling,
  General & Administrative Expense (SG&A)

Total
  SG&A expense increased 2% to $35.1 million in the first quarter of fiscal
  2007, or 40.2% of sales, compared to $34.3 million, or 38.8% of sales,
  last year. Selling expenses, which comprise selling, marketing and clinical
  support costs, increased 4% compared to the same quarter last year. General
  and administrative expense was unchanged from the first quarter last year.

SG&A
  expense for the Cardiac Assist / Monitoring Products segment increased $2.5 million
  or 10% to $27.1 million in the first quarter of fiscal 2007, primarily attributable
  to the addition of selling and clinical expenses for the EVH business acquired
  in January 2006.

SG&A
  expense for the Interventional Products / Vascular Grafts segment decreased
  $0.3 million or 3% to $9.0 million in the first quarter of fiscal 2007, due
  primarily to the workforce reduction in the Interventional Products Division
  in the second quarter of fiscal 2006. Segment SG&A expense includes fixed
  corporate G&A charges.

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Gain
  on Sale of Realty

In
  the first quarter of fiscal 2006, we recorded a pretax gain of $0.8 million
  on the sale of an unused facility in Vaals, the Netherlands.

Interest
  Income

Interest
  income of $0.7 million in the first quarter of fiscal 2007 increased $0.2 million
  compared to the same period last year, attributable to an increase in the average
  yield (3.9% to 4.8%) and an increase in the average portfolio ($50.5 million
  to $61.6 million).

Other,
  Net

Other,
  net of $0.1 million decreased $0.6 million in the first quarter of fiscal 2007.
  The first quarter last year reflected an impairment loss of approximately $0.6
  million related to the write-down of marketable investments that were to be
  liquidated during fiscal 2006 as part of the planned repatriation of foreign
  earnings of approximately $30 million.

Income
  Taxes

In
  the first quarter of fiscal 2007, the consolidated effective tax rate was 32.8%
  compared to 26.6% in the first quarter last year. The higher tax rate in fiscal
  2007 was primarily attributable to the incremental phase-out of the extraterritorial
  income exclusion and the expiration of the U.S. Research Credit, which expired
  on December 31, 2005. In addition, last years first quarter included
  the utilization of a foreign tax loss carryforward (that had a valuation allowance)
  on the $0.8 million gain on sale of realty. Our effective tax rate could be
  impacted by changes
  in the geographic mix of our earnings.

Net
  Earnings

Net
  earnings were $4.5 million or $0.29 per diluted share in the first quarter of
  fiscal 2007 compared to $6.1 million or $0.40 per diluted share last year. The
  lower earnings in the first quarter of fiscal 2007 were primarily attributable
  to reduced earnings in the Cardiac Assist / Monitoring Products segment, an
  increased loss in the Interventional Products / Vascular Grafts segment and
  a higher tax rate in the first quarter this year. In addition, earnings last
  year included the gain on the sale of realty of $0.8 million, or $0.05 per diluted
  share.

Subsequent
  Events

On
  October 19, 2006, we announced a plan to exit the vascular closure market and
  phase out the Interventional Products (IP) business by the end of fiscal 2007.
  Although our On-Site next generation vascular closure device had gained some
  traction in the market with a relatively small sales force, we were not prepared
  to accept the current level of expenses of the IP business, nor make the additional
  investment in distribution needed to move the business ahead more quickly.

We
     will continue to fill customer orders and provide clinical support for our
    vascular
  closure devices, VasoSeal and On-Site, until the close of fiscal year 2007.
     Our Cardiac Assist direct sales force, augmented by a portion of the IP
    sales
  force, will sell the Safeguard manual compression assist device. We will continue
     to supply the ProLumen and ProGuide products for the interventional radiology

  market while we explore opportunities for the sale or independent distribution
     of these products. We expect to complete the redesign and PMA Supplement
    submission
  of the X-Site vascular closure device and seek the sale or independent distribution
     of this device as well. We also plan to seek a buyer for the On-Site and
    VasoSeal
  products.

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Most of the IP employees will leave the Company by the end of the second
    quarter of fiscal 2007. We expect to record a pretax charge in the second
    quarter
  of fiscal 2007 in the range of $3.7 to $4.0 million for severance and other
    employee-related termination benefits. We are still in the process
  of determining what write-offs, if any, would be applicable to the IP assets
    comprising purchased technology, inventory, and property and equipment. We
    are
  also assessing any potential charge for purchase commitments and contract termination
  costs related to the IP business.

We
    also announced a plan to reduce operating expenses in our Patient Monitoring
    division through the elimination of approximately 26 positions. As a consequence,
    we expect to record a pretax charge for severance and other employee-related
    termination benefits in the second quarter of fiscal 2007 of approximately
    $0.5
  million.

The
  combination of the IP exit and PM workforce reduction is estimated to save $17
  million of costs annually, $15 million of which will take effect at the start
  of the fiscal third quarter, with the balance of $2 million taking effect at
  the start of fiscal 2008.

Liquidity
  and Capital Resources

We
  consider our cash and cash equivalents, short-term investments and available
  unsecured lines of credit to be our principal sources of liquidity.

Cash
  and cash equivalents and short-term investments at September 30, 2006 were $55.1 million
  compared to $52.6 million at June 30, 2006. Long-term investments were $22.6
  million at September 30, 2006 compared to $22.3 million at June 30, 2006.

In
  the first quarter of fiscal 2007, we provided $8.3 million of net cash from
  operating activities compared to $9.3 million last year. The decrease was primarily
  due to the lower net earnings.

We
  used a net $2.9 million of cash from investing activities. Net sales and maturities
  of investments yielded $27.4 million of cash. These proceeds were spent on $26.8
  million of investment purchases, $1.6 million of capital and technology and
  $1.9 million of capitalized software.

We
  used $2.6 million of net cash from financing activities. We paid $1.7 million
  for share repurchases and $1.1 million in dividends, comprising a quarterly
  dividend of $0.07 per share. Financing cash outlays were partially funded by
  $0.2 million of proceeds from the exercise of stock options.

At
  September 30, 2006, we had available unsecured lines of credit totaling $99.4
  million, with interest payable at LIBOR-based rates, determined by the borrowing
  period. Of the total available, $24.0 million expires in November 2006, $25.0
  million expires in January 2007 and $25 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.

On
  September 12, 2006, the Board of Directors of the Company declared a regular
  quarterly cash dividend of $0.07 per share and a special dividend of $1.00 per
  share, both payable on October 6, 2006 to stockholders of record as of September
  28, 2006. In addition, the Board approved a stock repurchase program for $40
  million of our common stock. Purchases under this program may be made from time
  to time on the open market and in privately negotiated transactions, and may
  be discontinued at any time at the discretion of the Company. During the quarter
  ended September 30, 2006, we purchased approximately 56 thousand shares
  at a cost of $1.7 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

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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 workforce reductions at the Interventional
  Products and Patient Monitoring Divisions may not produce the full amount of
  cost savings projected, that quote volume for Panorama systems with hard-wired
  bedside monitors, particularly in the first quarter of fiscal 2007, will not
  lead to a strengthening of this market segment, that Panorama Gateway will not
  provide new opportunities for increased sales to the Companys installed
  customer base, and that the redesign and PMA submission of the X-Site vascular
  closure device will not be completed and that 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 and 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, 2006.

Recent
  Accounting Pronouncements

In
  July 2006, the Financial Accounting Standards Board (FASB) issued
  FASB Interpretation (FIN) 48, Accounting for Uncertainty in Income
  Taxes, an interpretation of SFAS No. 109, Accounting for Income Taxes.
  This statement creates a single model to address uncertainty in tax positions
  which utilizes a two-step approach for evaluating such tax positions. Recognition
  (step one) occurs when an enterprise concludes that a tax position, based solely
  on its technical merits, is more likely than not to be sustained upon examination.
  Measurement (step two) is only addressed if step one has been satisfied. In
  addition, expanded disclosures are required. FIN 48 is effective for fiscal
  years beginning after December 15, 2006 (our fiscal year 2008 beginning July
  1, 2007). We are currently evaluating the impact of adopting FIN 48.

In
  September 2006, FASB issued Statement of Financial Accounting Standards (SFAS)
  No. 157, Fair Value Measurements. SFAS 157 defines fair value
  as: the price that would be

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received
     to sell an asset or paid to transfer a liability in an orderly transaction
    between
  market participants at the measurement date. In addition, SFAS 157 establishes
     a fair value hierarchy to be used to classify the source of information
    used
  in fair value measurements, new disclosures of assets and liabilities measured
     at fair value based on their level in the hierarchy and a modification of
    the
  long-standing accounting presumption that the transaction price of an asset
     or liability equals its initial fair value. SFAS 157 is effective in fiscal

  years beginning after November 15, 2007 (effective for our fiscal year beginning
     July 1, 2008). We are currently evaluating the impact of adopting SFAS 157.

In
  September 2006, FASB issued SFAS No. 158, Employers Accounting for
  Defined Benefit Pension and Other Postretirement Plans (SFAS 158) an amendment
  to SFAS 87, 88, 106 and 132(R). SFAS 158 requires an employer to fully recognize
  an asset or liability for the overfunded or the underfunded status of their
  benefit plans in financial statements. The pension asset or liability equals
  the difference between the fair value of the plans assets and its benefit
  obligation. The benefit obligation is measured as the projected benefit obligation
  (PBO) for pension plans and as the accumulated postretirement benefit obligation
  (APBO) for other postretirement benefit plans. SFAS 158 does not affect how
  an entity computes its benefit expense recognized in the income statement. SFAS
  158 postpones until our fiscal year ending June 30, 2009 the requirement that
  the measurement date for plan assets and liabilities must coincide with the
  sponsors year end. The standard provides two ways for companies to make
  the measurement-date transition. SFAS 158 also includes additional disclosures
  in an entitys annual financial statements. SFAS 158 is effective
  for years ending after December 15, 2006 (effective for our fiscal year ending
  June 30, 2007). At June 30, 2006, we had a PBO that was approximately $6 million
  higher than the fair value of the U.S. and International defined pension plan
  assets. The SERP plans had a PBO of approximately $16 million at June 30, 2006.
  There are no assets in the SERP plans. We cannot project the impact to our balance
  sheet at the adoption date of June 30, 2007 because the PBO and plan assets
  are dependent on a number of factors that cannot be accurately predicted at
  this time.

In
  September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108, Quantifying
  Misstatements. SAB 108 requires registrants to use both a balance sheet
  approach and an income statement approach when quantifying and evaluating
  the materiality of a misstatement and to adjust the financial statements if
  either approach results in quantifying a misstatement that is material. SAB
  108 also contains guidance on correcting errors under the dual approach and
  provides transition guidance for correcting errors existing in prior years.
  If prior year errors that had been previously considered immaterial (based on
  the appropriate use of the registrants prior approach) now are considered
  material based on the approach in SAB 108, the registrant need not restate
  prior period financial statements. SAB 108 is effective for financial statements
  for fiscal years ending after November 15, 2006 (our fiscal year 2007). We are
  currently evaluating the impact of SAB 108, but do not expect that its adoption
  will have a material effect on our financial statements.

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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-month periods ended September 30, 2006 and 2005.

As
  of September 30, 2006, we had a notional amount of $11.7 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.

During
    the quarter ended September 30, 2006, there were no changes in the Company's
    internal control over financial reporting that have materially affected,
    or are reasonably likely to materially affect, the Company's internal control
    over financial reporting.

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PART
  II. OTHER INFORMATION

Item
          1.
      Legal
          Proceedings


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.

As
  noted in our Form 10-K for the fiscal year ended June 30, 2006, on March 18,
  2005, Johns Hopkins University and Arrow International, Inc. filed a complaint,
  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. The Company has filed an answer
  denying such infringement and discovery has begun. On October 13, 2006, Johns
  Hopkins and Arrow filed a second complaint based upon their newly issued U.S.
  patent 7,108,704 claiming the Companys ProLumen device infringes the claims
  of this patent. The parties have agreed that this matter should be consolidated
  with the first case and are preparing the necessary document to accomplish this.
  As with the first two patents, the Company believes that it has meritorious
  defenses to such claims and intends to defend this action vigorously.

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 first quarter of fiscal year 2007.



Fiscal
          Period
      
      TotalNumber ofSharesPurchased
      
      AveragePricePer Share
      
      Total
          Number ofShares Purchased asa Part of PubliclyAnnounced Programs
      
      Total
          Value of Sharesthat May Yet BePurchased Under thePrograms($ 000s)07/01/06
          - 07/31/06
      
      
      
      $
      
      
      
      
      $
      4,68108/01/06
          - 08/31/06
      
      55,716
      
      
      30.82
      
      55,716
      
      
      2,96309/01/06
          - 09/30/06
      
      
      
      
      
      
      
      
      
      42,963
      (A)Total
      
      55,716
      
      $
      30.82
      
      55,716
      
      $
      42,963


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(A)
      The
          increase in the value of shares that may yet be purchased reflects an
          additional $40 million share repurchase program approved by
          the Board of Directors on September 12, 2006. The previous
          program was also for $40 million and was announced on May 16, 2001.
          There is no expiration date on the current programs.


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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:


      September
          15, 2006, pertaining to the announcement of a long-term incentive plan,
          a management incentive plan, a share repurchase program authorizing
          an additional $40 million for future purchases of common stock of the
          Company and the regular quarterly cash dividend of $0.07 per share and
          a special dividend of $1.00 per share, payable on October 6, 2006 to
          stockholders of record as of September 28, 2006



      August
          9, 2006 pertaining to the Earnings Release of Datascope Corp. dated
          August 8, 2006


Item
          6.
      Exhibits


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


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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.RegistrantBy:
      /s/ Lawrence SaperLawrence
          SaperChairman of the Board andChief Executive Officer




By:
      /s/ Scott D. KantorScott
          D. KantorVice President, Finance and Administration,and Chief Financial OfficerDated:
          November 9, 2006


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