<PAGE>

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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                   FORM 10-K

    (Mark One)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        [x]              SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 1998

                                      OR
        [ ]  TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to
                               ---------------------   ------------------------
Commission File Number 0-6516

                                ---------------
                                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 $.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 at least the past 90 days.
                                Yes   X            No
                                    -----             ----

                                -----------------
         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405) 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 [ ].

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

         The aggregate market value of the common stock held by persons other
than affiliates of the registrant, as of September 15, 1998, is approximately
$281,000,000.

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

         The number of shares outstanding of each of the registrant's classes
of common stock, as of September 15, 1998, is as follows:

                          Class                              Number of Shares
                          -----                              ----------------
         Common Stock, par value $.01 per share                      15,042,462

<PAGE>

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

                      DOCUMENTS INCORPORATED BY REFERENCE
         The registrant's proxy statement in connection with its 1998 annual
meeting of shareholders (the "Proxy Statement") is incorporated by reference
into Part III.

===============================================================================
                                    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 the intent, belief or current expectations of
Datascope Corp. (the "Company"), that relate to, among other things, trends
affecting the Company's financial condition or results of operations and the
Company's business and strategies. Readers are cautioned that any such
forward-looking statement is not a guarantee of future performance and
involves risks and uncertainties, and that actual results may differ
materially from those projected in the forward- looking statement as a result
of many important factors. Many of these important factors are outside of the
Company's control, including competitive factors, changes in government
regulation, the Company's ability to introduce new products and information
provided to the Company by third parties regarding their "Year 2000"
compliance. 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 the business of the Company and under Item
7 concerning "Management's Discussion and Analysis of Financial Condition and
Results of Operations," identifies additional important factors that could
cause such differences. The Company does not undertake to publicly update or
revise its forward-looking statements even if experience or future changes
make it clear that any projected results expressed or implied therein will not
be realized.

Item 1.   Business.

         The Company manufactures proprietary products for clinical health
care markets in interventional cardiology, radiology, anesthesiology,
cardiovascular and vascular surgery and for use in emergency rooms and
intensive care units. The Company's products are distributed worldwide by
direct sales personnel and independent distributors. In addition, in October
1997, the Company announced that it planned to enter the life science research
market. The Company was organized as a New York corporation in 1964 and was
reincorporated in Delaware in 1989.

         The Company's business is primarily conducted through its five
operating divisions, Cardiac Assist, Patient Monitoring, Collagen Products,
InterVascular, Inc. ("InterVascular") and Genisphere Inc. ("Genisphere"). The
Company's core businesses are cardiac assist systems (intra-aortic balloon
pump, or "IABP", systems) and multi-function patient monitoring devices. The
Company's Collagen Products Division manufactures and sells the 
VasoSeal(R) Vascular Hemostasis Device ("VHD").

                                       2

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On September 29, 1995, the Food and Drug Administration (the "FDA") approved
the VasoSeal Pre-Market Approval Application, making it the first device of its
kind to be approved in the United States. The VasoSeal device can rapidly seal
arterial punctures after procedures requiring femoral arterial
catheterization, including balloon angioplasty, diagnostic angiography and the
use of stents, and can result in reduced time to hemostasis, reduced time to
ambulation and increased patient satisfaction. The Collagen Products Division
also manufactures other hemostatic products that are utilized during surgical
procedures. See "--Collagen Products". InterVascular manufactures and sells a
proprietary line of knitted and woven polyester vascular grafts and patches
for reconstructive vascular and cardiovascular surgery. In October 1997, the
Company announced that it planned to enter the life science research market
with the introduction of reagents based on a new, proprietary class of DNA
molecules known as 3DNA(TM) (Three-Dimensional Nucleic Acid). The unique
reagents, which are designed for use with conventional assays, have been shown
to greatly increase the sensitivity of nucleic acid detection and may also
provide substantially greater sensitivity for the detection of proteins than
was previously possible. The Company formed its new subsidiary, Genisphere, to
manufacture and market the new 3DNA-based reagents. See "--Life Science
Research."

         The following table sets forth the relative contribution of the
Company's principal classes of products to total sales for the periods
indicated:

<TABLE>
<CAPTION>

                                                       Fiscal Year Ended June 30,
                                                       --------------------------

                                                      1998                 1997                1996
                                                      ----                 ----                ----
<S>                                                  <C>                  <C>                 <C>
Cardiac Assist.............................            42%                  46%                 51%
Patient Monitoring.........................            38%                  39%                 37%
VasoSeal and Hemostats - Collagen Products             12%                   8%                  4%
Vascular Grafts............................             8%                   7%                  8%
Life Science Research Products - Genisphere             0%(1)                --                  --
</TABLE>


         Cardiac Assist.  The Company is widely recognized as the leading 
manufacturer and distributor of IABP systems. IABP therapy increases the
heart's output and the supply of oxygen-rich blood to the heart, while
reducing the heart muscle's workload and its oxygen demand. IABP therapy is
used to stabilize heart function in instances of cardiogenic shock, before and
after open heart surgery and in the management of heart failure. IABP also
plays an important role in supporting acute angioplasty intervention,
especially in the high risk patient. It

--------

(1)Genisphere started operations in fiscal year 1998.

                                       3

<PAGE>

is also used to relieve refractory unstable angina and to correct certain
instances of medically resistant cardiac arrhythmias.

         The Company, a pioneer in IABP technology, introduced the first
balloon catheter capable of percutaneous insertion (by arterial puncture
through the skin), an innovation which eliminated the need for surgical
insertion and expanded the market for IABP products from cardiac surgery to
the interventional cardiology market. The Company has continued to advance its
IABP technology and to introduce new products.

         The Company manufactures a broad line of disposable intra-aortic
balloon ("IAB") catheters for use with balloon pumps. The Company offers IAB
catheters that permit sheathless insertion. Sheathless insertion results in a
30% reduction of the cross-sectional-indwelling area occupied by the catheter
compared to insertion using a 10Fr. Sheath. This means less obstruction to
blood flow and better peripheral circulation. In May 1997, the Company
introduced in both the United States and Europe a new 25cc IAB specifically
designed for use with patients who are 5 feet or less in height.

         In fiscal 1994, the Company began shipping the System 97 "Small
Wonder"(TM), a compact IABP designed for use either at bedside or in
transport. The System 97 has the most advanced features and performance of any
console balloon pump now being sold, including a built-in computer modem that
provides telephone transmission of data for remote diagnosis. In addition, the
System 97 has been designed in a compact form to utilize less floor space than
competing systems. The Company believes that the market for small IABPs
accounts for more than two-thirds of the total IABP market.

         In August 1996, the Company introduced the System 96 intra-aortic
balloon pump at the European Society of Cardiology conference. The System 96
was designed to address the need for a simple, yet cost-effective pump in
markets outside the United States. The System 96 incorporates many of the
advanced features seen in earlier pumps and provides the performance and
flexibility hospitals expect in a variety of clinical situations.

         In September 1997, the Company introduced the System 97e with
CardioSync software at the European Society of Cardiology conference.
CardioSync software is designed to assist as many beats as possible in the
presence of complex cardiac rhythms in both electrocardiogram ("ECG") and
pressure trigger modes. System 97e users can optimize beat-to-beat support
with minimal user intervention. The System 97e also provides diagnostic
software to facilitate service by telecommunication, using the system's
integral modem. The Company began shipping the System 97e in the second
quarter of fiscal 1998.

         In the fourth quarter of fiscal 1998, the Company introduced the new
System 98 intra-aortic balloon pump. The System 98 is the most advanced on
the market, with faster pneumatics, a larger display and greater automation
that makes balloon pumping therapy simpler to administer and faster to
initiate. Worldwide distribution of the System 98 began in July 1998.

                                       4

<PAGE>

         In May 1998, the Company received approval from the FDA to market its
new Profile 8Fr. Co-Lumen ("CL") intra-aortic balloon catheter in the United
States. The new Profile 8Fr. Catheter has the smallest profile of any
intra-aortic balloon catheter and is the first capable of insertion through an
8Fr. sheath, which is a standard sheath size used for coronary angioplasty and
stent procedures. This innovation will allow the interventional cardiologist
to move from a coronary angioplasty/stent intervention to balloon pumping,
while using the sheath already in place. This is expected to reduce possible
vascular complications and make balloon pumping simpler and more convenient.
In addition, the small balloon diameter of the Profile 8Fr. substantially
improves peripheral vascular flow, whether used with a sheath or inserted
without a sheath. Introduction of the Profile 8Fr. in international markets
began in January 1998. The Profile 8Fr. will be priced at a premium to the
Company's 9.5Fr. catheters. The Company began shipping the Profile 8Fr. in the
United States in July 1998.

         Patient Monitoring. The Company manufactures and markets a broad line
of physiological monitors designed to provide for patient safety and
management of patient care. The Company's monitors are capable of continuous
and simultaneous measurement of multiple vital sign parameters, and are used
in operating rooms, emergency rooms, critical care units, post-anesthesia care
units and recovery rooms, intensive care units, and labor and delivery rooms.

         The Company manufactures the PASSPORT(R) monitor, a portable,
battery-powered, multi-parameter patient monitor that offers the features of a
traditional bedside monitor, including measurement of ECG, blood pressure,
temperature, respiration and pulse oximetry, in a transportable unit that can
move with the patient to different settings in the hospital. The Company's
Passport(R) XG monitor features a larger and brighter screen than
competitive portable monitors. In January 1997, the Company introduced the
Passport(R) XG-CD monitor with a color display. The Company also offers
the PASSPORT EL monitor, with a large electroluminescent display panel providing
a wide viewing angle.

         In addition, the Company offers the VISA(TM) central station 
monitor system, which can be connected with up to eight Passport monitors or
small ECG-only transmitters that are attached to ambulatory patients. The VISA
can communicate using hard wire or telemetry, according to the patient's need.
When telemetry is used, information is transmitted from either the Passport
monitor or the ECG-only transmitter to the VISA. This allows the patient to move
within a department (i.e., the emergency room) or between departments (i.e.,
being transported from the emergency room to X-Ray) while being continuously
monitored. In addition, telemetry allows the institution to more flexibly
organize its delivery of patient care, since the monitors can be brought to the
patient rather than bringing the patient to a monitoring location.

         During fiscal year 1998, a clinical or hospital information interface
capability was added to both the VISA and Passport monitors, which provides
the user with the capability of sending vital sign information from the VISA
or Passport to its clinical or hospital information system.

                                       5

<PAGE>

         The Company manufactures the Accutorr(R) Plus non-invasive 
blood pressure ("NIBP") monitor, which was introduced to international markets
in fiscal 1996 and the U.S. market in fiscal 1998. The Accutorr Plus measures
NIBP, pulse oximetry and temperature. The Accutorr Plus is the first NIBP
monitor with an integrated patient database that provides automatic record
keeping on up to 100 measures.

         All of the monitoring product lines offered by the Company include
versions that can monitor blood oxygen saturation. This feature uses the
proprietary FLEXISENSOR(R) sensor and SENSOR GUARD(R) sensor,
which offer a low cost disposable sensor system for pulse oximetry.

         In October 1997, the Company introduced the EXPERT(TM), a new,
high-end, modular patient monitor that the Company believes will allow it to
compete in the estimated $350 million U.S. market for high-end patient
monitoring systems. The EXPERT is compatible with the VISA central monitoring
stations (including communication in either hard-wire or telemetry mode) and
the new Gas Module II. The resulting integrated patient monitoring systems
combine modular design with the advanced monitoring features needed in
operating rooms, intensive care and critical care units and advanced emergency
departments. The Company believes the EXPERT will enable primary care
hospitals to standardize on the Company's patient monitoring products for most
of their patient monitoring needs. Shipment of the EXPERT began in the third
quarter of fiscal 1998.

         In March 1998, the Company began shipping the Gas Module II, a new
gas measurement subsystem which monitors C0(2), oxygen, nitrous oxide and all 5
inhalated anesthetic gases. The Gas Module II interfaces with both the
Passport XG (for use in the growing day or ambulatory surgery market segment)
and the EXPERT, the Company's new high-end monitor (for use in main hospital
operating rooms). In addition, the interface integrates the Gas Module II into
the controls and displays of both monitors.

         In the second quarter of fiscal 1998, the Company received FDA 510(k)
clearance to market a new MRI compatible monitor. The MRI monitor effectively
measures the vital signs of patients in Magnetic Resonance Imaging ("MRI")
rooms, which contain powerful magnetic fields that distort the measurements of
ordinary monitors. The Company began shipping the new MRI monitor in the third
quarter of fiscal 1998. The annual United States market for MRI compatible
monitors is estimated at $30 million.

         Collagen Products. The Company's Collagen Products Division
manufactures and sells two principal product lines: (1) the VasoSeal(R)
VHD device, which can rapidly seal femoral arterial punctures after
catheterization procedures, including balloon angioplasty and diagnostic
angiography, and (2) other hemostatic products that are utilized during surgery.
In 1998, physicians will perform approximately 3,500,000 angiography and 770,000
balloon angioplasty procedures (balloon and stent) in both interventional
cardiology and radiology in the United States, according to industry estimates.
Based on currently approved indications for use, the above procedures represent
the potential market for VasoSeal in the United States and are

                                       6

<PAGE>

growing at an estimated 10% and 5% annual rate for angioplasty and diagnostic
angiography, respectively.

         On September 29, 1995, the VasoSeal device was approved by the FDA
for sale in the United States for coronary procedures, making it the first
device of its kind to be approved in the United States. The Company believes
that the VasoSeal device has created an entirely new market for improved
management of arterial puncture wounds made for catheterization procedures.

         The initial FDA approval for the VasoSeal device covered the claims
of reduced time to hemostasis and immediate removal of the sheath used during
certain coronary procedures, which is now left in place for around 4 hours. In
August 1996, the FDA approved revised VasoSeal labeling that includes the
claim that patients can be ambulated significantly earlier when using the
VasoSeal device, rather than under conventional clinical practice using manual
or mechanical compression. As an example, in the clinical study submitted to
support the new labeling, 80% of angiography patients receiving the VasoSeal
device were able to ambulate within 1 hour following removal of the catheter
sheath, compared with 4 to 6 hours under standard clinical practice.

         Early ambulation made possible by the VasoSeal device should result,
the Company believes, in significant potential cost savings for hospitals
because patients can be moved to lower, potentially less costly levels of
care. In addition, human and material resources are reduced, which results in
improved hospital efficiencies. At present, upon removal of the
catheterization sheath, the patient typically requires prolonged manual
compression at the arterial puncture site followed by the application of a
pressure dressing, sand bag or other mechanical compression device. In
addition, the patient is required to remain in bed for several hours or even
overnight. Clinical studies have shown that the VasoSeal device can cause
rapid sealing at the arterial puncture site, eliminating the need for
prolonged compression, which allows the patient to get out of bed more
quickly. The ability to claim early ambulation and its potential to lower cost
and increase revenue should continue to accelerate the VasoSeal device's
penetration of the vascular sealing market in the United States.

         In December 1996, the FDA approved the VasoSeal device for use in
diagnostic and interventional radiology procedures. In April 1997, the Company
received FDA approval to market the VasoSeal device for use following stent
implantation. Stents, which are devices that support the arterial wall, are
implanted in conjunction with approximately 60-70% of the 770,000 coronary and
peripheral balloon angioplasty procedures performed annually in the United
States. The VasoSeal device was the first vascular closure device approved in
the United States for use after stent implantation.

         In September 1997, the FDA approved deployment of the VasoSeal device
by health care professionals other than physicians. In addition to physicians,
the VasoSeal device may now be deployed by nurses and technicians who have
participated in a VasoSeal training program. The 

                                      7

<PAGE>

Company believes that this latest approval will further enhance the market
penetration of the VasoSeal device.

         The Company has had extensive experience with the VasoSeal device in
Europe since 1992. During calendar years 1993 through 1995, the Company
received regulatory approvals to market the VasoSeal device in Canada,
Australia, Italy, Spain and the Netherlands. In November 1997, the Company
received the CE mark for the VasoSeal device, which allowed it to begin
commercial sale of the VasoSeal device throughout the European Union,
including the major markets of Germany, France and the United Kingdom. The
Company began marketing the VasoSeal device in Germany, France and the United
Kingdom in the third quarter of fiscal 1998. According to industry estimates,
physicians will perform more than 1,100,000 angiography procedures and 560,000
angioplasty/stent procedures in Europe in 1998. In September 1994, the Company
received regulatory approval to market the VasoSeal device in Japan. However,
the Company is awaiting approval for insurance reimbursement in Japan. Until
such time, market penetration in Japan may be limited.

         In August 1998, the Collagen Products Division received the CE mark
for a second generation arterial puncture sealing device, known as VasoSeal
ES, allowing its sale throughout the European Union. Like the original
VasoSeal, the new device is used to rapidly seal the arterial puncture wound
created for angiography, balloon angioplasty and stent procedures in
interventional cardiology and radiology. The VasoSeal ES device eliminates
both the need to measure the depth from the skin surface to the artery and the
need to stock multiple sizes by providing a one-size-fits-all device. These
features are made possible by a unique locator which provides an easier method
for locating the arterial puncture site. Like the original VasoSeal device,
the VasoSeal ES device is based on extravascular technology in which a
collagen plug is deployed to the outside wall of the artery to seal the
puncture wound.

         The Collagen Products Division also manufactures a collagen
hemostatic pad and a fibrillar collagen hemostat which are sold in the United
States and abroad. These products are used to control bleeding during surgery.

         InterVascular. The Company's InterVascular subsidiary manufactures
and distributes a proprietary line of knitted and woven polyester vascular
grafts and patches for reconstructive vascular and cardiovascular surgery.
InterGard(TM) is InterVascular's collagen coated graft. The approval of
the coated InterGard range of products in both the U.S. and Japan led to
significant sales increases to the Company's distributors in those countries
during fiscal year 1998, as part of their product launches.

         During fiscal year 1999, the Company plans to extend the range of
products available in the United States with the expected approval of its
woven InterGard products (which are designed primarily for use in
cardiothoracic surgery) and its Ultra Thin(TM) products (which are
designed specifically for use in peripheral indications).

                                      8

<PAGE>

         As a result of the 40% price reduction imposed on vascular graft
products by the French Government in November 1996, sales and profitability in
France, which is InterVascular's single largest international market, were
adversely impacted. However, sales growth has resumed from a lower sales base
created by the price reduction.

         Life Science Research. In October 1997, the Company announced that it
planned to enter the life science research market with the introduction of
reagents based on a new, proprietary class of DNA molecules known as
3DNA(TM) (Three Dimensional Nucleic Acid). The 3DNA-based reagents,
which are designed for use with conventional assays, have been shown to greatly
increase the sensitivity of nucleic acid detection and may also provide
substantially greater sensitivity for the detection of proteins than was
previously possible.

         The 3DNA molecule consists of a large, three-dimensional matrix of
double-stranded DNA that can support hundreds to thousands of detection label
molecules. In contrast with PCR (polymerase chain reaction), which enhances
detection through amplification of the target material, 3DNA amplifies the
sensitivity of the actual detection system. Thus far, 3DNA-based reagents have
been used successfully to detect plant, animal, bacterial and viral gene
targets, including the Human Immunodeficiency Virus ("HIV") and the
Epstein-Barr Virus. Studies by several academic and industrial laboratories
have demonstrated a 50- to 1000-fold increase in sensitivity when 3DNA is used
in conjunction with conventional radioactive and chemiluminescent assays. Use
of 3DNA in a commercial setting has resulted in a 50- to 250-fold increase in
sensitivity. The 3DNA-based reagents have a potentially broad range of
applications, including both the research and clinical diagnostic markets.

         The 3DNA-based reagents were developed by Polyprobe, Inc., a
biotechnology company based in Bala Cynwyd, Pennsylvania, in collaboration
with the Company, which also funded the development of the technology. The
Company has exclusive rights to commercialize the technology and has formed a
new subsidiary, Genisphere, based in Oakland, New Jersey, to manufacture and
market the new 3DNA-based reagents. On June 30, 1998, the Company announced it
had reached an agreement with Fisher Scientific L.L.C. to distribute its new
Genisphere life science research products in the United States and Puerto
Rico.

Research and Development

         For the three years ended June 30, 1998, 1997 and 1996 the Company
spent approximately $30,109,000, $26,815,000 and $24,275,000, respectively, on
research and development relating to the development of new products and the
improvement of existing products. The increase in research and development
expenditures reflects the Company's continuing efforts to develop new products
such as the VasoSeal device and to expand existing product lines. The Company
has established relationships with several teaching hospitals for the
purpose of clinically evaluating new products, and also has consulting
arrangements with physicians and scientists in the areas of research, product
development and clinical evaluation.

                                      9

<PAGE>

Markets and Sales

         The Company's products are sold throughout the world through its own
direct sales organization and through independent distributors. The Company's
worldwide sales organization employs approximately 350 people consisting of
sales representatives, sales managers, clinical education specialists and sales
support personnel. The Company's worldwide clinical education staff, most of
whom are critical care and catheterization lab nurses, conducts seminars and
provides in-service training to nurses and physicians on a continuing basis. The
Company provides support services, including warranty service, invoicing and
inventory support, to its worldwide sales organization.

         The Company's cardiac assist products and the VasoSeal device are
sold primarily to major hospitals with open-heart surgery and balloon
angioplasty facilities and to community hospitals with cardiac catheterization
laboratories. More recently, cardiac assist product sales have been made, to a
growing degree, to a broader range of hospitals, where IABP 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.

         The Company's 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 Company's
collagen products are sold to both interventional cardiology and radiology
labs, both in the hospital and within freestanding diagnostic facilities.

         The Company provides service and maintenance to purchasers of its
products under warranty, and thereafter on a contract basis. The Company
employs service representatives in the United States and Europe and maintains
service facilities in the United States, the Netherlands, France, Germany and
the United Kingdom. Service revenues accounted for approximately 6% of the
Company's revenues in fiscal 1998. The Company conducts regional service
seminars throughout the United States for its customers and their biomedical
engineers and service technicians.

         During the three fiscal years ended June 30, 1998, 1997 and 1996,
foreign sales represented approximately 30%, 31% and 36%, respectively, of the
Company's total sales. The Company is continuing to actively expand its
international presence. The Company has subsidiaries in the United Kingdom,
France, Germany and the Netherlands, and InterVascular has subsidiaries in
France, Italy and Germany. Because a portion of the Company's foreign sales
are made in foreign currencies, the Company bears the risk of adverse changes
in exchange rates for such sales. Reference is made to Notes 2 and 8 to the
Financial Statements for additional information with respect to the Company's
foreign operations. The Company's sales are broadly based and no customer
accounts for more than 10% of its total sales

Competition

                                      10
<PAGE>

         The Company believes that the choice among competing products is
generally made on the basis of product performance, features, price and
service. In general, price has become an important factor in hospital
purchasing patterns as a result of cost containment pressures on the health
care industry, including Federal and State regulations limiting reimbursement
for services provided to Medicare and Medicaid patients. Many companies, some
of which are substantially larger than the Company, are engaged in
manufacturing competing products. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition" for a discussion of the impact
of competition on the Company's sales in the last fiscal year.

Suppliers

         The Company's products are made of components which it fabricates or
which are usually available from existing and alternate sources of supply.
Certain components are purchased from single or preferred sources of supply.
Recently, the Company has become more dependent on the use of original equipment
manufacturers to supply certain products to the Patient Monitoring Division,
such as the Gas Module II, the EXPERT monitor and the MRI monitor. The use of
single or preferred sources of supply by the Company increases its exposure to
price increases and production delays. In addition, certain suppliers have been
contemplating, and in a few cases have begun, reducing or eliminating sales of
their products to medical device manufacturers. The Company is unable to predict
whether or not additional suppliers will withhold their products from medical
device manufacturers. The Company has not thus far experienced any material
disruption or delay in processing its components.

Patents

         The Company holds a number of United States and foreign patents. In
addition, various patent applications have been filed and are pending. The
Company does not believe the expiration or invalidity of any of its patents
would have a material adverse effect on its business as currently conducted.
See "Legal Proceedings."

Employees

         The Company currently employs approximately 1,300 persons. The
Company believes its relationship with its employees is satisfactory.

Regulation

         The medical devices manufactured and marketed by the Company are
subject to regulation by the FDA and, in some instances, by state and foreign
governmental authorities. 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 (the "Act"), require manufacturers of medical devices to
comply with certain controls that regulate the composition, labeling, testing,
manufacturing and distribution of medical 

                                      11

<PAGE>

devices. FDA regulations known as "Current Good Manufacturing Practices for
Medical Devices" provide standards for the designing, manufacturing,
packaging, labeling, storing, installing and servicing of medical devices.
Facilities used by the Company to manufacture or assemble the Company's
products are subject to routine FDA inspections. The FDA may also conduct
investigations and evaluations of the Company's 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 the Act.

         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 premarket notification (510(k)) regulations and 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. The
Company's principal products are designated as Class II and Class III devices.

         The Company believes that the trend is toward increasing regulation
of device manufacturers. The process of obtaining requisite FDA approvals for
new products and improvements to existing products is taking longer. The FDA
has also intensified its surveillance and enforcement activities related to
medical device manufacturers. In the normal course of business, the Company
conducts regulatory audits of its operations.

         The Company also receives inquiries from the FDA and other agencies
and from time to time it 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
expenditures by the Company.

         The Company is also subject to certain federal, state and local
environmental regulations. The cost of complying with these regulations has
not been, and the Company does not expect them to be, material to the
Company's operations.

Health Care Reform

         The Company believes that concerns about potential health care reform
legislation have slowed the domestic sales of medical devices generally.
Management of the Company cannot predict at this time what impact, if any, the
adoption by the United States Congress of health care reform legislation would
have on the business of the Company.

Item 2.   Properties.

                                      12

<PAGE>

         The following table sets forth information with respect to the real
property owned or leased by the Company and its subsidiaries which the Company
considers material to its business:

<TABLE>
<CAPTION>
                                                                                           Ownership or
                                              General Character and Use of                  Expiration
              Location                                  Property                           Date of Lease
              --------                                  --------                           -------------
<S>                                 <C>                                                   <C>        
Montvale, New Jersey................ 38,000 sq. feet, used as the                              Owned
                                     Company's corporate headquarters
                                     and as offices for the Collagen
                                     Products Division

Oakland, New Jersey................. 42,000 sq. feet, used by Genisphere                       Owned
                                     for research and development and the
                                     manufacture of life science research
                                     products and corporate storage


Paramus, New Jersey................. 35,600 sq. feet, used for offices by                  December 31,
                                     the Patient Monitoring Division and                 1999 with option
                                     for the corporate service facility                      to extend

Paramus, New Jersey................. 72,700 sq. feet, used for research and                December 31,
                                     development and the manufacture of                        2001
                                     products for the Patient Monitoring
                                     Division and IABP systems for the
                                     Cardiac Assist Division

Fairfield, New Jersey............... 75,000 sq. feet, used for offices by                      Owned
                                     the Cardiac Assist Division and in
                                     the manufacture of disposable
                                     products

Clearwater, Florida................. 25,000 sq. feet, used by                              Leased until
                                     InterVascular for offices and in the                October 31, 2000
                                     manufacture of vascular grafts                      with an option to
                                                                                             purchase

La Ciotat, France................... 30,000 sq. feet, used by                               Part Owned
                                     InterVascular for the production of                 (18,000 sq. feet)
                                     vascular grafts                                      and Part Leased
                                                                                         (12,000 sq. feet)
                                                                                           until May 30,
                                                                                               2007
</TABLE>

                                      13

<PAGE>

<TABLE>
<CAPTION>

                                                                                           Ownership or
                                              General Character and Use of                  Expiration
              Location                                  Property                           Date of Lease
              --------                                  --------                           -------------

<S>                                 <C>                                                   <C>
Vaals, The Netherlands.............. 17,500 sq. feet, used in the                              Owned
                                     manufacture of, and for research and
                                     development relating to, collagen
                                     products

Hoevelaken, The                      12,700 sq. feet, used for sales and                       Owned
Netherlands......................... service offices
</TABLE>


         The Company also leases space for offices in various locations in the
United States and for its offices in England, France and Germany. The Company
believes that its facilities and the equipment located therein are in good
working condition and are adequate for its needs.

Item 3.  Legal Proceedings.

         On December 22, 1981, the Company instituted patent infringement
litigation relating to an intra-aortic balloon catheter against SMEC, Inc.
("SMEC") in the United States District Court for the District of New Jersey
(the "Court"). The Court rendered a decision on September 24, 1984 that one of
the Company's patents for the percutaneous intra-aortic balloon catheter is
valid and was infringed by SMEC. Certain claims of a second patent for the
intra-aortic balloon catheter system were held to be invalid. After the United
States Court of Appeals for the Federal Circuit upheld the lower court's
decision, a separate trial was held on the amount to which the Company was
entitled as damages from SMEC, and damages were awarded to the Company.

         In August 1990, SMEC filed for protection under Chapter 11 of the
Federal Bankruptcy Code. In that bankruptcy proceeding, at the request of the
Company, a trustee was appointed for SMEC so that the debtor, SMEC, would no
longer be in possession of its assets. The trustee then filed an action in the
Tennessee Bankruptcy Court against Peter Schiff, principal stockholder and
officer of SMEC, to recover from him assets belonging to SMEC. The bankruptcy
proceeding was thereafter converted to a case under Chapter 7. In July 1991,
the Company and the SMEC trustee initiated litigation in State Court in
Massachusetts against Boston Scientific Corporation and IABP Corp. for the
wrongful acquisition of SMEC assets.

         Datascope settled the Massachusetts action in the fourth quarter of
fiscal 1993. In addition, in the fourth quarter of fiscal 1993, the trustee
settled the Massachusetts action and the trustee's settlement was approved by
the Bankruptcy Court in Tennessee. In 

                                      14

<PAGE>

connection with the settlement by the trustee, Boston Scientific Corporation
and IABP Corp. made a payment to the trustee for the benefit of the bankruptcy
estate of SMEC.

         A complaint was filed on June 7, 1995 by the Trustee in Bankruptcy
for SMEC in the United States Bankruptcy Court for the Middle District of
Tennessee, which sought a judgment against the Company, Boston Scientific
Corporation and IABP Corp. for actual damages in the amount of $6 million. The
suit also sought recovery of treble damages, punitive damages, pre and post
judgment interest and attorney fees. The suit accused the Company and Boston
Scientific Corporation of entering into an elaborate scheme to defraud the
trustee in the SMEC bankruptcy case and sought recovery under theories of
breach of fiduciary duty, fraud conversion, RICO, and an impermissible
postpetition transfer of property by the bankruptcy estate. In effect the suit
was a collateral attack on the order of dismissal entered in the Massachusetts
case. The Company denied the Trustee's charges.

         A mediation was held in September 1998, resulting in an agreement in
principle (i) to settle all pending matters, (ii) to give mutual releases and
(iii) to pay the Company $200,000. Draft settlement documents are being
circulated among the parties, however, the settlement is subject to the
execution of definitive documentation by the parties and approval by the
Bankruptcy Court.

         The Company is subject, in the ordinary course of its business, to
product liability litigation. The Company believes it has meritorious defenses
in all material pending lawsuits and that it maintains adequate insurance
against any potential liability. The Company receives comments and
recommendations with respect to its products from the staff of the FDA and
from other agencies on an on-going basis. The Company may or may not agree
with such comments and recommendations; however, the Company is not a party to
any formal regulatory administrative proceedings. See "Business--Regulation."

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 1998.

Item 4a.  Executive Officers of the Company.

         The following table sets forth the names, ages and positions and
offices with the Company held by the Company's present executive officers:

                                      15

<PAGE>

                                               Positions and Offices
Name                            Age                Presently Held
----                            ---                --------------

Lawrence Saper .................70           Chairman of the Board,
                                             President and Chief
                                             Executive Officer
Murray Pitkowsky ...............67           Senior Vice President, Chief
                                             Financial Officer and
                                             Secretary; Acting President,
                                             Cardiac Assist Division
James Cooper ...................47           Vice President,
                                             Human Resources
John Gilbert ...................41           Vice President; President,
                                             Collagen Products Division
Timothy J. Haines...............41           Vice President; President,
                                             InterVascular, Inc.
Stanton Rowe....................47           Vice President, Business
                                             Development
Donald Southard ................52           Vice President, President,
                                             Patient Monitoring Division
S. Arieh Zak, Esq...............37           Vice President, Regulatory
                                             Affairs and Corporate
                                             Counsel
Eric H. Nietsch.................45           Treasurer

                                      16

<PAGE>

                                    PART II

Item 5.  Market for the Registrant's Common Equity and  Related Stockholder 
         Matters

Market Information

The Company's common stock is traded over-the-counter and is listed on the
NASDAQ National Market. (NASDAQ symbol: 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 NASDAQ.

Fiscal Year               High                                    Low
-----------               ----                                    ---

1997
----

First Quarter             18 3/8                                  15 1/4
Second Quarter            21 1/2                                  15 1/4
Third Quarter             24 3/4                                  17 5/8
Fourth Quarter            21 1/4                                  17 1/2

1998
----

First Quarter             24 3/4                                  19
Second Quarter            28 1/2                                  21 1/4
Third Quarter             26 7/8                                  22
Fourth Quarter            30 1/2                                  25 1/4

         As of September 15, 1998, there were approximately 859 holders of
record of the Company's common stock.

Dividend Policy

         The Company has never paid any cash dividends to its shareholders and
presently intends to continue its policy of retaining its earnings for
facility expansion, acquisitions and working capital purposes.

                                      17

<PAGE>

Recent Sales of Unregistered Securities

         None.

                                      18

<PAGE>

Item 6.  Selected Financial Data.

      The following selected consolidated financial information for the fiscal
years 1994 through 1998 has been derived from the consolidated financial
statements of the Company for those years, which have been audited by Deloitte
& Touche, LLP, independent certified public accountants, whose report for
fiscal years 1996 through 1998 is included elsewhere herein. All such
information is qualified by reference to the financial statements included
elsewhere herein.


                         SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
EARNINGS STATEMENT DATA:
    (In thousands, except per share data)
 
                                                                     YEAR ENDED JUNE 30,
                                                   --------------------------------------------------------
                                                     1998        1997        1996        1995        1994
                                                   --------    --------    --------    --------    --------
<S>                                                <C>         <C>         <C>         <C>         <C>
Net sales.......................................   $242,400    $225,600    $211,300    $195,700    $182,800
                                                   --------    --------    --------    --------    --------
Cost of sales...................................     84,408      80,606      75,000      69,506      64,953
Cost of sales, point of view charge.............         --          --       9,600          --          --
Research and development........................     30,109      26,815      24,275      19,400      18,765
Selling, general and administrative.............    102,928      96,151      89,708      84,249      78,208
Settlements of litigation.......................         --       8,554     (10,691)         --          --
                                                   --------    --------    --------    --------    --------
                                                    217,445     212,126     187,892     173,155     161,926
                                                   --------    --------    --------    --------    --------
Operating earnings..............................     24,955      13,474      23,408      22,545      20,874
Other (income) expense:
  Interest income...............................     (4,972)     (4,744)     (4,226)     (2,855)     (1,608)
  Interest expense..............................         25          18          50          55          24
  Other, net....................................        187         380         743         366         353
                                                   --------    --------    --------    --------    --------
                                                     (4,760)     (4,346)     (3,433)     (2,434)     (1,231)
                                                   --------    --------    --------    --------    --------
Earnings before taxes on income.................     29,715      17,820      26,841      24,979      22,105
Taxes on income.................................      8,074       3,716       6,424       7,640       6,437
                                                   --------    --------    --------    --------    --------
Net earnings....................................   $ 21,641    $ 14,104    $ 20,417    $ 17,339    $ 15,668
                                                   ========    ========    ========    ========    ========
Earnings per share, Basic.......................   $   1.37    $   0.88    $   1.27    $   1.08    $   0.98
                                                   --------    --------    --------    --------    --------
Earnings per share, Diluted.....................   $   1.32    $   0.86    $   1.24    $   1.07    $   0.97
                                                   --------    --------    --------    --------    --------
<CAPTION>

BALANCE SHEET DATA:
  (In thousands)
 

                                                                           JUNE 30,
                                                   --------------------------------------------------------
                                                     1998        1997        1996        1995        1994
                                                   --------    --------    --------    --------    --------
<S>                                                <C>         <C>         <C>         <C>         <C>
Total assets....................................   $253,048    $237,862    $234,464    $206,863    $185,421
Long-term debt..................................         --          --          --          --          --
Working capital.................................    117,897     123,716     121,359     110,744     102,943
Stockholders' equity............................    201,482     192,243     181,680     163,319     144,062
Cash dividends..................................         --          --          --          --          --
</TABLE>
 
                                      19

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS.
 
                        DATASCOPE CORP. AND SUBSIDIARIES
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
RESULTS OF OPERATIONS
 
     Net earnings for fiscal 1998 were $21.6 million compared to $19.2 million
last year (excluding special items), equivalent to $1.32 per diluted share
versus $1.17 per diluted share, respectively.
 
     Net earnings for fiscal 1997 including special charges of $5.1 million
after tax or $0.31 per diluted share were $14.1 million or $0.86 per diluted
share. The special charges included in fiscal 1997 earnings were as follows:
 
          1) Shareholder class action securities lawsuit settlement expense of
            $5.6 million or $3.3 million after tax, equivalent to $0.20 per
            diluted share.
 
          2) Quinton patent infringement lawsuit settlement expense of $3.0
            million or $1.8 million after tax, equivalent to $0.11 per diluted
            share.
 
COMPARISON OF RESULTS -- FISCAL 1998 VS. FISCAL 1997
 
     Net sales in fiscal 1998 were $242.4 million, an increase of 7% compared to
sales of $225.6 million in fiscal 1997.
 
     The following table shows the comparison of sales by product line over the
past three fiscal years.
 
<TABLE>
<CAPTION>
                                                                            SALES BY PRODUCT LINE
                                                                            (DOLLARS IN MILLIONS)
                                                                             YEAR ENDED JUNE 30,
                                                                          --------------------------
                                                                           1998      1997      1996
                                                                          ------    ------    ------
<S>                                                                       <C>       <C>       <C>
Cardiac Assist.........................................................   $102.9    $103.0    $107.8
  % change from prior year                                                     0%       (4)%       7%
  % of total sales                                                            42%       46%       51%
Patient Monitoring.....................................................   $ 91.5    $ 87.8    $ 77.6
  % change from prior year                                                     4%       13%        4%
  % of total sales                                                            38%       39%       37%
VasoSeal and Hemostats -- Collagen Products............................   $ 29.1    $ 18.9    $  8.1
  % change from prior year                                                    54%      131%       62%
  % of total sales                                                            12%        8%        4%
Vascular Grafts........................................................   $ 18.9    $ 15.9    $ 17.8
  % change from prior year                                                    19%      (11)%      21%
  % of total sales                                                             8%        7%        8%
Life Science Research Products -- Genisphere                              $    0(1)     --        --
Total Sales............................................................   $242.4    $225.6    $211.3
  % change from prior year                                                     7%        7%        8%
</TABLE>
 
------------------
 
(1) Genisphere started operations in fiscal year 1998.
 
     Cardiac Assist product sales were essentially unchanged in fiscal 1998
reflecting the highly competitive climate that has characterized the worldwide
intra-aortic balloon pumping business. Lower selling prices were offset by
increased sales of balloons and intra-aortic balloon pumps, including the new
System 97e. With the introduction of two new products, the Profile 8Fr. balloon
catheter in the fourth quarter of fiscal 1998 and the System 98 balloon pump in
the first quarter of fiscal 1999, the Company expects to strengthen its
competitive position in the balloon pumping market in fiscal 1999.
 
                                       20
<PAGE>

     Sales of Patient Monitoring products increased in fiscal 1998, reflecting
increased sales of Visa(TM) Central Station monitors and shipments of the
following new products introduced during the fiscal year: the
Expert(TM) high end monitoring system, the Accutorr(R) Plus
non-invasive blood pressure monitor and the MRI monitor. Sales growth was
impacted in the fourth quarter of fiscal 1998 by a shortfall in the supply of
new anesthetic gas modules sold with the Expert. The supplier of the gas modules
is working to resolve production problems that caused the shortfall and the
Company believes that the supply of gas modules will catch up to requirements by
the second quarter of fiscal 1999.
 
     Sales of VasoSeal devices in fiscal 1998, predominately in the U.S., grew
59% over last year reflecting increased unit shipments and the impact of higher
selling prices. The Company has continued to expand the U.S. VasoSeal direct
selling and clinical training organization to meet the growing demand for
vascular sealing products and an increasingly competitive environment. The
Company also expanded its direct selling organization in Germany upon receiving
CE mark approval in November 1997.
 
     Sales of vascular grafts grew in fiscal 1998 reflecting shipments of the
InterGard(TM) collagen-coated vascular grafts to distributors in the U.S.
and Japan following receipt of regulatory clearance in both markets in May 1997
and August 1997, respectively. Partially offsetting the above were lower selling
prices in France.
 
     Genisphere, the Company's new life science research products business,
started operations in fiscal 1998 for the manufacturing and marketing of a new
proprietary class of DNA molecules, called 3DNA(TM), which dramatically
increases the sensitivity of assays that are used to detect genetic material
such as DNA. On June 30, 1998, the Company announced an agreement with Fisher
Scientific L.L.C. to distribute its Genisphere life science research products in
the U.S. and Puerto Rico.
 
     The foreign exchange rate effect of the stronger U.S. dollar compared to
major European currencies decreased total sales by approximately $2.5 million in
fiscal 1998 compared to fiscal 1997.
 
     Cost of Sales was 34.8% of sales in fiscal 1998 compared to 35.7% in fiscal
1997 with the decrease primarily attributable to manufacturing efficiencies and
higher selling prices for the VasoSeal device and cost reductions in the Patient
Monitoring division, partially offset by lower selling prices for cardiac assist
and vascular graft products.
 
     Research and development expenses were higher by 12% in fiscal 1998
primarily from increased staffing and expenditures to accelerate the development
of new products in all businesses, including Genisphere.
 
     Selling, general and administrative expenses (SG&A) increased 7% primarily
as a result of the expansion of the U.S. and international VasoSeal selling
organization, new marketing programs in the Cardiac Assist division, higher
corporate expenses and the addition of new sales and marketing staff in
Genisphere.
 
     The strengthening of the U.S. dollar compared to major European currencies
decreased SG&A expenses by approximately $1.7 million in fiscal 1998 compared to
fiscal 1997.
 
     The higher interest income in fiscal 1998 compared to fiscal 1997 was
attributable to an increase in the investment portfolio from cash generated by
operations.
 
     Foreign exchange forward contracts outstanding at June 30, 1998 totaled
$200 thousand, all of which were in European currencies, with maturities that do
not exceed twelve months. See Item 7a in Form 10-K.
 
     The consolidated effective tax rate for fiscal 1998 was 27.2% compared to
20.9% for fiscal 1997. The tax rate in both years was lower than the federal
statutory tax rate primarily as a result of the tax benefit from the Foreign
Sales Corporation, earnings in an international tax exempt industrial zone and
interest income exempt from federal income tax. The higher tax rate in fiscal
1998 compared to fiscal 1997 was primarily attributable to a higher proportion
of domestic expenses (due to the special charges recorded in fiscal 1997) 
versus international expenses incurred in fiscal 1997.


                                       21
<PAGE>

     Excluding the special charges recorded in fiscal 1997, net earnings in
fiscal 1998 were 13% higher compared to fiscal 1997 primarily as a result of
increased earnings from VasoSeal and improved profitability in the Patient
Monitoring division and InterVascular, Inc., partially offset by reduced
earnings in the Cardiac Assist division.
 
COMPARISON OF RESULTS -- FISCAL 1997 VS. FISCAL 1996
 
     Cardiac Assist product sales decreased in fiscal 1997 reflecting the
intensified worldwide competitive environment. Increased unit shipments of both
intra-aortic balloons and pumps were offset by lower prices required to maintain
the Company's dominant market position.
 
     Sales of Patient Monitoring products grew in fiscal 1997, reflecting strong
domestic sales growth of the Passport(R) XG line of portable monitors,
introduced in June 1996, and higher sales of VISA central station monitors. The
Company believes that its Passport monitors continued to gain market share
throughout fiscal 1997 and expanded its product line further with the
introduction of the Passport XG-CD model, with a color display screen for better
viewing and acuity, in the third quarter of fiscal 1997.
 
     Sales of vascular grafts declined in fiscal 1997 despite higher unit graft
shipments due to a price reduction of 40% imposed by the French Government on
vascular grafts in November 1996, an unfavorable foreign exchange impact and
lower sales to the Japanese distributor which reduced its inventory of uncoated
grafts while awaiting approval for InterGard(TM) collagen-coated grafts.
Japanese regulatory approval for InterGard was received in August 1997. Higher
U.S. graft sales were attributable to sales of InterGard grafts to Impra, the
new U.S. distributor, in the fourth quarter of fiscal 1997, upon receiving Food
and Drug Administration (FDA) approval in May of 1997.
 
     In August 1996, the FDA approved revised VasoSeal(R) labeling that
includes the claim that patients who receive the VasoSeal device can be
ambulated significantly earlier, rather than under conventional clinical
practice using manual or mechanical compression. The Company believes that early
ambulation made possible by the VasoSeal device should result in significant
potential cost savings for hospitals because patients can be moved to lower,
less costly levels of care. In addition, human and material resources are
reduced, which results in improved hospital efficiencies. The ability to claim
early ambulation and its potential to lower cost and increase revenue should
assist the VasoSeal device in the vascular sealing market in the U.S.
 
     In December 1996, the FDA approved the VasoSeal device for use in
diagnostic and interventional radiology procedures. In April 1997, the Company
received FDA approval to market the VasoSeal device for use following stent
implantation. Stents, which are devices that support the arterial wall, are
implanted in conjunction with approximately 60-70% of the 770,000 coronary and
peripheral balloon angioplasty procedures performed annually in the United
States. The VasoSeal device was the first vascular closure device approved in
the United States for use after stent implantation.
 
     Sales of the VasoSeal device in fiscal 1997, predominately in the U.S.,
grew to $17.9 million in the first full year of sales. The Company continued to
expand its direct U.S. sales and marketing organization to meet the growing
demand for vascular sealing devices.
 
     The foreign exchange rate effect of the stronger U.S. dollar compared to
major European currencies decreased total sales by approximately $1.6 million in
fiscal 1997 compared to fiscal 1996.
 
     Cost of Sales was 35.7% of sales in fiscal 1997 compared to 35.5% in fiscal
1996 (excluding the special charge applicable to the POV monitor) with the
slight increase primarily attributable to lower selling prices for cardiac
assist and vascular graft products partially offset by improved manufacturing
efficiencies for the VasoSeal device. Fiscal 1996 cost of sales was 40.0%
including the POV special charge.
 
     Research and development expenses were higher by 11% in fiscal 1997
primarily from increased staffing and increased use of outside technical
resources to accelerate new product development in all businesses.
 
                                       22
<PAGE>

     Selling, general and administrative expenses (SG&A) increased 7% primarily
as a result of the buildup of the U.S. marketing and selling organization for
the VasoSeal device and increased staffing of the Patient Monitoring field sales
force. Partially offsetting the above increases were lower legal fees in fiscal
1997 as fiscal 1996 included legal fees for the Quinton patent suit.
 
     The strengthening of the U.S. dollar compared to major European currencies
decreased SG&A expenses by approximately $1.1 million in fiscal 1997 compared to
fiscal 1996.
 
     The higher interest income in fiscal 1997 compared to fiscal 1996 was
attributable to an increase in the investment portfolio from cash generated by
operations and an increase in interest rates.
 
     Foreign exchange forward contracts outstanding at June 30, 1997 totaled
$612 thousand, all of which were in European currencies, with maturities that
did not exceed twelve months.
 
     The consolidated effective tax rate for fiscal 1997 was 20.9% compared to
23.9% for fiscal 1996. The tax rate in both years was lower than the federal
statutory tax rate primarily as a result of the tax benefit from the Foreign
Sales Corporation, earnings in an international tax exempt industrial zone and
interest income exempt from federal income tax. The lower tax rate in fiscal
1997 compared to fiscal 1996 was primarily attributable to the reinstatement of
the federal R&D tax credit in July 1996 and higher state R&D tax credits as a
result of increased R&D spending in fiscal 1997.
 
     Excluding special items in both years, net earnings in fiscal 1997 were 6%
higher compared to fiscal 1996 primarily as a result of increased earnings from
higher U.S. sales of the VasoSeal device, lower corporate legal expenses and
increased interest income earned on investments.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company continued its strong financial position in fiscal 1998. Working
capital at June 30, 1998 was $117.9 million compared to $123.7 million and the
current ratio was 4.2:1 compared to 4.8:1 last year. The decrease in working
capital and the current ratio was primarily attributable to cash used for the
stock repurchase program ($14.0 million) and investing more funds ($8.5 million)
long-term (up to 4 years).
 
     In May 1996 the Company announced a stock repurchase program of up to $20
million to buy shares of its common stock from time to time subject to market
conditions and other relevant factors affecting the Company. Through June 30,
1998, the Company purchased $18.1 million of stock under the repurchase program.
A second stock repurchase program for up to $20 million was approved by the
board of directors on August 5, 1998.
 
     Cash provided by operations was $18.5 million in fiscal 1998. Cash was used
to purchase $7.8 million of equipment and to purchase $14.0 million of Company
stock under the stock repurchase program.
 
     Cash provided by operations was $8.3 million in fiscal 1997. Cash was used
to purchase $5.3 million of equipment and to purchase $2.5 million of Company
stock under the stock repurchase program, with the balance invested in short-
and long-term investments.
 
     Cash provided by operations was $25.0 million in fiscal 1996. Cash was used
to purchase $5.0 million of equipment and to purchase $1.6 million of Company
stock under the stock repurchase program, with the balance invested in short-
and long-term investments.
 
     Management believes that the Company's financial resources are sufficient
to meet its projected cash requirements.
 
     The moderate rate of U.S. inflation during the past three fiscal years has
not significantly affected the Company.
 
                                       23
<PAGE>

YEAR 2000
 
     Many currently installed computer systems, software products and
manufactured products that utilize microprocessors are coded to accept only
two-digit entries in the date code field. These date code fields will need to
accept four-digit entries to distinguish twenty-first century dates from
twentieth century dates. This is commonly referred to as the "Year 2000 issue."
The Company is aware of the Year 2000 issue and during fiscal 1998 commenced a
program to identify, remediate, test and develop contingency plans for, the Year
2000 issue (the "Y2K Program"), to be substantially completed by the fall of
1999.
 
     Under the Y2K Program, the Company began to assess the Year 2000 readiness
of (1) the software and computer information systems used in the internal
business ("CIS") of the Company ("Company CIS"); (2) the Company's products; 
(3) the CIS of, and the products delivered to the Company by, its key third-
party vendors, manufacturers and suppliers; and (4) the CIS of its key 
customers. Although the Y2K Program is still underway, the Company does not
currently anticipate that the cost of the Y2K Program will be material to its
financial condition or results of operations. Satisfactorily addressing the Year
2000 issue is dependent on many factors, some of which are not completely within
the Company's control, such as the availability of certain resources,
third-party remediation plans and other factors.
 
     As of September 15, 1998, the results of the assessment being conducted
under the Y2K Program were as follows:
 
          Computer Information Systems (Company CIS).  Most of the Company CIS
     was found to be Year 2000 compliant. Several minor software programs that
     are not currently compliant will be modified by December 31, 1998 by the
     software vendor or third party support vendor. As a contingency, if a
     vendor does not modify their non-compliant software program by
     December 31, 1998, then the Company intends to replace the non-compliant
     program by July 1, 1999.
 
          Products.  It was determined that all currently marketed patient
     monitor and intra-aortic balloon pump products are Year 2000 compliant
     or are not affected because the product does not contain a date field in
     the software. A small number of patient monitor products that are no
     longer manufactured are not Year 2000 compliant. In these cases, the
     Company has plans to offer an upgrade to any customer requiring Year 2000
     compliance for their monitor.
 
          Third Parties.  The Company solicited statements of compliance from 
     its key outside vendors, manufacturers and suppliers with respect to
     their CIS and products. Approximately 60% of these parties responded and 
     informed the Company that they are currently compliant or plan to be
     compliant by December 31, 1999. In the event that any of these parties are
     unable to certify that they will be Year 2000 compliant by early 1999, the
     Company will be reviewing its alternatives with respect to other vendors,
     manufacturers or suppliers (as applicable). The Company intends to
     solicit statements of compliance from its key customers with respect to 
     their CIS. In the event that its key customers are unable to certify that 
     they will be Year 2000 compliant by early 1999, the Company will be
     assessing the accounts receivable collection risk of such key customers.
 
          Costs.  The cost to modify the computer software programs used in the
     Company CIS is covered by existing service agreements with the software
     vendors. The assessments, testing and verification of all Company CIS and
     the Company's software and manufactured products was performed by existing
     staff. No significant outside resources were required. Despite the use of
     internal resources for the Y2K Program, there was no significant deferral
     of other Company CIS projects.
 
     The Year 2000 issue presents far-reaching implications, some of which
cannot be anticipated with any degree of certainty. Based on the assessment that
has been made under the Y2K Program, and other than as stated above, the Company
has no other  contingency plans in the event of any Year 2000 non-compliance and
does not currently believe that any other contingency plans are necessary.
However,  management is not able to determine the effect of any Year 2000
noncompliance (including with respect to a "worst-case scenario") on 
 
                                       24
<PAGE>

the Company, but there can be no guarantee that any such noncompliance would not
have an adverse effect on the Company's CIS, products, results of operations or
financial condition.
 
STATEMENT CONCERNING FORWARD LOOKING INFORMATION
 
     This Management's Discussion includes forward-looking statements that
involve risks and uncertainties because of the possibility that market
conditions may change, particularly as the result of competitive activity in the
cardiac assist, vascular sealing device and other markets served by the Company,
and because of the Company's dependence on its suppliers for certain patient
monitoring products. Additional risks are the ability of the Company to
successfully introduce and gain market acceptance for new products, continued
demand for the Company's products generally, the rapid and significant changes
that characterize the medical device and life science research industries and
the ability to continue to respond to such technological changes, and because
the timing of regulatory approvals is uncertain, as well as other risks detailed
from time to time in documents filed by Datascope with the Securities and
Exchange Commission.
 
RECENT PRONOUNCEMENTS OF THE FINANCIAL ACCOUNTING STANDARDS BOARD
 
     Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (FAS No. 130) will apply to fiscal year 1999 and
establishes standards for reporting, classifying and displaying comprehensive
income and its components in a full set of financial statements. Comprehensive
income items include all nonowner changes in equity during a period.
 
     Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (FAS No. 131) will apply to
fiscal year 1999 and requires additional reporting on revenues, expenses, profit
or loss and assets on the operating segments of a business.
 
     Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" (FAS No. 132) will
apply to fiscal year 1999 and requires revised disclosures about pension plans
and other postretirement benefit plans.

     Adoption of FAS Nos. 130, 131 and 132 will expand the Company's current 
disclosure requirements.
 
     Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS No. 133) will be effective
for the Company in the first quarter of fiscal 2000 and establishes accounting
and reporting standards for derivative instruments and for hedging activities.
It requires companies to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value.

     The adoption of FAS No. 133 will not have a material effect on the
Company's financial statements. 

                                      25

<PAGE>

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

      The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company enters
into foreign currency forward exchange contracts to hedge foreign currency
transactions (which are primarily related to certain receivables denominated
in foreign currencies) on a continuing basis for periods consistent with its
committed foreign currency exposures. The effect of this practice is to
minimize the impact of foreign exchange rate movements on the Company's
operating results. The Company's hedging activities do not subject the Company
to exchange rate risk because gains and losses on these contracts offset
losses and gains on the assets, liabilities and transactions being hedged. The
net foreign exchange transaction gain or loss is reported in other income and
expense.

      As of June 30, 1998, the Company had $200 thousand of foreign exchange
forward contracts outstanding, all of which were in European currencies. The
foreign exchange forward contracts generally have maturities that do not
exceed 12 months and require the Company to exchange foreign currencies for
U.S. dollars at maturity, at rates agreed to at inception of the contracts.

Item 8.   Financial Statements and Supplementary Data

      See financial statements following Item 14 of this Annual Report on Form
10-K.

Item 9.   Changes In and Disagreement with Accountants on Accounting and
Financial Disclosure

      None.
          

                                      26

<PAGE>

                                   PART III

Items 10, 11, 12 and 13.

      Except for the information included in Item 4a of this report, the
information called for by Items 10, 11, 12 and 13 of this Form 10-K is
incorporated by reference to those portions of the Company's 1998 Proxy
Statement that contain such information.

                                      27

<PAGE>

                                    PART IV

Item 14.          Exhibits, Financial Statement Schedules and Reports on Form 
                  8-K.

(a) 1. Financial Statements

      The following consolidated financial statements of the Company and its
subsidiaries are filed on the pages listed below, as part of Part II, Item 8
of this report:

                                                                           Page
                                                                           ----

      Report of Independent Auditors.........................................F-1
      Consolidated balance sheets -- June 30,
        1998 and 1997........................................................F-2

      Statements of consolidated earnings -- Years
        ended June 30, 1998, 1997 and 1996...................................F-3
      Statements of consolidated stockholders'
        equity -- Years ended June 30, 1998,
        1997 and 1996........................................................F-4
      Statements of consolidated cash flows --
        Years ended June 30, 1998, 1997 and 1996.............................F-5
      Notes to consolidated financial statements......................F-6 - F-19

2.    Financial Statement Schedules

      II --       Valuation and Qualifying Accounts.........................S-1

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

3.    Exhibits

2.    Agreement and Plan of Merger, dated as of October 25, 1989, by and
      between the registrant and Datascope New York (incorporated by reference
      to Exhibit 2 to the registrant's Registration Statement on Form 8-B,
      filed with the Commission on January 1990 (the "Form 8-B")).

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 Form 8-B).

3.2   By-Laws, as currently in effect (incorporated by reference to Exhibit
      3.2 to Annual Report on Form 10-K for fiscal year ended June 30, 1993
      (the "1993 10-K")).

                                      28

<PAGE>

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 Registrant'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 "May 31, 1991 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 May 31, 1991 Form 8-A).

10.1* 1981 Incentive Stock Option Plan (incorporated by reference to Exhibit
      10.2.1 to the Form 8-B).

10.2* Stock Option Agreements, dated November 30, 1982, between David
      Altschiller, William Asmundson, Alan Patricof and Norman Schneider,
      respectively, and the registrant (incorporated by reference to Exhibit
      10.5 to Annual Report on Form 10-K for the fiscal year ended June 30,
      1989 (the "1989 10-K")).

10.3* Stock Option Agreement, dated December 7, 1988 between Joseph Grayzel,
      M.D. and the registrant (incorporated by reference to Exhibit 10.6 to
      the 1989 10-K).

10.4* Stock Option Agreements, dated as of March 1, 1990, between David
      Altschiller, William Asmundson, Joseph Grayzel, Alan Patricof and Norman
      Schneider, respectively, and the registrant (incorporated by reference
      to Exhibit 10.9 to Annual Report on Form 10-K for the fiscal year ended
      June 30, 1990).

10.5* Stock Option Agreement, dated as of September 28, 1990, between David
      Altschiller and the registrant (incorporated by reference to Exhibit
      10.8 to the Annual Report on Form 10-K for the fiscal year ended June
      30, 1991).

10.6* 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 1998 10-Q")).

10.7* Datascope Corp. 1997 Executive Bonus Plan (incorporated by reference to
      Exhibit 10.2 to the 2Q 1998 10-Q).

10.8* Datascope Corp. Annual Incentive Plan (incorporated by reference to
      Exhibit 10.3 to the 2Q 1998 10-Q).

10.9* Datascope Corp. Compensation Plan for Non-Employee Directors
      (incorporated by reference to Exhibit 10.4 to the 2Q 1998 10-Q).

                                      29

<PAGE>

10.10* Agreement, dated as of July 1, 1996, by and between Datascope Corp. and
       Lawrence Saper.

10.11* Split-Dollar Agreement made as of July 25, 1994 by and among Datascope
       Corp., 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 Annual Report on Form 10-K for fiscal
       year ended June 30, 1996 (the "1996 10-K")).

10.12* Modification Agreement made as of July 25, 1994 by and among Datascope
       Corp., 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 1996 10-K).

10.13* 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
       Metropolitan Life Insurance Company Insurance Policy No. 940 750 122UM
       in favor of Datascope Corp. (incorporated by reference to Exhibit 10.17
       to 1996 10-K).

10.14* 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 1996 10-K).

21.   Subsidiaries.

23.   Consent of Deloitte & Touche LLP.

      (b)         Reports on Form 8-K

                  N/A

      (c)         Management contracts or compensatory plans or arrangements
                  required to be filed as an exhibit pursuant to Item 14(c)
                  are denoted by an (*).

                                      30

<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 28, 1998             By: /s/ Lawrence Saper
                                            -------------------------------
                                                Lawrence Saper
                                                Chairman of the Board, President
                                                 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>

                  Signatures                                          Title                                      Date
                  ----------                                          -----                                      ----

<S>                                                  <C>                                                  <C>
          /s/ Lawrence Saper                          Chairman of the Board, President and                 September 28, 1998
---------------------------------------               Chief Executive Officer (Principal
              Lawrence Saper                                  Executive Officer)
                                                        

         /s/  Murray Pitkowsky                        Senior Vice President, Chief Financial               September 28, 1998
---------------------------------------                     Officer and Secretary
              Murray Pitkowsky
                                              

          /s/ Alan Abramson                                       Director                                 September 28, 1998
--------------------------------------
              Alan Abramson
</TABLE>

                                      31

<PAGE>


<TABLE>
<CAPTION>
                  Signatures                                          Title                                      Date
                  ----------                                          -----                                      ----
<S>                                                                <C>                                   <C>
          /s/  David Altschiller                                    Director                              September 28, 1998
--------------------------------------
               David Altschiller


          /s/  William Asmundson                                    Director                              September 28, 1998
--------------------------------------
               William Asmundson


          /s/ Joseph Grayzel                                        Director                              September 28, 1998
--------------------------------------
              Joseph Grayzel, M.D.


          /s/ George Heller                                         Director                              September 28, 1998
--------------------------------------
              George Heller


          /s/ Arno Nash                                             Director                              September 28, 1998
--------------------------------------
              Arno Nash
</TABLE>

                                      32

<PAGE>

                          INDEPENDENT AUDITORS' REPORT
 
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, 1998 and 1997, and the
related consolidated statements of earnings, stockholders' equity and cash flows
for each of the three years in the period ended June 30, 1998. Our audits also
included the financial statement schedule listed in the index at Item 14(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 generally accepted auditing
standards. 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, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1998 in conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedule, when considering 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
----------------------------
New York, New York
July 28, 1998
 
                                      F-1

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)
 
<TABLE>
<CAPTION>
                                                                                      JUNE 30,
                                                                                --------------------
                                                                                  1998        1997
                                                                                --------    --------
<S>                                                                             <C>         <C>
ASSETS
Current Assets:
  Cash and cash equivalents..................................................   $  3,364    $  2,597
  Short-term investments (Note 2)............................................     46,314      57,338
  Accounts receivable, less allowance for doubtful accounts of $1,078 and
     $922....................................................................     55,248      52,240
  Inventories (Note 3).......................................................     40,246      34,604
  Prepaid expenses and other current assets..................................     10,036       9,485
                                                                                --------    --------
        Total Current Assets.................................................    155,208     156,264
Property, Plant and Equipment, net (Note 4)..................................     50,946      44,742
Non-Current Marketable Securities (Note 2)...................................     34,371      25,902
Other Assets.................................................................     12,523      10,954
                                                                                --------    --------
                                                                                $253,048    $237,862
                                                                                ========    ========
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable...........................................................   $ 14,378    $  6,650
  Accrued expenses (Note 6)..................................................     12,743      15,755
  Accrued compensation.......................................................     10,190       9,336
  Taxes on income (Note 5)...................................................         --         807
                                                                                --------    --------
        Total Current Liabilities............................................     37,311      32,548
Other Liabilities (Note 9)...................................................     14,255      13,071
Commitments and Contingencies (Notes 2, 7, 9 and 10)
Stockholders' Equity (Note 7):
  Preferred stock, par value $1.00 per share:
     Authorized 5,000,000 shares; Issued, none...............................         --          --
  Common stock, par value $.01 per share:
     Authorized, 45,000,000 shares; Issued and outstanding, 16,394,387 and
        16,245,732 shares....................................................        164         162
  Additional paid-in capital.................................................     47,041      44,266
  Treasury stock at cost, 793,400 and 223,300 shares.........................    (18,122)     (4,151)
  Retained earnings..........................................................    177,509     155,868
  Cumulative translation adjustments.........................................     (5,110)     (3,902)
                                                                                --------    --------
                                                                                 201,482     192,243
                                                                                --------    --------
                                                                                $253,048    $237,862
                                                                                ========    ========
</TABLE>
 
                 See notes to consolidated financial statements
 
                                      F-2
<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
                      STATEMENTS OF CONSOLIDATED EARNINGS
                    (In thousands, except per share amounts)
 
<TABLE>
<CAPTION>
                                                                         YEAR ENDED JUNE 30,
                                                                   --------------------------------
                                                                     1998        1997        1996
                                                                   --------    --------    --------
<S>                                                                <C>         <C>         <C>
Net Sales.......................................................   $242,400    $225,600    $211,300
                                                                   --------    --------    --------
Costs and Expenses:
  Cost of sales.................................................     84,408      80,606      75,000
  Cost of sales, point of view charge (Note 12).................         --          --       9,600
  Research and development expenses.............................     30,109      26,815      24,275
  Selling, general and administrative expenses..................    102,928      96,151      89,708
  Settlements of litigation (Note 12)                                    --       8,554     (10,691)
                                                                   --------    --------    --------
                                                                    217,445     212,126     187,892
                                                                   --------    --------    --------
Operating Earnings..............................................     24,955      13,474      23,408
 
Other (Income) Expense:
  Interest income...............................................     (4,972)     (4,744)     (4,226)
  Interest expense..............................................         25          18          50
  Other, net....................................................        187         380         743
                                                                   --------    --------    --------
                                                                     (4,760)     (4,346)     (3,433)
                                                                   --------    --------    --------
Earnings Before Taxes on Income.................................     29,715      17,820      26,841
Taxes on Income (Note 5)........................................      8,074       3,716       6,424
                                                                   --------    --------    --------
Net Earnings....................................................   $ 21,641    $ 14,104    $ 20,417
                                                                   ========    ========    ========

Earnings Per Share, Basic.......................................   $   1.37    $   0.88    $   1.27
                                                                   ========    ========    ========
Weighted Average Number of Common Shares Outstanding, Basic.....     15,840      16,049      16,100
                                                                   ========    ========    ========
Earnings Per Share, Diluted.....................................   $   1.32    $   0.86    $   1.24
                                                                   ========    ========    ========
Weighted Average Number of Common Shares Outstanding, Diluted...     16,403      16,356      16,516
                                                                   ========    ========    ========
</TABLE>
 
                 See notes to consolidated financial statements
 
                                      F-3

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
 
                STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
                             (Dollars in thousands)
 
<TABLE>
<CAPTION>
                                         COMMON STOCK
                                      -------------------   ADDITIONAL              TREASURY   CUMULATIVE
                                        SHARES       PAR     PAID-IN     RETAINED    STOCK     TRANSLATION
                                      OUTSTANDING   VALUE    CAPITAL     EARNINGS   AT COST    ADJUSTMENTS    TOTAL
                                      -----------   -----   ----------   --------   --------   -----------   --------
<S>                                   <C>           <C>     <C>          <C>        <C>        <C>           <C>
Balance, June 30, 1995..............   16,070,689   $ 161    $ 41,837    $121,347   $     --     $   (26)    $163,319
 
Exercise of stock options...........       79,346       1         793                                             794
Tax benefit relating to exercise of
  stock options.....................                              226                                             226
Treasury shares acquired upon
  exercise of stock options.........      (14,608)                                      (309)                    (309)
Cancellation of treasury stock......                   (1)       (308)                   309                       --
Treasury shares acquired under
  repurchase program................      (94,000)                                    (1,671)                  (1,671)
Currency translation................                                                              (1,096)      (1,096)
Net earnings........................                                       20,417                              20,417
                                      -----------   -----    --------    --------   --------     -------     --------
Balance, June 30, 1996..............   16,041,427     161      42,548     141,764     (1,671)     (1,122)     181,680
 
Exercise of stock options...........      113,310       1       1,647                                           1,648
Tax benefit relating to exercise of
  stock options.....................                              131                                             131
Treasury shares acquired upon
  exercise of stock options.........       (3,005)                                       (60)                     (60)
Cancellation of treasury stock......                              (60)                    60                       --
Treasury shares acquired under
  repurchase program................     (129,300)                                    (2,480)                  (2,480)
Currency translation................                                                              (2,780)      (2,780)
Net earnings........................                                       14,104                              14,104
                                      -----------   -----    --------    --------   --------     -------     --------
Balance, June 30, 1997..............   16,022,432     162      44,266     155,868     (4,151)     (3,902)     192,243
 
Exercise of stock options...........      157,527       2       2,383                                           2,385
Tax benefit relating to exercise of
  stock options.....................                              612                                             612
Treasury shares acquired upon
  exercise of stock options.........       (8,872)                                      (220)                    (220)
Cancellation of treasury stock......                             (220)                   220                       --
Treasury shares acquired under
  repurchase program................     (570,100)                                   (13,971)                 (13,971)
Currency translation................                                                              (1,208)      (1,208)
Net earnings........................                                       21,641                              21,641
                                      -----------   -----    --------    --------   --------     -------     --------
Balance, June 30, 1998..............   15,600,987   $ 164    $ 47,041    $177,509   $(18,122)    $(5,110)    $201,482
                                      ===========   =====    ========    ========   ========     =======     ========
</TABLE>
 
                 See notes to consolidated financial statements
 
                                      F-4

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
 
                     STATEMENTS OF CONSOLIDATED CASH FLOWS
                             (Dollars in thousands)
 
<TABLE>
<CAPTION>
                                                                                     YEAR ENDED JUNE 30,
                                                                                ------------------------------
                                                                                 1998       1997        1996
                                                                                -------    -------    --------
<S>                                                                             <C>        <C>        <C>
OPERATING ACTIVITIES:
  Net Earnings...............................................................   $21,641    $14,104    $ 20,417
  Adjustments to reconcile net earnings to net cash provided by operating
     activities:
     Depreciation and amortization...........................................     9,765      9,576       8,638
     Provision for supplemental pension......................................       708        897         844
     Provision for losses on accounts receivable.............................       277        255         350
     Deferred income tax (benefit)...........................................       847      1,763      (5,121)
     Tax benefit relating to stock options exercised.........................       612        131         226
  Changes in operating assets and liabilities:
     Accounts receivable.....................................................    (3,458)    (2,603)     (5,890)
     Inventories.............................................................   (14,024)    (6,271)     (2,557)
     Other assets............................................................    (3,228)    (2,090)       (748)
     Accounts payable........................................................     7,758        100        (868)
     Income taxes payable....................................................      (807)    (1,290)       (212)
     Accrued and other liabilities...........................................    (1,555)    (6,263)      9,963
                                                                                -------    -------    --------
  Net cash provided by operating activities..................................    18,536      8,309      25,042
                                                                                -------    -------    --------
 
INVESTING ACTIVITIES:
  Purchases of property, plant and equipment.................................    (7,776)    (5,310)     (4,967)
  Purchases of marketable securities.........................................   (88,576)   (98,877)   (149,698)
  Maturities of marketable securities........................................    91,132     97,806     130,048
                                                                                -------    -------    --------
  Net cash used in investing activities......................................    (5,220)    (6,381)    (24,617)
                                                                                -------    -------    --------
 
FINANCING ACTIVITIES:
  Exercise of stock options..................................................     2,165      1,588         485
  Treasury shares acquired under repurchase program..........................   (13,971)    (2,480)     (1,671)
                                                                                -------    -------    --------
  Net cash used in financing activities......................................   (11,806)      (892)     (1,186)
                                                                                -------    -------    --------
  Effect of exchange rates on cash...........................................      (743)    (1,013)        239
                                                                                -------    -------    --------
Increase (decrease) in cash and cash equivalents.............................       767         23        (522)
Cash and cash equivalents, beginning of year.................................     2,597      2,574       3,096
                                                                                -------    -------    --------
Cash and cash equivalents, end of year.......................................   $ 3,364    $ 2,597    $  2,574
                                                                                =======    =======    ========
 
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the period for:
     Interest................................................................   $    25    $    18    $     50
                                                                                -------    -------    --------
     Income taxes............................................................   $ 7,302    $ 3,247    $ 11,530
                                                                                -------    -------    --------
 
Non-cash transactions:
  Net transfers of inventory to fixed assets for use as demonstration
     equipment...............................................................   $ 8,189    $ 5,745    $  3,775
                                                                                -------    -------    --------
</TABLE>
 
                 See notes to consolidated financial statements
 
                                      F-5

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Principles of Consolidation
 
     The consolidated financial statements include the accounts of Datascope
Corp. and its subsidiaries (the "Company"). All material intercompany balances
and transactions have been eliminated.
 
Cash and Cash Equivalents
 
     Cash and cash equivalents consist primarily of highly liquid investments
which have original maturities less than 90 days.
 
Inventories
 
     Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market.
 
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 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.
 
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
 
     The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which requires the
use of the liability method of accounting for deferred 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.
 
Revenue Recognition
 
     The Company recognizes revenue and all related costs, including warranty,
when product is shipped and title passes to the customer. Revenue for service
contracts is recognized ratably over the term of the contract.
 
Earnings Per Share
 
     In accordance with Statement of Financial Accounting Standards No. 128, the
Company reports 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.

Impairment of Long Lived Assets

     The recoverability of the excess of cost over fair value of net assets
acquired is evaluated by an analysis of operating results and consideration of
other significant events or changes in the business environment.  If management
believes an impairment exists, the carrying amount of these assets would be
reduced to their fair value as defined in Statement of Financial Accounting
Standards No. 121.
 
                                      F-6

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

Other Assets
 
     a. Goodwill resulting from the purchase of InterVascular, Inc. is being
        amortized by the straight-line method over 20 years and is included in
        other assets. Unamortized goodwill as of June 30, 1998 and 1997 amounted
        to $2,313,000 and $2,546,000, respectively.
 
     b. 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. Such
        costs are amortized using the straight-line method over the remaining
        estimated economic life of the product, not to exceed 5 years.
 
     The carrying value of capitalized software costs is regularly reviewed by
the Company, and a loss is recognized when the net realizable value falls below
the unamortized cost.
 
Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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.
 
Reclassifications
 
     The presentation of certain prior year information has been reclassified to
conform with the current year presentation.
 
2. FINANCIAL INSTRUMENTS
 
     The carrying amounts and estimated fair values of the Company's significant
financial instruments at June 30, 1998 and 1997 were as follows:
 
<TABLE>
<CAPTION>
                                                                               1998                        1997
                                                                        -------------------        -------------------
                                                                        CARRYING     FAIR          CARRYING     FAIR
                                                                         AMOUNT      VALUE          AMOUNT      VALUE
                                                                        --------    -------        --------    -------
                                                                          (IN THOUSANDS)
<S>                                                                     <C>         <C>            <C>         <C>
Cash and short-term investments......................................   $ 49,678    $49,716        $ 59,935    $59,883
                                                                        --------    -------        --------    -------
Non-current marketable securities....................................   $ 34,371    $34,821        $ 25,902    $25,964
                                                                        --------    -------        --------    -------

</TABLE>
 
     The fair value of accounts receivable and payable are assumed to equal
their carrying value because of their short maturity.
 
     The fair value of other liabilities have been determined based upon
actuarial valuations.

     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 non-current marketable securities are also
based upon quoted market prices and include accrued interest.
 
     The Company has determined that its investment portfolio will be
held-to-maturity and is therefore carried at amortized cost.
 
                                      F-7

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
2. FINANCIAL INSTRUMENTS -- (CONTINUED)

     As of June 30, 1998, the Company's marketable securities were classified as
follows:
 
<TABLE>
<CAPTION>
                                                                                   GROSS
                                                                                UNREALIZED
                                                                 AMORTIZED    ---------------
                                                                   COST       GAINS    LOSSES    FAIR VALUE
                                                                 ---------    -----    ------    ----------
                                                                               (IN THOUSANDS)
<S>                                                              <C>          <C>      <C>       <C>
SHORT TERM
U.S. Treasury Securities......................................    $43,123     $  36     $  4      $ 43,155
Tax-Exempt Securities.........................................      3,191         6       --         3,197
                                                                  -------     -----     ----      --------
  Short-term total............................................    $46,314     $  42     $  4      $ 46,352
                                                                  =======     =====     ====      ========
LONG TERM
U.S. Treasury Securities......................................    $19,017     $ 341     $  9      $ 19,349
Tax-Exempt Securities.........................................     15,354       120        2        15,472
                                                                  -------     -----     ----      --------
  Long-term total.............................................    $34,371     $ 461     $ 11      $ 34,821
                                                                  =======     =====     ====      ========
  Totals......................................................    $80,685     $ 503     $ 15      $ 81,173
                                                                  =======     =====     ====      ========
</TABLE>

     As of June 30, 1997, the Company's marketable securities were classified as
follows:
 
<TABLE>
<CAPTION>
                                                                                   GROSS
                                                                                UNREALIZED
                                                                 AMORTIZED    ---------------
                                                                   COST       GAINS    LOSSES    FAIR VALUE
                                                                 ---------    -----    ------    ----------
                                                                               (IN THOUSANDS)
<S>                                                              <C>          <C>      <C>       <C>
SHORT TERM
U.S. Treasury Securities......................................    $47,698     $  77     $129      $ 47,646
Tax-Exempt Securities.........................................      9,640         2        2         9,640
                                                                  -------     -----     ----      --------
  Short-term total............................................    $57,338     $  79     $131      $ 57,286
                                                                  =======     =====     ====      ========
LONG TERM
U.S. Treasury Securities......................................    $18,010     $  72     $ 58      $ 18,024
Tax-Exempt Securities.........................................      7,892        48       --         7,940
                                                                  -------     -----     ----      --------
  Long-term total.............................................    $25,902     $ 120     $ 58      $ 25,964
                                                                  =======     =====     ====      ========
  Totals......................................................    $83,240     $ 199     $189      $ 83,250
                                                                  =======     =====     ====      ========
</TABLE>
 
     The Company invests its excess cash primarily in U.S. Treasury and tax-
exempt securities. Since the Company holds all short- and long-term securities
until maturity, such investments are subject to little market risk. The Company
has not incurred losses related to these investments.
 
Derivative Financial Instruments
 
     The Company has limited involvement with derivative financial instruments
and does not use them for trading purposes. The Company utilizes foreign
currency forward exchange contracts to hedge specific foreign currency
exposures. The effect of this practice is to minimize the impact of foreign
exchange rate movements on the Company's operating results. The Company's
hedging activities do not subject the Company to exchange rate risk because
gains and losses on these contracts offset losses and gains on hedged exposures.
 
     As of June 30, 1998, the Company had $0.2 million of foreign exchange
forward contracts outstanding, all of which were in European currencies. The
foreign exchange forward contracts generally have maturities that do not exceed
12 months and require the Company to exchange foreign currencies for U.S.
dollars at maturity, at rates agreed to at inception of the contracts.
 
Concentration of Credit Risk
 
     Concentrations of credit risk with respect to trade receivables are limited
due to the large number of customers comprising the Company's customer base.
Ongoing credit evaluations of customers' financial condition are performed. The
Company maintains reserves for potential credit losses and such losses, in the
aggregate, have not exceeded management's expectations.
 
3. INVENTORIES
 
<TABLE>
<CAPTION>
                                                                             JUNE 30,
                                                                        ------------------
                                                                         1998       1997
                                                                        -------    -------
                                                                        (IN THOUSANDS)
<S>                                                                     <C>        <C>
Materials............................................................   $13,323    $10,917
Work in process......................................................     6,620      4,885
Finished goods.......................................................    20,303     18,802
                                                                        -------    -------
                                                                        $40,246    $34,604
                                                                        =======    =======
</TABLE>
 
                                      F-8

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
4. PROPERTY, PLANT AND EQUIPMENT
 
<TABLE>
<CAPTION>
                                                                             JUNE 30,
                                                                        ------------------
                                                                         1998       1997
                                                                        -------    -------
                                                                        (IN THOUSANDS)
<S>                                                                     <C>        <C>
Land.................................................................   $ 4,059    $ 4,059
Buildings............................................................    20,782     22,023
Machinery, furniture and equipment...................................    68,906     56,641
Leasehold improvements...............................................     3,979      4,098
                                                                        -------    -------
                                                                         97,726     86,821
Less accumulated depreciation and amortization.......................    46,780     42,079
                                                                        -------    -------
                                                                        $50,946    $44,742
                                                                        =======    =======
</TABLE>
 
     The Company estimates the useful life of its machinery and equipment at 5
years, furniture at 8 years and buildings at 40 years.
 
5. TAXES ON INCOME
 
     The provision (benefit) for income taxes consists of the following:
 
<TABLE>
<CAPTION>
                                                                 YEAR ENDED JUNE 30,
                                                            -----------------------------
                                                             1998       1997       1996
                                                            -------    -------    -------
                                                                    (IN THOUSANDS)
<S>                                                         <C>        <C>        <C>
Current:
  Federal................................................   $ 5,550    $   854    $ 7,402
  State..................................................       803        187      1,696
  Foreign................................................       874        912      2,447
                                                            -------    -------    -------
     Total current.......................................     7,227      1,953     11,545
Deferred:
  Federal................................................       925      2,013     (4,021)
  State..................................................      (104)       111     (1,100)
  Foreign................................................        26       (361)        --
                                                            -------    -------    -------
     Total deferred......................................       847      1,763     (5,121)
                                                            -------    -------    -------
        Total taxes on income............................   $ 8,074    $ 3,716    $ 6,424
                                                            =======    =======    =======
</TABLE>
 
                                      F-9

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
5. TAXES ON INCOME -- (CONTINUED)

     The reconciliation of the statutory federal income tax rate to the
Company's effective tax rate is as follows:
 
<TABLE>
<CAPTION>
                                                                              YEAR ENDED JUNE 30,
                                                         -------------------------------------------------------------
                                                                1998                  1997                 1996
                                                         -------------------   ------------------   ------------------
                                                                                 (IN THOUSANDS)
                                                                   EFFECTIVE            EFFECTIVE            EFFECTIVE
                                                         AMOUNT     RATE       AMOUNT    RATE       AMOUNT    RATE
                                                         -------   ---------   ------   ---------   ------   ---------
<S>                                                      <C>       <C>         <C>      <C>         <C>      <C>
Tax computed at federal statutory rate.................  $10,400      35.0%    $6,237      35.0%    $9,394      35.0%
(Decrease) increase resulting from:
Benefit attributable to foreign sales corp.............     (821)     (2.8)      (787)     (4.4)      (911)     (3.4)
State taxes on income, net of federal income tax
  benefit..............................................      454       1.5        194       1.1        387       1.4
Research and development credit, net...................     (518)     (1.7)      (414)     (2.3)        --        --
Income exempt from foreign corporate taxes.............   (1,432)     (4.8)    (1,194)     (6.7)    (2,672)    (10.0)
Rate differential on foreign income....................      206       0.7        167       0.9         70       0.3
Interest income exempt from federal income tax.........     (239)     (0.8)      (204)     (1.1)      (282)     (1.0)
Other..................................................       24       0.1       (283)     (1.6)       438       1.6
                                                         -------     -----     ------     -----     ------     -----
    Total taxes on income..............................  $ 8,074      27.2%    $3,716      20.9%    $6,424      23.9%
                                                         =======     =====     ======     =====     ======     =====
</TABLE>
 
     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
 
     Significant components of the Company's deferred tax assets and liabilities
as of June 30, 1998 and 1997 were as follows:
 
<TABLE>
<CAPTION>
                                                                                    JUNE 30,
                                                        -----------------------------------------------------------------
                                                                     1998                              1997
                                                        -------------------------------   -------------------------------
                                                                                 (IN THOUSANDS)
                                                        DEFERRED   DEFERRED               DEFERRED   DEFERRED
                                                          TAX         TAX                   TAX         TAX
                                                        ASSETS     LIABILITIES    NET     ASSETS     LIABILITIES    NET
                                                        --------   -----------   ------   --------   -----------   ------
<S>                                                     <C>        <C>           <C>      <C>        <C>           <C>
Inventories...........................................   $2,027      $    --     $2,027    $3,401      $    --     $3,401
Warranty..............................................      978           --        978       593           --        593
Sales returns & allowances............................       51           --         51       424           --        424
Accrued expenses......................................      461           --        461       609           --        609
Foreign & State Tax Credits...........................      833           --        833       388           --        388
Unrealized Foreign Exchange Losses....................      316           --        316       361           --        361
Deferred State Income Taxes...........................       --          371       (371)       --          365       (365)
                                                         ------      -------     ------    ------      -------     ------
  Current.............................................    4,666          371      4,295     5,776          365      5,411
                                                         ------      -------     ------    ------      -------     ------
Supplemental pension..................................    4,350           --      4,350     4,080           --      4,080
Tax loss carryforwards................................    1,912           --      1,912     1,893           --      1,893
Accelerated depreciation..............................       --        2,370     (2,370)       --        2,064     (2,064)
Accrued pension expense...............................       --          317       (317)       --          346       (346)
Other, net............................................      225           --        225        --           51        (51)
Less: Valuation allowance.............................   (1,912)          --     (1,912)   (1,893)          --     (1,893)
                                                         ------      -------     ------    ------      -------     ------
  Non-current.........................................    4,575        2,687      1,888     4,080        2,461      1,619
                                                         ------      -------     ------    ------      -------     ------
    Total.............................................   $9,241      $ 3,058     $6,183    $9,856      $ 2,826     $7,030
                                                         ======      =======     ======    ======      =======     ======
</TABLE>
 
     The net current deferred tax assets have been included in prepaid expenses
and other current assets and the net non-current deferred tax assets have been
included in other assets on the accompanying consolidated balance sheet.
 
                                      F-10

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
5. TAXES ON INCOME -- (CONTINUED)

     The valuation allowance increased by $19,000 during fiscal 1998 due to the
net increase of foreign and state tax loss carryforwards. The valuation
allowance of $1,912,000 at June 30, 1998 was comprised of tax benefits of
$189,000 of foreign tax loss carryforwards and $1,723,000 of state tax loss
carryforwards. Benefits from foreign tax loss carryforwards of $121,000 expire
during the period 2001 through 2004 and $68,000 may be carried forward
indefinitely. The benefits of state tax loss carryforwards expire during the
period 1999 through 2014. The valuation allowance reduces the deferred tax
assets to management's best estimate of net deferred tax assets which more
likely than not will be realized.
 
     It has not been necessary to provide for income taxes on cumulative
undistributed earnings of international subsidiaries. These earnings will be
either indefinitely reinvested or remitted substantially free of additional tax.
The cumulative amount of undistributed earnings of foreign subsidiaries at June
30, 1998 approximates $26,092,000.
 
     The Company has a subsidiary in an industrial development zone in Europe.
Profits from manufacturing activities in this zone are exempt from corporation
taxes until December 1999.
 
6. ACCRUED EXPENSES

     Accrued expenses at June 30, 1998 and 1997 were comprised of the following:
 
<TABLE>
<CAPTION>
                                                                              JUNE 30,
                                                                        --------------------
                                                                         1998         1997
                                                                        -------      -------
                                                                        (IN THOUSANDS)
<S>                                                                     <C>          <C>
Deferred service contract revenue....................................   $ 3,401      $ 3,644
Point of View accrued expenses.......................................       631        1,905
General expense accruals.............................................     8,711       10,206
                                                                        -------      -------
                                                                        $12,743      $15,755
                                                                        -------      -------
</TABLE>
 
7. STOCK OPTIONS, SHAREHOLDER RIGHTS AND STOCK REPURCHASE PLANS
 
Stock Option Plans
 
     The Company has two employee stock option plans covering 4,575,000 shares
of common stock and option agreements with certain consultants and members of
the board of directors. 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,
                                          -----------------------------------------------------------------------
                                                  1998                     1997                     1996
                                          ---------------------    ---------------------    ---------------------
                                                       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..................   1,940,619     $16.93     1,740,969     $16.63     1,434,016     $15.20
     Granted...........................     476,700      25.00       493,100      17.94       470,950      19.85
     Exercised.........................    (156,737)     15.09      (112,625)     14.51       (77,911)      9.73
     Canceled..........................     (95,662)     19.69      (180,825)     18.35       (86,086)     16.70
                                          ---------                ---------                ---------
Outstanding at June 30.................   2,164,920      18.72     1,940,619      16.93     1,740,969      16.63
                                          =========                =========                =========
Exercisable at June 30.................   1,243,616     $16.41     1,141,830     $15.88     1,000,654     $15.21
                                          =========                =========                =========
</TABLE>
 
                                      F-11

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
7. STOCK OPTIONS, SHAREHOLDER RIGHTS AND STOCK REPURCHASE PLANS -- (CONTINUED)

     At June 30, 1998 there were 2,551,882 shares of common stock reserved for
the exercise of stock options.
 
     The Company adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (FAS No. 123) in fiscal 1997. The
Company continues to account for its stock-based awards using the intrinsic
value method in accordance with APB Opinion No. 25 "Accounting for Stock Issued
to Employees." Under APB Opinion No. 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized. In accordance with
FAS No. 123 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 the Company's stock option plans, pro forma net income and earnings
per share would have been reported as the following pro forma amounts:
 
<TABLE>
<CAPTION>
                                                                            YEAR ENDED JUNE 30,
                                                                       -----------------------------
                                                                        1998       1997       1996
                                                                       -------    -------    -------
                                                                           (IN THOUSANDS, EXCEPT
                                                                             PER SHARE AMOUNTS)
<S>                                                                    <C>        <C>        <C>
Net earnings -- as reported.........................................   $21,641    $14,104    $20,417
                                                                       -------    -------    -------
Net earnings -- pro forma...........................................   $19,936    $12,517    $19,950
                                                                       -------    -------    -------
Basic earnings per share -- as reported.............................   $  1.37    $  0.88    $  1.27
                                                                       -------    -------    -------
Basic earnings per share -- pro forma...............................   $  1.26    $  0.78    $  1.24
                                                                       -------    -------    -------
Diluted earnings per share -- as reported...........................   $  1.32    $  0.86    $  1.24
                                                                       -------    -------    -------
Diluted earnings per share -- pro forma.............................   $  1.22    $  0.76    $  1.21
                                                                       -------    -------    -------
</TABLE>
 
     This pro forma impact only takes into account options granted since July
1, 1995 and is likely to increase in future years as additional options are
granted and amortized ratably over the respective vesting period.
 
     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,
                                                                       ------------------------------
                                                                         1998       1997       1996
                                                                       --------   --------   --------
<S>                                                                    <C>        <C>        <C>
Dividend yield.....................................................        None       None       None
Volatility.........................................................         33%        33%        33%
Risk-free interest rate............................................       5.52%      6.33%      6.42%
Expected life......................................................     4 Years    4 Years    4 Years
</TABLE>

     The weighted average fair value of options granted during 1998, 1997 and
1996 was $8.43, $6.41 and $7.06, respectively.
 
     The following table summarizes information concerning outstanding and
exercisable stock options at June 30, 1998.
 
<TABLE>
<CAPTION>
                             STOCK OPTIONS OUTSTANDING
                     -----------------------------------------     STOCK OPTIONS EXERCISABLE
                                      WEIGHTED        WEIGHTED    ---------------------------
                                      AVERAGE          AVERAGE                    WEIGHTED
RANGE OF EXERCISE                     REMAINING       EXERCISE                    AVERAGE
      PRICES          OPTIONS     CONTRACTUAL LIFE     PRICE       OPTIONS     EXERCISE PRICE
------------------   ---------    ----------------    --------    ---------    --------------
<S>                  <C>          <C>                 <C>         <C>          <C>
$ 7.375--$13.875       104,761          3.36           $11.02       104,761        $11.02
$14.000--$14.000       500,000          5.09           $14.00       500,000        $14.00
$14.250--$17.875       553,685          7.48           $16.72       336,198        $16.88
$18.250--$31.125     1,006,474          8.02           $22.95       302,657        $21.74
                     ---------          ----           ------     ---------        ------
                     2,164,920          6.98           $18.72     1,243,616        $16.41
                     =========                                    =========
</TABLE>
 
                                      F-12

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
7. STOCK OPTIONS, SHAREHOLDER RIGHTS AND STOCK REPURCHASE PLANS -- (CONTINUED)

Shareholder Rights Plan
 
     Under the terms of the Company's Shareholder Rights Plan, all shareholders
of common stock were issued for each share owned a preferred stock purchase
right entitling them to purchase from the Company one one-thousandth of a share
of Series A Preferred Stock, par value $1.00 per share, at an exercise price of
$300.00. The rights are not exercisable until after the date on which the
Company's right to redeem has expired. The Company may redeem rights for $.01
per right at any time until the 10th business day after the date of a public
announcement (the "Stock Acquisition Date") that a person (the "Acquiring
Person") has acquired ownership of stock having 15 percent or more of the
Company's general voting power.
 
     The plan provides that, after a Stock Acquisition Date, generally each
holder of a right will be entitled to purchase, at the exercise price, a number
of the Company's preferred shares having a market value of twice the exercise
price. The plan also provides that in the event of certain other business
combinations, generally each holder of a right will be entitled 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. Prior to the acquisition by
the Acquiring Person of 50% or more of the Common Stock outstanding, the Company
may exchange the rights (other than rights owned by the Acquiring Person and its
affiliates and associates, which will be null and void), in whole or in part,
for Common Stock on the basis of an exchange ratio of one share of Common Stock
for each Right (subject to adjustment). The rights will expire on June 2, 2001.
 
Stock Repurchase Plans
 
     On May 3, 1996, the Company announced a stock repurchase program which
authorizes the purchase of up to $20 million of its common stock from time to
time, subject to market conditions and other relevant factors affecting the
Company. As of June 30, 1998, the Company had repurchased 793,400 shares at a
cost of approximately $18,122,000. A second stock repurchase program, for an
additional $20 million, was authorized by the Company's board of directors on
August 5, 1998.
 
Stock Compensation Plan for Non-Employee Directors
 
     Under the terms of the Company's Compensation Plan for Non-Employee
Directors, which became effective in calendar year 1998, any member of the board
of directors who is not an employee of, or consultant to, the Company or any of
its divisions or subsidiaries will receive an annual retainer (currently
$24,000) payable in shares of Company common stock. Payment of the annual
retainer will be made in arrears at the beginning of the next succeeding
calendar year. Pursuant to a form of election, 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 Company common stock that will be deposited into a
director's account established under the plan. In the case of a non-employee
director who elects current receipt of the retainer (or who has not filed a form
of election), 39.6% of such retainer will be paid in cash (to approximate
current federal income tax liability) and the balance in Company common stock.
Distribution of amounts in a director's account, if applicable, will be made
upon the occurrence of an event of distribution and pursuant to the method of
distribution set forth in the form of election.
 
                                      F-13

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
8. OPERATIONS IN GEOGRAPHIC AREAS, FOREIGN OPERATIONS AND EXPORT SALES
 
     The Company develops, manufactures and markets medical systems and devices
which constitute a single business segment. The following information sets forth
geographic information on the Company's sales, profits and assets:
 
<TABLE>
<CAPTION>
                                                                UNITED      EUROPEAN
                                                                STATES     SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                                               --------    ------------    ------------    ------------
                                                                                 (IN THOUSANDS)
<S>                                                            <C>         <C>             <C>             <C>
YEAR ENDED JUNE 30, 1998:
  Sales to unaffiliated customers...........................   $208,745      $ 33,655        $     --        $242,400
  Transfers between geographic areas........................     14,384         8,976         (23,360)             --
                                                               --------      --------        --------        --------
     Total sales............................................   $223,129      $ 42,631        $(23,360)       $242,400
                                                               ========      ========        ========        ========
Operating earnings..........................................   $ 20,125      $  4,682        $    148        $ 24,955
                                                               ========      ========        ========
Other income, net...........................................                                                    4,760
                                                                                                             --------
Earnings before taxes on income.............................                                                 $ 29,715
                                                                                                             ========
Assets at June 30, 1998.....................................   $222,763      $ 33,690        $ (3,405)       $253,048
                                                               ========      ========        ========        ========
YEAR ENDED JUNE 30, 1997:
  Sales to unaffiliated customers...........................   $192,039      $ 33,561        $     --        $225,600
  Transfers between geographic areas........................     14,397         8,683         (23,080)             --
                                                               --------      --------        --------        --------
     Total sales............................................   $206,436      $ 42,244        $(23,080)       $225,600
                                                               ========      ========        ========        ========
Operating earnings..........................................   $  9,344      $  3,998        $    132        $ 13,474
                                                               ========      ========        ========
Other income, net...........................................                                                    4,346
                                                                                                             --------
Earnings before taxes on income.............................                                                 $ 17,820
                                                                                                             ========
Assets at June 30, 1997.....................................   $210,447      $ 30,769        $ (3,354)       $237,862
                                                               ========      ========        ========        ========
YEAR ENDED JUNE 30, 1996:
  Sales to unaffiliated customers...........................   $174,914      $ 36,386        $     --        $211,300
  Transfers between geographic areas........................     12,757         8,395         (21,152)             --
                                                               --------      --------        --------        --------
     Total sales............................................   $187,671      $ 44,781        $(21,152)       $211,300
                                                               ========      ========        ========        ========
Operating earnings..........................................   $ 17,919      $  4,999        $    490        $ 23,408
                                                               ========      ========        ========
Other income, net...........................................                                                    3,433
                                                                                                             --------
Earnings before taxes on income.............................                                                 $ 26,841
                                                                                                             ========
Assets at June 30, 1996.....................................   $207,553      $ 30,288        $ (3,377)       $234,464
                                                               ========      ========        ========        ========
</TABLE>
 
     In determining operating earnings, interest income and expense, other
income and expense, and income taxes were excluded.
 
     The Company had export sales, principally to Europe, Canada, Latin America
and the Far East, of $37,883,000, $37,471,000 and $40,524,000 in the years ended
June 30, 1998, 1997 and 1996, respectively.
 
                                      F-14

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
9. PENSION AND RETIREMENT PLANS
 
Defined Benefit Plan
 
     The Company has both domestic and foreign defined benefit pension plans
which cover substantially all employees. Pension benefits are based on years of
service, compensation and the primary social security benefits. Funding for the
domestic plan is within the range prescribed under the Employee Retirement
Income Security Act of 1974. Funding for the foreign plans is accomplished
through the purchase of guaranteed insurance contracts. Total pension expense
for the domestic and foreign pension plans was $1,963,000 in 1998, $1,458,000 in
1997 and $1,577,000 in 1996.
 
  Domestic
 
     The components of net pension expense and the funded status of the domestic
defined benefit pension plan are set forth below:
 
<TABLE>
<CAPTION>
                                                                              YEAR ENDED JUNE 30,
                                                                           --------------------------
                                                                            1998      1997      1996
                                                                           ------    ------    ------
                                                                                 (IN THOUSANDS)
<S>                                                                        <C>       <C>       <C>
Service cost for benefits earned during the year........................   $1,587    $1,304    $1,398
Interest cost on projected benefit obligation...........................    1,576     1,369     1,417
Actual return on plan assets............................................   (2,089)   (1,267)     (927)
Net amortization and deferral...........................................      458      (284)     (588)
                                                                           ------    ------    ------
        Net periodic pension cost -- domestic...........................   $1,532    $1,122    $1,300
                                                                           ======    ======    ======
</TABLE>
 
     The Plan's Funded Status was as follows:
 
<TABLE>
<CAPTION>
                                                                                        JUNE 30,
                                                                                   ------------------
                                                                                    1998       1997
                                                                                   -------    -------
                                                                                     (IN THOUSANDS)
<S>                                                                                <C>        <C>
Actuarial present value of accumulated benefit obligation
  Vested........................................................................   $16,881    $14,251
  Nonvested.....................................................................     2,263      1,840
                                                                                   -------    -------
  Accumulated benefit obligation................................................    19,144     16,091
  Effects of anticipated future compensation increases..........................     6,769      5,191
                                                                                   -------    -------
  Projected benefit obligation..................................................    25,913     21,282
  Plan assets at fair value.....................................................    23,623     20,460
                                                                                   -------    -------
  Projected benefit obligation in excess of plan assets.........................    (2,290)      (822)
  Unamortized net transition obligation.........................................       396        467
  Unrecognized prior service cost...............................................        69         73
  Unrecognized net actuarial loss...............................................     2,652      1,182
                                                                                   -------    -------
Net prepaid pension cost........................................................   $   827    $   900
                                                                                   =======    =======
</TABLE>
 
     The assumptions used to develop the actuarial present value of the
projected benefit obligation are as follows:
 
<TABLE>
<CAPTION>
                                                                                        1998      1997
                                                                                        ----      ----
<S>                                                                                     <C>       <C>
Weighted average discount rate.......................................................   7.00%     7.25%
Rate of increase in compensation levels..............................................   6.00%     6.00%
Expected long-term rate of return on plan assets.....................................   7.75%     8.00%
</TABLE>
 
     Plan assets are invested in U.S. Government and corporate securities and
include investments in the Company's common stock of $2,550,000 (96,000 shares)
at June 30, 1998. No dividends are paid on the Company's common stock.
 
                                      F-15

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
9. PENSION AND RETIREMENT PLANS -- (CONTINUED)

  Foreign
 
     Retirement coverage for the foreign employees of the Company is provided,
to the extent deemed appropriate, through separate plans. Funding policies are
based on local statutes. Retirement benefits are based on years of service,
final average earnings and social security benefits.
 
     The components of net pension expense and the funded status of the foreign
defined benefit pension plans are set forth below:
 
<TABLE>
<CAPTION>
                                                                                 YEAR ENDED JUNE 30,
                                                                                 --------------------
                                                                                 1998    1997    1996
                                                                                 ----    ----    ----
                                                                                    (IN THOUSANDS)
<S>                                                                              <C>     <C>     <C>
Service cost for benefits earned during the year..............................   $179    $142    $132
Interest cost on projected benefit obligation.................................    100      92      93
Estimated return on plan assets...............................................    (42)    (40)    (36)
Net amortization and deferral.................................................     42      38      41
                                                                                 ----    ----    ----
        Net periodic pension cost -- foreign..................................   $279    $232    $230
                                                                                 ====    ====    ====
</TABLE>
 
     The Plan's Funded Status was as follows:
 
<TABLE>
<CAPTION>
                                                                                         JUNE 30,
                                                                                     ----------------
                                                                                      1998      1997
                                                                                     ------    ------
                                                                                      (IN THOUSANDS)
<S>                                                                                  <C>       <C>
Actuarial present value of accumulated benefit obligation
  (fully vested)..................................................................
                                                                                     $  250    $  450
                                                                                     ------    ------
Projected benefit obligation......................................................    1,722     1,239
Plan assets at fair value.........................................................      250       450
                                                                                     ------    ------
Projected benefit obligation in excess of plan assets.............................   (1,472)     (789)
Unamortized net transition obligation.............................................      100       117
Unrecognized net actuarial loss...................................................    1,325       747
                                                                                     ------    ------
        Net (accrued) prepaid pension cost........................................   $  (47)   $   75
                                                                                     ======    ======
</TABLE>
 
     The assumptions used to develop foreign net pension cost and the actuarial
present value of projected benefit obligations are as follows:
 
<TABLE>
<CAPTION>
                                                                                        1998      1997
                                                                                        ----      ----
<S>                                                                                     <C>       <C>
Weighted average discount rate.......................................................    7.0%      7.5%
Rate of increase in compensation levels..............................................    6.0%      6.0%
Expected long-term rate of return on plan assets.....................................    8.0%      9.0%
</TABLE>
 
     The assets of the foreign defined benefit pension plans are invested in
guaranteed insurance contracts.
 
Supplemental Retirement Plan
 
     The Company has noncontributory, unfunded supplemental retirement plans for
Mr. Saper and certain other key officers. Life insurance has been purchased by
the Company to recover a substantial portion of the net after tax cost for these
supplemental retirement plans. The assumptions used to develop the supplemental
pension cost and the actuarial present value of the projected benefit obligation
are reviewed annually.
 
     Under the retirement provision of Mr. Saper's five-year employment
agreement with the Company, 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
 
                                      F-16
<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
9. PENSION AND RETIREMENT PLANS -- (CONTINUED)

preceding his retirement, but not less than the value of the benefit that would
have been payable had his retirement occurred at age 65. The plan provides
survivor benefits in the form of a $10 million life insurance policy, maintained
pursuant to a split-dollar agreement among Mr. Saper, the Corporation and a
trust for the benefit of Mr. Saper's family. The supplemental pension expense
for Mr. Saper recognized in the consolidated financial statements was $526,000,
$741,000 and $689,000 for 1998, 1997 and 1996, respectively.
 
     The supplemental retirement plan covering certain other key officers
provides that at age 65, these employees may receive, for a period of up to 15
years, a pension of up to 60% of a predetermined earnings level for the
five-year period prior to retirement. The supplemental pension expense for these
executives recognized in the consolidated financial statements was $182,000,
$156,000 and $155,000 for 1998, 1997 and 1996, respectively.
 
     The actuarial present value of both the accumulated benefit obligation and
projected benefit obligation for the supplemental retirement plans was
$6,688,000 and $8,328,000 for 1998 and 1997, respectively.
 
     The components of the total supplemental pension expense are set forth
below:
 
<TABLE>
<CAPTION>
                                                                                 YEAR ENDED JUNE 30,
                                                                                 --------------------
                                                                                 1998    1997    1996
                                                                                 ----    ----    ----
                                                                                    (IN THOUSANDS)
<S>                                                                              <C>     <C>     <C>
Service cost for benefits earned during the year..............................   $165    $200    $277
Interest cost on projected benefit obligation.................................    467     568     624
Amortization of prior service cost............................................    841     841     496
Amortization of gain..........................................................   (765)   (712)   (553)
                                                                                 ----    ----    ----
        Total supplemental pension expense....................................   $708    $897    $844
                                                                                 ====    ====    ====
</TABLE>
 
Savings and Supplemental Retirement Plan
 
     The Company maintains a 401(k) savings and supplemental retirement plan for
eligible domestic employees. This 401(k) plan was established to enhance the
existing retirement plan and to provide an incentive to employees to save and
invest regularly for their retirement. The Company contributions, which were
based on matching 50% of participating employees' contributions up to a maximum
of 6% of compensation, were $1,210,000 for 1998, $1,084,000 for 1997 and
$976,000 for 1996.
 
10. COMMITMENTS AND CONTINGENCIES
 
Leases
 
     Future minimum rental commitments under noncancellable operating leases are
as follows:
 
<TABLE>
<CAPTION>
         YEAR                                                                            (IN THOUSANDS)
         -----------------------------------------------------------------------------   --------------
<S>      <C>                                                                             <C>
         1999.........................................................................       $2,877
         2000.........................................................................        2,023
         2001.........................................................................        1,294
         2002.........................................................................          429
         2003.........................................................................          202
         Thereafter...................................................................          152
                                                                                             ------
                 Total future minimum rental payments.................................       $6,977
                                                                                             ======
</TABLE>
 
     Total rent expense for the years ended June 30, 1998, 1997 and 1996
amounted to approximately $4,044,000, $4,266,000 and $4,264,000, respectively.
 
                                      F-17

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
10. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)

Litigation
 
     The Company is subject to litigation in the ordinary course of its
business. The Company believes it has meritorious defenses in all material
pending lawsuits and that the outcome will not have a material adverse effect on
the Company's financial position or results of operations. See Footnote 12 for
further discussion of settlements of litigation.
 
Credit Arrangements
 
     The Company has lines of credit totaling $50,400,000, borrowings under
which bear interest principally at the lenders' respective prime rates. There
were no short-term borrowings under lines of credit at June 30, 1998 and 1997.
The lines expire as follows: $25,000,000 in December 1998 and $25,000,000 in
April 1999. These lines are renewable annually at the option of the banks. The
Company also has $400,000 in lines of credit with no expiration date.
 
11. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    YEAR ENDED JUNE 30, 1998
                                                     ------------------------------------------------------
                                                      FIRST       SECOND      THIRD     FOURTH
                                                     QUARTER      QUARTER    QUARTER    QUARTER     TOTAL
                                                     -------      -------    -------    -------    --------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                  <C>          <C>        <C>        <C>        <C>
Net sales.........................................   $54,300      $62,700    $60,300    $65,100    $242,400
                                                     -------      -------    -------    -------    --------
Gross margin......................................   $34,904      $40,282    $39,842    $42,964    $157,992
                                                     -------      -------    -------    -------    --------
Net earnings......................................   $ 2,669      $ 5,647    $ 6,205    $ 7,120    $ 21,641
                                                     -------      -------    -------    -------    --------
Earnings per share, basic.........................   $  0.17      $  0.35    $  0.39    $  0.46    $   1.37
                                                     -------      -------    -------    -------    --------
Earnings per share, diluted.......................   $  0.16      $  0.34    $  0.38    $  0.44    $   1.32
                                                     -------      -------    -------    -------    --------
 
<CAPTION>
                                                                    YEAR ENDED JUNE 30, 1997
                                                     ------------------------------------------------------
                                                      FIRST       SECOND      THIRD     FOURTH
                                                     QUARTER      QUARTER    QUARTER    QUARTER     TOTAL
                                                     -------      -------    -------    -------    --------
<S>                                                  <C>          <C>        <C>        <C>        <C>
Net sales.........................................   $47,600      $57,600    $57,900    $62,500    $225,600
                                                     -------      -------    -------    -------    --------
Gross margin......................................   $30,951      $37,633    $37,398    $39,012    $144,994
                                                     -------      -------    -------    -------    --------
Net earnings......................................   $(3,298)(A)  $ 5,051    $ 5,750    $ 6,601    $ 14,104
                                                     -------      -------    -------    -------    --------
Earnings per share, basic.........................   $ (0.21)     $  0.31    $  0.36    $  0.41    $   0.88
                                                     -------      -------    -------    -------    --------
Earnings per share, diluted.......................   $ (0.20)(A)  $  0.31    $  0.35    $  0.40    $   0.86
                                                     -------      -------    -------    -------    --------
</TABLE>
 
------------------
(A) Q1 and FY 1997 earnings includes shareholder class action securities lawsuit
    settlement expense of $5.6 million before taxes, or $3.3 million after
    income tax, equivalent to $0.20 per diluted share, and Quinton patent
    infringement lawsuit settlement expense of $3.0 million before taxes, or
    $1.8 million after income tax, equivalent to $0.11 per diluted share.
 
     Quarterly and total year earnings per share are calculated independently
based on the weighted average number of shares outstanding during each period.
 
12. SPECIAL ITEMS
 
     Included in fiscal 1997 earnings were two special items as follows:
 
Settlement of Shareholder Class Action Securities Lawsuit
 
     The Company settled the shareholder class action securities lawsuit filed
in November 1993. The cost of the settlement, including legal fees, was $5.6
million or $3.3 million after tax, equivalent to $0.20 per diluted share.
 
                                      F-18

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12. SPECIAL ITEMS -- (CONTINUED)

Settlement of Patent Infringement Lawsuit
 
     The Company settled the patent infringement lawsuit filed in February 1996
by Quinton Instruments Company and Sherwood Medical Company concerning the
VasoSeal Vascular Hemostasis Device. The settlement allows all parties to market
their respective vascular hemostasis products and includes covenants against
future litigation. The cost of the settlement, including legal fees, was $3.0
million or $1.8 million after tax, equivalent to $0.11 per diluted share.
 
     Included in fiscal 1996 earnings were two special items as follows:
 
Income from Settlement of Litigation
 
     The Company settled all litigation brought by its wholly-owned
subsidiaries, InterVascular, Inc. and InterVascular S.A. (France), against
several former employees and certain other defendants. Income from the
settlement of litigation, net of related expenses, was $10.7 million or $7.9
million after tax, equivalent to $0.47 per diluted share.
 
Point of View Charge
 
     The Company wrote off approximately $9.6 million or $5.6 million after tax,
equivalent to $0.34 per diluted share, for excess and obsolete inventory and
other costs related to the point of view(R) monitor.
 
                                      F-19

<PAGE>

                        DATASCOPE CORP. AND SUBSIDIARIES
 
                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)
 
<TABLE>
<CAPTION>
                   COLUMN A                      COLUMN B               COLUMN C              COLUMN D        COLUMN E
                  ---------                      ----------    ---------------------------    ----------      ----------
                                                                        ADDITIONS
                                                               ---------------------------
                                                                  (1)           (2)                     
                                                                             CHARGED TO       DEDUCTIONS
                                                 BALANCE AT    CHARGED TO     OTHER             FROM          BALANCE AT
                                                 BEGINNING     COSTS AND     ACCOUNTS --       RESERVES --     CLOSE OF
                 DESCRIPTION                     OF PERIOD     EXPENSES      DESCRIBE         DESCRIBE         PERIOD
                 -----------                     ----------    ----------    -----------      ----------      ----------
<S>                                              <C>           <C>           <C>              <C>             <C>
YEAR ENDED JUNE 30, 1998
 
Allowance for doubtful accounts...............     $  922         $277            $--            $121(A)        $1,078
                                                   ======         ====            ===            ====           ======
Reserve for warranty costs....................        700           --             --              60(A)           640
                                                   ======         ====            ===            ====           ======
 
YEAR ENDED JUNE 30, 1997
 
Allowance for doubtful accounts...............     $1,198         $255            $--            $531(A)        $  922
                                                   ======         ====            ===            ====           ======
Reserve for warranty costs....................        810           --             --             110(A)           700
                                                   ======         ====            ===            ====           ======
 
YEAR ENDED JUNE 30, 1996
 
Allowance for doubtful accounts...............     $1,273         $350            $--            $425(A)        $1,198
                                                   ======         ====            ===            ====           ======
Reserve for warranty costs....................        750           60             --              --              810
                                                   ======         ====            ===            ====           ======
</TABLE>
 
------------------
(A) Write-offs
 
                                      S-1