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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                ----------------

                                   FORM 10-K
                       FOR ANNUAL AND TRANSITION REPORTS
                    PURSUANT TO SECTIONS 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)

     |X|       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

               FOR THE FISCAL YEAR ENDED JUNE 30, 2004

                                       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 OR OTHER JURISDICTION OF                       (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NO.)
            14 PHILIPS PARKWAY                                  07645
           MONTVALE, NEW JERSEY                               (ZIP CODE)
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201) 391-8100

                                ----------------

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                      NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                    Common Stock, par value $0.01 per share

                                (TITLE OF CLASS)

                                ----------------

   Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                                 Yes |X| No|_|

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

   Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).

                                 Yes |X| No|_|

   The aggregate market value of the common stock held by non-affiliates of the
registrant as of December 31, 2003 was approximately $447 million. As of
September 1, 2004, there were 14,792,906 outstanding shares of the
registrant's common stock.
                                ----------------

                      DOCUMENTS INCORPORATED BY REFERENCE

   The registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission no later than October 28, 2004 pursuant to Regulation
14A of the Securities Exchange Act of 1934 is incorporated by reference in
Items 10 through 14 of Part III of this Form 10-K.
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                               TABLE OF CONTENTS

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                                     PART I
Item 1.       Business...................................................     1
Item 2.       Properties.................................................    15
Item 3.       Legal Proceedings..........................................    16
Item 4.       Submission of Matters to a Vote of Security Holders........    18
Item 4A.      Executive Officers of the Company..........................    18
                                     PART II
Item 5.       Market for Registrant's Common Equity, Related Stockholder
              Matters and Issuer Purchases of Equity Securities..........    19
Item 6.       Selected Financial Data....................................    20
Item 7.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations..................................    21
Item 7A.      Quantitative and Qualitative Disclosures About Market Risk.    33
Item 8.       Financial Statements and Supplementary Data................    33
Item 9.       Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure...................................    33
Item 9A.      Controls and Procedures....................................    33
Item 9B.      Other Information..........................................    34
                                    PART III
Item 10.      Directors and Executive Officers of the Registrant.........    35
Item 11.      Executive Compensation.....................................    35
Item 12.      Security Ownership of Certain Beneficial Owners and
              Management and Related Stockholder Matters.................    35
Item 13.      Certain Relationships and Related Transactions.............    35
Item 14.      Principal Accountant Fees and Services.....................    35
                                     PART IV
Item 15.      Exhibits, Financial Statement Schedules, and Reports on
              Form 8-K ..................................................    36
</TABLE>


                                       i
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                                     PART I


   This Report on Form 10-K contains statements that constitute "forward-
looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "estimate," "anticipate,"
"believe," "target," "plan," "project" or "continue" or the negatives thereof
or other variations thereon or similar terminology. These statements appear in
a number of places in this Report on Form 10-K and include statements
regarding our intent, belief or current expectations that relate to, among
other things, trends affecting our financial condition or results of
operations and our business and strategies. We may make additional written or
oral forward-looking statements from time to time in filings with the
Securities and Exchange Commission or otherwise. Forward-looking statements
speak only as of the date the statement is made. Readers are cautioned that
these forward-looking statements are not a guarantee of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements as a result of many
important factors. Many of these important factors cannot be predicted or
quantified and are outside of our control, including competitive factors,
changes in government regulation and our ability to introduce new products.
The accompanying information contained in this Report on Form 10-K, including,
without limitation, the information set forth below under Item 1 regarding the
description of our business and under Item 7 concerning "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
identifies additional important factors that could cause these differences. We
do not undertake to publicly update or revise our forward-looking statements
even if experience or future changes make it clear that any projected results
expressed or implied in this Report on Form 10-K will not be realized. All
subsequent written and oral forward-looking statements attributable to us or
persons acting for or on our behalf are expressly qualified in their entirety
by this section.

ITEM 1. 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. Operating data for each segment for the last three fiscal years is set
forth in footnote 10 to the Consolidated Financial Statements. Our products
are distributed worldwide by direct sales employees and independent
distributors. Originally organized as a New York corporation in 1964, we
reincorporated in Delaware in 1989.

   AVAILABLE INFORMATION. Our annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, amendments to those reports and
other information is available on our website at www.datascope.com.

   We have adopted a written Corporate Business Conduct Policy (including Code
of Ethics) that applies to all Datascope employees. The Business Conduct
Policy is posted on our website under the "Corporate Governance" caption. We
intend to disclose any amendments to, or waivers from, the Business Conduct
Policy on our website. In addition, the Company's audit committee charter,
compensation committee charter and nominations and corporate governance
committee charter is also posted on the Company's website. A copy of any of
these documents is available, free of charge, upon written request sent to
Datascope Corp., 14 Philips Parkway, Montvale, New Jersey 07645, Attention:
Secretary.

   Information included on the Company's website is not deemed to be
incorporated into this Annual Report on Form 10-K.

   GLOSSARY. WE HAVE PREPARED THE GLOSSARY BELOW TO HELP YOU UNDERSTAND OUR
BUSINESS.

   Angioplasty is the reconstruction of blood vessels, usually damaged by
atherosclerosis. If the arteries in question are in the heart, a coronary
bypass operation may be recommended. However, the nonsurgical method of
balloon angioplasty is often employed, especially when only one vessel is
blocked.
<PAGE>
   Balloon Angioplasty, also known as percutaneous transluminal coronary
angioplasty (PTCA), is a nonsurgical method of clearing coronary and other
arteries blocked by atherosclerotic plaque, fibrous and fatty deposits on the
walls of arteries. A catheter with a balloon-like tip is threaded up from the
arm or groin through the artery until it reaches the blocked area. The balloon
is then inflated, flattening the plaque and increasing the diameter of the
blood vessel opening. The arterial passage is thus widened or dilated. Balloon
angioplasty has evolved to include direct coronary stenting in greater than
70% of angioplasty procedures to prevent recoil or abrupt closure of the
artery post dilatation.

   Hemostasis is the stopping of bleeding, either by physiological properties
of coagulation and vasoconstriction or by surgical or mechanical means.

   Manual Compression is the stopping of bleeding by physical pressure placed
specifically on a venous or arterial access site. With relation to Datascope's
interventional products, manual compression is typically applied to the
femoral artery.

   Mechanical Thrombectomy is the process of removing clots within
arteriovenous (AV) grafts or AV fistulas on chronic hemodialysis patients who
are typically being treated for end stage renal disease.

   Vascular Access is the means of entering the vasculature percutaneously in
order to place a variety of catheters. Vascular Access can be either venous or
arterial in nature and can occur at various points of the body. The most
typical vascular access points are femoral (groin), subclavian (upper chest),
internal and external jugular (neck), brachial and radial (arm).

   MAJOR PRODUCT LINES. Our four major product lines are Patient Monitoring,
Cardiac Assist, Interventional Products (formerly Collagen Products) and
InterVascular (Vascular Grafts). The following table shows the percentage of
sales by major product line as a percentage of total sales for the last three
years:

                                                      FISCAL YEAR ENDED
                                                           JUNE 30,
                                                     -------------------
                                                     2004    2003   2002
                                                     ----    ----   ----
      Patient Monitoring .........................    42%     42%    39%
      Cardiac Assist .............................    38%     36%    36%
      Interventional Products ....................    11%     13%    17%
      Vascular Grafts ............................     9%      9%     8%

   Below is a more detailed description of our major product lines:

   PATIENT MONITORING.  We manufacture and market a broad line of
physiological monitors and monitoring systems designed to provide for patient
safety and management of patient care. Our monitoring solutions were developed
for the demands of today's health care environment and can be integrated with
our complete central station and telemetry system. They range from automated
blood pressure monitoring devices to intensive care unit monitoring systems.
They are used in operating rooms, emergency departments, critical care units,
post-anesthesia units and recovery rooms, intensive care units and labor and
delivery rooms. As part of our operating room business, we offer the
Anestar(TM) Anesthesia Delivery System, a unique integrated breathing system
designed for use with our Gas Module SE(TM) and our Passport 2(R) and
Spectrum(TM) monitors.

   Our line of patient monitoring products and their significant features are
as follows.

PATIENT MONITORS

   PASSPORT 2
   o Portable, bedside monitor with color or monochrome display and 6 traces
   o Optional View 12(TM) ECG Analysis module provides continuous 12-lead ECG
     interpretation with ST and arrhythmia analysis
   o Built-in power supply, with Sealed Lead Acid or Lithium Ion battery
     option
   o Fold-away bed rail hook, battery and lightweight design ensure convenient
     portability
   o Specialized graph trend of heart rate, respiration and pulse oximetry for
     neonatal applications


                                       2
<PAGE>
   o Oridion Microstream(R)1 CO2 with unique FilterLines(R)1 that adapt to any
     patient for easy CO2 monitoring
   o Optional dual-trace, integrated recorder
   o Masimo SET(R)2 or Nellcor(R)3 Oxismart(R)3 pulse oximetry
   o Telemetry or hardwire communications to our central stations
   o Anesthetic gas analysis through the Gas Module SE

   SPECTRUM
   o Powerful, portable bedside monitor built for performance and function
   o Large, bright 12.1" high-resolution color display with up to 8 traces
   o Specialized graph trend of heart rate, respiration and pulse oximetry for
     neonatal applications
   o Built-in power supply with Sealed Lead Acid battery option
   o Advanced functions for acute care areas, including advanced arrhythmia
     analysis, up to 4 invasive pressures, cardiac output with hemodynamic
     calculations, pulmonary artery wedge pressure and drug calculations
   o Optional View 12 ECG Analysis module provides continuous 12-lead ECG
     interpretation with ST and arrhythmia analysis
   o Available standard with Masimo SET pulse oximetry or with optional
     Nellcor Oxismart pulse oximetry
   o Communicates with our central stations via telemetry or direct
     connections
   o Anesthetic gas analysis with automatic 5-agent ID with the Gas Module SE
   o Oridion Microstream technology ensures fast CO2 results with lightweight
     FilterLines

   TRIO(TM)
   o Portable, lightweight, compact monitor
   o Ergonomically designed fold-away handle with built-in bed rail hook
   o 8.4" high resolution color display with 4 traces
   o Standard parameters include 3 or 5-lead ECG, NIBP, SpO2, respiration and
     temperature
   o Full graphic and list trends of all monitored parameters with event
     markers
   o Built-in power supply with Sealed Lead Acid or Lithium Ion battery option
   o Masimo SET or OxiMax(R)3 pulse oximetry
   o Optional two-trace, integral recorder

   ACCUTORR PLUS(R)
   o First non-invasive blood pressure monitor with an integrated patient
     database that automatically records up to 100 patient measurements
   o Measures pulse oximetry (or blood oxygen saturation), temperature and
     heart rate
   o Optional recorder module
   o Optional Masimo SET or OxiMax pulse oximetry
   o Long life lithium ion battery technology for up to 8 hours run time

   GAS MODULE SE
   o Anesthetic gas measurement subsystem
   o Monitors CO2, oxygen, nitrous oxide and all 5 inhalated anesthetic gases
   o Interfaces with the controls and displays of the Passport 2 monitor for
     use in the growing out-patient surgery market
   o Interfaces with the controls and displays of the Spectrum or Passport 2
     monitors for use in main hospital operating rooms


---------------
1   Microstream and FilterLines are registered trademarks of Oridion Medical
    Ltd.
2   Masimo SET is a registered trademark of Masimo Corporation.
3   Nellcor, Oxismart and OxiMax are registered trademarks of Nellcor Puritan
    Bennett Inc.

                                       3
<PAGE>
CENTRAL STATIONS

   PANORAMA(TM) PATIENT MONITORING NETWORK
   The Panorama Central Station, formally introduced on July 28, 2004, is
Datascope's new platform for centralized monitoring of vital signs
information. The Panorama Patient Monitoring Network is an integrated family
of patient monitoring products that will enable hospitals to seamlessly share
information on all patients via one network. The network will continue to
evolve with the planned addition of remote viewing stations, a paging
interface, hospital information systems interface and support for additional
Datascope bedside monitors.

   The significant features of the Panorama are:
   o Central Station displays up to 12 patients on a single display or 16
     patients on a single central station
   o Bi-directional communication enables bedside alarm tracking between the
     bedside monitors and central station.
   o Utilizes a single antenna infrastructure to support instrument and
     ambulatory telemetry in the protected Wireless Medical Telemetry Service
     medical band
   o Supports hardwired and wireless monitoring on the same central station
   o Stores all monitored parameters including continuous 12-lead ECG data
   o Includes a new ambulatory telepack with integrated remote printing, nurse
     call and attendant preset buttons
   o Includes new arrhythmia analysis package for central station and bedside
     monitors

   PATIENTNET(R)4
   o Telemetry system is Wireless Medical Telemetry Service compliant,
     operating on a dedicated hospital telemetry bandwidth in the 608-614 MHz
     range
   o Can support both instrument and ambulatory patient telemetry
   o Compatible with our Spectrum and Passport monitors
   o Patient information may be exported to hospital and clinical information
     systems
   o Employs access point technology which reduces the number of antenna
     required in older systems
   o SiteLink(R)4 option allows caregivers to view and interact with patient
     information from many miles away

ANESTHESIA DELIVERY SYSTEMS

   ANESTAR
   o An advanced anesthesia delivery system
   o Easy to use touch screen display
   o IntelliVent(TM) ventilator offers volume and pressure ventilation for
     adults and pediatrics
   o A unique integrated heated breathing system (EZ-Flow(TM)) eliminates
     potential for leaks, condensation and rainout, as well as warms patient
     gases to reduce potential risks to the patient
   o Fresh gas decoupling ensures constant tidal volume delivery for easier
     maintenance of the system
   o Automatic compliance compensation enhances the accuracy of the ventilator
     by compensating for any potential leaks
   o Compatible with Passport 2, Spectrum, Trio and Gas Module SE

   ANESTAR S
   o Integrates the advanced functions of the Anestar platform into a smaller,
     more cost-effective package
   o Smaller footprint and ergonomic design
   o Same comprehensive safety features as the Anestar
   o LCD touch screen display
   o Low flow capabilities reduce the cost of ownership
   o Compatible with Passport 2, Spectrum, Trio and Gas Module SE


---------------
4   PatientNet and SiteLink are registered trademarks of GE Medical Systems
    Information Technologies.

                                       4
<PAGE>
   SIGNIFICANT DEVELOPMENTS

   In the last few years, we have expanded our line of patient monitoring
products and achieved the following regulatory and marketing milestones:
   o Panorama telemetry products distribution began in the first quarter of
     fiscal 2005
   o Panorama Central Stations distribution began in the fourth quarter of
     fiscal 2004
   o Trio received FDA 510(k) clearance in February 2004
   o Anestar S anesthesia delivery system distribution began in September 2003
   o OxiMax, Nellcor's newest patented SpO2 technology, was introduced in
     high-end Accutorr Plus models in the third quarter of fiscal 2004
   o Cardiac output, calculations and pulmonary artery wedge pressure addition
     to Spectrum received FDA 510(k) clearance in September 2003
   o Spectrum United States and international distribution began in the third
     quarter of fiscal 2003
   o Trio began international distribution in the third quarter of fiscal 2003
   o View 12 ECG Analysis Module for the Passport 2 began United States
     distribution in the first quarter of 2003
   o View 12 ECG Analysis Module received FDA 510(k) clearance to market in
     September 2002
   o Anestar anesthesia delivery system began distribution in January 2002
   o Accutorr Plus product with the Lithium Ion battery began distribution in
     the first quarter of fiscal 2001
   o Passport 2 began international distribution in the first quarter and
     United States distribution in the third quarter of fiscal 2000
   o Passport 2 received FDA 510(k) clearance in January 2000

   Markets, Sales and Competition. Our patient monitors are used in hospital
operating rooms, emergency rooms, critical care units, post-anesthesia care
units and recovery rooms, intensive care units and labor and delivery rooms.
The Passport 2 provides a portable and cost effective monitoring solution for
a wide range of departments, from emergency rooms and post-anesthesia care
units to operating rooms and intensive care units. The Spectrum builds on the
Passport 2's portability and ease of use with added features that make it a
robust monitoring solution for higher acuity departments such as intensive
care units, operating rooms and coronary care units. The Trio is targeted
towards markets such as subacute care facilities, surgery centers, GI/
Endoscopy and general patient areas. The Panorama central station and
telemetry network strengthens our product offerings across departments with
innovative and unique features such as wireless bed-to-bed communications and
storage of 12-lead ECG data. Lastly, with the addition of our Anestar and
Anestar S anesthesia delivery systems, we offer a complete operating room
solution that brings advanced features and functionality to outpatient surgery
centers and operating rooms with space constraints.

   A number of companies, some of which are substantially larger than us,
manufacture and market products that compete with our patient monitoring and
anesthesia delivery system products. Our major competitors in patient
monitoring are Philips Medical, GE Healthcare, Spacelabs Medical, Nihon Kohden
and Welch Allyn Medical Products. Our major anesthesia delivery system
competitors are GE Healthcare through their Datex-Ohmeda unit and Draeger
Medical.

   CARDIAC ASSIST.  We are a leader and pioneer in intra-aortic balloon (IAB)
counterpulsation therapy and products including IAB pumps and catheters.
Counterpulsation therapy is used to support and stabilize heart function. This
therapy increases the heart's output and the supply of oxygen-rich blood to
the heart's coronary arteries while reducing the heart muscle's workload and
its oxygen demand.

   The intra-aortic balloon system is used for the treatment of high-risk
cardiac conditions resulting from ischemic heart disease and heart failure.
Patients experiencing acute coronary syndromes such as acute myocardial
infarction, cardiogenic shock and unstable angina may require IAB therapy to
support and stabilize their cardiac status. IAB therapy is also used for high-
risk patients who require revascularization procedures such as percutaneous
coronary interventions or coronary artery bypass procedures including both on-
pump and off-pump techniques. These products and therapy may be used before or
during coronary artery bypass grafting or percutaneous coronary interventions
for hemodynamic support.

   We produce a line of disposable intra-aortic balloon catheters that serve as
the pumping device within the patient's aorta. We introduced the first balloon
catheter capable of percutaneous insertion. This innovation

                                       5
<PAGE>
eliminated the need for surgical insertion. As a result, the market for
cardiac assist products expanded from open-heart surgery to interventional
cardiology. We continue to advance our cardiac assist technology and to
introduce new products.

   Our line of cardiac assist products includes intra-aortic balloon pumps and
intra-aortic balloon catheters.

INTRA-AORTIC BALLOON PUMPS (IABPS)

   In August 2003, we launched our newest pump, the CS100(TM). The CS100 with
IntelliSync(TM), a new proprietary software program, represents a major
technological leap in the field of intra-aortic balloon counterpulsation. This
new pump matches intelligence, automation and speed of delivery in a
sophisticated algorithm that will adapt automatically to changing conditions.
The result is continuous, consistent support for the patient.

   We manufacture and market the following IABPs:

   CS100
   o IntelliSync software with smarter algorithms for greater patient support
   o Automated trigger selection for easier and continuous patient support
   o Automatic "Beat to Beat" timing adjustments based on the patient's
     physiologic landmarks
   o Faster pneumatics to support the most challenging arrhythmic patients

   SYSTEM 98XT
   o CardioSync(R) 2 software with improved algorithms to provide enhanced
     counterpulsation therapy
   o Faster pneumatics
   o Further reduction in required user intervention

   SYSTEM 98
   o Larger display
   o Better automation
   o Features make balloon pumping therapy simpler to administer and faster to
     initiate

   SIGNIFICANT DEVELOPMENTS

   In the last few years, we have expanded our product line of intra-aortic
balloon pumps and achieved the following regulatory and marketing milestones:
   o CS100 United States and European market introduction in August 2003
   o System 98XT United States and European market introduction in December
     2000
   o System 98 approval to distribute in Japan received in March 1999
   o System 98 United States and European Union distribution began in 1998

INTRA-AORTIC BALLOON CATHETERS

   We manufacture a broad line of disposable intra-aortic balloon catheters for
use with intra-aortic balloon pumps in support of counterpulsation therapy.

   LINEAR(TM) 7.5 FR.
   In June 2004, we launched our Linear 7.5 Fr. intra-aortic balloon catheter.
Linear 7.5 Fr., with our new Durathane balloon material and improved 7.5
French ("Fr.") introducer sheath, offers easier insertion, improved abrasion
and fatigue properties and, we believe, provides an improved solution for
smaller adults, women, diabetics and patients with peripheral vascular
disease.

   In June 2004, we introduced the first and only needle-free securement device
for IAB catheters, the StatLock(R), which secures the IAB catheter to the
patient without the danger of accidental needlesticks or suture wound
complications.

   FIDELITY(TM)
   In February 2002, we launched our Fidelity intra-aortic balloon catheter. We
believe that Fidelity provides superior performance to all other 8 Fr.
catheters in the market. Fidelity also offers the largest central

                                       6
<PAGE>
lumen (0.030") for consistent, clear arterial waveforms which results in
better delivery of counterpulsation therapy for the patient and easier patient
management for the healthcare provider. A new polymer design enables Fidelity
to insert easily and navigate tortuous anatomies. Once inserted, physicians
have the longest insertable length available on the market to ensure optimal
balloon placement. Fidelity is available in 25cc, 34cc and 40cc balloon
volumes.

   In addition, we manufacture a complete line of intra-aortic balloon
catheters to accommodate counterpulsation therapy in both the adult and
pediatric population. We also manufacture catheters for pediatric patients in
the 2.5cc, 5cc, 7cc, 12cc and 20cc volumes. Our 9.5 Fr. intra-aortic balloon
catheters are available in 25cc, 34cc and 40cc volumes. A 50cc volume is also
available for patients who are taller than 6 feet.

   Clinical Support. We provide the following clinical and educational services
to our customers:
   o Telemedicine via our PC-IABP products which offers remote pump
     monitoring, allowing the healthcare provider continuous access and
     instantaneous troubleshooting from highly trained technicians
   o 24 hour, 7 days a week clinical support
   o On-site training and education for all personnel involved with patient
     care; over 30,000 clinicians are trained by our clinical staff annually
   o Comprehensive educational materials for hospital staff, patient and
     family
   o Consultative services to help hospitals maximize the goals of
     counterpulsation therapy within the hospital network
   o The Benchmark(R) Registry--a comprehensive registry database to assist
     hospitals worldwide in tracking and comparing outcomes of
     counterpulsation therapy administered to their patients. This enables our
     customers to demonstrate and measure the clinical benefits of the
     therapy. We believe that we are the only supplier offering a
     comprehensive, centralized repository of global IABP information

   Markets, Sales and Competition. Our cardiac assist products are sold
primarily to major hospitals with open-heart surgery and balloon angioplasty
facilities and community hospitals with cardiac catheterization laboratories.
Our cardiac assist products have been sold, to a growing degree, to the
broader range of community hospitals, where counterpulsation therapy is used
for temporary support to the patient's heart prior to transport to a major
hospital center where definitive procedures, such as balloon angioplasty or
open-heart surgery, can be conducted. Our main competitor for cardiac assist
products is Arrow International, Inc.

   INTERVENTIONAL PRODUCTS (FORMERLY COLLAGEN PRODUCTS).  Our primary products
are used to seal arterial puncture wounds after angiography and other
interventional procedures relying upon access to the body through the femoral
artery. We participate in three distinct vascular sealing market segments
primarily used in cardiology: collagen based products, suture based products
and manual compression assist products. In addition, we have begun to develop
a portfolio of products for Interventional Radiology. The new Interventional
Products (IP) division name reflects our objective to broaden the division's
product portfolio to include new products for interventional cardiology and
interventional radiology. Our first product available for interventional
radiology is a mechanical thrombectomy device used to clear blood clots from
blocked dialysis access sites of hemodialysis patients.

   Our line of interventional products is discussed below:

VASCULAR SEALING PRODUCTS

   We design, manufacture and market the following vascular sealing products:
collagen based products, suture based products and manual compression assist
products.

COLLAGEN BASED PRODUCTS

   Our VasoSeal(R) and Elite(TM) brand vascular sealing products assure fast
and reliable arterial hemostasis after common percutaneous cardiology and
radiology procedures, such as balloon angioplasty, arterial stenting and
diagnostic angiography.


                                       7
<PAGE>
   We manufacture and market vascular sealing devices under four brand names,
VasoSeal(R) VHD, VasoSeal ES(R), VasoSeal Low Profile and Elite. These
products rapidly seal femoral arterial punctures. Unlike many other vascular
sealing products, VasoSeal works extravascularly, meaning that the product
works by sealing the femoral artery on the outside of the artery. With
VasoSeal, doctors have an effective alternative to the many competitive
sealing products that produce sealing by placing (and leaving behind)
permanent foreign objects, such as sutures inside patient arteries. VasoSeal
vascular sealing devices provide for reduced time to hemostasis of the
arterial puncture wound, reduced time to patient ambulation and discharge
following certain percutaneous procedures, cost savings to the hospital and
increased patient satisfaction versus manual methods of arterial hemostasis.

   VASOSEAL VHD
   We manufacture and market the VasoSeal VHD extravascular sealing device, the
first device of its kind to be approved in the United States. Prior to the
introduction of VasoSeal VHD in 1995, the only way to seal femoral arterial
puncture wounds was to apply significant pressure by hand over the arterial
puncture site and to wait for the blood in the tract to clot naturally. This
arterial sealing process is called "manual compression." Manual compression
can take 20 minutes or more to accomplish even in the best of circumstances.
But sometimes, if a patient has been administered anti-clotting drugs prior to
their percutaneous procedure, the patient has to wait many minutes, sometimes
even hours, for the effect of the anti-clotting drugs used during their
procedure to diminish before manual compression can be successfully
administered on their puncture site.

   The concept behind the VasoSeal device is simple. The VasoSeal VHD comes
with a measuring device that tells the doctor the depth of a patient's artery
from the skin surface. The doctor then uses the VasoSeal VHD to deploy a soft
collagen plug directly over the puncture site on the outside of the artery.
VasoSeal VHD produces hemostasis in two ways. First, the collagen plug effects
a mechanical barrier stopping blood from flowing up the puncture tract.
Second, the collagen in the device's plug interacts with the patient's own
blood to stimulate the formation of fibrin, simulating the body's own, natural
clotting process. By design, and unlike other vascular sealing devices on the
market, VasoSeal VHD does not leave a foreign object inside of a patient's
artery after deployment. In addition, unlike manual compression, VasoSeal VHD
permits the immediate removal of the procedural sheath used in many cardiology
and radiology procedures, even when anti-clotting drugs have been administered
to a patient.

   VASOSEAL ES
   The VasoSeal ES device, introduced in Europe in 1998 and in the United
States in 1999, retains the proprietary, extravascular technology of our
original VasoSeal VHD. However, VasoSeal ES features a "one-size-fits-all" (5
to 8 Fr.) design that eliminates the physician's need to measure skin-to-
artery distance and the hospital's need to stock multiple sizes of the device.
These features are made possible by VasoSeal ES's unique locator technology
that is capable of easily and precisely locating the arterial puncture site
below the skin's surface.

   VasoSeal ES is the first vascular sealing device to have been found safe and
effective in patients with peripheral vascular disease. As many as 30% of the
total patient population undergoing percutaneous cardiology and radiology
procedures have peripheral vascular disease.

   VASOSEAL LOW PROFILE
   VasoSeal Low Profile is a smaller version of VasoSeal and is available in
five kit sizes. This device meets the needs of hospitals who have been
increasingly using smaller diameter access sheaths in their percutaneous
procedures to minimize vascular trauma. VasoSeal Low Profile is approved for
sealing 5 Fr. or smaller puncture sites.

   ELITE
   Elite is the newest VasoSeal product utilizing a unique, proprietary sponge
collagen technology to produce hemostasis. Elite's new sponge collagen is
deployed into a patient's tissue tract, just above the femoral artery, in a
compressed form. Upon exposure to blood, the compressed sponge collagen plug
expands in seconds to produce an effective mechanical blockade above the
femoral artery.


                                       8
<PAGE>
   Elite uses the same one-size-fits-all location system as VasoSeal ES.
However, the body design of Elite is substantially different than that of
VasoSeal ES. The Elite body design was developed after years of studying the
ergonomics of the earlier generation VasoSeal devices and the different ways
physicians deploy these devices. From this research, we developed the unique
and effective body design for Elite. The new Elite body was designed
specifically to minimize variations in physician deployment methods,
variations that could compromise the precise placement of VasoSeal's collagen
plug. The new body design of the Elite maximizes the device's potential for
producing rapid, secure and consistent mechanical hemostasis.

   Elite provides physicians with the same rapid and reliable mechanical
closure capabilities of the competitive closure devices that leave foreign
objects behind in patient arteries. Yet, like the rest of the VasoSeal line,
Elite achieves its goals while protecting and preserving the common femoral
artery from unnecessary intrusions and left-behind artifacts.

   Elite is designed to serve as the only vascular sealing device a hospital
should need to stock. It can be utilized for both diagnostic and
interventional procedures. It can be used with a broad variety of 5 to 8 Fr.
sheaths. Like VasoSeal ES, Elite has been proven safe and effective in diverse
patient populations, including those with peripheral vascular disease.

   ADVANTAGES OF VASOSEAL

   VasoSeal devices offer the following advantages:
   o Reduced time to ambulation: Certain patients can be ambulated much faster
     than is possible with conventional manual compression methods. This claim
     provides the following benefits to the user and hospital.
       1.  Significant potential savings for hospitals because patients can be
           moved relatively quickly after their percutaneous catheterization
           procedures to lower cost areas in the hospital.
       2.  Allows the majority of diagnostic angiography patients to be
           ambulated safely within one hour after the procedure, compared with
           4 to 6 hours under standard clinical practice, which involves manual
           compression for vascular closure.
       3.  Lowers the use of human and material resources in the hospital which
           results in improved patient management and cost minimization.
   o Provides increased comfort and satisfaction for patients. Many patients
     receiving diagnostic or interventional procedures in hospitals are in
     poor health, are elderly and/or have other medical problems which make it
     difficult for them to remain motionless or to lie flat for long periods
     of time. The pressure devices (i.e. sand bags and manual compression),
     still predominately used by hospitals to produce vascular sealing, cause
     further discomfort to these patients.
   o Has been proven to be safe and effective in patients diagnosed with
     peripheral vascular disease. As a result, VasoSeal can be used on many
     more patients than other competitive devices.
   o Approved for deployment by healthcare professionals other than physicians
     (i.e. nurses and technicians), providing a more cost-effective use of
     hospital resources.
   o Reduced time to discharge: Early discharge of certain patients provides
     the facility with efficiencies throughout the patient care-path. Fewer
     patient recovery hours equates to better bed utilization, more efficient
     staffing and fewer overall resources required, providing another cost
     saving component of the VasoSeal product use.

   SIGNIFICANT DEVELOPMENTS

   In the last few years, we have expanded our line of vascular sealing
products and achieved the following regulatory and marketing milestones:

   United States, FDA Approvals, Major Products:
   o Elite PMA Supplement approved in August 2002
   o VasoSeal Low Profile PMA Supplement approved in June 2002
   o VasoSeal ES PMA Supplement approved in December 1998
   o VasoSeal VHD granted Pre-Market Approval (PMA) in September 1995
   United States, FDA Additional VasoSeal Approvals:
   o Modified Hold Technique deployment method in March 2002


                                       9
<PAGE>
   o Reduced time to discharge claim in diagnostic angiography patients in
     September 2001
   o Use in patients with peripheral vascular disease demonstrated as safe and
     effective in August 1999
   o Deployment by nurses and technologists in September 1997
   o Use after stent implantation in April 1997
   o Use in radiology procedures in December 1996
   o Early ambulation claim in diagnostic angiography and delayed sheath pull
     interventional patients in August 1996
   CE Mark Approvals:
   o Elite approved to market in Europe in 2002
   o VasoSeal Low Profile approved to market in Europe in 2002
   o VasoSeal ES approved to market in Europe in 1998
   o VasoSeal VHD approved to market in Europe in 1997
   o Prior to 1997, European approvals for VasoSeal VHD had been granted in
     individual countries, specifically Italy, Spain and the Netherlands
   Japan:
   o VasoSeal VHD cleared for reimbursement for certain interventional
     procedures by the Ministry of Health in January 2000
   o VasoSeal VHD approved to market in 1994
   Canada:
   o VasoSeal VHD Medical Device License granted for prior approvals 2000
   o VasoSeal ES Amendment to License approved 2000

   Markets, Sales and Competition. Our VasoSeal line of products is sold to
both interventional cardiology and radiology labs, both in hospitals and in
independent diagnostic facilities. The current market size for vascular
closure devices is approximately $430 million annually. A number of companies,
some of which are substantially larger than us, manufacture and market
products that compete with the VasoSeal VHD, VasoSeal Low Profile, VasoSeal ES
and Elite devices. Our competitors are Abbott Laboratories (Perclose,
StarClose and Chito-Seal patch), St. Jude Medical (Angio-Seal), Vascular
Solutions, Inc. (Duett and D-Stat Dry patch), Sutura, Inc. (Super Stitch),
Marine Polymer Technologies (Syvek Patch) and Scion Technologies (Clo-Sur Pad,
marketed by Medtronic, Inc.).

MANUAL COMPRESSION ASSIST PRODUCT

   SAFEGUARD(TM)
   Safeguard is a manual compression assist product to aid in the treatment for
hemostasis, providing the customer with multiple device options. It is
typically utilized on the femoral arterial site but may also be used in
brachial, radial and subclavian vessels as well on cardiac, dialysis and
critical care patients. Safeguard affixes to the site with an adhesive backing
and offers hands-free pressure through inflation of a bulb with a syringe.
Safeguard was introduced in the second quarter of fiscal 2004.

   ADVANTAGES OF SAFEGUARD
   o Adjustable, hands-free pressure which guards the site with consistent
     pressure
   o Maintains pressure during patient recovery and maximizes valuable staff
     resources
   o Innovative design makes Safeguard easy to apply and simple to use
   o Provides direct visualization of the site and allows for immediate
     pressure adjustments
   o Enhanced patient comfort, because Safeguard is flexible and conformable,
     does not restrict patient mobility and no ancillary equipment or straps
     are required

   SIGNIFICANT DEVELOPMENTS

   Safeguard has achieved the following milestones:
   o Been determined to be a Class I, exempt product within the FDA
     regulations; and
   o Received the CE Mark in October 2003.

   Markets, Sales and Competition. We estimate the market for manual
compression assist devices to be approximately $60-80 million annually.
Safeguard competes with other manually assisted compression devices such as
FemStop (Radi) and patches. A number of companies, some of which are larger
than us,

                                       10
<PAGE>
manufacture and market competitive products. Among them are Abbott
Laboratories, St. Jude Medical, Medtronic, Vascular Solutions and Marine
Polymer Technologies.

SUTURE BASED PRODUCT

   In May 2004, Datascope acquired certain assets and technology from X-Site
Medical, LLC (X-Site), a privately held company located in Blue Bell,
Pennsylvania. The acquired assets include all technology related to X-Site's
lead product, a suture-based vascular closure device for achieving hemostasis
after coronary catheterization procedures. The product is scheduled to be
released in fiscal 2005.

   In a controlled clinical study of approximately 260 patients, the X-Site
device was shown to be easy to use and demonstrated an excellent safety
profile. The device has received FDA clearance and will increase our presence
in the vascular closure market. The addition of the X-Site product represents
a logical expansion in the area of hemostasis management and reflects our
strategy of providing new and innovative products in this field.

   Markets, Sales and Competition. The X-Site product competes in the vascular
sealing closure device market estimated at approximately $430 million
annually, with suture-mediated devices representing over $100 million in
sales. To date, Abbott Laboratories, which markets the Perclose product, is
the only other suture-mediated device in this segment. The X-Site product will
be manufactured and marketed by the Interventional Products direct sales
force, which currently sells other vascular closure devices.

INTERVENTIONAL RADIOLOGY

   PROLUMEN(TM)
   Our first entry in the interventional radiology market was a dialysis
access product, the ProLumen, launched in March 2004. ProLumen is a mechanical
thrombectomy device designed to break up clots in arteriovenous grafts in
patients who are on chronic hemodialysis. The product is placed through a sheath
and advanced through the graft. The ProLumen received FDA 510(k) clearance in
February 2004.

   ADVANTAGES OF PROLUMEN

   Because of its S-wave wire design, we believe that ProLumen provides
superior mechanical thrombectomy and effectively competes with both wall and
non-wall contact devices. The S-wave wire also provides excellent
maneuverability around tight bends in the graft. ProLumen comes with both the
wire and motor drive unit preassembled. Further, there is no capital equipment
investment required as the device is a single use product.

   Markets, Sales and Competition. The market for mechanical thrombectomy
devices is approximately $30-40 million annually. A larger segment continues
to use thrombolytic agents (known as "lyse and wait") prior to mechanical
intervention. We cannot predict how quickly the market will shift from these
agents to mechanical intervention. ProLumen is primarily marketed to
interventional radiologists and vascular surgeons. A number of companies
manufacture and market products that compete with ProLumen. Our main
competitors are Arrow International and Possis Medical, Inc.

   Clinical Education and Support - Interventional Products. We offer health
care providers the following services in connection with our interventional
products:
   o On-site training and education of all personnel involved with product
     deployment and post-deployment patient care to assure successful device
     outcome
   o 24 hour, 7 days a week clinical support
   o Comprehensive educational materials and programs for staff
   o Patient information guides to educate the patient on appropriate post-
     care regimens
   o Consultative services to help facilities identify and maximize the goals
     and objectives of vascular sealing

   INTERVASCULAR (VASCULAR GRAFTS). Our InterVascular Inc. subsidiary designs,
manufactures and distributes a proprietary line of knitted and woven polyester
vascular grafts and patches for reconstructive vascular and cardiovascular
surgery. Vascular grafts are used to replace and bypass diseased arteries.

                                       11
<PAGE>
InterVascular is actively broadening its line of vascular surgery products.
Our vascular graft products and their significant features are as follows.

   INTERGARD(R) KNITTED PRODUCTS
   Collagen coated graft for use in most vascular applications for
reconstruction of abdominal and peripheral arteries.

   INTERGARD(R) WOVEN PRODUCTS
   Designed primarily for use in thoracic aortic repair and open-heart surgery.

   INTERGARD(R) SILVER
   o World's first anti-microbial vascular graft
   o Designed to prevent post-operative infection of the graft, which occurs
     in 2% to 5% of cases, by using the broad spectrum, anti-infective
     properties of silver, which is released from the surface of the graft
     into surrounding tissues following implantation
   o Prosthetic graft infections are associated with high morbidity, including
     amputation and high mortality
   o Vascular graft infection typically lengthens the hospital stay of a
     patient by up to 50 days, which results in an increase in treatment cost
     of approximately $85,000

   INTERGARD(R) ULTRATHIN
   o The thinnest knitted polyester collagen coated graft on the market giving
     it exceptional handling and suturing
   o Designed specifically for use in the replacement of peripheral arteries

   INTERGARD(R) HEPARIN
   o A heparin bonded collagen coated graft for replacement and bypass of
     peripheral arteries
   o Occlusion of a peripheral graft following surgery is the most frequent
     cause of graft failure
   o InterGard Heparin is designed to address the issue of occlusion and
     improve long term patency of the graft by allowing the antithrombogenic
     and antiproliferative properties of unfractionated heparin to be
     available locally on the graft surface for several weeks following
     implantation
   o Three year results of a clinical trial have shown that use of InterGard
     Heparin has 25% better patency and 65% fewer amputations compared to
     ePTFE, a synthetic material frequently used for peripheral artery bypass
     or repair

   HEMACAROTID PATCHES
   o Collagen coated patches used for repair of carotid and peripheral
     arteries
   o HemaCarotid patches also manufactured in the UltraThin configuration
   o HemaCarotid and HemaPatches also manufactured in Silver and Heparin
     configurations

   SIGNIFICANT DEVELOPMENTS
   In the last few years, we have expanded our line of vascular graft products
and achieved the following regulatory and marketing milestones:
   o HemaPatch Silver was introduced in Europe in March 2004
   o HemaCarotid Patch Heparin was introduced in Europe in March 2004
   o InterGard Heparin UltraThin graft was introduced in the United States in
     fiscal 2003
   o Aortic Arch and HemaBridge (specialty grafts for thoracic aorta repair
     and replacement) received FDA clearance in March 2002
   o InterGard Heparin received FDA clearance in January 2001
   o InterGard UltraThin was introduced in the United States during fiscal
     1999
   o InterGard Silver received CE Mark April 1999, for commercial sale
     throughout European Union
   o InterGard Woven Products were introduced in the United States during
     fiscal 1999
   o InterGard was approved in both the United States and Japan in fiscal 1998

   Markets, Sales and Competition. Our vascular graft products are sold to
vascular and cardiothoracic surgeons. A number of companies, some of which are
substantially larger than us, manufacture and market products that compete
with our vascular graft products. Our major competitors are Boston Scientific,
Vascutek, W.L. Gore and Impra, a subsidiary of C.R. Bard, Inc.


                                       12
<PAGE>
   LIFE SCIENCE RESEARCH PRODUCTS. In 1998, we entered the life science
research market by forming a new subsidiary, Genisphere Inc. Genisphere has
developed reagents based on a new, proprietary class of DNA molecules known as
3DNA(R), or Three Dimensional Nucleic Acid. A reagent is a biologically or
chemically active substance. Genisphere's reagents are used to detect and
measure other biological substances. Our 3DNA-based reagents have been shown
to provide greater sensitivity in nucleic acid and protein detection assays
than it is possible to achieve using conventional detection methods.

   Based on our current market entry strategy, our life science research
products will be designed primarily for use in newly developed kinds of
detection assays. In these new markets, adoption of new technologies, such as
3DNA technology, occurs much faster and potential customers are more highly
concentrated and easier to reach, when compared to the mature blot market,
which was our initial target market. Our first products for these new markets
were detection kits designed to improve the reliability and sensitivity of
microarray experiments. We have also recently begun selling proprietary
products that are designed to increase the size of nucleic acid samples.

   A number of companies, some of which are substantially larger than us,
manufacture and market products that compete with our life science research
products. Our major competitors include Amersham Biosciences, PerkinElmer Life
Sciences Inc. and Agilent Technologies.

RESEARCH AND DEVELOPMENT

   We invested approximately $32.5 million in 2004, $29.0 million in 2003 and
$25.7 million in 2002 on research and development of new products and the
improvement of our existing products. We have established relationships with
several teaching hospitals for the purpose of clinically evaluating our new
products. We also have consulting arrangements with physicians and scientists
in the areas of research, product development and clinical evaluation.

OUR MARKETING AND SALES ORGANIZATION

   Our products are sold through direct sales representatives in the United
States and a combination of direct sales representatives and independent
distributors in international markets. Our worldwide direct sales organization
employs approximately 400 people and consists of sales representatives, sales
managers, clinical education specialists and sales support personnel. We have
a worldwide clinical education staff, most of whom are critical care and
catheterization lab nurses. They conduct seminars and provide in-service
training to nurses and physicians on a continuing basis. Our sales are broadly
based and no customer accounted for more than 10% of our total sales in fiscal
years 2004, 2003 and 2002. Our primary customers include physicians, hospitals
and other medical institutions.

   We provide service and maintenance to purchasers of our products under
warranty. After the warranty expires, we provide service and maintenance on a
contract basis. We employ service representatives in the United States and
Europe and maintain service facilities in the United States, the Netherlands,
France, Germany, Belgium and the United Kingdom. We conduct regional service
seminars throughout the United States for our customers and their biomedical
engineers and service technicians.

   International sales as a percentage of our total sales were 35% in 2004, 32%
in 2003 and 30% in 2002. We have subsidiaries in the United Kingdom, France,
Germany, Italy, Belgium and the Netherlands. Because a portion of our
international sales are made in foreign currencies, we bear the risk of
adverse changes in exchange rates for such sales. Please see Notes 1, 2 and 10
to the Consolidated Financial Statements for additional information with
respect to our international operations and foreign currency exposures.

COMPETITION

   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

                                       13
<PAGE>
U.S., particularly in certain European countries. Many companies, some of
which are substantially larger than us, are engaged in manufacturing competing
products.

SEASONALITY

   Typically, our net sales are lower in the first and second quarters and
higher in the third and fourth quarters. Lower net sales in the first quarter
result from patient tendencies to defer, if possible, hospital procedures
during the summer months and from the seasonality of the United States and
European markets, where summer vacation schedules normally result in fewer
hospital procedures. Lower net sales in the second quarter result from
holidays in the United States and other markets and patient tendencies to
defer, if possible, hospital procedures during these holiday seasons.
Independent distributors may randomly place large orders that can distort the
net sales pattern just described. In addition, new product introductions and
regulatory approvals can impact the typical sales patterns.

SUPPLIERS

   Our products are made of components which we manufacture or which are
usually available from existing and alternate sources of supply. Some of our
products are manufactured through agreements with unaffiliated companies. We
purchase certain components from single or preferred sources of supply. Our
use of single or preferred sources of supply increases our exposure to price
increases and production delays. In addition, certain of our suppliers have
been contemplating, and in a few cases have begun, reducing or eliminating
sales of their products to medical device manufacturers like us. We are not
able to predict whether or not additional suppliers will withhold their
products from medical device manufacturers, including us.

PATENTS

   We hold a number of United States and foreign patents. In addition, we also
have filed a number of patent applications that are currently pending. We do
not believe the expiration or invalidity of any of our patents would have a
material adverse effect on our business as currently conducted.

EMPLOYEES

   At the end of fiscal 2004, we had approximately 1,320 employees worldwide.
We believe our relationship with our employees is good.

ORDERS BACKLOG

   At June 30, 2004, we had a total backlog of unshipped customer orders of
$26.4 million, primarily for patient monitoring products. Substantially all of
the backlog will be delivered in fiscal 2005. The total backlog at June 30,
2003 was $20.7 million.

REGULATION

   Our medical devices are subject to regulation by the FDA. In some cases,
they are also subject to regulation by state and foreign governments. The
Medical Device Amendment of 1976 and the Safe Medical Device Act of 1990,
which are amendments to the Federal Food, Drug and Cosmetics Act of 1938,
require manufacturers of medical devices to comply with certain controls that
regulate the composition, labeling, testing, manufacturing and distribution of
medical devices. FDA regulations known as "Current Good Manufacturing
Practices for Medical Devices" provide standards for the design, manufacture,
packaging, labeling, storage, installation and service of medical devices. Our
manufacturing and assembling facilities are subject to routine FDA
inspections. The FDA can also conduct investigations and evaluations of our
products at its own initiative or in response to customer complaints or
reports of malfunctions. The FDA also has the authority to require
manufacturers to recall or correct marketed products which it believes do not
comply with the requirements of these laws.

   Under the Act, all medical devices are classified as Class I, Class II or
Class III devices. In addition to the above requirements, Class II devices
must comply with pre-market notification, or 510(k), regulations and

                                       14
<PAGE>
with performance standards or special controls established by the FDA. Subject
to certain exceptions, a Class III device must receive pre-market approval
from the FDA before it can be commercially distributed in the United States.
Our principal products are designated as Class II and Class III devices.

   We also receive inquiries from the FDA and other agencies. Sometimes, we may
disagree with positions of members of the staffs of those agencies. To date,
the resolutions of such disagreements with the staffs of the FDA and other
agencies have not resulted in material cost to us.

   We are also subject to certain federal, state and local environmental
regulations. The cost of complying with these regulations has not been, and we
do not expect them to be, material to our operations.

   We are also affected by laws and regulations concerning the reimbursement of
our customers' costs incurred in purchasing our medical devices and products.
Healthcare providers that purchase our medical devices and products generally
rely on third-party payors, including the Centers for Medicare and Medicaid
Services (CMS) which administers Medicaid and Medicare, and other types of
insurance programs, to reimburse all or part of the cost of such devices. The
laws and regulations in this area are constantly changing, and we are unable
to predict whether, and the extent to which, we may be affected in the future
by legislative or regulatory developments relating to the reimbursement of our
medical devices and products.

   On August 1, 2000, CMS established a product-specific reimbursement system
for devices used in the hospital outpatient setting that provided for
reimbursement for VasoSeal ES and, as of October 1, 2000, for VasoSeal VHD.
Effective April 1, 2001, CMS replaced the product-specific reimbursement
system with a new system that provided reimbursement for specific types of
devices, including vascular closure devices. VasoSeal VHD and ES devices were
eligible for reimbursement under this new system as well. Effective April 1,
2002, CMS significantly reduced the reimbursement rate for all vascular
closure devices. These reimbursements ended as of January 1, 2003.

HEALTH CARE REFORM

   Our management cannot predict at this time what impact, if any, the adoption
by the United States Congress of health care reform legislation will have on
our business.

ITEM 2. PROPERTIES.

   The following table contains information concerning our significant real
property that we own or lease:

<TABLE>
<CAPTION>
                                                                                                  OWNERSHIP OR
                                          GENERAL CHARACTER                                         EXPIRATION
LOCATION                                 AND USE OF PROPERTY                                      DATE OF LEASE
--------                             --------------------------------                             -------------
<S>                                  <C>                                                            <C>
Fairfield, New Jersey                75,000 sq. feet, used for Cardiac Assist facility and          Owned
                                     manufacturing of intra-aortic balloons

Hatfield, Pennsylvania               15,000 sq. feet, used for Genisphere research and              Leased (until 6/30/11)
                                     development, manufacturing and warehousing

Hoevelaken, the Netherlands          12,700 sq. feet, used for administrative offices and the       Owned
                                     European central warehouse

La Ciotat, France                    30,000 sq. feet, used by InterVascular for manufacturing       Owned
                                     and warehousing of vascular grafts and administrative
                                     offices
</TABLE>


                                       15
<PAGE>

<TABLE>
<CAPTION>
                                                                                                     OWNERSHIP OR
                                         GENERAL CHARACTER                                            EXPIRATION
LOCATION                                AND USE OF PROPERTY                                         DATE OF LEASE
--------                             ---------------------------                                    -------------

<S>                                  <C>                                                            <C>
Mahwah, New Jersey                   130,000 sq. feet, used for:                                    Owned

                                     o Patient Monitoring facility - manufacturing and
                                       warehousing of patient monitoring products, research and
                                       development and administrative offices

                                     o Manufacturing of cardiac assist balloon pump systems

Mahwah, New Jersey                   90,000 sq. feet, used for:                                     Owned

                                     o Interventional Products facility - manufacturing,
                                       warehousing, research and development and distribution of
                                       collagen products and administrative offices

                                     o Warehousing, packaging and distribution of cardiac assist
                                       products

                                     o Warehousing and distribution of InterVascular products

                                     o Corporate records storage

Montvale, New Jersey                 38,000 sq. feet, used for corporate and InterVascular          Owned
                                     headquarters
</TABLE>


   We also lease office space in England, France, Italy, Belgium and Germany.
We believe that our facilities and equipment are in good working condition and
are adequate for our needs.

ITEM 3.  LEGAL PROCEEDINGS.

   We are subject to litigation 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. We receive comments and recommendations with
respect to our products from the staff of the FDA and from other agencies on
an on-going basis. We may or may not agree with these comments and
recommendations. However, we are not a party to any formal regulatory
administrative proceedings.

   In December 2000, an action was filed in New York Supreme Court against us
and our board of directors entitled David B. Shaev v. Lawrence Saper, Alan B.
Abramson, David Altschiller, Joseph Grayzel, M.D., George Heller, Arno Nash
and Datascope Corp. The complaint alleges, inter alia, common law claims for
breach of the duty of loyalty and breach of fiduciary duty for approving
allegedly excessive compensation to defendant Saper. By agreement, the time to
respond to this complaint has been extended. The action is pending.

   In August 2001, an action was filed in United States District Court for the
District of New Jersey against us and our board of directors entitled David B.
Shaev v. Lawrence Saper, Alan B. Abramson, David Altschiller, Joseph Grayzel,
M.D., George Heller, Arno Nash and Datascope Corp. The Complaint alleges,
inter alia, that our October 27, 2000 proxy statement contained materially
false and misleading statements concerning, among other things, the
deductibility for federal income tax purposes of Mr. Saper's bonus
compensation, that it omitted material facts regarding the bonuses payable and
the number of persons eligible under the Management Incentive Plan, and that
it was coercive insofar as it stated that we might grant Mr. Saper a bonus if
the Plan were not approved by the stockholders. The Complaint also alleges
that the defendant directors breached their duties of good faith and loyalty
and were negligent in connection with these matters, and by approving
allegedly excessive payments to Mr. Saper. On April 1, 2002, the District

                                       16
<PAGE>
Court granted our motion to dismiss the action, holding that the proxy
statement did not contain materially false or misleading statements. The Court
declined to exercise its supplemental jurisdiction over the remaining state
law claims and dismissed those claims without prejudice. Plaintiff appealed
from the order of dismissal to the Third Circuit Court of Appeals. In a
decision filed on February 21, 2003, the Third Circuit vacated the District
Court's order of dismissal and remanded the case for further proceedings. In
so doing, the Third Circuit noted that for purposes of the appeal it was
required to accept as true all of the plaintiff's allegations and held that
the plaintiff stated a cause of action on the grounds, among other things,
that the proxy statement failed to accurately disclose certain matters
relating to management incentive plans under which Mr. Saper received
compensation. The Third Circuit also found that dismissal of the complaint for
failure by plaintiff to make demand upon the Board of Directors prior to
bringing a derivative action was not appropriate at this preliminary stage of
the case. Following remand, the parties have participated in mediation
procedures and have begun discovery.

   On January 28, 2003, Sanmina-SCI, one of our 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. We believe we have meritorious
defenses and a meritorious counterclaim and intend to proceed vigorously in
this matter. Mediation was attempted in April 2004 without success and now
discovery is being conducted.

   The Public Prosecutor's Office in Darmstadt, Germany is conducting an
investigation of current and former employees of one of our German
subsidiaries. The investigation concerns marketing practices under which
benefits were provided to customers of the subsidiary. We are cooperating with
the investigation. The German subsidiary has annual revenues of under
$5 million. We cannot predict at this time what the results of the
investigation may be or whether it could have a material adverse effect on us
or our business.

   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. In response, the Company has filed an answer denying the
allegations of the complaint and has brought counterclaims against Mr. Barile
seeking damages resulting from Mr. Barile's improper conduct as an employee of
Datascope. The Company believes it has meritorious counterclaims and
meritorious defenses to Mr. Barile's claims and intends to defend and
prosecute this action vigorously. Mr. Barile has replied to the Company's
counterclaims by denying them. Mediation was held on April 28, 2004 and the
parties agreed to exchange a limited amount of discovery material before
another mediation, to discuss settlement, is scheduled.

   On July 20, 2004, a former Datascope employee, Harry Gugnani, filed a
complaint in the Superior Court of New Jersey, Law Division, Bergen County,
against Datascope Corp. and various John Does seeking damages for emotional
distress, damage to reputation and malicious prosecution related to a criminal
action brought against him by the United States Attorney's Office for the
District of Maryland. The Company will file an answer denying the allegations
of the complaint. The Company believes it has meritorious defenses to
Mr. Gugnani's claims and intends to defend this action vigorously.


                                       17
<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

   No matters were submitted to a vote of security holders in the fourth
quarter of fiscal year 2004.

ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY.

The following table sets forth the names, ages, positions and offices of our
executive officers:

<TABLE>
<CAPTION>
NAME                        AGE      POSITIONS AND OFFICES PRESENTLY HELD
----                        ---      ------------------------------------
<S>                        <C>       <C>
Lawrence Saper               76      Chairman of the Board and Chief Executive Officer
Murray Pitkowsky             73      Senior Vice President, Chief Financial Officer, Treasurer and Secretary
Fred Adelman                 51      Vice President; Chief Accounting Officer; Corporate Controller, Accounting
Nicholas E. Barker           46      Vice President, Corporate Design
Steven Block                 41      Acting President, Patient Monitoring Division
James L. Cooper              53      Vice President, Human Resources
David Gibson                 35      Vice President, Service
Terrence J. Gunning          46      Vice President; President, Cardiac Assist Division
                             41      Vice President; President, Interventional Products Division and InterVascular
Peter Hinchliffe                     Group
Henry Scaramelli             51      Vice President; Corporate Controller, Operations
S. Arieh Zak                 43      Vice President, Regulatory Affairs and Corporate Counsel
</TABLE>


                                       18
<PAGE>
                                    PART II


ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.

MARKET INFORMATION

   Our common stock is traded over-the-counter and is listed on the Nasdaq
National Market. Our Nasdaq symbol is DSCP. The following table sets forth,
for each quarter period during the last two fiscal years, the high and low
sale prices as reported by The Nasdaq Stock Market, and the quarterly
dividends per share declared by the Company.


   FISCAL YEAR                        HIGH       LOW      DIVIDENDS
   -----------                         ----       ---     ---------
   2003
    First Quarter                     $30.20     $21.60     $0.05
    Second Quarter                     28.50      23.48      0.05
    Third Quarter                      27.85      21.71      0.05
    Fourth Quarter                     33.00      26.13      0.05
   2004
    First Quarter                     $34.70     $29.17     $0.20(a)
    Second Quarter                     36.80      30.76      0.05
    Third Quarter                      36.82      30.73      0.05
    Fourth Quarter                     40.07      32.74      0.05

---------------
(a) In fiscal 2004, the Company declared a special dividend of $0.15 per
    share, or $2.2 million, in addition to the regular quarterly dividend of
    $0.05 per share, which was paid on October 1, 2003 to holders of record on
    September 2, 2003.

   As of September 1, 2004, there were approximately 546 holders of record of
our common stock.

DIVIDEND POLICY

   On December 7, 1999, the Board of Directors inaugurated quarterly cash
dividends. Our dividend policy is reviewed periodically.

RECENT SALES OF UNREGISTERED SECURITIES

   None.

ISSUER PURCHASES OF EQUITY SECURITIES

   The following table sets forth information on repurchases by the Company of
its common stock during the fourth quarter of the fiscal year ended June 30,
2004.

<TABLE>
<CAPTION>
                                                                  TOTAL NUMBER OF SHARES    MAXIMUM DOLLAR VALUE
                                 TOTAL NUMBER                      PURCHASED AS PART OF    OF SHARES THAT MAY YET
          FISCAL                   OF SHARES     AVERAGE PRICE      PUBLICLY ANNOUNCED     BE PURCHASED UNDER THE
          PERIOD                   PURCHASED       PER SHARE             PROGRAMS            PROGRAMS ($ 000'S)
 -----------------------------   ------------    -------------    ----------------------   ----------------------
<S>                              <C>             <C>              <C>                      <C>
 4/01/04 - 4/30/04                       --          $   --                   --                   $17,500
 5/01/04 - 5/31/04                   48,794           34.65               48,794                    15,809
 6/01/04 - 6/30/04                   78,860           37.88               78,860                    12,822
                                    -------          ------              -------                   -------
 Total Fourth Quarter               127,654          $36.64              127,654                   $12,822
                                    =======          ======              =======                   =======
</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.


                                       19
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.

   The following table sets forth selected financial data for Datascope as of
the dates and for the periods indicated. The data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and related notes
thereto on pages F-1 to F-27.

                         SELECTED FINANCIAL INFORMATION

EARNINGS STATEMENT DATA:
 (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                        YEAR ENDED JUNE 30,
                                       ------------------------------------------------------
                                         2004       2003        2002       2001        2000
                                       --------   --------    --------   --------    --------
<S>                                    <C>        <C>         <C>        <C>         <C>
Net Sales..........................    $343,300   $328,300    $317,400   $312,800    $301,400
                                       --------   --------    --------   --------    --------
Cost of sales......................     140,481    138,153     133,532    125,030     119,665
Research and development...........      32,465     29,034      25,720     24,402      24,426
Selling, general and administrative     137,537    130,871     126,075    117,571     116,792
Other Items (A)....................          --     (3,028)     11,463         --      (3,825)
                                       --------   --------    --------   --------    --------
                                        310,483    295,030     296,790    267,003     257,058
                                       --------   --------    --------   --------    --------
Operating earnings.................      32,817     33,270      20,610     45,797      44,342
Other (income) expense:
 Interest income ..................      (1,822)    (1,607)     (1,913)    (3,692)     (3,686)
 Interest expense .................          26         25         159         74          48
 Other, net .......................         459        350         297       (176)        132
                                       --------   --------    --------   --------    --------
                                         (1,337)    (1,232)     (1,457)    (3,794)     (3,506)
                                       --------   --------    --------   --------    --------
Earnings before taxes on income....      34,154     34,502      22,067     49,591      47,848
Taxes on income....................      10,246     11,203       8,166     15,348      14,773
                                       --------   --------    --------   --------    --------
Net earnings.......................    $ 23,908   $ 23,299    $ 13,901   $ 34,243    $ 33,075
                                       ========   ========    ========   ========    ========
Earnings per share, Basic..........    $   1.62   $   1.58    $   0.94   $   2.30    $   2.18
Earnings per share, Diluted........    $   1.58   $   1.57    $   0.92   $   2.20    $   2.06
Dividends per share (B)............    $   0.35   $   0.20    $   0.20   $   0.19    $   0.12
</TABLE>

<TABLE>
<CAPTION>
BALANCE SHEET DATA:
   (in thousands)                                          AS OF JUNE 30,
                                       ------------------------------------------------------
                                         2004       2003        2002       2001        2000
                                       --------   --------    --------   --------    --------
<S>                                    <C>        <C>         <C>        <C>         <C>
Total assets.......................    $368,335   $338,832    $316,022   $310,335    $295,326
Long-term debt.....................          --         --          --         --          --
Working capital....................     119,868    131,374     118,241    129,715     120,298
Stockholders' equity...............     292,570    271,675     250,978    243,478     227,286
Cash dividends (B).................       5,177      2,957       2,956      2,805       1,809
</TABLE>

---------------
(A) Other Items include gain on legal settlement in fiscal 2003, restructuring
    charges in fiscal 2002 and gain on sale of technology in fiscal 2000.
(B) In fiscal 2004, the Company declared a special dividend of $0.15 per
    share, or $2.2 million, which was paid on October 1, 2003 to holders of
    record on September 2, 2003.


                                       20
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

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. The
Cardiac Assist/Monitoring Products segment accounts for 80% of total sales.
Our products are sold 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 U.S., 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 our emphasis on new product
development and have increased our investment in research and development
(R&D). In fiscal 2004 we spent $32.5 million on R&D, an increase of
$3.4 million or 12% from fiscal 2003. We expect to increase R&D spending in
fiscal 2005 as compared to 2004. We also plan to increase sales through
selective acquisitions of products and technologies from other companies.
During the past two years we have made investments in several new
technologies, including the ProLumen(TM) thrombectomy device and the X-Site
vascular closure device. We have also improved our operating margins through
increasing the efficiency of our manufacturing operations and cost containment
programs.

   Datascope's financial position continued strong at the end of fiscal 2004,
with cash and short- and long-term marketable investments at $69.4 million
compared to $68.3 million at June 30, 2003. The increase resulted primarily
from positive cash flow from operations.

RESULTS OF OPERATIONS

FINANCIAL SUMMARY

   The following table shows the comparison of net earnings and earnings per
diluted share over the past three fiscal years.


                                                        (DOLLARS IN MILLIONS,
                                                             EXCEPT EPS)
                                                       ----------------------
                                                         YEAR ENDED JUNE 30,
                                                       ----------------------
                                                        2004    2003     2002
                                                        ----    ----     ----
      Net Earnings .................................   $23.9    $23.3   $13.9
      Earnings per share, diluted ..................   $1.58    $1.57   $0.92


   The increase in net earnings and diluted earnings per share in fiscal 2004
compared to fiscal 2003, primarily reflects an increase in earnings from
higher sales, an improved gross margin percentage in the Cardiac Assist/
Monitoring Products segment and a lower consolidated effective tax rate.
Partially offsetting the above were reduced earnings in the Interventional
Products/Vascular Grafts segment.

   Net earnings and earnings per share in fiscal years 2003 and 2002 shown
above include the following items: gain on legal settlement of $1.9 million
after tax or $0.13 per diluted share in fiscal 2003 and restructuring charges
of $9.5 million after tax or $0.63 per diluted share in fiscal 2002.


                                       21
<PAGE>
COMPARISON OF RESULTS--FISCAL 2004 VS. FISCAL 2003

NET SALES (SALES)

   The following table shows sales by product line over the past three fiscal
years.

<TABLE>
<CAPTION>
                                                            SALES BY PRODUCT LINE
                                                            (DOLLARS IN MILLIONS)
                                                             YEAR ENDED JUNE 30,
                                                          -------------------------
                                                           2004     2003      2002
                                                           ----     ----      ----
      <S>                                                 <C>      <C>       <C>
      Patient Monitoring..............................    $144.2   $136.5    $125.0
       % change from prior year ......................         6%       9%       13%
       % of total sales ..............................        42%      42%       39%
      Cardiac Assist..................................    $129.5   $118.4    $112.5
       % change from prior year ......................         9%       5%       (5)%
       % of total sales ..............................        38%      36%       36%
      Interventional Products.........................    $ 37.3   $ 42.0    $ 53.4
       % change from prior year ......................       (11)%    (21)%      (9)%
       % of total sales ..............................        11%      13%       17%
      Vascular Grafts.................................    $ 30.9   $ 30.1    $ 25.5
       % change from prior year ......................         3%      18%       10%
       % of total sales ..............................         9%       9%        8%
      Genisphere......................................    $  1.4   $  1.3    $  1.0
       % change from prior year ......................        --       --        --
       % of total sales ..............................        --       --        --
         Total Sales..................................    $343.3   $328.3    $317.4
         % change from prior year.....................         5%       3%        1%
</TABLE>


   Sales of the Cardiac Assist/Monitoring Products segment in fiscal 2004
increased 7% to $273.7 million from $254.9 million last year.

 Patient Monitoring

   Patient monitoring sales in fiscal 2004 rose 6% to $144.2 million compared
to $136.5 million last year. The increase in sales was primarily attributable
to higher sales of bedside monitors, including the recently introduced
Spectrum(TM) and Trio(TM) monitors, increased sales of Masimo SET(R)1 pulse
oximetry sensors and favorable foreign exchange translation of $2.2 million.
Sales of central monitoring systems decreased in fiscal 2004 because of the
introduction of our new Panorama(TM) central monitoring system. During the
fourth quarter, many customers placed substantial new orders for Panorama, or
replaced existing orders for the older PatientNet central system with orders
for Panorama. Only a small number of Panorama units were shipped in the fourth
quarter, consistent with our policy of limiting new central monitoring system
shipments in the first period after product release.

   The Panorama Patient Monitoring Network is our new platform for centralized
monitoring of vital signs information. The Panorama is an integrated family of
patient monitoring products that will enable hospitals to seamlessly share
information on all patients via one network. Its user interface will be
integrated with our Passport 2(R) and Spectrum monitors. This will simplify
user training, will enable the capture and storage of all data including
continuous 12-lead ECG acquisition, and will provide for control of bedside
alarms. Additionally, the Central Station will store all waveform and numeric
vital signs gathered by the monitors, creating a continuous electronic patient
record. Panorama will also include a compact ambulatory telemetry transmitter,
the Panorama Telepack, and an instrument transmitter, the Panorama Instrument
Radio, to wirelessly communicate patient data to and from the Panorama Central
Station.

---------------
1 Masimo SET is a registered trademark of Masimo Corporation.

                                       22
<PAGE>
   Panorama replaces a previous system purchased by us on an OEM basis and sold
by the Patient Monitoring division. We anticipate that the launch of the
Panorama will strengthen our competitive position in the high-end market and
will increase sales of our wireless systems and of the Spectrum, our high
acuity and higher priced monitor. We also anticipate a higher gross margin
from sales of the new Panorama system that has a lower manufacturing cost
compared to the cost of the OEM system.

 Cardiac Assist

   Cardiac Assist sales in fiscal 2004 increased 9% to $129.5 million from
$118.4 million last year, due to continued higher sales of intra-aortic
balloon (IAB) catheters and pumps, and favorable foreign exchange translation
of $2.6 million. Shipments of the premium-priced Fidelity(TM) 8 Fr. IAB
catheter continued to increase, accounting for 82% of total IAB catheter sales
in the fourth quarter. Increased purchases of IAB's by our Japanese
distributor and higher shipments to other international markets also
contributed to increased IAB sales. Higher pump sales reflect continued strong
demand for the new CS100(TM) intra-aortic balloon pump, our first fully
automatic pump, launched globally in September 2003.

   Sales of the Interventional Products/Vascular Grafts segment decreased 5% to
$68.2 million compared to $72.1 million last year.

 Interventional Products

   Sales of Interventional Products decreased 11% to $37.3 million from
$42.0 million last year as sales of VasoSeal(R) vascular closure devices
continued to weaken, as a result of continued strong competition, and the
decline was only partially offset by sales contributed by the new
Safeguard(TM) and ProLumen products. Safeguard, a manual compression assist
device designed to maintain hemostasis after arterial catheterization
procedures, was launched in the second quarter. ProLumen is a new thrombectomy
device designed to quickly and effectively clear blood clots from blocked
dialysis access sites. Shipment of ProLumen began at the end of the third
quarter of fiscal 2004.

   Aside from other new products being developed for the dialysis market, we
have undertaken a number of new product initiatives with the intent of halting
and reversing the decline of our vascular closure sales. The first such
initiative was announced in May 2004 when we acquired assets and technology
from X-Site Medical, LLC (X-Site). The acquired assets include all technology
related to X-Site's lead product, a suture based vascular closure device for
achieving hemostasis after coronary catheterization procedures. Suture based
devices represent over $100 million of an estimated $430 million annual market
for vascular closure devices. The X-Site product will be marketed by the
Interventional Products division through its existing sales force, which
currently sells other vascular closure devices.

 Vascular Grafts

   Sales of InterVascular Inc.'s products increased 3% to $30.9 million
compared to $30.1 million last year, with favorable foreign exchange
contributing $2.0 million to this year's results. Excluding the impact of
foreign exchange translation, sales declined 4% due to lower selling prices in
certain European markets, lower sales in the U.S. and reduced shipments to
InterVascular's distributor in Japan. In March, we resubmitted our 510(k)
notification to the FDA for regulatory clearance to market InterGard(R) Silver
grafts in the United States. In August, the FDA requested that we provide
additional data from our European postmarketing studies of the InterGard
Silver.

 Genisphere

   Sales of Genisphere products were $1.4 million in fiscal 2004 compared to
$1.3 million in fiscal 2003, as Genisphere continued to pursue its marketing
strategy, to target major academic institutions and the research and
development department of pharmaceutical and biotechnology companies.


                                       23
<PAGE>
COSTS AND EXPENSES

 Gross Profit (Net Sales Less Cost of Sales)

   The gross profit percentage was 59.1% for fiscal 2004 compared to 57.9% last
year, with the increase primarily due to an improved gross margin percentage
in the Cardiac Assist/Monitoring Products segment, as a result of cost
reduction programs and sales of new products with higher margins. Partially
offsetting the above was the impact from a less favorable sales mix, as a
result of reduced sales of higher margin interventional products and vascular
grafts.

 Research and Development (R&D)

   We continued our companywide focus on new product development and
improvements of existing products in fiscal 2004. Spending on research and
development reflects investment in new product development programs,
sustaining R&D on existing products, regulatory compliance and clinical
evaluations. Total R&D expenses increased 12% to $32.5 million in fiscal 2004,
equivalent to 9.5% of sales compared to $29.0 million, or 8.8% of sales last
year.

   R&D expenses for the Cardiac Assist/Monitoring Products segment increased 6%
to $20.0 million in fiscal 2004 compared to $18.9 million last year, with the
increase primarily due to expenses related to recently introduced products
including the CS100 intra-aortic balloon pump in Cardiac Assist and the
Panorama, central monitoring network in Patient Monitoring, as well as new
product development projects.

   R&D expenses for the Interventional Products/Vascular Grafts segment
increased 21% to $9.5 million in fiscal 2004 compared to $7.8 million last
year, with the increase primarily due to expenses related to new product
development projects in InterVascular.

   The balance of consolidated R&D is in Corporate and Other and amounted to
$3.0 million in fiscal 2004 compared to $2.3 million for the comparable period
last year.

 Selling, General and Administrative (SG&A)

   Total selling, general and administrative expenses increased 5% to
$137.5 million in fiscal 2004, or 40.1% of sales compared to $130.9 million,
or 39.9% of sales last year.

   SG&A expenses for the Cardiac Assist/Monitoring Products segment increased
11% to $95.8 million in fiscal 2004, primarily attributable to filling open
field sales positions, costs associated with the increased sales and
unfavorable foreign exchange translation ($2.6 million).

   SG&A expenses for the Interventional Products/Vascular Grafts segment in
fiscal 2004 were essentially unchanged compared to last year at $47.0 million,
as lower selling and marketing expenses in Interventional Products were offset
by higher expenses in InterVascular attributable to unfavorable foreign
exchange translation.

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

   The weaker U.S. dollar compared to the Euro and the British Pound increased
total SG&A expenses by approximately $4.5 million in fiscal 2004.

GAIN ON LEGAL SETTLEMENT

   In July 1999, we instituted patent infringement litigation relating to a
vascular sealing method against Vascular Solutions, Inc. in the United States
District Court, District of Minnesota. In that litigation our complaint
alleged that the manufacture, use and/or sale of Vascular Solutions' Duett
device infringed our United States Patent No. 5,725,498. In November 2002, the
parties settled the matter. Pursuant to the settlement, Vascular Solutions
paid us $3.75 million and we granted Vascular Solutions a limited, non-
exclusive patent license. In the second quarter of fiscal 2003, we recorded a
pretax gain on the settlement, net of related legal expenses, of $3.0 million,
or $1.9 million after tax, equivalent to $0.13 per diluted share.


                                       24
<PAGE>
INTEREST INCOME

   Interest income was $1.8 million in fiscal 2004 compared to $1.6 million
last year, with the increase primarily due to a higher average portfolio
balance ($65.8 million vs. $49.2 million), partially offset by a decline in
the average yield from 3.2% to 2.7%.

INCOME TAXES

   In fiscal 2004, the consolidated effective tax rate was 30.0% compared to
32.5% last year. The lower tax rate in fiscal 2004 was primarily attributable
to an increase in the Extraterritorial Income Exclusion (EIE) and the Federal
Research Credit. The increase in the EIE was attributable to increased profits
from higher U.S. export sales. The higher Federal Research Credit resulted
from increased R&D expenses in fiscal 2004. Last year, the effect on the
consolidated tax rate of the gain on legal settlement was 0.5%.

NET EARNINGS

   Net earnings were $23.9 million or $1.58 per diluted share in fiscal 2004
compared to $23.3 million, or $1.57 per diluted share in fiscal 2003. Net
earnings last year included a gain of $1.9 million after-tax or $0.13 per
diluted share, from the settlement of patent litigation with Vascular
Solutions, Inc. The increased earnings in fiscal 2004 primarily reflects an
increase in profits from higher sales, an improved gross margin in the Cardiac
Assist/Monitoring Products segment and a lower consolidated effective tax
rate. Partially offsetting the above were reduced earnings in the
Interventional Products/Vascular Grafts segment.

PURCHASED TECHNOLOGY

 X-Site

   In May 2004, we acquired certain assets and technology of X-Site Medical,
LLC (X-Site), a privately held company in the business of developing,
manufacturing and marketing products for the vascular closure market. The
acquired assets include all technology related to X-Site's lead product, a
suture based vascular closure device for achieving hemostasis after coronary
catheterization procedures. The X-Site purchase will broaden and enhance our
existing vascular closure product line. The purchase price was approximately
$13.6 million, in cash, comprised of an initial payment of $11.4 million,
including transaction expenses, and an accrued liability for an additional
$2.2 million, representing the present value of guaranteed minimum payments to
be paid over the next five years. Pursuant to the asset purchase agreement, we
may also be required to make additional contingent payments, which would be
triggered by the achievement of certain milestones and sales performance
levels not currently estimable. The X-Site purchase was accounted for using
the purchase method of accounting. The aggregate purchase price for X-Site was
allocated to tangible assets and intangible assets based on their estimated
fair value at date of acquisition. There was no goodwill recorded in the
transaction because the purchase price for this acquisition did not exceed the
estimated fair value of the net assets acquired. Intangible assets acquired of
$13.5 million, consisting primarily of intellectual property and manufacturing
know-how, are being amortized over a period of approximately 16 years based
primarily on the remaining legal life of the underlying acquired technology.
An independent valuation firm was used to determine the fair market value of
the intangible assets acquired.

 ProLumen

   In May 2003, we acquired technology from Rex Medical, LP, for the ProLumen
thrombectomy device. With the launch of the ProLumen in March 2004 we entered
the dialysis access market. Thrombectomy is the process of removing blood
clots from blocked dialysis access sites. Thrombectomy procedures are
performed primarily by interventional radiologists in the U.S., a current and
well-established sales call point for our Interventional Products division.
Through June 30, 2004, we paid $5.0 million in cash based on achieving certain
milestones. The technology transfer agreement also requires us to pay
additional contingent payments, which would be triggered by the achievement of
additional milestones and sales performance levels not currently estimable.
The payments made for the ProLumen technology were recorded as purchased
technology and will be amortized over approximately 16 years based on the
remaining legal life of the underlying technology.


                                       25
<PAGE>
FOREIGN CURRENCY

   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 consolidated statement of earnings. We do not use derivative
financial instruments for trading purposes.

   As of June 30, 2004, we had a notional amount of $13.4 million of foreign
exchange forward contracts outstanding, all of which were 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 U.S.
dollars at maturity, at rates agreed to when the contract is signed.

COMPARISON OF RESULTS-FISCAL 2003 VS. FISCAL 2002

SALES

   Sales of the Cardiac Assist/Monitoring Products segment in fiscal 2003
increased 7% to $254.9 million from $237.5 million last year.

 Cardiac Assist

   Cardiac assist product sales increased 5% to $118.4 million in fiscal 2003.
The increase is due to stronger worldwide sales of intra-aortic balloon pumps,
a modest increase in sales of balloon (IAB) catheters and the favorable effect
of foreign exchange translation. Our distributor in Japan reduced purchases of
IAB catheters in the first half of the fiscal year in order to reduce
inventory and resumed its normal purchasing pattern in the second half of the
year. Sales of the new, premium-priced Fidelity(TM) 8 Fr. IAB catheter
continued to grow, accounting for 61% of total IAB catheter sales in the
fourth quarter.

 Patient Monitoring

   Sales of patient monitoring products rose 9% to $136.5 million in fiscal
2003. The sales increase reflects strong growth of several product lines,
including Accutorr Plus(R) noninvasive blood pressure monitors, wireless
central monitoring systems, Masimo SET pulse oximetry sensors and the
Anestar(TM) anesthesia delivery system. Favorable foreign exchange translation
also contributed to sales growth.

   During the third quarter, we positioned ourselves for renewed growth in the
bedside monitoring market segment with the introduction of two new monitors,
Spectrum(TM) and Trio(TM). The Spectrum monitor is a battery-powered, portable
bedside monitor for the high-end, critical care market, a $650 million market
segment. The Trio is a compact and highly portable monitor with applications
in a wide variety of hospital and outpatient settings. It is aimed at price
sensitive markets such as surgery centers, general hospital applications and
international markets. The Trio should enable us to expand our share of an
estimated $80 million low-end monitor market. Shipments of Spectrum in the
U.S. and to international markets began in the third quarter. Shipments of
Trio to international markets began in the third quarter, and U.S. sales are
expected to begin in the first half of fiscal 2004 when FDA market clearance
is expected. Sales of bedside monitors increased in the fourth quarter
following the introduction of these two new products.

   Sales of the Interventional Products/Vascular Grafts segment decreased 9% to
$72.1 million compared to $78.9 million last year.

 Interventional Products

   Sales of VasoSeal(R) sealing devices decreased 21% to $41.2 million from
$52.0 million last year due to continued strong competition and to the
production problem that arose shortly after manufacturing of

                                       26
<PAGE>
VasoSeal Elite(TM) began in the third quarter, which interrupted the launch of
this next-generation product. This production problem was resolved and
shipments of VasoSeal Elite devices, which incorporate a new, proprietary
collagen hemostat, resumed in June.

   Sales of collagen hemostats were $0.8 million compared to $1.4 million last
year with the decrease due to reduced sales in international markets.

   During the first quarter of fiscal 2004 we changed the name of our Collagen
Products division, which manufactures and markets the VasoSeal devices, to the
Interventional Products division. The new name reflects our objective to
broaden the product portfolio offered by the division to include new products
for interventional cardiology and interventional radiology that are not
collagen-based. The first of these new products, Safeguard, an innovative
pressure-assisted dressing for post-hemostasis wound management was launched
in the first half of fiscal 2004.

 Vascular Grafts

   Sales of InterVascular, Inc.'s products increased 18% to $30.1 million,
primarily reflecting favorable foreign exchange translation, a full year of
direct sales in the U.S., and increased sales of the InterGard Silver anti-
microbial graft in Europe. Sales in the U.S. were also higher than last year
because our former distributor, whose termination became effective at the end
of December 2001, placed no orders in the second quarter last year. We are
continuing to seek FDA approval to sell InterGard Silver grafts in the United
States.

 Genisphere

   Sales of Genisphere products were $1.3 million in fiscal 2003 compared to
$1.0 million in the prior year, as Genisphere continued to pursue its
marketing strategy, to target major academic institutions and the research and
development department of pharmaceutical and biotechnology companies.

   The weaker U.S. dollar compared to the Euro and the British Pound increased
consolidated sales by approximately $6.8 million in fiscal 2003 compared to
fiscal 2002.

COSTS AND EXPENSES

   The gross profit percentage of 57.9% for fiscal 2003 was unchanged from last
year. An improved gross margin in the Cardiac Assist/Monitoring Products
segment as a result of cost reduction programs and higher average selling
prices was offset by the effect of a less favorable sales mix, the write-off
of obsolete inventory related to the MR Monitor line and costs associated with
the VasoSeal Elite production problem. In addition, for fiscal 2003, the gross
margin was favorably impacted by an insurance settlement of $500 thousand
recorded in the first quarter related to unusable collagen inventory, which
was reserved for in June 1997 with a charge to cost of sales. Datascope filed
a claim under its property insurance policy for the unusable collagen
inventory. When we received the insurance settlement of $500 thousand, in the
first quarter of fiscal 2003, the settlement was accounted for as a reduction
to cost of sales, consistent with the accounting treatment for the related
inventory reserve.

   We continued our companywide focus on new product development and
improvements of existing products in fiscal 2003. Spending on research and
development reflects investment in new product development programs,
sustaining R&D on existing products, regulatory compliance and clinical
evaluations. R&D expenses increased 13% to $29.0 million in fiscal 2003,
equivalent to 8.8% of sales compared to $25.7 million, or 8.1% of sales last
year.

   R&D expenses for the Cardiac Assist/Monitoring Products segment increased
10% to $18.9 million in fiscal 2003 compared to $17.2 million last year, with
the increase primarily due to new product development projects in Patient
Monitoring.

   R&D expenses for the Interventional Products/Vascular Grafts segment
increased 19% to $7.8 million in fiscal 2003 compared to $6.6 million last
year, with the increase primarily due to new product development projects in
InterVascular.


                                       27
<PAGE>
   The balance of consolidated R&D is in Corporate and Other and amounted to
$2.3 million in fiscal 2003 compared to $1.9 million for the comparable period
last year.

   Selling, general and administrative expenses increased 4% to $130.9 million
in fiscal 2003, or 39.9% of sales compared to $126.1 million, or 39.7% of
sales last year.

   SG&A expenses for the Cardiac Assist/Monitoring Products segment increased
3% to $86.2 million in fiscal 2003, primarily attributable to filling open
positions, costs associated with the increased sales and the impact of foreign
exchange translation.

   SG&A expenses for the Interventional Products/Vascular Grafts segment
decreased 2% to $47.1 million in fiscal 2003. The decrease was primarily
attributable to lower selling and marketing expenses in Interventional
Products, partially offset by increased selling expenses in InterVascular due
to a full year of U.S. direct field force expenses in fiscal 2003 compared to
a half year in fiscal 2002 and the impact of foreign exchange translation.

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

   The weaker U.S. dollar compared to the Euro and the British Pound increased
total SG&A expenses by approximately $4.7 million in fiscal 2003.

GAIN ON LEGAL SETTLEMENT

   In July 1999, we instituted patent infringement litigation relating to a
vascular sealing method against Vascular Solutions, Inc. in the United States
District Court, District of Minnesota. In that litigation our complaint
alleged that the manufacture, use and/or sale of Vascular Solutions' Duett
device infringed our United States Patent No. 5,725,498. In November 2002, the
parties settled the matter. Pursuant to the settlement, Vascular Solutions
paid us $3.75 million and we granted Vascular Solutions a limited, non-
exclusive patent license. In the second quarter of fiscal 2003, we recorded a
pretax gain on the settlement, net of related legal expenses, of $3.0 million,
or $1.9 million after tax, equivalent to $0.13 per diluted share.

RESTRUCTURING CHARGES

   In fiscal 2002, we recorded restructuring charges totaling $11.5 million The
restructuring charges consisted of the following.

   o severance expenses, asset write-downs and contractual obligations related
     to the closure of the VasoSeal manufacturing and R&D facility in Vaals,
     the Netherlands, and severance expenses for U.S. employees.

   o asset write-downs, severance expenses and contractual and incremental
     obligations associated with exiting the coronary stent sales business in
     Europe, including the resulting impairment of our investments in AMG and
     QualiMed.

   o closure of an unprofitable Cardiac Assist direct sales operation in a
     European country.

   o workforce reductions in Patient Monitoring.

   The workforce reductions totaled 151 employees or 11% of our worldwide
employment. The restructuring programs were completed in fiscal 2003.

INTEREST INCOME

   Interest income was $1.6 million in fiscal 2003 compared to $1.9 million
last year, with the decrease primarily the result of a decline in the average
yield from 4.5% to 3.2%, partially offset by a higher average portfolio
balance ($49.2 million vs. $38.6 million).

INCOME TAXES

   In fiscal 2003, the consolidated effective tax rate was 32.5% compared to
37.0% last year. The consolidated effective tax rate for fiscal 2002 was
significantly impacted by expenses related to the

                                       28
<PAGE>
restructuring programs in the first and second quarters which were not
deductible for tax purposes, primarily in international businesses. The effect
on the consolidated tax rate of the gain on legal settlement in fiscal 2003
and the restructuring charge in fiscal 2002 was 0.5% and 6.7%, respectively.
The remaining increase in the consolidated effective tax rate in fiscal 2003
was primarily attributable to an increase in state income tax rates.

NET EARNINGS

   Net earnings were $23.3 million or $1.57 per diluted share in fiscal 2003
compared to $13.9 million, or $0.92 per diluted share last year. The increased
earnings in fiscal 2003 primarily reflects an increased gross margin from
higher sales in all product lines, except VasoSeal, the gain on legal
settlement ($1.9 million after-tax), and the negative impact on earnings last
year of the restructuring charges ($9.5 million after-tax), partially offset
by higher R&D and SG&A expenses, as discussed above.

LIQUIDITY AND CAPITAL RESOURCES

   Working capital at June 30, 2004 was $119.9 million compared to
$131.4 million at June 30, 2003. The current ratio was 3.3:1 compared to 3.8:1
at June 30, 2003. The decrease in working capital and the current ratio was
primarily the result of a decrease in cash and short-term investments
($14.3 million) and accounts receivable ($3.3 million), and an increase in
current liabilities ($6.7 million). Partially offsetting the above was an
increase in prepaid expenses and other current assets ($8.8 million) and
inventories ($3.4 million).

   The decrease in cash and short-term investments was primarily due to our
decision to invest more funds in long-term investments to increase the
investment yield on the portfolio. Long-term investments increased
$15.4 million at June 30, 2004 compared to June 30, 2003. The decrease in
accounts receivable of $3.3 million primarily reflected a decrease in days
sales outstanding resulting from tighter control over the granting of credit
terms and improved collections. The increase in prepaid expenses and other
current assets of $8.8 million resulted primarily from an increase in prepaid
income taxes. The increase in inventories was attributable to the build-up of
inventory for new products, such as the Panorama central monitoring system,
ProLumen, Safeguard and Elite.

   In fiscal 2004, cash provided by operations was $38.5 million compared to
$39.8 million last year. The decrease is primarily attributable to an increase
in inventories and other current assets, as discussed above.

   Net cash used in investing activities was $33.3 million, primarily
attributable to purchases of investments of $73.7 million, offset by
$69.4 million for maturities of investments, $15.2 million for purchased
technology and licenses, $5.3 million for capitalized software and the
purchase of $6.8 million of property, plant and equipment. Net cash used in
financing activities was $7.5 million, due to $5.2 million dividends paid and
stock repurchases of $9.8 million, offset by stock option activity of
$7.4 million.

   Purchases of technology and licenses included cash payments for the X-Site
assets and technology of $11.4 million and milestone payments to Rex Medical,
LP for the ProLumen and others devices of $3.8 million.

   We purchased about 273,000 of our common shares for approximately
$9.8 million during fiscal year 2004.

   Working capital at June 30, 2003 was $131.4 million compared to
$118.2 million at June 30, 2002. The current ratio was 3.8:1 compared to 3.4:1
at June 30, 2002. The increase in working capital and the current ratio was
primarily the result of an increase in cash and short-term investments
($17.1 million) and a decrease in current liabilities ($3.2 million),
partially offset by a decrease in accounts receivable ($5.5 million) and
inventories ($2.5 million).

   In fiscal 2003, cash provided by operations was $39.8 million compared to
$24.0 million in fiscal 2002. The increase is primarily attributable to the
higher net earnings, higher depreciation and amortization and a decrease in
accounts receivable.

   Net cash used in investing activities was $30.4 million, attributable to
purchases of investments of $54.1 million, offset by $35.7 million for
maturities of investments, capitalized software of $4.8 million,

                                       29
<PAGE>
purchased technology and licenses of $2.1 million, equity investments of
$0.4 million and the purchase of $4.6 million of property, plant and
equipment. Net cash used in financing activities was $3.2 million, due to
$3.0 million dividends paid and stock repurchases of $0.9 million, offset by
stock option activity of $0.7 million.

   We purchased about 35,000 of ourcommon shares for approximately $0.9 million
during fiscal year 2003.

   Working capital at June 30, 2002 was $118.2 million compared to
$129.7 million at June 30, 2001. The current ratio was 3.4:1 compared to 3.5:1
at June 30, 2001. The decrease in working capital was primarily the result of
a decrease in cash and short term investments ($16.8 million), partially
offset by a decrease in current liabilities ($2.6 million).

   In fiscal 2002, cash provided by operations was $24.0 million, primarily
attributable to net earnings and depreciation and amortization, partially
offset by increased other assets and a decrease in accounts payable. Net cash
used in investing activities was $12.1 million, primarily attributable to the
purchase of $6.0 million of property, plant and equipment, investments of
$68.0 million, offset by $68.5 million for maturities of investments,
capitalized software of $4.8 million, equity investments of $1.6 million and
purchased technology and licenses of $0.3 million. Net cash used in financing
activities was $11.1 million, attributable to stock repurchases of $9.4 million
and $3.0 million dividends paid, partially offset by $1.3 million cash
received from exercise of stock options.

   We purchased about 233,000 of our common shares for approximately
$9.4 million during fiscal year 2002.

   We believe our financial resources are sufficient to meet our projected cash
requirements. The moderate rate of current U.S. inflation has not significantly
affected us. The impact of foreign exchange rate fluctuations, primarily the
Euro and British Pound, did not have a significant impact on our liquidity.

   Consistent with recent business and financial plans, the Company has
concluded that we may no longer hold our investment portfolio to maturity.
Accordingly, we reclassified the investment portfolio from held-to-maturity to
available-for-sale, excluding the preferred stock investments.

   Presented below is a summary of our contractual obligations and other
commitments as of June 30, 2004.
<TABLE>
<CAPTION>
   (DOLLARS IN MILLIONS)                                                          PAYMENTS DUE BY PERIOD
                                                          ----------------------------------------------------------------------
                                                          TOTAL    LESS THAN 1 YEAR   1-3 YEARS    3-5 YEARS   MORE THAN 5 YEARS
                                                          -----    ----------------   ---------    ---------   -----------------
   <S>                                                    <C>      <C>                <C>          <C>         <C>
   Operating lease obligations (1) ....................   $ 8.6         $ 3.3            $3.9        $0.9            $ 0.5
   Purchase commitments (1,2) .........................    36.3          36.3              --          --               --
   Contingent milestone payments (3) ..................    19.8           1.3             2.5         4.6             11.4
                                                          -----         -----            ----        ----            -----
   Total contractual obligations and other commitments    $64.7         $40.9            $6.4        $5.5            $11.9
                                                          =====         =====            ====        ====            =====
</TABLE>
---------------
(1) In accordance with accounting principles generally accepted in the United
    States, these obligations are not recorded in the consolidated balance
    sheet.
(2) These amounts include commitments for inventory and capital expenditures
    that do not exceed our projected requirements over the related terms and
    are in the normal course of business.
(3) These amounts represent contingent milestone payments under various
    agreements, including X-Site and Rex Medical. While it is not certain if
    and/or when these payments will be made, we have included the payments in
    the table based on our estimate of the earliest date when the milestones
    or contingencies may be met.

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 important factors cannot be predicted or quantified and
are outside our control, including the possibility that the release of the
Panorama will not strengthen the Company's competitive position in the high-
end market, or increase sales of wireless systems and the Spectrum monitor
because of the risk that planned enhancements to the initial launch version of
the Panorama are not completed in a timely manner, or
                                       30
<PAGE>
the possibility that margins in the Patient Monitoring division will not
improve, market conditions may change, particularly as the result of
competitive activity in the cardiac assist, vascular sealing and other markets
served by the Company, the Company's dependence on certain unaffiliated
suppliers (including single source manufacturers) for Patient Monitoring,
Cardiac Assist and Interventional products and the Company's ability to gain
market acceptance for new products. Additional risks are the ability of the
Company to successfully introduce new products, continued demand for the
Company's products generally, rapid and significant changes that 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 us with the Securities and Exchange Commission.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

   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. We believe that the following are our most critical
accounting policies and estimates:

   o REVENUE RECOGNITION

       We recognize revenue and all related costs, including warranty costs,
       when title and risk of loss passes to the customer and collectibility
       of the sales price is reasonably assured. Revenue is recognized for
       products shipped FOB shipping point when they leave our premises.
       Revenue is recognized for products shipped FOB destination when they
       reach the customer. For certain products where we maintain consigned
       inventory at customer locations, revenue is recognized at the time we
       are notified that the product has been used by the customer. We record
       estimated sales returns as a reduction of net sales in the same period
       that the related revenue is recognized. Historical experience is used
       to estimate an accrual for future returns relating to recorded sales,
       as well as estimated warranty costs. Revenue for service repairs and
       maintenance is recognized after service has been completed, and service
       contract revenue is recognized ratably over the term of the contract.
       For certain products, revenue is recognized individually for delivered
       components when undelivered components, such as installation, are not
       essential to their functionality. Post shipment obligations for
       training commitments are considered perfunctory, and sales are
       recognized when delivered with provision for incremental costs.

   o ALLOWANCE FOR DOUBTFUL ACCOUNTS

       We maintain an allowance for doubtful accounts for estimated losses
       resulting from the inability of our customers to make required
       payments. This allowance is used to state trade receivables at
       estimated net realizable value. We rely on prior experience to estimate
       cash which ultimately will be collected from the gross receivables
       balance at period-end. Such amount cannot be known with certainty at
       the financial statement date. We maintain a specific allowance for
       customer accounts that will likely not be collectible due to customer
       liquidity issues. We also maintain an allowance for estimated future
       collection losses on existing receivables, determined based on
       historical trends.

   o INVENTORY VALUATION

       We value our inventories at the lower of cost or market. Cost is
       determined by the "first-in, first-out" (FIFO) method. Inventory
       reserves are recorded to report inventory at its estimated fair market
       value. A reserve is recorded for inventory specifically identified as
       slow-moving or obsolete. In addition, a reserve is recorded based upon
       our historical experience with inventory becoming obsolete due to age,
       changes in technology and other factors.


                                       31
<PAGE>
   o INCOME TAXES

       As part of the process of preparing our consolidated financial
       statements, we are required to estimate our income taxes in each of the
       jurisdictions in which we operate. This process involves estimating the
       current tax expense as well as assessing temporary differences in the
       treatment of items for tax and accounting purposes. These timing
       differences result in deferred tax assets and liabilities, which are
       included in our consolidated balance sheets. We must then assess
       whether it will be more likely than not that our deferred tax assets
       will be recovered from future taxable income, and to the extent that we
       cannot conclude that recovery is likely, a valuation allowance must be
       established. At June 30, 2004, we had approximately $14.7 million of
       gross deferred tax assets, including net operating loss and tax credit
       carryforwards that will expire from 2005 to 2014 if not utilized. We
       have recorded a valuation allowance at June 30, 2004 of $1.6 million
       for the net operating loss and tax credit carryforwards, which we
       believe will not be fully realized based upon our estimates of future
       taxable income.

       We have not recorded U.S. deferred income taxes on our international
       subsidiaries' undistributed earnings, because such amounts are intended
       to be reinvested outside the United States indefinitely. However,
       should we change our business and tax strategies in the future and
       decide to repatriate a portion of these earnings to one of our U.S.
       subsidiaries, additional U.S. tax liabilities would be incurred.

       In the normal course of business, we will undergo scheduled reviews by
       taxing authorities regarding the amount of taxes due. These reviews
       include questions regarding the timing and amount of tax credits and
       deductions and the allocation of income among various tax jurisdictions.
       Tax reviews frequently require an extended period of time to resolve and
       may result in income tax adjustments. In our opinion, adequate provisions
       for income taxes have been made for all years subject to audit. Our U.S.
       income tax returns for fiscal 1998 and prior years have been audited by
       the Internal Revenue Service and are closed. In the U.S., the statutory
       audit period has expired for fiscal years 1999 and 2000, and is open for
       subsequent years.

   o PENSION PLAN ACTUARIAL ASSUMPTIONS

       We sponsor defined benefit pension plans covering substantially all of
       our employees who meet the applicable eligibility requirements. We use
       several actuarial and other statistical factors which attempt to
       estimate the ultimate expense and liability related to our pension
       plans. These factors include assumptions about discount rate, expected
       return on plan assets and rate of future compensation increases. In
       addition, subjective assumptions, such as withdrawal and mortality
       rates are utilized. The actuarial assumptions may differ materially
       from actual results due to the changing market and economic conditions,
       higher or lower withdrawal rates or longer or shorter life spans of
       participants. These differences, depending on their magnitude, could
       have a significant impact on the amount of pension expense we record in
       any particular period.

RECENT ACCOUNTING PRONOUNCEMENTS

   In December 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46R (FIN 46R), "Consolidation of Variable Interest
Entities." FIN 46R replaces the same titled FIN 46 that was issued in January
2003. FIN 46R identifies when entities must be consolidated with the financial
statements of a Company where the investors in an entity do not have the
characteristics of a controlling financial interest or the entity does not
have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support. Application of this
Interpretation applies to our financial statements beginning January 1, 2004.
The adoption of FIN 46R did not have a material impact on our consolidated
financial statements.

   In December 2003, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 132 (revised 2003) "Employers'
Disclosures about Pensions and Other Postretirement Benefits - an amendment of
FASB Statements No. 87, 88 and 106," ("SFAS No. 132 (revised)"). This
Statement revises employers' disclosures about pension plans and other
postretirement benefit plans. SFAS No. 132 (revised) retains the disclosure
requirements contained in SFAS No. 132, which it replaces. It requires

                                       32
<PAGE>
additional disclosures to those in the original Statement 132 about the
assets, obligations, cash flows, and net periodic benefit cost of defined
benefit pension plans and other defined benefit postretirement plans. SFAS
No. 132 (revised) is effective for fiscal years ending after December 15, 2003
and for interim periods beginning after December 15, 2003. Based on these
effective dates, we have provided the additional interim disclosures beginning
with our third quarter ended March 31, 2004 and the annual disclosures
beginning with our fiscal year ended June 30, 2004.

ITEM 7A. 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 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 years ended June 30, 2004, 2003 and 2002.

As of June 30, 2004, we had a notional amount of $13.4 million of foreign
exchange forward contracts outstanding, all of which were 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

   See Financial Statements following Item 15 of this Annual Report on Form 10-
K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

   Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

   The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's 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 Company's
management, including its 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.

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

   There have been no significant changes in the Company's internal controls
over financial reporting or in other factors that have materially affected, or
are reasonably likely to materially affect, the Company's internal controls
over financial reporting during the Company's most recent fiscal quarter. The
Company has

                                       33
<PAGE>
implemented additional control procedures over the classification of amounts
reported in the Consolidated Statements of Cash Flows.

ITEM 9B. OTHER INFORMATION.

   Not applicable.


                                       34
<PAGE>
                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

   Except for the information included in Item 4A of this report, the
information required by this item is incorporated by reference from our
definitive proxy statement to be filed with the Securities and Exchange
Commission no later than October 28, 2004 pursuant to Regulation 14A of the
Securities Exchange Act of 1934.

ITEM 11. EXECUTIVE COMPENSATION.

   The information required by this item is incorporated by reference from our
definitive proxy statement to be filed with the Securities and Exchange
Commission no later than October 28, 2004 pursuant to Regulation 14A of the
Securities Exchange Act of 1934.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

   The information required by this item is incorporated by reference from our
definitive proxy statement to be filed with the Securities and Exchange
Commission no later than October 28, 2004 pursuant to Regulation 14A of the
Securities Exchange Act of 1934.

   The following table provides information as of June 30, 2004 about our
Common Stock that may be issued under our existing equity compensation plans
upon the exercise of stock options or otherwise:

                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                                                                               NUMBER OF SECURITIES
                                             NUMBER OF SECURITIES                            REMAINING AVAILABLE FOR
                                               TO BE ISSUED UPON       WEIGHTED-AVERAGE       FUTURE ISSUANCE UNDER
                                                  EXERCISE OF         EXERCISE PRICE OF     EQUITY COMPENSATION PLANS
                                             OUTSTANDING OPTIONS,    OUTSTANDING OPTIONS,     (EXCLUDING SECURITIES
PLAN CATEGORY                                 WARRANTS AND RIGHTS    WARRANTS AND RIGHTS     REFLECTED IN COLUMN (A))
 -----------------------------------------   --------------------    --------------------   -------------------------
                                                      (A)                    (B)                       (C)
<S>                                          <C>                     <C>                    <C>
Equity compensation plans approved by
  security holders (1)....................         2,607,657                $31.46                   580,591
Equity compensation plans not approved by
  security holders........................           106,700(2)             $22.02                        --
                                                   ---------                ------                   -------
   Total .................................         2,714,357                $31.08                   580,591
</TABLE>

---------------
(1) See footnote 9 to the Consolidated Financial Statements for a description
    of our stock option plans and the compensation plan for non-employee
    directors.
(2) Includes grants of options to consultants to purchase up to 76,700 shares
    of our Common Stock. These options have terms ranging from 5 to 10 years,
    with exercise prices ranging from $18.25 to $39.45. Some of these options
    vest over time or upon the occurrence of specified events.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

   The information required by this item is incorporated by reference from our
definitive proxy statement to be filed with the Securities and Exchange
Commission no later than October 28, 2004 pursuant to Regulation 14A of the
Securities Exchange Act of 1934.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

   The information required by this item is incorporated by reference from our
definitive proxy statement to be filed with the Securities and Exchange
Commission no later than October 28, 2004 pursuant to Regulation 14A of the
Securities Exchange Act of 1934.


                                       35
<PAGE>
                                    PART IV


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)
1. Financial Statements

   Our consolidated financial statements are filed on the pages listed below,
as part of Part II, Item 8 of this report:

<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
<S>                                                                  <C>
Report of Independent Registered Public Accounting Firm ..........       F-1
Consolidated balance sheets - June 30, 2004 and 2003 .............       F-2
Consolidated statements of earnings - Years ended June 30, 2004,
  2003 and 2002...................................................       F-3
Consolidated statements of stockholders' equity - Years ended
  June 30, 2004, 2003 and 2002....................................       F-4
Consolidated statements of cash flows - Years ended June 30,
  2004, 2003 and 2002.............................................       F-5
Notes to consolidated financial statements .......................   F-6 - F-27
   2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts ..................       S-1
</TABLE>


   All other schedules have been omitted because they are inapplicable, or not
required, or the information is included in the financial statements or
footnotes.

   3. Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO.                              DOCUMENT DESCRIPTION
-----------                              --------------------
<S>             <C>
 3.1          Restated Certificate of Incorporation as filed with the Secretary of
              State of the State of Delaware on October 30, 1989, incorporated by
              reference as Exhibit 3.1 to the registrant's Registration Statement on
              Form 8-B, filed with the Commission in January 1990 (the "Form 8-B").
 3.2          By-Laws, incorporated by reference to Exhibit 3.2 to the Company's Annual
              Report on Form 10-K for fiscal year ended June 30, 1993.
 4.1          Specimen of certificate of Common Stock, incorporated by reference to
              Exhibit 4.2 to the Form 8-B.
 4.2          Form of Certificate of Designations of the Company's Series A Preferred
              Stock, incorporated by reference to Exhibit 2.2 to the Company's
              Registration Statement on Form 8-A, filed with the Commission on May 31,
              1991 (the "Form 8-A").
 4.3          Form of Rights Agreement, dated as of May 22, 1991, between the Company
              and Continental Stock Transfer & Trust Company, incorporated by reference
              to Exhibit 2.1 to the Form 8-A.
 4.4          Form of Amendment to Rights Agreement, dated May 24, 2000, between the
              Company and Continental Stock Transfer & Trust Company, incorporated by
              reference to Exhibit 2 to the Form 8-A/A, filed with the Commission on
              June 1, 2000.
10.1          Datascope Corp. 1981 Incentive Stock Option Plan, incorporated by
              reference to Exhibit 10.2.1 to the Form 8-B.
10.2          Datascope Corp. 1995 Stock Option Plan, as amended, incorporated by
              reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the
              quarter ended December 31, 1997 (the "2Q 1997 10-Q").
10.3          Datascope Corp. 1997 Executive Bonus Plan, incorporated by reference to
              Exhibit 10.2 to the 2Q 1997 10-Q.
10.4          Datascope Corp. Annual Incentive Plan, incorporated by reference to
              Exhibit 10.3 to the 2Q 1997 10-Q.
10.5          Datascope Corp. Amended and Restated Compensation Plan for Non-Employee
              Directors, incorporated by reference to Annex A to the Company's Proxy
              Statement on Schedule 14A filed by the Company on October 28, 2002.
10.6          Employment Agreement, dated July 1, 1996, by and between the Company and
              Lawrence Saper, incorporated by reference to Exhibit 10.8 to the Annual
              Report on Form 10-K for the fiscal year ended June 30, 1997.
</TABLE>


                                       36
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                              DOCUMENT DESCRIPTION
-----------                              --------------------
<S>             <C>
10.7          Split-Dollar Agreement, dated July 25, 1994, by and among the Company,
              Lawrence Saper and Carol Saper, Daniel Brodsky and Helen Nash, Trustees
              of the Saper Family 1994 Trust UTA. dtd. 6/28/94, incorporated by
              reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K
              for fiscal year ended June 30, 1996 (the "1996 10-K").
10.8          Modification Agreement, dated July 25, 1994, by and among the Company,
              Lawrence Saper and Carol Saper, Daniel Brodsky and Helen Nash, Trustees
              of the Saper Family 1994 Trust UTA. dtd. 6/28/94, incorporated by
              reference to Exhibit 10.16 to the 1996 10-K.
10.9          Assignment, dated July 25, 1994, by Carol Saper, Daniel Brodsky and Helen
              Nash, Trustees of the Saper Family 1994 Trust UTA. dtd. 6/28/94 of
              Metropolitan Life Insurance Company Insurance Policy No. 940 750 122UM in
              favor of the Company, incorporated by reference to Exhibit 10.17 to the
              1996 10-K.
10.10         Assignment made as of July 25, 1994 by Carol Saper, Daniel Brodsky and
              Helen Nash, Trustees of the Saper Family 1994 Trust UTA. dtd. 6/28/94 of
              Security Mutual Life Insurance Company of New York Insurance Policy
              No. 11047711 in favor of Datascope Corp., incorporated by reference to
              Exhibit 10.18 to the 1996 10-K.
10.11         Stock Option Agreement between the Company and William E. Cohn,
              incorporated by reference to Exhibit 4.1 of the Registration Statement on
              Form S-8, filed with the Commission on June 20, 2000 (the "June 20, 2000
              Form S-8").
10.12         Stock Option Agreement between the Company and Thor W. Nilsen,
              incorporated by reference to Exhibit 4.2 of the June 20, 2000 Form S-8.
10.13         Stock Option Agreement between the Company and Robert Getts, Ph.D.,
              incorporated by reference to Exhibit 4.3 of the June 20, 2000 Form S-8.
10.14         Stock Option Agreement between the Company and Robert Getts, Ph.D., James
              Kadushin and William Ohley, Ph.D., incorporated by reference to Exhibit
              4.4 of the June 20, 2000 Form S-8.
10.15         Stock Option Agreement between the Company and Arno Nash and Alan
              Abramson, incorporated by reference to Exhibit 4.5 of the June 20, 2000
              Form S-8.
10.16         Stock Option Agreement between the Company and David Altschiller,
              incorporated by reference to Exhibit 4.7 of the June 20, 2000 Form S-8.
10.17         Amendment to Employment Agreement, dated as of May 30, 2000, by and
              between Datascope Corp. and Lawrence Saper, incorporated by reference to
              Exhibit 10.22 of the Company's Annual Report on Form 10-K for fiscal year
              ended June 30, 2000.
10.18         Series G Preferred Stock Purchase Agreement, dated as of September 14,
              2001, by and between Masimo Corporation and Datascope Corp., incorporated
              by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K
              for fiscal year ended June 30, 2002 (the "2002 10-K").
10.19         Second Amendment to Employment Agreement, dated as of October 31, 2001,
              by and between Datascope Corp. and Lawrence Saper, incorporated by
              reference to Exhibit 10.20 of the 2002 10-K.
10.20         Stock Option Agreement between the Company and William L. Asmundson,
              incorporated by reference to Exhibit 10.1 of the Registration Statement
              on Form S-8, filed with the Commission on December 19, 2001 (the
              "December 19, 2001 Form S-8").
10.21         Stock Option Agreement between the Company and Jorgen K. Winther,
              incorporated by reference to Exhibit 10.2 of the December 19, 2001 Form S-
              8.
10.22         Third Amendment to Employment Agreement, dated as of March 13, 2002, by
              and between Datascope Corp. and Lawrence Saper, incorporated by reference
              to Exhibit 10.23 of the 2002 10-K.
10.23         Fourth Amendment to Employment Agreement, dated as of October 1, 2002, by
              and between Datascope Corp. and Lawrence Saper.
10.24         Stock Option Agreement between the Company and David Altschiller, dated
              February 25, 2003 incorporated by reference to Exhibit 4.2 of the
              Registration Statement on Form S-8, filed with the Commission on May 30,
              2003 (the "May 30, 2003 Form S-8").
10.25         Stock Option Agreement between the Company and Dr. Samuel Money,
              incorporated by reference to Exhibit 4.3 of the May 30, 2003 Form S-8.
</TABLE>


                                       37
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                              DOCUMENT DESCRIPTION
-----------                              --------------------
<S>             <C>
10.26         Stock Option Agreement between the Company and Leonard Gottlieb, dated
              May 20, 2003.
10.27         Datascope Corp. 2004 Management Incentive Plan, incorporated by reference
              to Annex A to the Company's Proxy Statement on Schedule 14A filed by the
              Company on October 28, 2003.
21.1*         Subsidiaries of the Company.
23.1*         Consent of Deloitte& Touche LLP.
31.1*         Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-
              14(a)
31.2*         Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-
              14(a)
32.1*         Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
              Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

---------------
*Filed herewith.

(b) Reports on Form 8-K.

   During the last quarter for which this report on Form 10-K is filed, we
filed a Form 8-K dated April 29, 2004 reporting under Item 9 of our issuance
of the Earnings Release of Datascope Corp. dated April 28, 2004, and we filed,
on behalf of Datascope Corp. 401(k) Savings and Supplemental Retirement Plan,
a Form 8-K dated June 10, 2004 reporting under Item 4 of the change in the
plan's certifying accountant.

(c) Exhibits.

   See Item 15(a)(3) above.


                                       38
<PAGE>
                                   SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                             DATASCOPE CORP.

Date: September 13, 2004     By: /s/ Lawrence Saper
                                 -------------------------------------
                             Name: Lawrence Saper
                             Title: Chairman of the Board
                                    and Chief Executive Officer

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
               SIGNATURE                                          TITLE                                    DATE
               ---------                                          -----                                    ----
<S>                                       <C>                                                       <C>
          /s/ Lawrence Saper              Chairman of the Board and Chief Executive Officer           September 13, 2004
  ------------------------------------     (Principal Executive Officer)
             Lawrence Saper


         /s/ Murray Pitkowsky             Senior Vice President, Chief Financial Officer,             September 13, 2004
  ------------------------------------     Treasurer and Secretary (Principal Financial Officer)
            Murray Pitkowsky


           /s/ Fred Adelman               Vice President; Chief Accounting Officer; Corporate         September 13, 2004
  ------------------------------------     Controller, Accounting (Principal Accounting Officer)
              Fred Adelman


           /s/ Alan Abramson              Director                                                    September 13, 2004
  ------------------------------------
             Alan Abramson


         /s/ David Altschiller            Director                                                    September 13, 2004
  ------------------------------------
           David Altschiller


         /s/ William Asmundson            Director                                                    September 13, 2004
  ------------------------------------
           William Asmundson


           /s/ George Heller              Director                                                    September 13, 2004
  ------------------------------------
             George Heller


          /s/ Robert Klatell              Director                                                    September 13, 2004
  ------------------------------------
             Robert Klatell


             /s/ Arno Nash                Director                                                   September 13, 2004
  ------------------------------------
               Arno Nash
</TABLE>


                                       39
<PAGE>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Datascope Corp.
Montvale, New Jersey

   We have audited the accompanying consolidated balance sheets of Datascope
Corp. and its subsidiaries (the "Company") as of June 30, 2004 and 2003 and
the related consolidated statements of earnings, stockholders' equity, and
cash flows for each of the three years in the period ended June 30, 2004. Our
audits also included the financial statement schedule listed in the index at
Item 15(a)(2). These financial statements and the financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the consolidated financial statements and the financial
statement schedule based on our audits.

   We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

   In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Datascope Corp. and its
subsidiaries as of June 30, 2004 and 2003, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
2004, in conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.



/s/ Deloitte & Touche LLP
-------------------------

Parsippany, New Jersey
September 13, 2004


                                      F-1
<PAGE>
                        DATASCOPE CORP. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                  JUNE 30,
                                                             -------------------
                                                               2004       2003
                                                             --------   --------
<S>                                                          <C>        <C>
                          ASSETS
Current Assets:
 Cash and cash equivalents ..............................    $  8,123   $ 10,572
 Short-term investments .................................      16,013     27,878
 Accounts receivable less allowance for doubtful
   accounts of $2,414 and $2,020.........................      70,603     73,924
 Inventories ............................................      52,858     49,409
 Prepaid income taxes ...................................      10,042      4,106
 Prepaid expenses and other current assets ..............       8,529      5,621
 Current deferred taxes .................................       6,500      6,006
                                                             --------   --------
   Total Current Assets..................................     172,668    177,516
Property, Plant and Equipment, net ......................      88,915     89,607
Long-term Investments ...................................      52,223     36,827
Intangible Assets .......................................      23,748      6,505
Other Assets ............................................      30,781     28,377
                                                             --------   --------
                                                             $368,335   $338,832
                                                             ========   ========
           LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Accounts payable .......................................    $ 16,982   $ 13,137
 Accrued expenses .......................................      15,790     14,064
 Accrued compensation ...................................      15,840     14,579
 Deferred revenue .......................................       4,188      4,362
                                                             --------   --------
   Total Current Liabilities.............................      52,800     46,142
Other Liabilities .......................................      22,965     21,015
Commitments and Contingencies ...........................          --         --
Stockholders' Equity:
 Preferred stock, par value $1.00 per share:
   Authorized 5 million shares; Issued, none.............          --         --
 Common stock, par value $.01 per share:
   Authorized, 45 million shares;
   Issued, 18,044 and 17,750 shares......................         180        178
 Additional paid-in capital .............................      81,571     73,319
 Treasury stock at cost, 3,254 and 2,981 shares .........     (97,177)   (87,423)
 Retained earnings ......................................     311,643    292,912
 Accumulated other comprehensive loss:
   Cumulative translation adjustments....................      (2,502)    (4,435)
   Minimum pension liability adjustments.................        (619)    (2,876)
   Unrealized loss on available-for-sale securities......        (526)        --
                                                             --------   --------
    Total Stockholders' Equity ..........................     292,570    271,675
                                                             --------   --------
                                                             $368,335   $338,832
                                                             ========   ========
</TABLE>


                 See notes to consolidated financial statements

                                      F-2
<PAGE>
                        DATASCOPE CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF EARNINGS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED JUNE 30,
                                                                                   -------------------------------
                                                                                     2004        2003       2002
                                                                                   --------    --------   --------
<S>                                                                                <C>         <C>        <C>
Net Sales......................................................................    $343,300    $328,300   $317,400
                                                                                   --------    --------   --------
Costs and Expenses:
 Cost of sales.................................................................     140,481     138,153    133,532
 Research and development expenses.............................................      32,465      29,034     25,720
 Selling, general and administrative expenses..................................     137,537     130,871    126,075
                                                                                   --------    --------   --------
   Subtotal....................................................................     310,483     298,058    285,327
 Gain on legal settlement......................................................          --      (3,028)        --
 Restructuring charges.........................................................          --          --     11,463
                                                                                   --------    --------   --------
                                                                                    310,483     295,030    296,790
                                                                                   --------    --------   --------
Operating Earnings.............................................................      32,817      33,270     20,610
Other (Income) Expense:
 Interest income...............................................................      (1,822)     (1,607)    (1,913)
 Interest expense..............................................................          26          25        159
 Other, net....................................................................         459         350        297
                                                                                   --------    --------   --------
                                                                                     (1,337)     (1,232)    (1,457)
                                                                                   --------    --------   --------
Earnings Before Taxes on Income................................................      34,154      34,502     22,067
Taxes on Income................................................................      10,246      11,203      8,166
                                                                                   --------    --------   --------
Net Earnings...................................................................    $ 23,908    $ 23,299   $ 13,901
                                                                                   ========    ========   ========
Earnings Per Share, Basic......................................................    $   1.62    $   1.58   $   0.94
                                                                                   ========    ========   ========
Weighted Average Number of Common Shares Outstanding, Basic....................      14,782      14,774     14,778
                                                                                   ========    ========   ========
Earnings Per Share, Diluted....................................................    $   1.58    $   1.57   $   0.92
                                                                                   ========    ========   ========
Weighted Average Number of Common Shares Outstanding, Diluted..................      15,121      14,850     15,075
                                                                                   ========    ========   ========
</TABLE>


                 See notes to consolidated financial statements

                                      F-3
<PAGE>
                        DATASCOPE CORP. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       (SHARES AND DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                              COMMON STOCK                    TREASURY STOCK                  ACCUMULATED
                             --------------    ADDITIONAL    -----------------                   OTHER
                                       PAR      PAID-IN                          RETAINED    COMPREHENSIVE
                             SHARES   VALUE     CAPITAL     SHARES      COST     EARNINGS        LOSS          TOTAL
                             ------   -----    ----------   ------    --------   --------    -------------   --------
<S>                          <C>      <C>      <C>          <C>       <C>        <C>         <C>             <C>
Balance, June 30, 2001...    17,508    $175     $69,148     (2,713)   $(77,038)  $261,625      $(10,432)     $243,478
Net earnings.............                                                          13,901                      13,901
Foreign currency
  translation............                                                                         2,605         2,605
                                                                                                             --------
Total comprehensive
  income.................                                                                                      16,506
                                                                                                             --------
Stock option
  transactions...........       216       3       7,833                 (6,534)                                 1,302
Tax benefit relating to
  exercise of stock
  options................                         2,094                                                         2,094
Cancellation of treasury
  stock..................                (1)     (6,533)                 6,534                                     --
Treasury shares acquired
  under repurchase
  programs...............                                     (233)     (9,446)                                (9,446)
Cash dividends on common
  stock..................                                                          (2,956)                     (2,956)
                             ------    ----     -------     ------    --------   --------      --------      --------
Balance, June 30, 2002...    17,724     177      72,542     (2,946)    (86,484)   272,570        (7,827)      250,978
Net earnings.............                                                          23,299                      23,299
Minimum pension
  liability adjustments,
  net of tax of $1,988...                                                                        (2,876)       (2,876)
Foreign currency
  translation............                                                                         3,392         3,392
                                                                                                             --------
Total comprehensive
  income.................                                                                                      23,815
                                                                                                             --------
Stock option
  transactions...........        26       1         885                   (179)                                   707
Tax benefit relating to
  exercise of stock
  options................                            71                                                            71
Cancellation of treasury
  stock..................                          (179)                   179                                     --
Treasury shares acquired
  under repurchase
  programs...............                                      (35)       (939)                                  (939)
Cash dividends on common
  stock..................                                                          (2,957)                     (2,957)
                             ------    ----     -------     ------    --------   --------      --------      --------
Balance, June 30, 2003...    17,750     178      73,319     (2,981)    (87,423)   292,912        (7,311)      271,675
Net earnings.............                                                          23,908                      23,908
Minimum pension
  liability adjustments,
  net of tax of ($1,559).                                                                         2,257         2,257
Foreign currency
  translation............                                                                         1,933         1,933
Unrealized loss on
  available-for-sale
  securities, net of tax
  of $196................                                                                          (526)         (526)
                                                                                                             --------
Total comprehensive
  income.................                                                                                      27,572
                                                                                                             --------
Stock option
  transactions...........       294       2       7,860                   (452)                                 7,410
Tax benefit relating to
  exercise of stock
  options................                           844                                                           844
Cancellation of treasury
  stock..................                          (452)                   452                                     --
Treasury shares acquired
  under repurchase
  programs...............                                     (273)     (9,754)                                (9,754)
Cash dividends on common
  stock..................                                                          (5,177)                     (5,177)
                             ------    ----     -------     ------    --------   --------      --------      --------
Balance, June 30, 2004...    18,044    $180     $81,571     (3,254)   $(97,177)  $311,643      $ (3,647)     $292,570
                             ======    ====     =======     ======    ========   ========      ========      ========
</TABLE>

                 See notes to consolidated financial statements

                                      F-4
<PAGE>
                        DATASCOPE CORP. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                    YEAR ENDED JUNE 30,
                                                                                              -------------------------------
                                                                                                2004        2003       2002
                                                                                              --------    --------   --------
<S>                                                                                           <C>         <C>        <C>
OPERATING ACTIVITIES:
 Net Earnings.............................................................................    $ 23,908    $ 23,299   $ 13,901
 Adjustments to reconcile net earnings to net cash provided by operating activities:
   Depreciation...........................................................................      14,577      14,219     13,296
   Amortization...........................................................................       3,148       2,189        945
   Provision for supplemental pension.....................................................       1,115         733        501
   Provision for losses on accounts receivable............................................         661       1,118         91
   Write-down of facility in Vaals, The Netherlands.......................................          --          --      1,807
   Write-off of investments in AMG and QualiMed...........................................          --          --      3,247
   Deferred income tax (benefit)..........................................................       2,263        (479)      (130)
   Tax benefit relating to stock options exercised........................................         844          71      2,094
 Changes in assets and liabilities
   Accounts receivable....................................................................       3,734       7,132     (2,057)
   Inventories............................................................................      (9,069)     (3,623)    (2,110)
   Other assets...........................................................................      (7,537)        294     (3,237)
   Accounts payable.......................................................................       3,724      (2,376)    (3,981)
   Accrued and other liabilities..........................................................       1,171      (2,806)      (412)
                                                                                              --------    --------   --------
 Net cash provided by operating activities................................................      38,539      39,771     23,955
                                                                                              --------    --------   --------
INVESTING ACTIVITIES:
 Purchases of property, plant and equipment...............................................      (6,827)     (4,644)    (6,001)
 Purchases of investments.................................................................     (73,699)    (54,100)   (68,042)
 Maturities of investments................................................................      69,446      35,737     68,503
 Capitalized software.....................................................................      (5,343)     (4,806)    (4,768)
 Purchased technology and licenses........................................................     (15,206)     (2,133)      (266)
 Equity investments and other.............................................................      (1,701)       (450)    (1,554)
                                                                                              --------    --------   --------
 Net cash used in investing activities....................................................     (33,330)    (30,396)   (12,128)
                                                                                              --------    --------   --------
FINANCING ACTIVITIES:
 Treasury shares acquired under repurchase programs.......................................      (9,754)       (939)    (9,446)
 Exercise of stock options................................................................       7,410         707      1,302
 Cash dividends paid......................................................................      (5,177)     (2,957)    (2,956)
                                                                                              --------    --------   --------
 Net cash used in financing activities....................................................      (7,521)     (3,189)   (11,100)
                                                                                              --------    --------   --------
Effect of exchange rates on cash..........................................................        (137)     (1,162)      (724)
                                                                                              --------    --------   --------
Increase in cash and cash equivalents.....................................................      (2,449)      5,024          3
Cash and cash equivalents, beginning of year..............................................      10,572       5,548      5,545
                                                                                              --------    --------   --------
Cash and cash equivalents, end of year....................................................    $  8,123    $ 10,572   $  5,548
                                                                                              ========    ========   ========
SUPPLEMENTAL CASH FLOW INFORMATION
 Cash paid during the year for:
   Interest...............................................................................    $     26    $     25   $    159
                                                                                              --------    --------   --------
   Income taxes...........................................................................    $ 10,665    $ 13,819   $  7,546
                                                                                              --------    --------   --------
 Non-cash investing and financing activities:
   Net transfers of inventory to fixed assets for use as demonstration equipment..........    $  6,314    $  8,566   $  8,024
                                                                                              --------    --------   --------
   Net present value of guaranteed milestone payments accrued on X-Site purchase..........    $  2,179    $     --   $     --
                                                                                              --------    --------   --------
</TABLE>


                                      F-5
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Company 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. Our products
are sold through our own direct sales representatives in the United States and
a combination of direct sales representatives and independent distributors in
international markets.

 Principles of Consolidation

   The consolidated financial statements include the accounts of Datascope
Corp. and its subsidiaries (the "Company"--which may be referred to as our, us
or we). All significant intercompany balances and transactions have been
eliminated. The presentation of certain prior year information has been
reclassified to conform with the current year presentation.

 Use of Estimates

   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

 Foreign Currency Translation

   Assets and liabilities of foreign subsidiaries have been translated at year-
end exchange rates, while revenues and expenses have been translated at
average exchange rates in effect during the year. Resulting cumulative
translation adjustments have been recorded as a separate component of
stockholders' equity.

 Taxes on Income

   We utilize the asset and liability method for accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates in effect for the
years in which the differences are expected to reverse.

 Cash and Cash Equivalents

   Cash and cash equivalents consist primarily of highly liquid investments
which have original maturities less than 90 days. We maintain overdraft
facilities with certain banks. Any overdraft positions at the end of each
reporting period are reclassified to accounts payable within the consolidated
balance sheet.

 Inventories

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

 Property, Plant and Equipment

   Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Additions and improvements are capitalized,
while maintenance and repairs are expensed as incurred. Asset and accumulated
depreciation accounts are relieved for dispositions, with resulting gains or
losses reflected in
                                      F-6
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

earnings. Depreciation of plant and equipment is provided using the straight-
line method over the estimated useful lives of the various assets, or for
leasehold improvements, over the term of the lease, if shorter. Certain products
used as sales demonstration and service loaner equipment are transferred from
inventory to machinery and equipment and depreciated over 3 to 5 years.

 Impairment of Long Lived Assets

   The recoverability of certain long-lived assets is evaluated by an analysis
of undiscounted cash flows expected to result from the use and eventual
disposition of an asset or group of assets compared to its carrying value, and
consideration of other significant events or changes in the business
environment. If we believe an impairment exists, the carrying amount of these
assets is reduced to fair value as defined in SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets."

 Other Assets

   a. Capitalized Software Development--In accordance with SFAS No. 86,
      "Accounting for the Costs of Computer Software to be Sold, Leased, or
      Otherwise Marketed," costs incurred in the research and development of
      new software products and enhancements to existing software products are
      expensed as incurred until technological feasibility has been
      established. After technological feasibility is established, any
      additional software development costs are capitalized and included in
      Other Assets. Software development costs are amortized using the
      straight-line method over the remaining estimated economic life of the
      product, not to exceed 5 years.

   b. Internal Use Capitalized Computer Software Costs--We capitalize costs
      incurred to develop internal use computer software during the
      application development stage, in accordance with the AICPA Statement of
      Position 98-1, "Accounting for the Costs of Computer Software Developed
      or Obtained for Internal Use." Internal use computer software costs are
      amortized on a straight line basis over the remaining estimated economic
      life of the software, not to exceed 5 years. Costs become amortizable as
      functionality of the computer software is achieved.

 Intangible Assets

   a. Purchased Technology--We capitalize payments for purchased technology
      when it is considered probable that the technology will be brought to
      market in the near future and the profitability of the product is such
      that it can support recovery of the investment. Satisfaction of the
      above conditions requires that there be no significant uncertainty about
      attaining marketability and the remaining open issues necessary to have
      a saleable product are reasonably predictable. Purchased technology is
      amortized on a straight-line basis over the remaining estimated economic
      life of the technology.

   b. Goodwill--Goodwill represents the excess of cost over the fair value of
      net assets acquired. The Company discontinued amortizing goodwill in
      fiscal 2002 in accordance with SFAS No. 142. Under the provisions of
      SFAS No. 142, we perform an annual impairment test on the carrying value
      of goodwill. There was no impairment of goodwill based on appropriate
      testing and analysis.

 Revenue Recognition

   We recognize revenue and all related costs, including warranty costs, when
title and risk of loss passes to the customer and collectibility of the sales
price is reasonably assured. Revenue is recognized for products shipped FOB
shipping point when they leave our premises. Revenue is recognized for
products shipped FOB destination when they reach the customer. For certain
products where we maintain consigned inventory at customer locations, revenue
is recognized at the time we are notified that the product has been used by
the customer. We record estimated sales returns as a reduction of net sales in
the same period that the related
                                      F-7
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

revenue is recognized. Historical experience is used to estimate an accrual
for future returns relating to recorded sales, as well as estimated warranty
costs. Revenue for service repairs and maintenance is recognized after service
has been completed, and service contract revenue is deferred and recognized
ratably over the term of the contract. For certain products, revenue is
recognized individually for delivered components when undelivered components,
such as installation, are not essential to their functionality. Post shipment
obligations for training commitments are considered perfunctory, and sales are
recognized when delivered with provision for incremental costs.

   We reflect shipping and handling fees as revenue and shipping and handling
costs as cost of sales.

 Earnings Per Share

   In accordance with Statement of Financial Accounting Standards (SFAS)
No. 128, "Earnings per Share," we report basic earnings per share, which is
based upon weighted average common shares outstanding, and diluted earnings
per share, which includes the dilutive effect of stock options outstanding.

 Stock-Based Compensation

   We adopted SFAS No. 123, "Accounting for Stock-Based Compensation," in
fiscal 1997 and SFAS No. 148, "Accounting for Stock-Based Compensation--
Transition and Disclosure--an amendment of FASB Statement No. 123," in January
2003. We continue to account for our employee stock-based awards using the
intrinsic value method in accordance with Accounting Principles Board (APB)
Opinion No. 25 "Accounting for Stock Issued to Employees." Under APB Opinion
No. 25, because the exercise price of our employee stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.

   In accordance with SFAS No. 123, and as amended by SFAS No. 148, the fair
value of option grants is estimated on the date of grant using an option-
pricing model. Had the fair value method of accounting been applied to our
stock option plans, pro forma net earnings and earnings per share would have
been reported as the following pro forma amounts:

<TABLE>
<CAPTION>
                                                                                YEAR ENDED JUNE 30,
                                                                           ----------------------------
                                                                             2004      2003       2002
                                                                           -------    -------   -------
      <S>                                                                  <C>        <C>       <C>
      Net earnings--as reported ........................................   $23,908    $23,299   $13,901
      Add: Total stock-based employee compensation
       expense included in determination of net
       income as reported ..............................................        --         --        --
      Deduct: Total stock-based employee compensation
       expense determined under fair value based method
       for all awards, net of related tax effects ......................    (3,446)    (3,475)   (6,563)
                                                                           -------    -------   -------
      Net earnings--pro forma ..........................................   $20,462    $19,824   $ 7,338
                                                                           =======    =======   =======
      Earnings per share:
       Basic--as reported ..............................................   $  1.62    $  1.58   $  0.94
                                                                           =======    =======   =======
       Basic--pro forma ................................................   $  1.38    $  1.34   $  0.50
                                                                           =======    =======   =======
       Diluted--as reported ............................................   $  1.58    $  1.57   $  0.92
                                                                           =======    =======   =======
       Diluted--pro forma ..............................................   $  1.35    $  1.33   $  0.49
                                                                           =======    =======   =======
</TABLE>


                                      F-8
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

   These pro forma amounts may not be representative of the effects on net
earnings in future years since options generally vest over several years and
additional awards may be made each year.

   The fair values of option grants were determined using the Black-Scholes
option-pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED JUNE 30,
                                                         ----------------------------------
                                                            2004        2003         2002
                                                         ---------    ---------   ---------
      <S>                                                <C>          <C>         <C>
      Dividend yield .................................        0.59%        0.71%       0.66%
      Volatility .....................................          32%          34%         34%
      Risk-free interest rate ........................        3.94%        2.50%       3.77%
      Expected life ..................................   5.2 Years    5.2 Years   5.2 Years
</TABLE>

 Recent Accounting Pronouncements

   In December 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46R (FIN 46R), "Consolidation of Variable Interest
Entities." FIN 46R replaces the same titled FIN 46 that was issued in January
2003. FIN 46R identifies when entities must be consolidated with the financial
statements of a company where the investors in an entity do not have the
characteristics of a controlling financial interest or the entity does not
have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support. Application of this
Interpretation applies to our financial statements beginning January 1, 2004.
The adoption of FIN 46R did not have a material impact on our consolidated
financial statements.

   In December 2003, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 132 (revised 2003) "Employers'
Disclosures about Pensions and Other Postretirement Benefits--an amendment of
FASB Statements No. 87, 88 and 106," ("SFAS No. 132 (revised)"). This
Statement revises employers' disclosures about pension plans and other
postretirement benefit plans. SFAS No. 132 (revised) retains the disclosure
requirements contained in SFAS No. 132, which it replaces. It requires
additional disclosures to those in the original Statement 132 about the
assets, obligations, cash flows, and net periodic benefit cost of defined
benefit pension plans and other defined benefit postretirement plans. SFAS
No. 132 (revised) is effective for fiscal years ending after December 15, 2003
and for interim periods beginning after December 15, 2003. Based on these
effective dates, we have provided the additional interim disclosures beginning
with our third quarter ended March 31, 2004, and the annual disclosures
beginning with our fiscal year ended June 30, 2004.

2. FINANCIAL INSTRUMENTS AND INVESTMENTS

   The fair value of accounts receivable and payable are assumed to equal their
carrying value because of their short maturity. Fair values of short-term
investments are based upon quoted market prices, including accrued interest,
and approximate their carrying values due to their short maturities. Fair
values of long-term investments, which mature in years 2006 to 2013, are also
based upon quoted market prices and include accrued interest. Investments in
preferred stock are carried at cost and evaluated for impairment. We
determined that our investment portfolio will be held-to-maturity and is
therefore carried at amortized cost. Investments in preferred stock are
accounted for under the provision of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," or carried at cost, as
appropriate.

                                      F-9
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


2. FINANCIAL INSTRUMENTS AND INVESTMENTS--(CONTINUED)

   As of June 30, 2004, investments were classified as follows:

<TABLE>
<CAPTION>
                                                    GROSS UNREALIZED
                                                  --------------------
                                         COST       GAINS      LOSSES   FAIR VALUE
                                      ----------  ---------  ---------  ----------
<S>                                   <C>          <C>        <C>        <C>
SHORT TERM
----------
U.S. Treasury Securities............    $16,004    $    19    $    10    $16,013
                                        =======    =======    =======    =======
LONG TERM
---------
U.S. Treasury Securities............    $43,870    $   290    $ 1,165    $42,995
AAA--Rated Corporate Notes..........      2,084        144         --      2,228
Preferred Stock.....................      7,000         --         --      7,000
                                        -------    -------    -------    -------
 Long-term total ...................    $52,954    $   434    $ 1,165    $52,223
                                        =======    =======    =======    =======
 Totals ............................    $68,958    $   453    $ 1,175    $68,236
                                        =======    =======    =======    =======
</TABLE>

   As of June 30, 2003, investments were classified as follows:

<TABLE>
<CAPTION>
                                                        GROSS
                                                      UNREALIZED
                                        CARRYING   ----------------
SHORT TERM                               VALUE      GAINS    LOSSES   FAIR VALUE
----------                              --------   ------    ------   ----------
<S>                                     <C>        <C>       <C>      <C>
U.S. Treasury Securities                $27,878    $  107     $  1      $27,984
                                        =======    ======     ====      =======
LONG TERM
---------
U.S. Treasury Securities..              $27,730    $1,099     $138      $28,691
AAA--Rated Corporate Notes                2,097       294       --        2,391
Preferred Stock...........                7,000        --       --        7,000
                                        -------    ------     ----      -------
 Long-term total .........              $36,827    $1,393     $138      $38,082
                                        =======    ======     ====      =======
 Totals ..................              $64,705    $1,500     $139      $66,066
                                        =======    ======     ====      =======
</TABLE>

   Our preferred stock investments are in privately held companies for which
fair value is not readily determinable. We have reviewed these investments for
impairment and concluded that there was no impairment at the end of fiscal 2004.

   Consistent with recent business and financial plans, the Company has
concluded that we may no longer hold our investment portfolio to maturity.
Accordingly, we reclassified the investment portfolio from held-to-maturity to
available-for-sale, excluding the preferred stock investments. As a result of
the above, unrealized losses of $722 thousand, net of related income taxes of
$196 thousand, as of June 30, 2004 were recorded in accumulated other
comprehensive loss in stockholders' equity.

   Contractual maturities of debt securities as of June 30, 2004 are as
follows:

<TABLE>
<CAPTION>
      AVAILABLE-FOR-SALE                                          FAIR VALUE
      ------------------                                          ----------
      <S>                                                         <C>
      Due within one year ...................................      $16,013
      Due after one year through five years .................       22,721
      Due after five years through ten years ................       22,502
                                                                   -------
                                                                   $61,236
                                                                   =======
</TABLE>

 Derivative Financial Instruments

   We have limited involvement with derivative financial instruments and do not
use them for trading purposes. We utilize foreign currency forward exchange
contracts to mitigate the foreign exchange impact of gains or losses relating
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. These contracts are not designated as hedges and are
recorded at fair value with any gains or losses recognized in current period
earnings.

   We recorded net losses related to these contracts of $0.5 million,
$1.6 million and $1.6 million in 2004, 2003 and 2002, respectively. These
amounts, included within Other, net, in our consolidated statements of

                                      F-10
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


2. FINANCIAL INSTRUMENTS AND INVESTMENTS--(CONTINUED)

earnings, consist of gains and losses from contracts settled during fiscal
years 2004, 2003 and 2002, as well as contracts outstanding at June 30, 2004,
2003 and 2002 that are recorded at fair value.

   As of June 30, 2004, we had a notional amount of $13.4 million of foreign
currency forward exchange contracts outstanding, all of which were in Euros
and British Pounds. The foreign currency forward exchange contracts generally
have maturities that do not exceed 12 months and require that we exchange
foreign currencies for U.S. dollars at maturity, at rates agreed to at
inception of the contracts. The foreign currency forward exchange contracts
are with large international financial institutions.

   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 years ended June 30, 2004, 2003 and 2002.

 Concentration of Credit Risk

   Concentrations of credit risk with respect to trade receivables are limited
due to the large number of customers comprising our customer base. Ongoing
credit evaluations of customers' financial condition are performed. We
maintain reserves for potential credit losses and these losses have not
exceeded our expectations.

3. INVENTORIES, NET

<TABLE>
<CAPTION>
                                                                         JUNE 30,
                                                                    ------------------
                                                                      2004      2003
                                                                    -------    -------
      <S>                                                           <C>        <C>
      Materials .................................................   $21,480    $20,523
      Work in process ...........................................    10,650      8,093
      Finished goods ............................................    20,728     20,793
                                                                    -------    -------
                                                                    $52,858    $49,409
                                                                    =======    =======
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                        JUNE 30,
                                                                  --------------------
                                                                    2004        2003
                                                                  --------    --------
      <S>                                                         <C>         <C>
      Land ....................................................   $ 10,706    $ 10,250
      Buildings                                                     51,584      49,366
      Machinery, furniture and equipment ......................     97,825      95,220
      Leasehold improvements ..................................      3,408       3,202
                                                                  --------    --------
                                                                   163,523     158,038
      Less accumulated depreciation and amortization ..........     74,608      68,431
                                                                  --------    --------
                                                                  $ 88,915    $ 89,607
                                                                  ========    ========
</TABLE>

   Depreciation expense was $14.6 million in 2004, $14.2 million in 2003 and
$13.3 million in 2002. We estimate the useful life of machinery and equipment
at 3 to 5 years, furniture at 8 years and buildings at 40 years.

                                      F-11
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


5. ACQUIRED INTANGIBLE ASSETS

   The following is a summary of our intangible assets.

<TABLE>
<CAPTION>
                                                                          JUNE 30,
                                                                     -----------------
      INTANGIBLE ASSETS                                                2004      2003
      -----------------                                              -------    ------
      <S>                                                            <C>        <C>
      Purchased technology and licenses, gross ...................   $19,889    $2,505
      Accumulated amortization ...................................      (206)      (65)
                                                                     -------    ------
      Purchased technology and licenses, net                         $19,683    $2,440
                                                                     =======    ======
</TABLE>

   Amortization expense for the fiscal years ended June 30, 2004 and 2003 was
$141 thousand and $46 thousand, respectively.

   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 and the ProLumen thrombectomy device,
purchased from Rex Medical LP.

 X-Site Acquisition

   In May 2004, we acquired certain assets and technology of X-Site Medical,
LLC, (X-Site) a privately held company in the business of developing,
manufacturing and marketing products for the vascular closure market. The
acquired assets include all technology related to X-Site's lead product, a
suture based vascular closure device for achieving hemostasis after coronary
catheterization procedures. The X-Site purchase will broaden and enhance our
existing vascular closure product line. The purchase price was approximately
$13.6 million, in cash, comprised of an initial payment of $11.4 million,
including transaction expenses, and an accrued liability for an additional
$2.2 million, representing the present value of guaranteed minimum payments
($1.7 million long-term liability and $0.5 million current liability) to be
paid over the next five years. Pursuant to the asset purchase agreement, we
may also be required to make additional contingent payments, which would be
triggered by the achievement of certain milestones and sales performance
levels not currently estimable. The X-Site purchase was accounted for using
the purchase method of accounting. The aggregate purchase price for X-Site was
allocated to tangible assets and intangible assets based on their estimated
fair value at date of acquisition. There was no goodwill recorded in the
transaction because the purchase price for this acquisition did not exceed the
estimated fair value of the net assets acquired. Intangible assets acquired of
$13.5 million, consisting primarily of intellectual property and manufacturing
know-how, are being amortized over a period of approximately 16 years based
primarily on the remaining legal life of the underlying acquired technology.

   The following table summarizes the allocation of the X-Site purchase price
to the estimated fair values of the assets acquired.

<TABLE>
<CAPTION>
      ASSETS ACQUIRED                                            ESTIMATED FAIR VALUES
      ---------------                                            ---------------------
      <S>                                                        <C>
      Inventory..............................................           $    18
      Plant and equipment....................................               131
      Purchased technology...................................            13,451
                                                                        -------
      Total purchase price...................................           $13,600
                                                                        =======
</TABLE>

 ProLumen Technology Acquisition

   In May 2003, we acquired technology from Rex Medical LP, for the ProLumen
thrombectomy device. With the launch of the ProLumen in March 2004 we entered
the dialysis access market. Thrombectomy is the process of removing blood
clots from blocked dialysis access sites. Thrombectomy procedures are
performed


                                      F-12
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


5. ACQUIRED INTANGIBLE ASSETS--(CONTINUED)

primarily by interventional radiologists in the U.S., a current and well-
established sales call point for our Interventional Products division. Through
June 30, 2004, we paid $5.0 million in cash ($3.0 million in fiscal 2004 and
$2.0 million in fiscal 2003) based on achieving certain milestones. The
technology transfer agreement also requires us to pay additional contingent
payments, which would be triggered by the achievement of certain additional
milestones and sales performance levels not currently estimable. The payments
made for the ProLumen technology were recorded as purchased technology and
will be amortized over approximately 16 years based on the remaining legal
life of the underlying technology.

   At June 30, 2004, estimated future amortization expense of intangible assets
subject to amortization is as follows: $0.9 million, $1.4 million, $1.5 million,
$1.6 million and $1.9 million for fiscal years 2005, 2006, 2007, 2008 and 2009,
respectively.

 Goodwill

   Goodwill as of June 30, 2004 and 2003 was $4.1 million. There was no acquired
goodwill and no change in the carrying value of existing goodwill during the
fiscal year ended June 30, 2004. Amortization of goodwill was discontinued
upon the adoption of SFAS No. 142 in fiscal year 2002. The Company's annual
impairment test is performed during the fourth quarter of its fiscal year.
There has been no impairment of goodwill based on appropriate testing and
analysis performed since the initial test for impairment in the fourth quarter
of fiscal 2002.

   Of the $4.1 million in net goodwill, $1.8 million is included in the
lnterventional Products/Vascular Grafts segment and the remaining $2.3 million
is in Corporate and Other.

6. OTHER ASSETS

   Other Assets at June 30, 2004 and 2003 were comprised of the following:

<TABLE>
<CAPTION>
                                                                         JUNE 30,
                                                                    ------------------
                                                                      2004      2003
                                                                    -------    -------
      <S>                                                           <C>        <C>
      Capitalized software, net of accumulated amortization of
       $7,366 and $4,358 ........................................   $16,129    $14,000
      Cash surrender value of officers' life insurance ..........    10,994     10,684
      Equity investments ........................................     2,215      1,872
      Other non-current assets ..................................     1,443      1,122
      Non-current deferred tax assets ...........................        --        699
                                                                    -------    -------
                                                                    $30,781    $28,377
                                                                    =======    =======
</TABLE>

   Amortization of capitalized software costs was $3.0 million in fiscal 2004,
$2.2 million in fiscal 2003 and $945 thousand in fiscal 2002.


                                      F-13
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


7. TAXES ON INCOME

   The provision for taxes on income consisted of the following:

<TABLE>
<CAPTION>
                                                                                                      YEAR ENDED JUNE 30,
                                                                                                  ---------------------------
                                                                                                    2004      2003      2002
                                                                                                  -------    -------   ------
      <S>                                                                                         <C>        <C>       <C>
      Taxes currently payable:
       Federal ................................................................................   $ 5,262    $ 8,566   $6,794
       State                                                                                        1,609      2,069    1,325
       Foreign ................................................................................     1,112      1,047      177
                                                                                                  -------    -------   ------
         Total current.........................................................................     7,983     11,682    8,296
                                                                                                  -------    -------   ------
      Deferred income taxes:
       Federal ................................................................................     1,692        (72)      36
       State ..................................................................................       556       (199)    (242)
       Foreign ................................................................................        15       (208)      76
                                                                                                  -------    -------   ------
         Total deferred........................................................................     2,263       (479)    (130)
                                                                                                  -------    -------   ------
         Total provision for taxes on income...................................................   $10,246    $11,203   $8,166
                                                                                                  =======    =======   ======
</TABLE>

   Amounts are reflected in the preceding table based on the location of the
taxing authorities. As of June 30, 2004, we have not made a U.S. tax provision
for the unremitted earnings of our international subsidiaries. These earnings,
which approximated $56.9 million as of June 30, 2004, are expected, for the
most part, to be permanently reinvested outside of the United States. However,
should we change our business and tax strategies in the future and decide to
repatriate a portion of these earnings to one of our U.S. subsidiaries,
additional U.S. tax liabilities would be incurred.

   Included in the net deferred income tax assets at June 30, 2004 is $1.4
million that has been recorded as a component of accumulated other comprehensive
loss.

   Reconciliation of the U.S. statutory income tax rate to our effective tax
rate is shown below:

<TABLE>
<CAPTION>
                                                                    YEAR ENDED JUNE 30,
                                             -----------------------------------------------------------------
                                                    2004                   2003                   2002
                                             -------------------    -------------------    -------------------
                                                       EFFECTIVE              EFFECTIVE              EFFECTIVE
                                              AMOUNT      RATE       AMOUNT      RATE       AMOUNT      RATE
                                             -------      ----      -------      ----      -------      ----
<S>                                          <C>        <C>         <C>        <C>         <C>        <C>
Tax computed at federal statutory rate ...   $11,954      35.0%     $12,076      35.0%     $ 7,723      35.0%
(Decrease) increase resulting from:
 Benefit from foreign sales corporation
   and extraterritorial income exclusion .    (1,795)     (5.3)      (1,415)     (4.1)      (1,153)     (5.2)
 State taxes on income, net of federal
   income tax benefit ....................     1,407       4.1        1,346       3.9          839       3.8
 Rate differential on foreign income(a) ..      (710)     (2.1)      (1,109)     (3.2)         373       1.7
 Other ...................................      (610)     (1.7)         305       0.9          384       1.7
                                             -------      ----      -------      ----      -------      ----
   Total provision for taxes on income ...   $10,246      30.0%     $11,203      32.5%     $ 8,166      37.0%
                                             =======      ====      =======      ====      =======      ====
</TABLE>
---------------
(a) Includes effect of non-tax deductible foreign restructuring expenses in
    fiscal 2002.


                                      F-14
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


7. TAXES ON INCOME--(CONTINUED)

   Deferred taxes arise because of differences in the timing of recognition
between financial statement accounting and tax accounting, known as "temporary
differences." We record the tax effect of these temporary differences as
"deferred tax assets" (generally items that can be used as a tax deduction or
credit in future periods) and "deferred tax liabilities" (generally items that
we receive a tax deduction for, but have not yet been recorded in the
consolidated statement of earnings). Deferred tax assets and liabilities are
measured using the enacted tax rates in effect for the years in which the
differences are expected to reverse.

   The tax effects of the major items recorded as deferred income tax assets
and liabilities are:

<TABLE>
<CAPTION>
                                                                         JUNE 30,
                                                                    ------------------
                                                                      2004      2003
                                                                    -------    -------
      <S>                                                           <C>        <C>
       DEFERRED INCOME TAX ASSETS
       --------------------------
       Inventories ..............................................   $ 4,447    $ 3,833
       Accounts receivable ......................................       600        535
       Warranty .................................................       732        412
       Foreign and state tax credits ............................     1,016        932
       Unrealized foreign exchange losses .......................       245        364
       Supplemental pension .....................................     5,649      5,215
       Tax loss carryforwards ...................................     1,558      1,546
       Minimum pension liability ................................       429      1,988
       Other ....................................................        39        688
                                                                    -------    -------
         Total...................................................   $14,715    $15,513
                                                                    =======    =======
       DEFERRED INCOME TAX LIABILITIES
       -------------------------------
       Accelerated depreciation .................................   $ 9,347    $ 6,605
       State income taxes .......................................       732        657
                                                                    -------    -------
         Total...................................................    10,079      7,262
                                                                    -------    -------
       Net deferred income tax assets ...........................     4,636      8,251
       Less: Valuation allowance ................................    (1,558)    (1,546)
                                                                    -------    -------
         Total...................................................   $ 3,078    $ 6,705
                                                                    =======    =======
</TABLE>

   A valuation allowance was recorded at June 30, 2004 and 2003, respectively,
because the tax loss carryforwards may not be realizable. The valuation
allowance reduces the deferred tax assets to our best estimate of net deferred
assets which more likely than not will be realized.

   The valuation allowance increased by $12 thousand and $125 thousand during
fiscal 2004 and 2003, respectively, due to the net increase in foreign and state
tax loss carryforwards. The valuation allowance of $1.6 million at June 30, 2004
was comprised of tax benefits of $0.4 million of foreign tax loss carryforwards
and $1.2 million of state tax loss carryforwards. Benefits from foreign tax loss
carryforwards expire during the period 2005 through 2011. The benefits of state
tax loss carryforwards expire during the period 2005 through 2014.

                                      F-15
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


8. OTHER LIABILITIES

   Other liabilities at June 30, 2004 and 2003 were comprised of the following:

<TABLE>
<CAPTION>
                                                                         JUNE 30,
                                                                    ------------------
                                                                      2004      2003
                                                                    -------    -------
      <S>                                                           <C>        <C>
      Supplemental pension payable ..............................   $13,993    $12,934
      Non-current deferred taxes ................................     3,422         --
      X-Site guaranteed minimum payments ........................     1,701         --
      Minimum pension liability .................................     1,303      5,193
      Non-current deferred income ...............................     1,034      1,427
      Other non-current liabilities .............................     1,512      1,461
                                                                    -------    -------
                                                                    $22,965    $21,015
                                                                    =======    =======
</TABLE>

9. STOCK OWNERSHIP PLANS

 Stock Option Plans

   We have two employee stock option plans covering 7,225,000 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.
The plans provide that options may be granted at a price of 100% of fair
market value on 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.

   A summary of activity under the stock option plans is as follows:

<TABLE>
<CAPTION>
                                                  YEAR ENDED JUNE 30,
                          --------------------------------------------------------------------
                                  2004                    2003                    2002
                          --------------------    --------------------    --------------------
                                      WEIGHTED                WEIGHTED                WEIGHTED
                                       AVERAGE                 AVERAGE                 AVERAGE
                                      EXERCISE                EXERCISE                EXERCISE
                           SHARES       PRICE      SHARES       PRICE      SHARES       PRICE
                          ---------   --------    ---------   --------    ---------   --------
<S>                       <C>         <C>         <C>         <C>         <C>         <C>
Outstanding at July 1.    2,833,214    $30.20     2,484,996    $30.92     1,985,155    $29.91
 Granted .............      498,655     33.82       625,750     28.03     1,103,750     30.19
 Exercised ...........     (306,079)    25.58       (32,182)    20.34      (369,274)    21.18
 Canceled ............     (311,433)    32.77      (245,350)    33.30      (234,635)    34.20
                          ---------               ---------               ---------
Outstanding at June 30    2,714,357     31.08     2,833,214     30.20     2,484,996     30.92
                          =========               =========               =========
Exercisable at June 30    1,598,247    $30.91     1,585,722    $29.67     1,285,005    $28.70
                          ---------               ---------               ---------
</TABLE>

   At June 30, 2004 there were 3,294,948 shares of common stock reserved for
stock options.

   The weighted average fair value of options granted was $11.74 in 2004, $9.58
in 2003 and $10.91 in 2002.


                                      F-16
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

9. STOCK OWNERSHIP PLANS--(CONTINUED)

   The following table summarizes information concerning outstanding and
exercisable stock options at June 30, 2004.

<TABLE>
<CAPTION>
                                                                            STOCK OPTIONS
                                     STOCK OPTIONS OUTSTANDING               EXERCISABLE
                             ----------------------------------------    --------------------
                                              WEIGHTED       WEIGHTED                WEIGHTED
                                              AVERAGE         AVERAGE                 AVERAGE
                                             REMAINING       EXERCISE                EXERCISE
RANGE OF EXERCISE PRICES      OPTIONS     CONTRACTUAL LIFE     PRICE      OPTIONS      PRICE
------------------------     ---------    ----------------   --------    ---------   --------
<S>                          <C>          <C>                <C>         <C>         <C>
$15.63--$28.67 ...........     941,222          6.17          $26.36       819,475    $26.77
$28.80--$32.86 ...........   1,010,110          8.66          $30.66       256,915    $30.14
$33.07--$41.58 ...........     763,025          7.15          $37.48       521,857    $37.80
                             ---------                                   ---------
                             2,714,357          7.37          $31.08     1,598,247    $30.91
                             =========                                   =========
</TABLE>

 Shareholder Rights Plan

   On May 22, 1991, we adopted a Shareholder Rights Plan. The purpose of the
plan is to prevent us from being the target of an unsolicited tender offer or
unfriendly takeover. On May 16, 2000, we amended the Shareholder Rights Plan
to provide for (i) an extension of the final expiration date of the
Shareholder Rights Plan from June 2, 2001 to June 2, 2011 and (ii) a change in
the purchase price of the rights from $300 to $200 per one one-thousandths of
a share of Series A Preferred Stock, subject to adjustment.

   Under the plan, our common stockholders were issued one preferred stock
purchase right for each share of common stock owned by them. Until they are
redeemed by us or expire, each preferred stock purchase right entitles the
holder to purchase .001 share of our Series A Preferred Stock, par value $1.00
per share, at an exercise price of $200. We may redeem the preferred stock
purchase rights for $.01 per right at any time until after the date on which
our right to redeem them has expired. In addition, the preferred stock
purchase rights do not become exercisable until our right to redeem them has
expired. Our right to redeem the preferred stock purchase rights expires on
the 10th business day after the date of a public announcement that a person,
or an acquiring person, has acquired ownership of our stock representing 15
percent or more of our shareholders' general voting power. Before an acquiring
person acquires 50 percent or more of our outstanding common stock, the plan
provides that we may offer to exchange the rights, in whole or in part, on the
basis of an exchange ratio of one share of common stock for each right.
However, any rights owned by the acquiring person and its affiliates and
associates will be null and void and cannot be exchanged for common stock.

   The plan also provides that, after the date of a public announcement that a
person has acquired ownership of our stock representing 15 percent or more of
our shareholders' general voting power, generally each holder of a preferred
stock purchase right will have the right to purchase, at the exercise price, a
number of shares of our preferred stock having a market value equal to twice
the exercise price. The plan further provides that if certain other business
combinations occur, generally each holder of a preferred stock purchase right
will have the right to purchase, at the exercise price, a number of shares of
the acquiring person's common stock having a market value of twice the
exercise price.

 Stock Repurchase Programs

   During fiscal years 1996 through 2001 we completed three stock repurchase
programs totaling $70 million. We acquired 2,550,275 shares under these
programs.

   A fourth stock repurchase program for $40 million was announced on May 16,
2001. We acquired 704,000 shares through June 30, 2004 at a cost of
$27.2 million.

                                      F-17
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


9. STOCK OWNERSHIP PLANS--(CONTINUED)

 Stock Compensation Plan for Non-Employee Directors

   We have a compensation plan for non-employee directors, which became
effective in calendar year 1998. A summary of this plan is shown below:

   o Any member of the board of directors who is not an employee or a
     consultant to us or any of our divisions or subsidiaries will receive an
     annual retainer (currently $24 thousand) payable in shares of our common
     stock

   o Payment of the annual retainer is made in January for the prior calendar
     year

   o A non-employee director may elect to defer receipt of the annual retainer
     in which case the annual retainer will be paid entirely in shares of our
     common stock that will be deposited into a director's account established
     under the plan

   o In the case of a non-employee director who does not elect to defer the
     retainer (or who has not filed a form of election), a portion of the
     retainer will be paid in cash that is equivalent to the current maximum
     federal income tax liability and the balance in our common stock

   o Distribution of amounts in a director's account will be made when an
     event of distribution occurs, in accordance with the method of
     distribution stated in the form of election

   o Each member of the Board of Directors who is not an employee of, or
     consultant to, the Company receives an annual grant of options to
     purchase 5,000 shares of our common stock

   o In fiscal 2003, an additional grant of options to purchase 2,500 shares
     of our common stock was given to each eligible member of the Board of
     Directors

10. SEGMENT INFORMATION

   Our business is the development, manufacture and sale of medical devices. We
have 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 vascular
disease and electronic physiological monitors that provide for patient safety
and management of patient care.

   The Interventional Products/Vascular Grafts segment includes vascular
sealing devices, which are used to seal arterial puncture wounds to stop
bleeding 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.

                                      F-18
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


10. SEGMENT INFORMATION--(CONTINUED)

<TABLE>
<CAPTION>
                                    CARDIAC     INTERVENTIONAL
                                    ASSIST/        PRODUCTS/      CORPORATE
                                   MONITORING      VASCULAR          AND
                                    PRODUCTS        GRAFTS        OTHER(A)    CONSOLIDATED
                                    --------       --------        -------      --------
<S>                                <C>          <C>               <C>         <C>
YEAR ENDED JUNE 30, 2004
Net sales to external customers     $273,751       $ 68,157        $ 1,392      $343,300
Operating earnings.............     $ 35,391       $ (5,079)       $ 2,505      $ 32,817
Assets (b).....................     $179,768       $101,127        $87,440      $368,335
Long-lived asset expenditures..     $  6,353       $ 22,481        $ 1,644      $ 30,478
Depreciation and amortization..     $ 14,250       $  2,384        $ 1,091      $ 17,725
YEAR ENDED JUNE 30, 2003
Net sales to external customers     $254,941       $ 72,048        $ 1,311      $328,300
Operating earnings (c).........     $ 29,732       $    504        $ 3,034      $ 33,270
Assets (b).....................     $183,259       $ 71,256        $84,317      $338,832
Long-lived asset expenditures..     $  5,645       $  5,214        $ 2,259      $ 13,118
Depreciation and amortization..     $ 13,934       $  1,556        $   918      $ 16,408
YEAR ENDED JUNE 30, 2002
Net sales to external customers     $237,560       $ 78,865        $   975      $317,400
Operating earnings (d).........     $ 15,071       $  1,879        $ 3,660      $ 20,610
Assets (b).....................     $184,040       $ 61,479        $70,503      $316,022
Long-lived asset expenditures..     $  5,013       $  4,249        $ 4,201      $ 13,463
Depreciation and amortization..     $ 11,918       $  1,594        $   729      $ 14,241
</TABLE>

---------------
(a) Net sales of life science products by Genisphere are included within
    Corporate and Other. Assets within Corporate and Other include cash,
    investments, property, plant and equipment including the corporate
    headquarters, goodwill and cash surrender value of officers' life
    insurance. Segment SG&A expenses include fixed corporate G&A charges.
(b) Assets in the Interventional Products/Vascular Grafts segment include
    goodwill of $1.8 million in 2004, 2003 and 2002. Assets in Corporate and
    Other include goodwill of $2.3 million in 2004, 2003 and 2002.
(c) Operating earnings for Corporate and Other includes a $3 million gain on
    legal settlement in fiscal 2003.
(d) Fiscal 2002 operating earnings for the Cardiac Assist/Monitoring Products
    segment includes $5.8 million in restructuring expenses and fiscal 2002
    operating earnings for the Interventional Products/Vascular Grafts segment
    includes $5.7 million in restructuring expenses.

   Reconciliation to consolidated earnings before income taxes:

<TABLE>
<CAPTION>
                                                                                                      YEAR ENDED JUNE 30,
                                                                                                 ----------------------------
                                                                                                   2004      2003       2002
                                                                                                 -------    -------   -------
      <S>                                                                                        <C>        <C>       <C>
      Consolidated operating earnings ........................................................   $32,817    $33,270   $20,610
      Interest income, net ...................................................................     1,796      1,582     1,754
      Other (expense) income .................................................................      (459)      (350)     (297)
                                                                                                 -------    -------   -------
      Consolidated earnings before taxes .....................................................   $34,154    $34,502   $22,067
                                                                                                 =======    =======   =======
</TABLE>


                                      F-19
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

10. SEGMENT INFORMATION--(CONTINUED)

   The following table presents net sales by geography based on the location of
the external customer.

<TABLE>
<CAPTION>
                                                                                                    YEAR ENDED JUNE 30,
                                                                                              -------------------------------
                                                                                                2004        2003       2002
                                                                                              --------    --------   --------
      <S>                                                                                     <C>         <C>        <C>
      United States .......................................................................   $223,973    $224,054   $221,199
      Foreign Countries ...................................................................    119,327     104,246     96,201
                                                                                              --------    --------   --------
       Total                                                                                  $343,300    $328,300   $317,400
                                                                                              ========    ========   ========
</TABLE>

   The following table presents long-lived assets by geography.

<TABLE>
<CAPTION>
                                                                                                    YEAR ENDED JUNE 30,
                                                                                              -------------------------------
                                                                                                2004        2003       2002
                                                                                              --------    --------   --------
      <S>                                                                                     <C>         <C>        <C>
      United States .......................................................................   $132,319    $113,363   $108,493
      Foreign Countries ...................................................................     11,125      10,427      9,435
                                                                                              --------    --------   --------
       Total                                                                                  $143,444    $123,790   $117,928
                                                                                              ========    ========   ========
</TABLE>

11. RETIREMENT BENEFIT PLANS

   We have various retirement benefit plans covering substantially all U.S. and
international employees. Total expense for the domestic and international
retirement plans was $6.4 million in 2004, $5.2 million in 2003 and
$4.6 million in 2002. Below is a further description of our 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 for the
international plan are based on years of service, final average earnings and
social security benefits. Funding policies are based on local statutes and the
assets are invested in guaranteed insurance contracts.

 Supplemental Executive Retirement Plans (SERP)

   We have noncontributory, unfunded supplemental defined benefit retirement
plans (SERP) 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.

   A summary of Mr. Saper's SERP is as follows:

   o Mr. Saper is entitled to receive a lifetime pension of up to 60% of his
     average earnings for the three-year period in which Mr. Saper's
     compensation was greatest of the ten years immediately preceding his
     retirement

   o The SERP will not be less than the value of the benefit that would have
     been payable had his retirement occurred at age 65

   o The expected annual SERP payment to Mr. Saper commencing at a presumed
     retirement age of 80, based on the above plan would be $2.9 million

                                      F-20
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


11. RETIREMENT BENEFIT PLANS--(CONTINUED)

   o The plan provides survivor benefits in the form of a $10 million life
     insurance policy, maintained pursuant to a split-dollar agreement between
     us, Mr. Saper and a trust for the benefit of Mr. Saper's family

   The SERP expense for Mr. Saper recognized in the consolidated financial
statements was $816 thousand in 2004, $432 thousand in 2003 and $262 thousand
in 2002.

   The SERP covering certain former key officers provides a pension at age 65,
for up to 15 years, based on a predetermined earnings level for the five-year
period prior to retirement. The SERP for two current officers provides a
lifetime retirement benefit. The SERP expense for these executives recognized
in the consolidated financial statements was $299 thousand in 2004, $301
thousand in 2003 and $239 thousand in 2002.

 Defined Contribution Plans

   We have defined contribution savings and supplemental retirement plans that
cover substantially all U.S. employees and certain international employees.
The plans provide an incentive to employees to save and invest regularly for
their retirement. In the U.S. we maintain a 401(k) savings and supplemental
retirement plan for eligible U.S. employees. The contributions are based on
matching 50% of participating employees' contributions up to a maximum of 6%
of compensation. The provisions for the international defined contribution
plans vary by local country. The total expense under these plans was
$1.91 million for 2004, $1.75 million for 2003 and $1.63 million for 2002.

 Pension Expense

   The components of net pension expense of the U.S. and International defined
benefit pension plans and the SERP include the following:

<TABLE>
<CAPTION>
                                                                           YEAR ENDED JUNE 30,
                                                         -------------------------------------------------------
                                                           2004      2003       2002      2004     2003     2002
                                                         -------    -------   -------    ------    -----   -----
                                                            U.S. AND INTERNATIONAL                 SERP
                                                         ----------------------------    -----------------------
<S>                                                      <C>        <C>       <C>        <C>       <C>     <C>
PENSION EXPENSE
---------------
 Service cost ........................................   $ 2,872    $ 2,417   $ 2,117    $  372    $ 311   $ 277
 Curtailment/termination cost ........................        --         --        78        --       --      --
 Interest cost .......................................     3,034      2,912     2,657       706      683     611
 Expected return on assets ...........................    (3,074)    (2,774)   (2,482)       --       --      --
 Amortization of:
   net loss (gain)....................................       483         55        15        14     (307)   (433)
   unrecognized prior service cost....................        11         10         1        23       46      46
   remaining unrecognized net obligation..............        44         71        73        --       --      --
                                                         -------    -------   -------    ------    -----   -----
    Net pension expense ..............................   $ 3,370    $ 2,691   $ 2,459    $1,115    $ 733   $ 501
                                                         =======    =======   =======    ======    =====   =====
</TABLE>


 Obligations and Funded Status

   The following table shows the changes in fiscal 2004 and 2003 in the
projected benefit obligation, plan assets and funded status of the U.S. and
International defined benefit pension plans and the SERP:

                                      F-21
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

11. RETIREMENT BENEFIT PLANS--(CONTINUED)

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED JUNE 30,
                                                                             -------------------------------------------
                                                                               2004        2003        2004       2003
                                                                             --------    --------    --------   --------
                                                                                   U.S. AND
                                                                                 INTERNATIONAL              SERP
                                                                             --------------------    -------------------
<S>                                                                          <C>         <C>         <C>        <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
--------------------------------------
 Pension benefit obligation at beginning of year .........................   $ 51,730    $ 42,238    $ 12,305   $  9,782
 Service cost ............................................................      2,872       2,417         372        311
 Interest cost ...........................................................      3,034       2,912         706        683
 Foreign exchange impact .................................................        122         290          --         --
 Plan amendments .........................................................         --         138          --         --
 Actuarial (gain) loss ...................................................     (5,074)      4,521        (453)     1,564
 Benefits paid ...........................................................       (948)       (786)        (56)       (35)
                                                                             --------    --------    --------   --------
   Pension benefit obligation at end of year..............................   $ 51,736    $ 51,730    $ 12,874   $ 12,305
                                                                             ========    ========    ========   ========
   Accumulated Benefit Obligation.........................................   $ 43,675    $ 44,338    $ 12,874   $ 12,305
                                                                             ========    ========    ========   ========
CHANGE IN PLAN ASSETS
---------------------
 Fair value of plan assets at beginning of year ..........................   $ 38,849    $ 32,273           *          *
 Actual return on assets .................................................        812       3,018           *          *
 Employer contributions ..................................................      1,625       4,344           *          *
 Benefits paid ...........................................................       (948)       (786)          *          *
                                                                             --------    --------    --------   --------
   Fair value of plan assets at end of year...............................   $ 40,338    $ 38,849           *          *
                                                                             ========    ========    ========   ========
FUNDED STATUS AT JUNE 30,
------------------------
 Pension benefit obligation                                                  $ 51,736    $ 51,730    $ 12,874   $ 12,305
 Fair value of plan assets                                                     40,338      38,849          --         --
                                                                             --------    --------    --------   --------
 Funded status-plan assets less than benefit obligation                       (11,398)    (12,881)    (12,874)   (12,305)
 Unrecognized prior service cost                                                  139         150         118        141
 Unrecognized net actuarial loss (gain)                                         7,967      11,139      (1,237)      (770)
 Unrecognized net obligation remaining at June 30,                                 --          44          --         --
                                                                             --------    --------    --------   --------
   Net amount recognized                                                     $ (3,292)   $ (1,548)   $ 13,993   $ 12,934
                                                                             ========    ========    ========   ========
</TABLE>
---------------
*   Not applicable

   At June 30, 2004, the U.S. defined benefit pension plan had an accumulated
benefit obligation in excess of plan assets. This was due primarily to the
significant decline in the discount rate at the June 30, 2004 and 2003
measurement dates. The following are recognized in the consolidated balance
sheets:

<TABLE>
<CAPTION>
                                                                         JUNE 30,
                                                                    ------------------
                                                                      2004      2003
                                                                    -------    -------
      <S>                                                           <C>        <C>
      Accrued benefit liability .................................   $(3,336)   $(5,489)
      Intangible asset ..........................................       139        190
      Accumulated other comprehensive loss ......................       906      4,634
                                                                    -------    -------
      Net amount recognized .....................................   $(2,291)   $  (665)
                                                                    =======    =======
</TABLE>

                                      F-22
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


11. RETIREMENT BENEFIT PLANS--(CONTINUED)

 Plan Assumptions

   Weighted average assumptions used in developing the benefit obligations and
net periodic benefit cost were as follows:

<TABLE>
<CAPTION>
                                                                        2004    2003   2002
                                                                        ----    ----   ----
<S>                                                                     <C>     <C>    <C>
BENEFIT OBLIGATION
------------------
 Discount rate......................................................    6.50%   5.75%  7.00%
 Rate of compensation increase......................................    4.50%   4.25%  6.00%
 Expected return on plan assets.....................................    6.50%   7.75%  7.75%
</TABLE>

<TABLE>
<CAPTION>
                                                                        2004    2003   2002
                                                                        ----    ----   ----
<S>                                                                     <C>     <C>    <C>
NET PERIODIC BENEFIT COST
-------------------------
 Discount rate......................................................    5.75%   7.00%  7.25%
 Rate of compensation increase......................................    4.25%   6.00%  6.00%
 Expected return on plan assets.....................................    7.75%   7.75%  7.75%
</TABLE>

   The measurement date for the defined benefit pension plans and the SERP is
July 1.

 U.S. Plan Asset Allocation and Investment Guidelines

   The percentages of the fair value of plan assets allocated at June 30, 2004
and 2003 by asset category and the weighted average target allocations for
fiscal 2005 for the U.S. defined pension plan are as follows:

<TABLE>
<CAPTION>
                                                                        JUNE 30,
                                                          -----------------------------------
                                                                 2005          2004     2003
                                                          -----------------    -----   ------
                                                                               PERCENTAGE OF
                                                          TARGET ALLOCATION     PLAN ASSETS
                                                          -----------------    --------------
<S>                                                       <C>                  <C>     <C>
ASSET CATEGORY
--------------
 Small Capitalization Equities(1).....................           10.0%          8.7%     7.2%
 Fixed Income Bonds--Corporate........................           15.0%         14.6%    18.9%
 Fixed Income Bonds--Government.......................           75.0%         75.5%    72.3%
 Cash.................................................            0.0%          1.2%     1.6%
                                                                -----          ----     -----
                                                                100.0%         100.0%  100.0%
</TABLE>

   The expected long-term rate of return of 6.2% is calculated by using the
target allocation and expected returns for each asset class in the table
above.

---------------
(1) Represents investment in our common stock of $3.8 million and $2.8 million
    (96,000 shares) at June 30, 2004 and 2003, respectively.

   Below is a summary of our U.S. pension investment guidelines.

   o Our investment objective is to invest in securities which provide minimal
     risk, a high degree of liquidity and an adequate return. Return on such
     investments, while recognized as important, is not the primary
     consideration. Safety of principal and liquidity are the key objectives.

   o At least 50% of the fixed portion of the portfolio will be invested in
     Treasury & Federal Agency obligations. The maximum maturity of each
     security is 10 years.

   o No more than 50% of the portfolio will be invested in 5 to 10 year
     medium-term AAA-rated corporate notes.

   o No more than $3 million in aggregate will be invested in any single
     company.


                                      F-23
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


11. RETIREMENT BENEFIT PLANS--(CONTINUED)

   o Investments may include Datascope common stock. The amount of Datascope
     stock is limited by ERISA rules (section 407 (a)), which says that the
     pension fund can purchase Company stock, as long as immediately
     thereafter, the aggregate fair market value of Company stock held by the
     fund does not exceed 10% of the fair market value of all pension fund
     assets.

   Expected benefit payments under the U.S., international and SERP defined
benefit pension plans over future years are as follows:

      FISCAL YEAR
      -----------
      2005............................................    $ 1,182
      2006............................................      1,438
      2007............................................      1,511
      2008............................................      1,712
      2009............................................      4,236
      2010--2014......................................     27,345

   The expected employer contribution to the U.S. and international defined
benefit pension plans in fiscal 2005, is between $3.1 million (minimum
regulatory requirement) and $3.3 million (maximum contribution). No decision
has been made at this time on the fiscal 2005 contribution.

12. COMMITMENTS AND CONTINGENCIES

 Leases

   Future minimum rental commitments under noncancellable operating leases are
as follows:

      FISCAL YEAR
      -----------
      2005...............................................    $3,301
      2006...............................................     2,403
      2007...............................................     1,511
      2008...............................................       507
      2009...............................................       377
       Thereafter........................................       487
                                                             ------
         Total future minimum rental payments                $8,586
                                                             ======

   Total rent expense amounted to approximately $3.93 million in 2004,
$3.94 million in 2003 and $3.67 million in 2002. Certain of our leases contain
purchase and/or renewal options.

 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 below, we have recorded accruals as of June 30, 2004 which
are not considered significant.

   In December 2000, an action was filed in New York Supreme Court against us
and our board of directors entitled David B. Shaev v. Lawrence Saper, Alan B.
Abramson, David Altschiller, Joseph Grayzel, M.D., George Heller, Arno Nash
and Datascope Corp. The complaint alleges, inter alia, common law claims for
breach of the duty of loyalty and breach of fiduciary duty for approving
allegedly excessive compensation


                                      F-24
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

to defendant Saper. By agreement, the time to respond to this complaint has
been extended. The action is pending.

   In August 2001, an action was filed in United States District Court for the
District of New Jersey against us and our board of directors entitled David B.
Shaev v. Lawrence Saper, Alan B. Abramson, David Altschiller, Joseph Grayzel,
M.D., George Heller, Arno Nash and Datascope Corp. The Complaint alleges,
inter alia, that our October 27, 2000 proxy statement contained materially
false and misleading statements concerning, among other things, the
deductibility for federal income tax purposes of Mr. Saper's bonus
compensation, that it omitted material facts regarding the bonuses payable and
the number of persons eligible under the Management Incentive Plan, and that
it was coercive insofar as it stated that we might grant Mr. Saper a bonus if
the Plan were not approved by the stockholders. The parties have participated
in mediation procedures and have begun discovery.

   On January 28, 2003, Sanmina-SCI, one of our 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. In response, we filed an answer denying the allegations of the
complaint and counterclaimed for damages. Discovery is now being conducted.

   The Public Prosecutor's Office in Darmstadt, Germany is conducting an
investigation of current and former employees of one of our German
subsidiaries. We are cooperating with the investigation. We cannot predict at
this time the outcome of the investigation or if there could be any material
adverse effect on our business.

   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. seeking indemnification from the Company of
approximately $1 million in legal fees and expenses he allegedly incurred in
defending a criminal action brought against him, as well as additional damages
Mr. Barile alleges he suffered. The Company has filed an answer denying the
allegations of the complaint and has brought counterclaims against Mr. Barile
seeking damages resulting from Mr. Barile's improper conduct while an
employee. The parties agreed to exchange a limited amount of discovery
material prior to further mediation.

   On July 20, 2004, a former Datascope employee, Harry Gugnani, filed a
complaint in the Superior Court of New Jersey, Law Division, Bergen County,
against Datascope Corp. seeking damages for emotional distress, damage to
reputation and malicious prosecution related to a criminal action brought
against him by the United States Attorney's Office. The Company will file an
answer denying the allegations of the complaint. The Company believes it has
meritorious defenses to Mr. Gugnani's claims and intends to defend this action
vigorously.

 Credit Arrangements

   We have available lines of credit totaling $98.9 million, with interest
payable at each lender's prime rate. We did not have any borrowings at June 30,
2004 or June 30, 2003. Of the total available, $25 million expires in October
2004, $23.4 million expires in November 2004 and $25 million expires in March
2005. These lines are renewable annually at the option of the banks, and we
plan to renew them. We also have $25.5 million in lines of credit with no
expiration date.

 Rabbi Trust

   We have established a trust to hold amounts which may become payable in the
future to certain executives of the Company pursuant to various employment,
supplemental benefit and severance agreements

                                      F-25
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

upon a change of control of the Company. We are obligated to fund the trust
upon the occurrence of events tending to indicate that a future change in
control of the Company could occur.

13. GAIN ON LEGAL SETTLEMENT

   In July 1999, we instituted patent infringement litigation relating to a
vascular sealing method against Vascular Solutions, Inc. in the United States
District Court, District of Minnesota. In that litigation our complaint
alleged that the manufacture, use and/or sale of Vascular Solutions' Duett
device infringed our United States Patent No. 5,725,498. In November 2002, the
parties settled the matter. Pursuant to the settlement, Vascular Solutions
paid us $3.75 million and we granted Vascular Solutions a limited, non-
exclusive patent license. In the second quarter of fiscal 2003, we recorded a
pretax gain on the settlement, net of related legal expenses, of $3 million,
or $1.9 million after tax, equivalent to $0.13 per diluted share.

14. RESTRUCTURING CHARGES

   In fiscal 2002, we recorded restructuring charges totaling $11.5 million.
The restructuring charges consisted of the following.

   o severance expenses, asset writedowns and contractual obligations related
     to the closure of the VasoSeal manufacturing and R&D facility in Vaals,
     the Netherlands and severance expenses for U.S. employees

   o asset write-downs, severance expenses and contractual and incremental
     obligations associated with exiting the coronary stent sales business in
     Europe, including the resulting impairment of our investments in AMG and
     QualiMed

   o closure of an unprofitable Cardiac Assist direct sales operation in a
     European country

   o workforce reductions in Patient Monitoring

   The workforce reductions totaled 151 employees or 11% of the Company's
worldwide employment. The restructuring programs were completed in fiscal
2003. A summary of the restructuring charges is shown below.

<TABLE>
<CAPTION>
                                                 CARDIAC              PATIENT
FY 2002 RESTRUCTURING PROGRAMS       VASOSEAL    ASSIST    STENTS    MONITORING    TOTAL
------------------------------       --------    -------   ------    ----------   -------
<S>                                  <C>         <C>       <C>       <C>          <C>
 Asset Write-downs (Non-Cash) ....    $1,807      $ --     $4,011       $ --      $ 5,818
 Severance Expenses ..............     3,552       374        639        420        4,985
 Contractual Obligations .........       355        55        250         --          660
                                      ------      ----     ------       ----      -------
   Total Restructuring Charges....     5,714       429      4,900        420       11,463
UTILIZED THROUGH JUNE 30, 2003
------------------------------
 Asset Write-downs (Non-Cash) ....     1,807        --      4,011         --        5,818
 Severance Expenses ..............     3,552       374        639        420        4,985
 Contractual Obligations .........       355        55        250         --          660
                                      ------      ----     ------       ----      -------
   Remaining Balance June 30, 2003    $   --      $ --     $   --       $ --      $    --
                                      ======      ====     ======       ====      =======
</TABLE>


                                      F-26
<PAGE>
                       DATASCOPE CORP. AND SUBSIDIARIES.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


15. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                            YEAR ENDED JUNE 30, 2004
                               --------------------------------------------------
                                FIRST     SECOND     THIRD     FOURTH
                               QUARTER   QUARTER    QUARTER   QUARTER     TOTAL
                               -------   -------    -------   -------    --------
<S>                            <C>       <C>        <C>       <C>        <C>
Net sales..................    $77,100   $86,800    $89,900   $89,500    $343,300
                               -------   -------    -------   -------    --------
Gross margin...............    $45,222   $50,626    $52,908   $54,063    $202,819
                               -------   -------    -------   -------    --------
Net earnings...............    $ 4,200   $ 5,619    $ 7,120   $ 6,969    $ 23,908
                               -------   -------    -------   -------    --------
Earnings per share, basic..    $  0.28   $  0.38    $  0.48   $  0.47    $   1.62
                               -------   -------    -------   -------    --------
Earnings per share, diluted    $  0.28   $  0.37    $  0.47   $  0.46    $   1.58
                               -------   -------    -------   -------    --------
</TABLE>

<TABLE>
<CAPTION>
                                            YEAR ENDED JUNE 30, 2003
                               --------------------------------------------------
                                FIRST     SECOND     THIRD     FOURTH
                               QUARTER   QUARTER    QUARTER   QUARTER     TOTAL
                               -------   -------    -------   -------    --------
<S>                            <C>       <C>        <C>       <C>        <C>
Net sales..................    $72,000   $82,500    $84,700   $89,100    $328,300
                               -------   -------    -------   -------    --------
Gross margin...............    $42,116   $47,810    $48,732   $51,489    $190,147
                               -------   -------    -------   -------    --------
Net earnings...............    $ 3,693   $ 6,982    $ 6,371   $ 6,253    $ 23,299
                               -------   -------    -------   -------    --------
Earnings per share, basic..    $  0.25   $  0.47    $  0.43   $  0.42    $   1.58
                               -------   -------    -------   -------    --------
Earnings per share, diluted    $  0.25   $  0.47    $  0.43   $  0.42    $   1.57
                               -------   -------    -------   -------    --------
</TABLE>

   Quarterly and total year earnings per share are calculated independently
based on the weighted average number of shares outstanding during each period.

16. EARNINGS PER SHARE

   The computation of basic and diluted earnings per share is shown in the
table below.

<TABLE>
<CAPTION>
                                                                                      YEAR ENDED JUNE 30,
                                                                                 ----------------------------
                                                                                   2004      2003       2002
                                                                                 -------    -------   -------
<S>                                                                              <C>        <C>       <C>
Net earnings.................................................................    $23,908    $23,299   $13,901
                                                                                 =======    =======   =======
Weighted average shares outstanding for basic earnings per share.............     14,782     14,774    14,778
Effect of dilutive employee stock options....................................        339         76       297
                                                                                 -------    -------   -------
Weighted average shares outstanding for diluted earnings per share...........     15,121     14,850    15,075
                                                                                 =======    =======   =======
Basic earnings per share.....................................................    $  1.62    $  1.58   $  0.94
                                                                                 =======    =======   =======
Diluted earnings per share...................................................    $  1.58    $  1.57   $  0.92
                                                                                 =======    =======   =======
</TABLE>

   At June 30, 2004, 2003 and 2002, common shares related to options
outstanding under the Company's stock option plans amounting to 758 thousand,
2.01 million and 822 thousand shares, respectively, were excluded from the
computation of diluted earnings per share, as the effect would have been
antidilutive.

17. RELATED PARTY TRANSACTIONS

   We have a preferred stock investment of $5.0 million in Masimo Corporation, a
key supplier to the Patient Monitoring business. We purchased $7.6 million of
product from Masimo Corporation during fiscal 2004, $7.8 million in fiscal 2003
and $5.2 million in fiscal 2002.

   In fiscal 2002, we advanced Mr. Saper $260 thousand for payment of a club
membership deposit. Mr. Saper will repay such amount upon the termination of Mr.
Saper's membership in the club or, if earlier, upon the termination of Mr.
Saper's employment with the Corporation.

                                      F-27
<PAGE>
                        DATASCOPE CORP. AND SUBSIDIARIES

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
            COLUMN A                 COLUMN B             COLUMN C            COLUMN D      COLUMN E
            --------               ------------    -----------------------   ----------    ----------
                                                         ADDITIONS
                                                   -----------------------
                                                      (1)          (2)
                                                  CHARGED TO    CHARGED TO   DEDUCTIONS
                                    BALANCE AT       COSTS        OTHER         FROM       BALANCE AT
                                   BEGINNING OF       AND       ACCOUNTS-     RESERVES-     CLOSE OF
          DESCRIPTION                 PERIOD       EXPENSES      DESCRIBE     DESCRIBE       PERIOD
          -----------              ------------   ----------    ----------   ----------    ----------
<S>                                <C>            <C>           <C>          <C>           <C>
YEAR ENDED JUNE 30, 2004
Allowance for doubtful accounts       $2,020        $  661         $--         $267(A)       $2,414
                                      ======        ======         ===         =======       ======
Reserve for warranty costs.....          400            --          --              --          400
                                      ======        ======         ===         =======       ======
YEAR ENDED JUNE 30, 2003
Allowance for doubtful accounts       $1,159        $1,118         $--         $257(A)       $2,020
                                      ======        ======         ===         =======       ======
Reserve for warranty costs.....          325            75          --              --          400
                                      ======        ======         ===         =======       ======
YEAR ENDED JUNE 30, 2002
Allowance for doubtful accounts       $1,350        $   91         $--         $282(A)       $1,159
                                      ======        ======         ===         =======       ======
Reserve for warranty costs.....          350            --          --           25(A)          325
                                      ======        ======         ===         =======       ======
</TABLE>

---------------
(A) Write-offs


                                      S-1