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Zoll Medical Corp – ‘424B4’ on 2/23/00

On: Wednesday, 2/23/00 · Accession #: 950135-0-1023 · File #: 333-94793

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/23/00  Zoll Medical Corp                 424B4                  1:204K                                   Bowne of Boston/FA

Prospectus — Rule 424(b)(4)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Zoll Medical Corporation                              67    316K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Business Capitalization Cash and cash equivalents Consolidated Balance Sheets Consolidated Financial Statements Consolidated Income Statements Consolidated Statements of Cash Flows Consolidated Statements of Stockholders' Equity Dilution Dividend Policy Earnings per Share Experts Information Regarding Forward-Looking Statements Legal Matters Management Management's Discussion and Analysis of Financial Condition and Results of Operations Market Price of Common Stock Notes to Consolidated Financial Statements Offering, The Principal Stockholders Prospectus Summary Relationships and Related Party Transactions Report of Independent Auditors Research and development Risk Factors Selected Financial Data The Offering Underwriting Use of Proceeds Where You Can Find More Information
1	1st Page - Filing Submission
5	Prospectus Summary
6	The Offering
8	Risk Factors
17	Information Regarding Forward-Looking Statements
19	Use of Proceeds
"	Market Price of Common Stock
"	Dividend Policy
20	Capitalization
"	Dilution
21	Selected Financial Data
22	Management's Discussion and Analysis of Financial Condition and Results of Operations
25	Business
36	Research and development
39	Management
41	Principal Stockholders
42	Relationships and Related Party Transactions
43	Underwriting
45	Legal Matters
"	Experts
"	Where You Can Find More Information
47	Consolidated Financial Statements
48	Report of Independent Auditors
49	Consolidated Balance Sheets
50	Consolidated Income Statements
51	Consolidated Statements of Stockholders' Equity
52	Consolidated Statements of Cash Flows
53	Notes to Consolidated Financial Statements
"	Cash and cash equivalents
54	Earnings per Share

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FILED PURSUANT TO RULE 424(b)(4)
REGISTRATION NO. 333-94793

PROSPECTUS
1,500,000 SHARES

[ZOLL LOGO]

ZOLL MEDICAL CORPORATION
COMMON STOCK

$41.75 PER SHARE
------------------

We are selling 1,500,000 shares of our common stock. We have granted the
underwriters a 30-day option to purchase up to an additional 225,000 shares to
cover over-allotments, if any.

Our common stock is quoted on the Nasdaq National Market under the symbol
"ZOLL". The last reported sale price of our common stock on the Nasdaq National
Market on February 22, 2000 was $41.52 per share.

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

INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

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

[Download Table]

PER SHARE TOTAL
--------- -----------

Public Offering Price $41.75 $62,625,000
Underwriting Discount $ 2.40 $ 3,600,938
Proceeds to Zoll (before expenses) $39.35 $59,024,062

The underwriters expect to deliver the shares to purchasers on or about
February 28, 2000.

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

SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY
ADAMS, HARKNESS & HILL, INC.

February 22, 2000

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[INSIDE FRONT COVER GRAPHIC]

Included on the inside front cover page of the printed prospectus
is a full page graphic containing a picture of our M Series
defibrillator and a vertical collage on the left side of the page
depicting numerous images relating to our products. The graphic
contains the following text:

KEY ADVANTAGES OF THE M SERIES DEFIBRILLATORS

- Portability (lightest & smallest full-featured external
defibrillator made)

- Ease-of-use with simple controls

- Vivid screen display

- Expandable monitoring capabilities and data management
features

- Superior biphasic defibrillation waveform

Zoll's newest line of external defibrillators are designed
to effectively treat sudden cardiac arrest, a leading cause
of death in the United States.

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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS
PROSPECTUS.

------------------------
TABLE OF CONTENTS

[Download Table]

PAGE
----

Prospectus Summary.......................................... 1
Risk Factors................................................ 4
Information Regarding Forward-Looking Statements............ 13
Use of Proceeds............................................. 15
Market Price of Common Stock................................ 15
Dividend Policy............................................. 15
Capitalization.............................................. 16
Dilution.................................................... 16
Selected Financial Data..................................... 17
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 18
Business.................................................... 21
Management.................................................. 35
Principal Stockholders...................................... 37
Relationships and Related Party Transactions................ 38
Underwriting................................................ 39
Legal Matters............................................... 41
Experts..................................................... 41
Where You Can Find More Information......................... 41
Consolidated Financial Statements........................... F-1

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[THIS PAGE INTENTIONALLY LEFT BLANK]

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
You should read this entire prospectus carefully, including the "Risk Factors"
section. In addition, we incorporate by reference important business and
financial information in this prospectus.

OUR COMPANY

We design, manufacture and market an integrated line of proprietary,
noninvasive cardiac resuscitation devices, our external
defibrillators/pacemakers, as well as disposable electrodes and emergency
medical system software data management solutions. Our cardiac resuscitation
products are designed to improve survival rates from sudden cardiac arrest, a
leading cause of death in the United States. Sudden cardiac arrest claims over
250,000 victims each year in the United States alone. For victims of sudden
cardiac arrest, time is the most critical element for survival. According to the
American Heart Association, more than 95% of sudden cardiac arrest victims die,
in many cases because life saving defibrillators arrive on the scene too late,
if at all. We believe that the importance of immediate treatment, coupled with
an aging population, implies a long-term growth opportunity in this market.

We estimate that the annual worldwide market for external defibrillator
products was $525 million in 1999. We divide the market for cardiac
resuscitation equipment into three principal markets: the hospital, pre-hospital
and public access defibrillation markets. We currently sell our devices in the
hospital and pre-hospital markets and plan to introduce a device for the public
access defibrillation market within the next 12 to 24 months. We believe we are
the second largest company in the world in external defibrillator product sales.
From fiscal 1998 to fiscal 1999, our revenues increased 37%, making us the
fastest growing worldwide external defibrillator company. We are the only
external defibrillator manufacturer whose customers include all of the top 12
cardiac care hospitals, as ranked by the U.S. News and World Report in July
1999. In addition, our newest line of defibrillators has recently been selected
as the standard device in the White House.

A major element of our business strategy is to capitalize on the success of
the M Series, our most recent line of defibrillators. In addition, we will
promote the use of our proprietary biphasic waveform in order to increase our
market share in both the domestic and international markets for cardiac
resuscitation products.

OUR M SERIES DEFIBRILLATORS

In September 1998, we shipped the first M Series defibrillators equipped
with a conventional monophasic waveform. The M Series is a new line of
defibrillators for both the hospital and pre-hospital markets. To date, the M
Series defibrillator is our best selling device and represented more than 80% of
our capital equipment device sales in the first quarter of fiscal 2000. We
believe that the clinical superiority of our biphasic waveform combined with the
product advantages listed below offer compelling reasons for customers to choose
our M Series defibrillators. We believe that our M Series defibrillators offer
the following competitive advantages:

- portability;

- ease-of-use with simple controls; and

- vivid screen display.

In addition, the M Series is an expandable platform that allows customers
to add features to tailor the devices to their specific needs.

OUR PROPRIETARY BIPHASIC WAVEFORM

We recently began shipping M Series defibrillators equipped with our
proprietary biphasic waveform. Our biphasic waveform has demonstrated higher
clinical efficacy than conventional monophasic waveforms.

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We have received clearance from the U.S. Food and Drug Administration to
label our M Series defibrillators equipped with our biphasic waveform as being
clinically superior to defibrillators with a monophasic waveform for particular
uses. We are the only company to receive a claim of superiority on its biphasic
waveform. We therefore believe that our proprietary biphasic waveform is
superior to the biphasic waveform utilized by any of our competitors. We believe
the clinical superiority of our biphasic waveform combined with product
advantages offer compelling reasons for customers to choose our products.

OUR MARKET OPPORTUNITIES

While we plan to increase our share in both the domestic and international
markets primarily by promoting our M Series defibrillators and biphasic
waveform, we also seek additional future growth opportunities. We intend to
enter the public access defibrillation market with a low-cost automated external
defibrillator. This device will bring cardiac resuscitation capabilities to the
large and relatively unpenetrated public access defibrillation market. In
addition, we plan to integrate the pieces of our data management solution into a
single system to capitalize on the significant growth opportunities that we
believe exist in the emergency medical system data management market.

We were incorporated in Massachusetts in 1980. Our executive offices are
located at 32 Second Avenue in Burlington, Massachusetts 01803, and our
telephone number is (781) 229-0020.

THE OFFERING

Common stock offered.................... 1,500,000 shares

Common stock to be outstanding after the
offering................................ 8,343,809 shares

Use of proceeds......................... To fund business development, such
as research and development and
sales and marketing, to fund future
acquisitions, particularly in
current and related lines of
business, to provide working
capital and for general corporate
purposes.

Unless we specifically state otherwise, the information in this prospectus
does not take into account the issuance of up to 225,000 shares of common stock
which the underwriters have the option to purchase solely to cover
over-allotments. If the underwriters exercise their over-allotment option in
full, 8,568,809 shares of common stock will be outstanding after the offering.

The number of shares of common stock to be outstanding immediately after
the offering is based upon shares outstanding as of January 1, 2000 and does not
take into account 1,063,918 shares of common stock issuable upon exercise of
options outstanding at a weighted average exercise price of $13.84 per share and
115,075 shares reserved under our existing stock option plans.

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SUMMARY FINANCIAL DATA

[Enlarge/Download Table]

FISCAL YEARS ENDED THREE MONTHS ENDED
-------------------------------------------------------- -------------------
SEPT. 30, SEPT. 28, SEPT. 27, SEPT. 26, OCT. 2, JAN. 2, JAN. 1,
1995 1996 1997(1) 1998 1999 1999 2000
--------- --------- --------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)

INCOME STATEMENT DATA:
Net sales.................. $ 45,884 $ 55,700 $ 57,833 $ 57,520 $ 78,682 $ 16,056 $ 24,435
Cost of goods sold......... 20,421 24,545 25,372 24,268 32,486 6,532 10,843
-------- -------- -------- -------- -------- -------- --------
Gross profit............... 25,463 31,155 32,461 33,252 46,196 9,524 13,592
Expenses:
Selling and marketing.... 15,575 16,773 18,484 20,152 24,364 5,415 7,674
General and
administrative........ 4,313 4,809 6,749 6,239 7,422 1,630 1,952
Research and
development........... 4,360 4,464 6,430 6,583 6,916 1,603 1,731
-------- -------- -------- -------- -------- -------- --------
Total expenses........ 24,248 26,046 31,663 32,974 38,702 8,648 11,357
-------- -------- -------- -------- -------- -------- --------
Income from operations..... 1,215 5,109 798 278 7,494 876 2,235
Net investment income
(expense)................ 243 278 355 413 (45) 66 (70)
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes.................... 1,458 5,387 1,153 691 7,449 942 2,165
Provision for income
taxes.................... 496 1,758 266 18 2,010 240 801
-------- -------- -------- -------- -------- -------- --------
Net income................. $ 962 $ 3,629 $ 887 $ 673 $ 5,439 $ 702 $ 1,364
======== ======== ======== ======== ======== ======== ========
Basic earnings per share... $ 0.15 $ 0.55 $ 0.13 $ 0.10 $ 0.82 $ 0.11 $ 0.20
======== ======== ======== ======== ======== ======== ========
Weighted average common
shares
outstanding.............. 6,519 6,562 6,602 6,602 6,656 6,628 6,794
Diluted earnings per
share.................... $ 0.15 $ 0.55 $ 0.13 $ 0.10 $ 0.79 $ 0.10 $ 0.19
======== ======== ======== ======== ======== ======== ========
Weighted average common and
equivalent shares
outstanding.............. 6,613 6,635 6,650 6,647 6,893 6,730 7,196

[Download Table]

Pro forma information(2):
Historical income before income taxes..................... $ 7,449 $ 942
Pro forma incremental operating costs..................... 272 65
-------- --------
Pro forma income before income taxes...................... 7,177 877
Pro forma provision for income taxes...................... 2,402 300
-------- --------
Pro forma net income...................................... $ 4,775 $ 577
======== ========
Pro forma diluted earnings per share...................... $ 0.69 $ 0.09
======== ========

[Enlarge/Download Table]

JANUARY 1, 2000
------------------------
ACTUAL AS ADJUSTED(3)
------- --------------
(UNAUDITED)
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 1,284 $ 59,708
Working capital............................................. 28,440 86,864
Total assets................................................ 63,020 121,444
Total long-term debt, excluding current portion............. 2,029 2,029
Total stockholders' equity.................................. 43,660 102,084

---------------
(1) For the year ended September 27, 1997, excluding one-time charges totaling
$2,300, net income would have been $2,405 and basic and diluted earnings per
share would have been $0.36.

(2) Pro forma information reflects the effect of (i) incremental operating costs
expected to be incurred by the Company as a result of the Pinpoint merger
and (ii) the provision for corporate income taxes on the previously untaxed
Subchapter S corporation earnings of Pinpoint. See Note B to the
consolidated financial statements included elsewhere in this prospectus.

(3) The As Adjusted information gives effect to this offering and assumes no
exercise of the underwriters' over-allotment option.

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RISK FACTORS

An investment in our common stock involves significant risks. You should
carefully consider the following risks before you decide to buy our common
stock.

IF WE FAIL TO COMPETE SUCCESSFULLY IN THE FUTURE AGAINST EXISTING OR POTENTIAL
COMPETITORS, OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED

Our principal global competitors with respect to our entire cardiac
resuscitation equipment product line are Physio-Control Corporation and Agilent
Technologies, Inc. Physio-Control is a subsidiary of Medtronic, Inc., a leading
medical technology company, and Agilent, which now includes Heartstream, Inc.,
was formerly part of Hewlett-Packard Company. Physio-Control has been the market
leader in the defibrillator industry for over twenty years and has a broader
line of product offerings and accessories than we do. As a result of
Physio-Control's dominant position in this industry, many potential customers
have relationships with Physio-Control that could make it difficult for us to
continue to penetrate the markets for our products. In addition, Physio-Control,
its parent and Agilent and other competitors each have significantly greater
resources than we do. Accordingly, Physio-Control, Agilent and other competitors
could substantially increase the resources they devote to the development and
marketing of products that are competitive with ours. Moreover, these and other
competitors may develop and successfully commercialize medical devices that
directly or indirectly accomplish what our products are designed to accomplish
in a superior and/or less expensive manner. For example, we expect our
competitors to develop and sell devices in the future that will compete directly
with our M Series product line and our biphasic waveform technology. As a
consequence, such competing medical devices may render our products obsolete.

In addition to external defibrillation and external pacing with cardiac
resuscitation equipment, it is possible that other alternative therapeutic
approaches to the treatment of sudden cardiac arrest may be developed. These
alternative therapies or approaches, including pharmaceutical or other
alternatives, could prove to be superior to our products.

Moreover, there is significant competition in the business of developing
and marketing software for data collection, billing and data management in the
emergency medical system market. Our principal competitors in this business
include PAD Systems, Healthware Technologies, Inc., Tritech Software Systems,
Inc., Sweet Computer Services, Inc., RAM Software Systems, Inc., Intergraph
Corporation and AmbPac, Inc., some of which have greater financial, technical,
research and development and marketing resources than we do. In addition,
because the barriers to entry in this business are relatively low, additional
competitors may easily enter this market in the future. It is possible that
systems developed by competitors could be superior to our data management
system. Consequently, our ability to sell our data management system could be
materially impacted and our financial results could be materially and adversely
affected.

OUR OPERATING RESULTS ARE LIKELY TO FLUCTUATE WHICH COULD CAUSE OUR STOCK PRICE
TO BE VOLATILE, AND THE ANTICIPATION OF A VOLATILE STOCK PRICE CAN CAUSE GREATER
VOLATILITY

Our quarterly and annual operating results have fluctuated and may continue
to fluctuate. Various factors have and may continue to affect our operating
results, including:

- high demand for our products which could disrupt our normal factory
utilization and cause shipments to occur in uneven patterns;

- variations in product orders;

- timing of new product introductions;

- changes in distribution channels;

- actions taken by our competitors such as the introduction of new products
or the offering of sales incentives;

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- the ability of our sales force to effectively market our products;

- supply interruptions from our single source vendors;

- regulatory actions, including actions taken by the U.S. Food and Drug
Administration; and

- delays in obtaining domestic or foreign regulatory approvals.

Based on these factors, period to period comparisons should not be relied
upon as indications of future performance. In addition, in anticipation of less
successful quarterly results, parties may take short positions in our stock. The
actions of parties shorting our stock might cause even more volatility in our
stock price. The volatility of our stock may cause the value of a stockholder's
investment to decline rapidly.

WE MAY BE REQUIRED TO IMPLEMENT A COSTLY PRODUCT RECALL

In the event that any of our products proves to be defective, we can
voluntarily recall, or the U.S. Food and Drug Administration, the FDA, could
require us to redesign or implement a recall of, any of our products. We and our
competitors have voluntarily recalled products in the past, and based on this
experience, we believe that future recalls could result in significant costs to
us and significant adverse publicity which could harm our ability to market our
products in the future. Though it is not possible to quantify the economic
impact of a recall, it could have a material adverse effect on our business,
financial condition and results of operations.

WE CAN BE SUED FOR PRODUCING DEFECTIVE PRODUCTS AND WE MAY BE REQUIRED TO PAY
SIGNIFICANT AMOUNTS TO THOSE HARMED IF WE ARE FOUND LIABLE, AND OUR BUSINESS
COULD SUFFER FROM ADVERSE PUBLICITY

The manufacture and sale of medical products such as ours entail
significant risk of product liability claims. Our quality control standards
comply with FDA requirements and we believe that the amount of product liability
insurance we maintain is adequate based on past product liability claims in our
industry. We cannot assure you, however, that the amount of such insurance will
be sufficient to satisfy claims made against us in the future or that we will be
able to maintain insurance in the future at satisfactory rates or in adequate
amounts. Product liability claims could result in significant costs or
litigation. In addition, a successful claim brought against us in excess of our
available insurance coverage or any claim that results in significant adverse
publicity against us could have a material adverse effect on our business,
financial condition and results of operations.

OUR DEPENDENCE ON SOLE AND SINGLE SOURCE SUPPLIERS EXPOSES US TO SUPPLY
INTERRUPTIONS THAT COULD RESULT IN PRODUCT DELIVERY DELAYS AND SUBSTANTIAL COSTS
TO REDESIGN OUR PRODUCTS

Although we use many standard parts and components for our products, some
key components are purchased from sole or single source vendors for which
alternative sources are not currently readily available. For example, we
currently purchase proprietary components, including capacitors, screens, gate
arrays and integrated circuits, for which there are no direct substitutes. Our
inability to obtain sufficient quantities of these components may result in
future delays or reductions in product shipments which could cause a fluctuation
in our results of operations.

These components could be replaced with alternatives from other suppliers,
which could involve a redesign of our products. Such redesign could involve
considerable time and expense. For example, in 1999, one of our vendors was
unable to provide sufficient quantities of screens that were used in our M
Series products. To keep up with the demand for our products, we sought
alternative screens from another supplier and redesigned our product
accordingly. Redesigning our products resulted in additional costs and delays in
the shipment of some of our products. Although we believe we have solved this
supply problem, we cannot assure you that we will not have similar supply
problems in the future.

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OUR RELIANCE ON INDEPENDENT MANUFACTURERS CREATES SEVERAL RISKS THAT COULD
RESULT IN PRODUCT DELIVERY DELAYS, INCREASED COSTS AND OTHER ADVERSE EFFECTS ON
OUR BUSINESS

We currently engage a small number of independent manufacturers to
manufacture several components for our products, including circuit boards,
molded plastic components, cables and high voltage assemblies. Our reliance on
these independent manufacturers involves a number of risks, including the
potential for inadequate capacity, unavailability of, or interruptions in access
to, process technologies, and reduced control over delivery schedules,
manufacturing yields and costs.

If our manufacturers are unable or unwilling to continue manufacturing our
components in required volumes, we will have to transfer manufacturing to
acceptable alternative manufacturers whom we have identified, which could result
in significant interruptions of supply. Moreover, the manufacture of these
components is complex, and our reliance on the suppliers of these components
exposes us to potential production difficulties and quality variations, which
could negatively impact the cost and timely delivery of our products.
Accordingly, any significant interruption in the supply, or degradation in the
quality, of any component would have a material adverse effect on our business,
financial condition and results of operations.

FAILURE TO PRODUCE NEW PRODUCTS OR OBTAIN MARKET ACCEPTANCE FOR OUR NEW PRODUCTS
IN A TIMELY MANNER COULD HARM OUR BUSINESS

Because substantially all of our revenue comes from the sale of cardiac
resuscitation devices and related products, our financial performance will
depend upon market acceptance of, and our ability to deliver and support, new
products such as upgrades to the M Series defibrillator, a product for the
public access defibrillation market and an integrated product for the emergency
medical system data management market. We cannot assure you that we will be able
to produce viable products in the time frames we currently estimate. Factors
which could cause delay in these schedules or even cancellation of our projects
to produce and market these new products include research and development
delays, the actions of our competitors producing competing products and the
actions of other parties who may provide alternative therapies or solutions
which could reduce or eliminate the markets for pending products.

The degree of market acceptance of any of our products will depend on a
number of factors, including:

- our ability to develop and introduce new products in the time frames we
currently estimate;

- our ability to successfully implement new product technologies;

- the market's readiness to accept new products such as our M Series
defibrillators and data management products;

- the standardization of an automated platform for data management systems;

- having adequate financial and technical resources for future product
development and promotion;

- the efficacy of our products; and

- the prices of our products compared to the prices of our competitors'
products.

If our new products do not achieve market acceptance, our financial
performance will be adversely affected.

WE MAY NOT BE ABLE TO OBTAIN APPROPRIATE REGULATORY APPROVALS FOR OUR NEW
PRODUCTS

The manufacture and sale of our products are subject to regulation by
numerous governmental authorities, principally the FDA and corresponding state
and foreign agencies. The FDA administers the Federal Food, Drug and Cosmetic
Act, as amended, and the rules and regulations promulgated thereunder. Some of
our products have been classified by the FDA as Class II devices and others,
such as our automated external defibrillators, have been classified as Class III
devices. All of these devices must

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secure either a 510(k) pre-market notification clearance or an approved
pre-market approval application before they can be introduced into the U.S.
market. The process of obtaining 510(k) clearance typically takes several months
and may involve the submission of limited clinical data supporting assertions
that the product is substantially equivalent to another medical device on the
market prior to 1976. The pre-market approval process typically requires
substantially more time than does 510(k) clearance and requires the submission
of significant quantities of clinical data and supporting information. Delays in
obtaining either 510(k), or if necessary, pre-market approval clearance could
have an adverse effect on the introduction of future products. Moreover,
approvals, if granted, may limit the uses for which a product may be marketed,
which could reduce or eliminate the commercial benefit of manufacturing any such
product.

We are also subject to regulation in each of the foreign countries in which
we sell products. Many of the regulations applicable to our products in such
countries are similar to those of the FDA. However, the national health or
social security organizations of certain countries require our products to be
qualified before they can be marketed in those countries. We cannot assure you
that such clearances will be obtained.

IF WE FAIL TO COMPLY WITH APPLICABLE REGULATORY LAWS AND REGULATIONS, THE FDA
COULD EXERCISE ANY OF ITS REGULATORY POWERS THAT COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS

Every company that manufactures or assembles medical devices is required to
register with the FDA and to adhere to certain good manufacturing practices
which regulate the manufacture of medical devices and prescribe record keeping
procedures and provide for the routine inspection of facilities for compliance
with such regulations. The FDA also has broad regulatory powers in the areas of
clinical testing, marketing and advertising of medical devices. To ensure that
manufacturers adhere to good manufacturing practices, medical device
manufacturers are routinely subject to periodic inspections by the FDA. If the
FDA believes that a company may not be operating in compliance with applicable
laws and regulations, it could take any of the following actions:

- place the company under observation and reinspect the facilities;

- issue a warning letter apprising of violative conduct;

- detain or seize products;

- mandate a recall;

- enjoin future violations; and

- assess civil and criminal penalties against the company, its officers or
its employees.

We, like most of our U.S. competitors, have received warning letters from
the FDA in the past, and may receive warning letters in the future. We have
always complied with the warning letters we have received. However, our failure
to comply with FDA regulations could result in sanctions being imposed on us,
including restrictions on the marketing or recall of our products. These
sanctions could have a material adverse effect on our business.

WE ARE DEPENDENT UPON LICENSED AND PURCHASED TECHNOLOGY FOR UPGRADEABLE FEATURES
IN OUR PRODUCTS, AND WE MAY NOT BE ABLE TO RENEW THESE LICENSES OR PURCHASE
AGREEMENTS IN THE FUTURE

We license and purchase technology from third parties for upgradeable
features in our products, including 12 lead analysis program and pulse oximetry
technologies. We anticipate that we will need to license and purchase additional
technology to remain competitive. We may not be able to renew our existing
licenses and purchase agreements or to license and purchase other technologies
on commercially reasonable terms or at all. If we are unable to renew our
existing licenses and purchase agreements or we are unable to license or
purchase new technologies, we may not be able to offer competitive products.

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FUTURE CHANGES IN APPLICABLE LAWS AND REGULATIONS COULD HAVE AN ADVERSE EFFECT
ON OUR BUSINESS

Although we are not aware of any pending changes in applicable laws and
regulations, we cannot assure you that federal, state or foreign governments
will not change existing laws or regulations or adopt new laws or regulations
that regulate our industry. Changes in or adoption of new laws or regulations
could result in the following consequences that would have an adverse effect on
our business:

- regulatory clearance previously received for our products could be
revoked;

- costs of compliance could increase; or

- we may be unable to comply with such laws and regulations so that we
would be unable to sell our products.

CHANGES IN THE HEALTH CARE INDUSTRY MAY REQUIRE US TO DECREASE THE SELLING PRICE
FOR OUR PRODUCTS OR COULD RESULT IN A REDUCTION IN THE SIZE OF THE MARKET FOR
OUR PRODUCTS, EACH OF WHICH COULD HAVE A NEGATIVE IMPACT ON OUR FINANCIAL
PERFORMANCE

Trends toward managed care, health care cost containment, and other changes
in government and private sector initiatives in the United States and other
countries in which we do business are placing increased emphasis on the delivery
of more cost-effective medical therapies which could adversely affect the sale
and/or the prices of our products. For example:

- major third-party payors of hospital services, including Medicare,
Medicaid and private health care insurers, have substantially revised
their payment methodologies during the last few years which has resulted
in stricter standards for reimbursement of hospital charges for certain
medical procedures;

- Medicare, Medicaid and private health care insurer cutbacks could create
downward price pressure in the cardiac resuscitation pre-hospital market;

- proposals were adopted recently that will change the reimbursement
procedures for the capital expenditure portion of the cost of providing
care to Medicare patients;

- numerous legislative proposals have been considered that would result in
major reforms in the U.S. health care system that could have an adverse
effect on our business;

- there has been a consolidation among health care facilities and
purchasers of medical devices in the United States who prefer to limit
the number of suppliers from whom they purchase medical products, and
these entities may decide to stop purchasing our products or demand
discounts on our prices;

- there is economic pressure to contain health care costs in international
markets;

- there are proposed and existing laws and regulations in domestic and
international markets regulating pricing and profitability of companies
in the health care industry; and

- there have been recent initiatives by third party payors to challenge the
prices charged for medical products which could affect our ability to
sell products on a competitive basis.

Both the pressure to reduce prices for our products in response to these
trends and the decrease in the size of the market as a result of these trends
could adversely affect our levels of revenues and profitability of sales, which
could have a material adverse effect on our business.

UNCERTAIN CUSTOMER DECISION PROCESSES MAY RESULT IN LONG SALES CYCLES WHICH
COULD RESULT IN UNPREDICTABLE FLUCTUATIONS IN REVENUES AND DELAY THE REPLACEMENT
OF CARDIAC RESUSCITATION DEVICES

Many of the customers in the pre-hospital market consist of municipal fire
and emergency medical systems departments. As a result, there are numerous
decision-makers and governmental procedures in the decision-making process. In
addition, decisions at hospitals concerning the purchase of new medical devices
are sometimes made on a department-by-department basis. Accordingly, we believe
the purchasing

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decisions of many of our customers may be characterized by long decision-making
processes, which have resulted in and may continue to result in long sales
cycles for our products. For example, the sales cycles for cardiac resuscitation
products typically have been between six to nine months, although some sales
efforts have taken as long as two years.

OUR INTERNATIONAL SALES EXPOSE OUR BUSINESS TO A VARIETY OF RISKS THAT COULD
RESULT IN SIGNIFICANT FLUCTUATIONS IN OUR RESULTS OF OPERATIONS

Approximately 20% of our sales in fiscal 1999 were made to foreign
purchasers, particularly in countries located in Europe and Asia, and we plan to
increase the sale of our products to foreign purchasers in the future. As a
result, a significant portion of our sales is and will continue to be subject to
the risks of international business, including:

- fluctuations in foreign currencies;

- trade disputes;

- changes in regulatory requirements, tariffs and other barriers;

- the possibility of quotas, duties, taxes or other changes or restrictions
upon the importation or exportation of the products being implemented by
the United States or these foreign countries;

- timing and availability of import/export licenses;

- political and economic instability;

- difficulties in accounts receivable collections;

- difficulties in managing laws;

- increased tax exposure if our revenues in foreign countries are subject
to taxation by more than one jurisdiction;

- accepting customer purchase orders governed by foreign laws which may
differ significantly from U.S. laws and limit our ability to enforce our
rights under such agreements and to collect damages, if awarded; and

- the general economies of these countries in which we transact business.

As international sales become a larger portion of our total sales, these
risks could create significant fluctuations in our results of operations. In
addition, these risks could affect our ability to resell trade-in products to
domestic distributors, who in turn often resell the trade-in products in
international markets. Our inability to sell trade-in products might require us
to offer lower trade-in values, which might impact our ability to sell new
products to customers desiring to trade in older models and then purchase newer
products.

FLUCTUATIONS IN CURRENCY EXCHANGE RATES MAY ADVERSELY AFFECT OUR INTERNATIONAL
SALES

Our revenue from international operations can be denominated in or
significantly influenced by the currency and general economic climate of the
country in which we make sales. A decrease in the value of such foreign
currencies relative to the U.S. dollar could result in downward price pressure
for our products or losses from currency exchange rate fluctuations. As we
continue to expand our international operations, downward price pressure and
exposure to gains and losses on foreign currency transactions may increase. We
may choose to limit such exposure by entering into forward-foreign exchange
contracts or engaging in similar hedging strategies. We cannot assure you that
any currency exchange strategy would be successful in avoiding losses due to
exchange rate fluctuations, or that the failure to manage currency risks
effectively would not have a material adverse effect on our business, financial
condition, cash flows, and results of operations.

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WE MAY FAIL TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS OR
SECURE RIGHTS TO THIRD PARTY PATENTS, AND OUR COMPETITORS CAN USE SOME OF OUR
PREVIOUSLY PROPRIETARY TECHNOLOGY

Our success will depend in part on our ability to obtain and maintain
patent protection for our products, methods, processes and other technologies,
to preserve our trade secrets and to operate without infringing the proprietary
rights of third parties. To date, we have been issued 21 U.S. patents for our
various inventions and technologies. Additional patent applications have been
filed with the U.S. Patent and Trademark Office and are currently pending. The
patents that have been granted to us are for a definitive period of time and
will expire. We have filed certain corresponding foreign patent applications and
intend to file additional foreign and U.S. patent applications as appropriate.
We cannot assure you as to:

- the degree and range of protection any patents will afford against
competitors with similar products;

- if and when patents will be issued;

- whether or not others will obtain patents claiming aspects similar to
those covered by our patent applications;

- whether or not competitors will use information contained in our expired
patents, such as our U.S. pacing system patent which will expire in 2000;

- whether or not others will design around our patents or obtain access to
our know-how; or

- the extent to which we will be successful in avoiding any patents granted
to others.

For example, we have patents and pending patent applications for our
proprietary biphasic technology. Our competitors could develop biphasic
technology that has comparable or superior clinical efficacy to our biphasic
technology if our patents do not adequately protect our technology, our
competitors are able to obtain patents claiming aspects similar to our biphasic
technology or our competitors can design around our patents.

If certain patents issued to others are upheld or if certain patent
applications filed by others issue and are upheld, we may be:

- required to obtain licenses or redesign our products or processes to
avoid infringement;

- prevented from practicing the subject matter claimed in those patents; or

- required to pay damages.

Litigation or administrative proceedings, including interference
proceedings before the U.S. Patent and Trademark Office, related to intellectual
property rights could be brought against us or be initiated by us. Any judgment
adverse to us in any litigation or other proceeding arising in connection with a
patent or patent application could materially and adversely affect our business,
financial condition and results of operations. In addition, the costs of any
such proceeding may be substantial whether or not we are successful.

Our success is also dependent upon the skills, knowledge and experience,
none of which is patentable, of our scientific and technical personnel. To help
protect our rights, we require all employees, consultants and advisors to enter
into confidentiality agreements which prohibit the disclosure of confidential
information to anyone outside of our company and require disclosure and
assignment to us of their ideas, developments, discoveries and inventions. We
cannot assure you, however, that these agreements will provide adequate
protection for our trade secrets, know-how or other proprietary information in
the event of any unauthorized use or disclosure of the lawful development by
others of such information.

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RELIANCE ON OVERSEAS VENDORS FOR SOME OF THE COMPONENTS FOR OUR PRODUCTS EXPOSES
US TO INTERNATIONAL BUSINESS RISKS WHICH COULD HAVE AN ADVERSE EFFECT ON OUR
BUSINESS

Some of the components we use in our products are acquired from foreign
manufacturers, particularly countries located in Europe and Asia. As a result, a
significant portion of our purchases of components is subject to the risks of
international business. The failure to obtain these components as a result of
any of these risks can result in significant delivery delays of our products
which could have an adverse effect on our business.

WE RELY HEAVILY ON SEVERAL EMPLOYEES WHO MAY LEAVE, AND TIGHT LABOR MARKETS MAY
MAKE IT DIFFICULT TO RECRUIT EMPLOYEES

Our future operating results will depend in part upon the contributions of
the persons who will serve in senior management positions and the continued
contributions of key technical personnel, some of whom would be difficult to
replace. In addition, our future success will depend in part upon our ability to
attract and retain highly qualified personnel, particularly product design
engineers. Increasingly tight labor markets could make it more difficult and/or
expensive to recruit and retain employees in a cost effective manner. There can
be no assurance that such key personnel will remain in our employment or that we
will be successful in hiring qualified personnel. Any loss of key personnel or
the inability to hire or retain qualified personnel could have a material
adverse effect on our business, financial condition and results of operations.

WE MAY USE A PORTION OF THE PROCEEDS OF THIS OFFERING TO ACQUIRE OTHER
BUSINESSES, AND WE MAY HAVE DIFFICULTY INTEGRATING THESE BUSINESSES OR
GENERATING AN ACCEPTABLE RETURN FROM ACQUISITIONS

We may attempt to acquire or make strategic investments in businesses and
other assets. Such acquisitions will involve risks, including:

- the inability to achieve the strategic and operating goals of the
acquisition;

- the inability to raise the required capital to fund the acquisition;

- difficulty in assimilating the acquired operations and personnel;

- disruption of our ongoing business; and

- inability to successfully incorporate acquired technology into our
existing product lines and maintain uniform standards, controls,
procedures, and policies.

We may not successfully overcome problems encountered in connection with
potential acquisitions. In addition, an acquisition could materially impair our
operating results by causing us to incur debt or requiring us to amortize
acquisition expenses and acquired assets.

PROVISIONS IN OUR CHARTER DOCUMENTS, OUR SHAREHOLDER RIGHTS AGREEMENT AND STATE
LAW MAY MAKE IT HARDER FOR OTHERS TO OBTAIN CONTROL OF ZOLL EVEN THOUGH SOME
STOCKHOLDERS MIGHT CONSIDER SUCH A DEVELOPMENT TO BE FAVORABLE

Our board of directors has the authority to issue up to 1,000,000 shares of
undesignated preferred stock and to determine the rights, preferences,
privileges and restrictions of such shares without further vote or action by our
stockholders. The rights of the holders of common stock will be subject to, and
may be adversely affected by, the rights of the holders of any preferred stock
that may be issued in the future. The issuance of preferred stock could have the
effect of making it more difficult for third parties to acquire a majority of
our outstanding voting stock.

In addition, our restated articles of organization provide for staggered
terms for the members of the board of directors which could delay or impede the
removal of incumbent directors and could make a merger, tender offer or proxy
contest involving the Company more difficult. Our restated articles of

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organization, restated by-laws and applicable Massachusetts law also impose
various procedural and other requirements that could delay or make a merger,
tender offer or proxy contest involving us more difficult.

In addition, we have implemented a so-called poison pill by adopting our
shareholders rights agreement. This poison pill significantly increases the
costs that would be incurred by an unwanted third party acquiror if such party
owns or announces its intent to commence a tender offer for more than 15% of our
outstanding common stock. The existence of this poison pill could delay, deter
or prevent a takeover of Zoll.

All of these provisions could limit the price that investors might be
willing to pay in the future for shares of our common stock which could preclude
our shareholders from recognizing a premium over the prevailing market price of
our stock.

WE HAVE ONLY ONE MANUFACTURING FACILITY FOR EACH OF OUR MAJOR PRODUCTS AND ANY
DAMAGE OR INCAPACITATION OF EITHER OF THE FACILITIES COULD IMPEDE OUR ABILITY TO
PRODUCE THESE PRODUCTS

We have only one manufacturing facility which produces defibrillators and
one separate manufacturing facility which produces electrodes. Damage to either
facility could render us unable to manufacture the relevant product or require
us to reduce the output of products at the damaged facility. This could
materially and adversely impact our business, financial condition and results of
operations.

OUR CURRENT AND FUTURE INVESTMENTS MAY LOSE VALUE IN THE FUTURE

We have made a $2.0 million investment in LifeCor, Inc., a development
stage company, and may in the future invest in the securities of other companies
and participate in joint venture agreements. This investment and future
investments are subject to the risks that the entities in which we invest will
become bankrupt or lose money. Investing in securities involves risks and no
assurance can be made as to the profitability of any investment. Our inability
to identify profitable investments could adversely affect our financial
condition and results of operations. Unless we hold a majority position in an
investment or joint venture, we will not be able to control all of the
activities of the companies in which we invest or the joint ventures in which we
are participating. Because of this, such entities may take actions against our
wishes and not in furtherance of, and even opposed to, our business plans and
objectives. These investments are also subject to the risk of impasse if no one
party exercises ultimate control over the business decisions.

INVESTORS IN THIS OFFERING WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION IN THE
NET TANGIBLE BOOK VALUE PER SHARE

Investors will incur immediate and substantial dilution in the net tangible
book value per share of the common stock they purchase in this offering. To the
extent outstanding options to purchase common stock are exercised, there will be
further dilution.

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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. The forward-looking
statements are principally contained in the sections "Prospectus Summary,"
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." These statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performances
or achievements expressed or implied by the forward-looking statements.
Forward-looking statements include, but are not limited to statements regarding:

- market acceptance of new products;

- competition in the industry;

- the ability to satisfy demand for our products;

- the impact of pending or future litigation;

- the impact of future product recalls;

- changes in, or the failure or inability to comply with, governmental
regulation;

- the integration of the personnel, products and operations of Pinpoint
Technologies, Inc., which we recently acquired;

- exchange rate fluctuations;

- the availability of debt and equity financing;

- the development of new competitive technologies;

- the availability of key components for our products;

- the availability of qualified personnel;

- international, national, regional and local economic and political
changes;

- the value of our investments;

- our production scheduling and related capacity levels;

- general economic conditions; and

- trends affecting the medical device industry, our financial condition or
results of operations.

In some cases, you can identify forward-looking statements by terms such as
"may," "will," "should," "could," "would," "expects," "plans," "anticipates,"
"believes," "estimates," "projects," "predicts," "potential" and similar
expressions intended to identify forward-looking statements. These statements
reflect our current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. Given these uncertainties,
you should not place undue reliance on these forward-looking statements. We
discuss many of these risks in greater detail under the heading "Risk Factors."
Also, these forward-looking statements represent our estimates and assumptions
only as of the date of this prospectus. Factors that might cause future results
to differ include, but are not limited to, the following:

- competition may lead to worse than expected financial condition or
results of operations;

- unpredictable demand for new products;

- pending or future litigation may negatively impact our financial
condition or results of operations;

- future recalls may negatively impact our financial condition or results
of operations;

- government regulation may negatively impact our financial condition or
results of operations;

- the costs associated with integrating acquisitions may be larger than we
anticipate;

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- exchange rate fluctuations may affect profitability of overseas sales;

- manufacturing disruptions could negatively impact our financial condition
or results of operations;

- qualified personnel may not be available which could negatively impact
our ability to grow our business;

- the value of our investments may decline which could negatively impact
our financial condition or results of operations; and

- the production of commercially feasible products may take longer and cost
more than expected.

You should read this prospectus and the documents that we incorporate by
reference in this prospectus completely and with the understanding that our
actual future results may be materially different from what we expect. We may
not update these forward-looking statements, even though our situation may
change in the future. We qualify all of our forward-looking statements by these
cautionary statements.

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USE OF PROCEEDS

We estimate that the net proceeds we will receive from the sale of
1,500,000 shares of common stock will be approximately $58.4 million, or
approximately $67.3 million if the underwriters fully exercise their
over-allotment option, at an offering price of $41.75 per share and after
deducting the underwriting discount and the estimated offering expenses. We
expect to use the net proceeds of this offering as follows:

- to fund business development, such as research and development and sales
and marketing;

- to fund future acquisitions, particularly in current and related lines of
business;

- to provide working capital; and

- for general corporate purposes.

We have not determined the amount of net proceeds to be used for each of
the specific purposes listed. Accordingly, we will have broad discretion to use
the proceeds as we see fit.

MARKET PRICE OF COMMON STOCK

Our common stock is traded publicly on the Nasdaq National Market under the
symbol "ZOLL". We completed the initial public offering of our common stock on
July 16, 1992. The following table shows the range of high and low sale prices
per share of our common stock as reported by the Nasdaq National Market for the
periods indicated.

[Download Table]

COMMON STOCK PRICE(1)
----------------------
HIGH LOW
------- -------

Fiscal year ended September 26, 1998
First Quarter............................................. $ 7.25 $ 5.16
Second Quarter............................................ 7.44 4.88
Third Quarter............................................. 8.00 5.50
Fourth Quarter............................................ 10.00 7.13
Fiscal year ended October 2, 1999
First Quarter............................................. 11.44 7.06
Second Quarter............................................ 12.75 8.50
Third Quarter............................................. 12.88 9.00
Fourth Quarter............................................ 31.81 11.88
Fiscal year ended September 30, 2000
First Quarter............................................. 41.38 22.63
Second Quarter (through February 22, 2000)................ 45.11 33.81

---------------
(1) The prices reflect the high and low closing prices as reported by the Nasdaq
National Market.

On February 22, 2000, the last sale price of our common stock reported by
the Nasdaq National Market was $41.52 per share. As of February 22, 2000, there
were 120 holders of record of our common stock.

DIVIDEND POLICY

We have not declared or paid cash dividends on our common stock in the past
and do not intend to pay dividends on our common stock in the foreseeable
future.

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CAPITALIZATION

The following table shows our capitalization as of January 1, 2000 on an
actual basis and as adjusted to reflect the sale of 1,500,000 shares of common
stock in this offering, at an offering price of $41.75 per share and after
deducting the underwriting discounts and offering expenses. This table should be
read in conjunction with the financial statements and related notes incorporated
in this prospectus by reference and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing elsewhere in this
prospectus.

[Download Table]

JANUARY 1, 2000
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)

Long-term debt.............................................. $ 2,029 $ 2,029
------- --------
Stockholders' equity:
Preferred stock, $0.01 par value; 1,000,000 shares
authorized; none issued
and outstanding........................................ -- --
Common stock, $0.02 par value; 19,000,000 shares
authorized; 6,843,809 issued and outstanding, and
8,343,809 shares issued and outstanding as adjusted for
this offering.......................................... 137 167
Additional paid-in capital................................ 23,697 82,091
Retained earnings......................................... 19,826 19,826
------- --------
Total stockholders' equity............................. 43,660 102,084
------- --------
Total capitalization.............................. $45,689 $104,113
======= ========

The above data excludes 1,063,918 shares of common stock issuable upon
exercise of options outstanding as of January 1, 2000 at a weighted average
exercise price of $13.84 per share.

DILUTION

Our net tangible book value as of January 1, 2000 was approximately $43.2
million, or $6.31 per share. Net tangible book value per share represents the
amount of our total tangible assets less total liabilities divided by the total
number of shares of common stock outstanding. After giving effect to the sale by
us of 1,500,000 shares of common stock offered by this prospectus at an offering
price of $41.75 per share and after deducting the underwriting discounts and the
estimated offering expenses, our net tangible book value at January 1, 2000
would have been approximately $101.6 million, or $12.18 per share. This
represents an immediate increase in net tangible book value of $5.87 per share
to existing stockholders and an immediate dilution of $29.57 per share to new
investors in this offering, as illustrated by the following table:

[Download Table]

Public offering price per share...................... $41.75
Net tangible book value per share before the
offering............................................ $6.31
Increase per share attributable to new investors..... 5.87
-----
Net tangible book value per share after the offering... 12.18
------
Net tangible book value dilution per share to new
investors............................................. $29.57
======

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SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with
the consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this prospectus. The selected financial data below as of
and for each of the five most recent fiscal years have been derived from our
audited consolidated financial statements. Our selected financial data as of
January 1, 2000 and for each of the three months ended January 2, 1999 and
January 1, 2000 were derived from our unaudited condensed consolidated financial
statements.

[Enlarge/Download Table]

STATEMENT OF OPERATIONS DATA:
Net sales............................ $ 45,884 $ 55,700 $ 57,833 $ 57,520 $ 78,682 $ 16,056 $ 24,435
Cost of goods sold................... 20,421 24,545 25,372 24,268 32,486 6,532 10,843
-------- -------- -------- -------- -------- -------- --------
Gross profit......................... 25,463 31,155 32,461 33,252 46,196 9,524 13,592
Expenses:
Selling and marketing.............. 15,575 16,773 18,484 20,152 24,364 5,415 7,674
General and administrative......... 4,313 4,809 6,749 6,239 7,422 1,630 1,952
Research and development........... 4,360 4,464 6,430 6,583 6,916 1,603 1,731
-------- -------- -------- -------- -------- -------- --------
Total expenses.................. 24,248 26,046 31,663 32,974 38,702 8,648 11,357
-------- -------- -------- -------- -------- -------- --------
Income from operations............... 1,215 5,109 798 278 7,494 876 2,235
Net investment income (expense)...... 243 278 355 413 (45) 66 (70)
-------- -------- -------- -------- -------- -------- --------
Income before income taxes........... 1,458 5,387 1,153 691 7,449 942 2,165
Provision for income taxes........... 496 1,758 266 18 2,010 240 801
-------- -------- -------- -------- -------- -------- --------
Net income........................... $ 962 $ 3,629 $ 887 $ 673 $ 5,439 $ 702 $ 1,364
-------- -------- -------- -------- -------- -------- --------
Basic earnings per share............. $ 0.15 $ 0.55 $ 0.13 $ 0.10 $ 0.82 $ 0.11 $ 0.20
======== ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding........................ 6,519 6,562 6,602 6,602 6,656 6,628 6,794
Diluted earnings per share........... $ 0.15 $ 0.55 $ 0.13 $ 0.10 $ 0.79 $ 0.10 $ 0.19
======== ======== ======== ======== ======== ======== ========
Weighted average common and
equivalent shares outstanding...... 6,613 6,635 6,650 6,647 6,893 6,730 7,196
Pro forma information(2):
Historical income before income
taxes........................... $ 7,449 $ 942
Pro forma incremental operating
cost............................ 272 65
-------- --------
Pro forma income before income
taxes........................... 7,177 877
Pro forma provision for income
taxes........................... 2,402 300
-------- --------
Pro forma net income............... $ 4,775 577
======== ========
Pro forma diluted earnings per
share........................... $ 0.69 $ 0.09
======== ========

[Enlarge/Download Table]

SEPT. 30, SEPT. 28, SEPT. 27, SEPT. 26, OCT. 2, JANUARY 1,
1995 1996 1997 1998 1999 2000
--------- --------- --------- --------- ---------- -----------
(IN THOUSANDS) (UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents.................... $ 5,641 $ 5,107 $ 9,958 $ 5,521 $ 1,821 $ 1,284
Working capital.............................. 24,223 25,303 24,361 21,678 26,728 28,440
Total assets................................. 36,263 42,507 45,013 46,656 59,687 63,020
Total long-term debt, excluding current
portion.................................... 864 713 565 446 2,069 2,029
Total stockholders' equity................... 29,596 33,614 34,463 34,787 41,222 43,660

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with
our financial statements and related notes thereto included elsewhere in this
prospectus.

OVERVIEW

On October 15, 1999, we acquired Pinpoint Technologies, Inc. and Pinpoint
Property Management LLC (Pinpoint individually and collectively) in a business
combination accounted for as a pooling of interests. Pinpoint, which creates,
develops and manufactures advanced information technology software, exclusively
focused on the emergency medical system market, became our wholly owned
subsidiary through the exchange of approximately 433,000 shares of our common
stock for all of the outstanding stock of Pinpoint. The Selected Financial Data
appearing elsewhere in this prospectus are derived from the consolidated
financial statements and presented on the assumption that the companies were
combined for all periods presented, and financial statements of prior years have
been restated to give effect to the combination.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JANUARY 1, 2000 COMPARED TO THREE MONTHS ENDED JANUARY 2,
1999

Our net sales increased 52.2% to $24,435,000 for the three months ended
January 1, 2000 from $16,056,000 for the three months ended January 2, 1999. Our
sales growth was driven primarily by increasing demand for the new M Series line
of defibrillators/pacemakers. Sales growth also reflected additional headcount
in our North America sales force. We experienced significant growth in all major
geographies and segments of our business. During the first quarter of 2000,
North American sales increased 38.7% to $19,193,000 from $13,837,000 for the
comparable period in 1999. Equipment sales to both the hospital and pre-hospital
markets increased 70.4% and 22.4% respectively, to $10,527,000 and $4,845,000,
respectively, as compared to the same period in the prior year. International
sales increased 136.2% to $5,242,000 compared to $2,219,000 reflecting the
preferential allocation of the M Series defibrillators to the North American
market during the prior year first quarter as well as the revenue from the
initial German Army shipments under the multi-year agreement.

Gross margin for the first quarter of 2000 was 55.6% compared to 59.3% for
the comparable prior year quarter. The decrease reflected volume pricing on our
large German Army contract and the change in mix of electrode sales and capital
equipment.

Selling and marketing expenses as a percentage of net sales decreased to
31.4% from 33.7%. The decrease in selling and marketing expenses as a percentage
of sales reflects leveraging from our reorganized, expanded North American sales
force as we increased sales volume. Selling and marketing expenses increased
41.7% to $7,674,000 due primarily to an increase in sales force headcount.

General and administrative expenses decreased as a percentage of net sales
to 8.0% from 10.2%. The decrease in the general and administrative expenses as a
percentage of sales reflects the absorption of relatively fixed operating
expenses by increased sales volume.

Research and development expenses decreased as a percentage of net sales to
7.1% from 10% reflecting primarily the significant increase in sales. Research
and development expenses increased 8.0% to $1,731,000 from $1,603,000 for the
comparable prior year quarter reflecting continued M Series development and
other initiatives.

The effective tax rate increased from 25.5% to 37.0% for the three months
ended, January 1, 2000 as compared to the same period in 1999. This increase
primarily relates to the fact that, prior to the Pinpoint acquisition, the
operating results of Pinpoint did not include any provision for income taxes
because Pinpoint operated as a Subchapter S corporation for income tax purposes.

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1999 COMPARED TO 1998

Net sales reached record levels, increasing 37% from the prior year to
$78.7 million, reflecting the rapid market acceptance of the M Series
defibrillators introduced to the market during the fourth quarter of 1998. Sales
growth also reflected the reorganization and enlargement of the North American
sales force to allow for a market-focused structure. Dedicated selling teams are
now focused on each of North America's markets: hospital and pre-hospital.

We experienced significant growth in all major geographies and segments of
our business. During 1999, North American sales increased 36% to $65 million.
Within North America, equipment sales to the hospital and pre-hospital markets
increased 55% and 28%, to $30.9 million and $19.1 million, respectively. Sales
in the international market increased 39% from the prior year.

Gross margin increased approximately 1% over the prior year. We experienced
an improvement in costs reflecting the M Series defibrillators introduction and
higher margins from data management products, primarily Pinpoint products.

Selling and marketing costs increased 21% over the prior year, due to the
increase in size of the North American sales force. Additionally, we established
a direct sales force in Germany during the fourth quarter of 1999. Selling and
marketing costs as a percentage of net sales decreased from 35% to 31%,
reflecting revenues which increased more rapidly than these costs as a result of
the reorganization of the North American sales force.

General and administrative expenses decreased as a percentage of sales,
from 11% to 9%, due to emphasis on expense controls and absorption of relatively
fixed expenses by higher sales.

Research and development expenses decreased as a percentage of sales, from
11% to 9%. Total expenses increased slower than revenues, reflecting the
completion of development of the initial M Series defibrillators and the related
transfer of available resources to the biphasic project and other initiatives.

We incurred net investment expense in 1999, as compared to net investment
income in 1998, due to the decrease in average cash balances from 1998 to 1999
and increased interest expense.

The income tax provision increased from $18,000 in 1998 to $2,010,000 in
1999. This increase results primarily from increased domestic profitability
partially offset by the benefits resulting from the utilization of tax loss
carryforwards from foreign operations. The operating results of Pinpoint for all
periods presented do not include any provision for income taxes as the company
operated as a Subchapter S corporation for income tax purposes. In the future,
our consolidated income tax provision will include an income tax provision for
Pinpoint's taxable income.

1998 COMPARED TO 1997

Our net sales remained relatively flat at $57,520,000 for 1998. An increase
in sales of disposable electrodes and data management products, particularly
Pinpoint, was offset by a decrease in equipment sales. We believe that the
decrease in equipment sales in North America was primarily the result of
customers holding back on purchases while waiting for the release of the M
Series defibrillators, which was not shipped until the end of the fourth quarter
of 1998. In addition, the decrease in sales in the international market was
primarily a result of depressed foreign markets. The M Series did not have any
significant impact on the sales to the international markets in 1998 as the roll
out to international distributors continued into 1999.

Gross profit increased as a percentage of sales from 56% to 58%. The
increase is a result of a higher mix of disposable electrodes and data
management products, particularly Pinpoint, relative to the equipment business.

Selling and marketing expenses increased as a percentage of sales from 32%
to 35%. Selling and marketing expenses increased 9% from $18,484,000 to
$20,152,000. This increase was primarily due to higher payroll related cost and
travel expenditures reflecting the reorganization of the North American

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sales force. This mid-year reorganization increased the size of and split the
sales force to focus on two distinct markets: hospital and pre-hospital. The
increase in selling and marketing expenses was due also to an increase in
expenditures for promotion, advertising and other selling activities related to
the introduction of the M Series defibrillators and higher international selling
expenditures offset by a decrease in product services and support.

General and administrative expenses slightly decreased as a percentage of
sales from 12% to 11%. General and administrative expenses decreased 8% from
$6,749,000 to $6,239,000. This decrease was due primarily to the occurrence of a
one-time charge recognized in 1997 of $1,300,000 related to the estimated cost
of proceeding to trial in a class action shareholder lawsuit. This decrease was
partially offset by an increase in 1998 for payroll related costs and
professional services.

Research and development expenses remained consistent as a percentage of
sales. Research and development expenses increased from $6,430,000 to
$6,583,000. In 1997, a charge of $1,000,000 was made to account for the value of
in-process research and development acquired in the purchase of assets from
Westech. Excluding this charge, research and development expenses increased by
21%, or $1,153. This increase was due primarily to an increase in prototype and
testing expenses for new technology and start-up costs for the M Series
defibrillators and an increase in payroll related costs.

Net investment income increased from the prior year due primarily to higher
average cash balances.

At September 26, 1998, we had available tax loss carryforwards of
approximately $1,600,000, which were primarily attributable to our foreign
operations and were not available to offset domestic taxable income.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents at January 1, 2000 totaled $1,284,000
compared with $1,821,000 at October 2, 1999, a decrease of $537,000.

Cash provided by operating activities for the three months ended January 1,
2000 totaled $2,000, while cash used over the same period in 1999 totaled
$2,094,000. Cash provided by operating activities for the first quarter of
fiscal 2000 included the payment of approximately $880,000 of accounts payable
related to the 1999 purchase of our new Enterprise Resource Planning information
technology system from Oracle Corporation. The increase in cash provided by
operations was primarily attributable to an increase in net income and a
reduction in the usage of cash for accounts receivable. Cash used for
inventories reflected an increase in production of the M Series defibrillators
resulting from the introduction of new features, strong product demand and year
2000 contingency planning.

The amount of cash required to fund investing activities increased by
$423,000 during the three months ended January 1, 2000 compared to the same
period in 1999. The increase primarily reflected the purchase of additional
capital equipment.

Cash provided by financing activities increased by $1,006,000 during the
three months ended January 1, 2000 compared to the same period in 1999. This
increase was primarily due to the exercise of stock options.

We maintain a working capital line of credit with our bank. Under this
working capital line, we may borrow on a demand basis. Currently, we may borrow
up to $12,000,000 at an interest rate equal to the bank's base rate (currently
8.25%) or LIBOR plus 2%. The outstanding balance under this line was zero at the
end of the first quarter of both 2000 and 1999.

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BUSINESS

OVERVIEW

We design, manufacture and market an integrated line of proprietary,
noninvasive cardiac resuscitation devices, our external
defibrillators/pacemakers, as well as disposable electrodes and emergency
medical system software data management solutions. Our cardiac resuscitation
products are designed to improve survival rates from sudden cardiac arrest,
which is a leading cause of death in the United States. Sudden cardiac arrest
claims over 250,000 victims each year in the United States alone. For victims of
sudden cardiac arrest, time is the most critical element for survival. According
to the American Heart Association, more than 95% of victims with sudden cardiac
arrest die, in many cases because life saving defibrillators arrive on the scene
too late, if at all.

The importance of immediate treatment creates an annual worldwide market
for external defibrillator products, which we estimate to have been $525 million
in 1999. We divide this market into three principal areas: the hospital,
pre-hospital and public access defibrillation markets. The hospital market
consists of doctors, nurses and other medical personnel who use defibrillators
in hospital settings. The pre-hospital market consists of care providers such as
paramedics, ambulance operators, emergency medical technicians,
medically-trained firefighters and other emergency medical personnel. The public
access market includes non-traditional providers such as police, non-medically
trained firefighters and other non-medically trained personnel. We currently
sell our products in the hospital and pre-hospital markets and plan to enter the
public access defibrillation market in the next 12 to 24 months. We believe we
are currently the second largest company in the world in external defibrillator
product sales. From fiscal 1998 to fiscal 1999, our revenues increased 37%,
making us the fastest growing worldwide external defibrillator company. In that
time, our revenues in the hospital market increased 52%. Comparatively, we
estimate that the overall hospital market grew at a rate of only 3% to 5%.

Our newest line of defibrillators is the M Series, which we began shipping
with the conventional monophasic waveform in September 1998. M Series
defibrillators are smaller and lighter than competitive products, making them
easier to use, carry and transport. We recently began shipping M Series
defibrillators equipped with our proprietary biphasic waveform that provides
improved defibrillation efficacy as compared to conventional monophasic
waveforms. We have received clearance from the U.S. Food and Drug
Administration, or the FDA, to label our M Series defibrillators equipped with
our biphasic waveform as being clinically superior to defibrillators with a
monophasic waveform for particular uses. We are the only company to have
received a claim of superiority on its biphasic waveform. We believe the
clinical superiority of our biphasic waveform combined with product advantages
including small size, light weight and relative ease-of-use offer compelling
reasons for customers to choose our products.

OUR BUSINESS STRATEGY

The cardiac resuscitation market is a large and growing market driven by a
demonstrated and increasing clinical need. Our business strategy is to continue
to gain an increased share in both the domestic and international markets by
offering superior products through direct sales distribution. While we plan to
increase our share in markets that we currently serve, we also seek future
growth by entering into new markets with significant opportunities. We believe
that the following elements of our strategy may provide current and longer-term
growth to our business:

- CONTINUE TO EXPAND SUCCESSFUL SALES OF M SERIES DEFIBRILLATORS. A major
element of our business strategy is to capitalize on the success of the M
Series defibrillators in order to increase our market

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share in the hospital and pre-hospital markets. To date, the M Series is our
best selling defibrillator, representing more than 80% of our capital equipment
device sales in the first quarter of fiscal 2000. We plan to increase our
profits in this segment by doing the following:

-- improving on the M Series platform by adding more optional features
and new technologies, which will increase revenues from each M Series
defibrillator sold with such features;

-- expanding our presence in both the domestic and international markets
by hiring additional salespeople; and

-- decreasing our cost of production for the M Series defibrillators
through improved engineering of the defibrillator and more
cost-effective manufacturing.

- ESTABLISH A PRE-EMINENT CLINICAL POSITION IN BIPHASIC DEFIBRILLATION. We
plan to capitalize on the industry-wide move towards biphasic waveforms.
We believe that this trend will give customers a compelling reason to
replace their monophasic defibrillators with biphasic defibrillators.
Thus, we expect that the size of the external defibrillator market will
increase. We are currently the only company to have received clearance
from the FDA to label our M Series biphasic defibrillators as clinically
superior to monophasic defibrillators for particular uses. We believe
that the demonstrated clinical superiority of our proprietary biphasic
waveform will offer a significant reason for customers to choose our
biphasic defibrillator over the biphasic defibrillators of our
competitors. We intend to capitalize on our clinically superior biphasic
defibrillators to allow us to capture a larger percentage of the growing
external defibrillator market.

- ENTER THE PUBLIC ACCESS DEFIBRILLATION MARKET WITH A WELL-DIFFERENTIATED
DEVICE. We are developing a device for the large and relatively
unpenetrated public access defibrillation market, also referred to as the
AED market. Our device will be relatively low-cost and easy to operate.
We believe we will be able to leverage our experience selling to EMS
personnel in our efforts to sell our device to police and fire
departments. We also intend to market our device to other non-traditional
providers of care.

- SEEK ADDITIONAL GROWTH OPPORTUNITIES IN THE EMS DATA MANAGEMENT
MARKET. We believe that the market for EMS data management solutions is
significant and relatively unpenetrated. We are currently selling several
products to this market. We are developing an integrated dispatch,
clinical information, data collection, data transfer, billing and quality
assurance software solution for sale to the EMS market. We intend to
leverage our existing relationships with purchasing decision-makers in
this market to sell our data management solutions. We believe our
software solution will be differentiated by our ability to offer a
complete data management solution which incorporates the clinical
information collected by our defibrillators.

OVERVIEW OF SUDDEN CARDIAC ARREST AND RESUSCITATION THERAPIES

Sudden cardiac death results from the unresuscitated, sudden, abrupt loss
or disruption of heart function. This loss of heart function, also known as
sudden cardiac arrest, is caused by the heart beating too rapidly and/or
chaotically. The American Heart Association, or AHA, estimates that sudden
cardiac arrest claims more than 250,000 lives each year in the United States
alone, making it a leading cause of death in the United States. According to the
AHA, early defibrillation is the single most critical factor in rescuing a
victim of sudden cardiac arrest. Each minute of delay in returning the heart to
its normal

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pattern of beating decreases the chance of survival by 7% to 10%. As
demonstrated in the graph shown below, very few resuscitation attempts are
successful after 10 minutes.

SURVIVAL CURVE
Shown here in the printed form of this prospectus is a graph of survival
rate vs. time to defibrillation. Time is displayed in minutes on the horizontal
axis, and the percent survival rate is displayed on the vertical axis. At 0
minutes, the survival rate is above 70%, decreasing so that at 5 minutes, the
survival rate is approximately 30%, and at 10 minutes the survival rate is less
than 20%. The survival rate continues to decrease toward zero after 15 minutes.

The Human Heart. The normal human heart has four chambers and expands and
contracts over 100,000 times each day. The two smaller, upper chambers are the
atria and the two larger, lower chambers are the ventricles. The walls of the
atria and the ventricles are made up of cardiac muscle which contracts
rhythmically when stimulated by an electrical current. Normally, the heartbeat
starts in the right atrium when a specialized group of cells sends an electrical
signal. This signal spreads though the atria and then moves to the ventricles.
As a result, the atria contract a fraction of a second before the ventricles.
This exact pattern must be followed to ensure that the heart beats properly.
This contraction and relaxation of the four chambers pumps blood to the lungs
and the rest of a body.

Arrhythmias are abnormal rhythms of the heart caused by insufficient
circulation of oxygenated blood, drugs, electrical shock, mechanical injury,
disease or other causes. The three types of arrhythmias which our devices treat
are ventricular fibrillation, atrial fibrillation and bradycardia. It is
possible for a patient to experience more than one type of arrhythmia during a
sudden cardiac arrest. In these situations, it is important to have
resuscitation equipment which has both defibrillation and pacing capabilities.

Ventricular Fibrillation. Ventricular fibrillation is a condition in which
disordered electrical activity causes the ventricles to contract in a rapid,
unsynchronized and uncoordinated fashion. When this occurs, an insufficient
amount of blood is pumped from the heart. Ventricular fibrillation is the most
common arrhythmia that causes sudden cardiac arrest. The onset of ventricular
fibrillation often occurs without warning and causes the heart to stop abruptly.
This sudden stopping of the heart is known as cardiac arrest, and is the cause
of sudden cardiac death.

The only accepted treatment of ventricular fibrillation is defibrillation,
in which a powerful electric shock is delivered to the heart to stop the
fibrillation and permit the return of coordinated cardiac contractions. In
emergency situations, external defibrillation has conventionally been
administered through hand-held paddles placed on the patient's chest. However,
external defibrillation can also be administered through disposable adhesive
electrodes, which we believe are safer and easier to use than paddles.

Atrial Fibrillation. The AHA estimates that close to 2 million Americans
suffer from atrial fibrillation. Atrial fibrillation is a condition in which
disordered electrical activity causes the atria to contract in a rapid,
unsynchronized and uncoordinated fashion. This inefficient contraction results
in a smaller amount of blood entering the ventricles, which in turn results in
an insufficient level of circulation. Since blood is not pumped completely out
of the atria, the blood can pool and clot. While not immediately

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life threatening, atrial fibrillation can lead to significant health threats
such as stroke. Over time, poorly functioning atria can also cause the
ventricles to work harder, wear out sooner and eventually lead to cardiac
arrest.

Common forms of treatment for atrial fibrillation include cardioversion and
drug therapies. During cardioversion, a defibrillator delivers an electric shock
which is synchronized with a patient's heartbeat in order to return the atria to
a normal rhythm. Cardioversion is usually an elective therapy, scheduled and
performed in a controlled environment. All of our manual defibrillators include
cardioversion capability.

Bradycardia. Bradycardia is a condition in which the heart beats too
slowly. The principal therapies for the emergency treatment of bradycardia are
drugs and temporary cardiac pacing, either or both of which may be used to
stimulate effective cardiac contractions and restore circulation. Cardiac pacing
utilizes an electrical pulse to stimulate the patient's heartbeat. For the
emergency treatment of bradycardia, there are two primary techniques for
temporary pacing: invasive endocardial pacing, in which a wire is inserted
directly into the heart to provide the electrical stimulus; and noninvasive
temporary pacing, which uses gelled electrodes applied to the patient's chest to
conduct an electrical stimulus. Noninvasive temporary pacing is an option on
most of our defibrillators and is recommended as the first intervention for
bradycardia in the AHA's resuscitation protocols.

OUR CARDIAC RESUSCITATION PRODUCTS

M SERIES DEFIBRILLATORS

In September 1998, we shipped the first M Series defibrillators. The M
Series is a new line of defibrillators for both the hospital and pre-hospital
markets. For the first quarter of fiscal 2000, our M Series defibrillators
represented over 80% of our capital equipment device sales. The M Series
defibrillator has quickly become our best selling product to date and has been
recently selected as the standard device in such places as The Mayo Clinic,
Scripps Health System, The Johns Hopkins Hospitals and the White House. We
believe the clinical superiority of our biphasic waveform combined with product
advantages including portability, ease-of-use and the vivid screen display offer
compelling reasons for customers to choose our M Series defibrillators. Our M
Series is a standardized platform which allows for expandable features. As a
result, we believe that this will help maximize customer retention by reducing
the need for operator retraining and enhancing operator confidence.

We believe that our standard M Series defibrillators offer the following
competitive advantages:

- PORTABILITY. The M Series defibrillator is the smallest, lightest
full-featured external defibrillator. It is approximately one-half the
weight and less than one-half of the size of the other leading devices
in this class. This allows M Series defibrillators to be easily used,
carried and transported with patients.

- EASE-OF-USE WITH SIMPLE CONTROLS. The M Series defibrillators enable
users to efficiently configure each unit, allowing local operating
preferences to be individually programmed into each unit. Additionally,
M Series defibrillators offer multiple language labeling as well as
multiple language voice prompts to meet both domestic and international
needs.

- VIVID SCREEN DISPLAY. One of the distinguishing features included in M
Series defibrillators is their high contrast screen. Our screen
incorporates the most technologically advanced defibrillator display
with a wider viewing angle than any LCD display.

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The following chart summarizes the features of the M Series as compared to
the primary competitive products.

PRODUCT COMPARISONS

[Download Table]

-------------------------------------------------------------
ZOLL PHYSIO-CONTROL AGILENT
M SERIES LIFEPAK 12 CODEMASTER XL
-------------------------------------------------------------

SIZE 574 in(3) 1680 in(3) 1454 in(3)
-------------------------------------------------------------
WEIGHT 11 lbs. 22 lbs. 24 lbs.
-------------------------------------------------------------
SCREEN High Contrast LCD CRT
-------------------------------------------------------------
FUNCTIONS Multiple Multiple One
-------------------------------------------------------------
12 LEAD Integrated Integrated Add-On
-------------------------------------------------------------

The M Series defibrillators are designed to be upgradable, allowing
customers to add features depending upon their individual needs. The M Series
defibrillators use our unique pacing technology, which has been clinically shown
to provide superior capture rates, lower mean capture thresholds, less muscle
impact and better patient tolerance. The M Series defibrillators are also
available with our patented biphasic waveform. Some of the features which we
currently offer include:

- DIAGNOSTIC 12 LEAD ECG WITH INTERPRETIVE ALGORITHM. In October 1999, we
received clearance from the FDA to include the GE Marquette Medical
Systems 12SL analysis program, or 12 lead, in our M Series line of
defibrillators. The 12 lead feature enables a user to see a diagnostic
electrocardiogram, or ECG, tracing consisting of 12 leads, or views, of
the heart's electrical activity. 12 lead is used to provide rapid and
early identification of myocardial infarction, commonly called a heart
attack, in the pre-hospital setting. We pay royalties on each 12SL
analysis program we sell.

- PULSE OXIMETRY. Pulse oximeters determine the oxygen saturation levels
in blood, allowing a rapid identification of potential problems in the
cardiopulmonary system. Since pulse oximeters can help detect the onset
of cardiovascular incidents, pulse oximetry is now widely used in both
hospital and pre-hospital settings when monitoring patients' vital signs.
While conventional pulse oximeters do not perform well in motion or in
intense light, we use Masimo Corporation's patented technology which is
designed to overcome these technical problems. We have received 510(k)
clearance to incorporate this pulse oximetry technology into our M Series
defibrillators. The new pulse oximetry technology adds a new monitoring
parameter that is essential during the transport and monitoring of
critical patients. We purchase circuit boards and sensors from Masimo
Corporation. We have a non-exclusive license to use the patented
technology incorporated in these parts which we then incorporate into our
products.

- CODE MARKERS WITH COMPLETE DATA MANAGEMENT. Our new code marker system
follows protocols established by the AHA and allows complete
documentation of an event with our unique "one touch" data annotation
feature. The record made of the event includes all information collected
by the defibrillator and can be upgraded to include an optional voice
recording. All of this data is stored on a removable data card.

In the future, we intend to offer M Series defibrillators with additional
features, including, among others:

- CAPNOGRAPHY. Capnography, also known as etCO(2), is the measurement of
the amount of carbon dioxide being exhaled, allowing for rapid
identification of potential problems in the cardio-pulmonary system. We
plan to purchase circuit boards and sensors from Novametrix Medical
Systems Inc. to provide this feature. We currently expect to introduce
the capnography feature during the next three to six months.

- NONINVASIVE BLOOD PRESSURE MEASUREMENT. We are in the process of
developing a noninvasive blood pressure, also known as NiBP, measurement
capability to be integrated into our M Series defibrillators. The
technology encompassing this product will be licensed from a third party.
We currently expect to introduce the NiBP feature during the next nine to
twelve months.

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BIPHASIC WAVEFORM

External defibrillators deliver current over time to the heart, which
results in a defined waveform shape. The waveform in general use today is
monophasic, meaning that current is delivered in a single pulse that flows in
one direction. A biphasic waveform, in contrast, delivers current that first
flows in a positive direction for a period of time and then reverses direction
so that it flows in a negative direction. Typical biphasic waveforms such as
those used by our competitors appear to achieve the same defibrillation success
rates as monophasic waveforms but at significantly lower current levels. Since
less current is used, potential injury to the heart and skin is reduced with a
biphasic shock compared to a monophasic shock. All of the major manufacturers of
external defibrillators are beginning to produce devices which use biphasic
waveforms. A comparison of monophasic, typical biphasic and our biphasic
waveform is shown below.

[DEFIBRILLATION WAVEFORMS]

Shown here in the printed form of this prospectus is a graphic
representation of three types of defibrillation wave forms:
monophasic, typical biphasic, and ZOLL biphasic. Current is plotted
on the vertical axis and duration is plotted on the horizontal axis
in each graph. This graphic depicts the wave forms described in the
preceding paragraph.

Biphasic waveforms are the first major advance in defibrillation technology
since the current monophasic waveform was adopted in the early 1960's. Although
there have been feature enhancements that make new monophasic defibrillators
easier to use and maintain, they have not proven to make defibrillators more
clinically effective or safer and thus have not rendered the older models
obsolete. At present, users generally replace existing defibrillators for
mechanical and other reasons unrelated to any clinical superiority of a new
defibrillator. Based on our sales and marketing experience, we estimate that
users replace defibrillators after approximately seven to ten years of service.
In light of the demonstrated clinical superiority of biphasic technology,
however, we believe that the introduction of biphasic waveforms could accelerate
the replacement of the large installed base of monophasic defibrillators. We
believe this accelerated replacement will increase the size of the market for
our defibrillators.

OUR BIPHASIC WAVEFORM

Our two primary competitors offer biphasic waveforms using the same general
shape. We have developed a uniquely shaped biphasic waveform, however, which
achieves higher efficacy at lower current levels than monophasic waveforms. We
have received clearance from the FDA to market this new technology. As shown in
the comparison graphs above, our new biphasic waveform reduces the heart's
exposure to high peak current. In addition, our biphasic waveform keeps the
waveform shape and duration constant over a wide range of patients whose
differing physiologies impact the transmittal of current. Our M Series
defibrillator equipped with our biphasic waveform is the only device cleared by
the FDA to be labeled clinically superior to monophasic defibrillators for
conversion of ventricular fibrillation in high-impedance patients, those
patients who are difficult to defibrillate, and for cardioversion of atrial
fibrillation. We therefore believe that our proprietary biphasic waveform is
superior to the biphasic waveform utilized by any of our competitors. Moreover,
we are able to achieve the highest reported efficacy with lower current levels
than utilized by our competitors. We believe that our proprietary

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biphasic waveform will offer compelling clinical benefits that should give
customers a reason to choose our biphasic defibrillators over those of our
competitors.

We have sponsored two clinical trials that have demonstrated that our
proprietary biphasic waveform provides improved efficacy compared to
conventional monophasic waveforms. In a randomized study for ventricular
fibrillation of 184 patients, our biphasic waveform converted 99% of patients on
the first shock compared to 93% of patients converted with the monophasic
waveform. This compares favorably with the results obtained by other parties in
similar trials.

[First Shock Efficacy for VF]

Shown here in the printed form of this prospectus is a graphic
representation of the first shock efficacy for ventricular
fibrillation. Percent efficacy is plotted on the vertical axis. On
the horizontal axis, 4 trials are plotted: an Agilent trial, a
Physio-Control trial and two Zoll trials. One of the Zoll trials was
conducted with high-impedence patients, all of the other trials did
not separate the patients by impedence. In Zoll's all patients
trial, Zoll's biphasic waveform converted 99% of the patients on the
first shock, compared to 93% of patients converted with a monophasic
waveform. In the trial with high impedence patients, Zoll's biphasic
converted approximately 99% of patients versus the approximately 86%
converted with the monophasic waveform. In Agilent's trial, each of
Agilent's biphasic and monophasic waveforms converted approximately
86% of the patient's on the first shock. In Physio-Control's trial,
Physio-Control's biphasic waveform converted approximately 84% of
patients versus the approximately 90% converted with the monophasic
waveform.

These studies also showed that our waveform required less than half the
current for converting ventricular and atrial fibrillation than the conventional
monophasic waveform. The graph below shows that less current is needed to
achieve 100% efficacy with our biphasic waveform.

[Amount of Current Needed to Achieve 100% Efficacy Current Required for VF]

Shown here in the printed form of this prospectus is a
horizontal bar graph which depicts the amount of current, in
amperes, required for each of a monophasic waveform and Zoll's
biphasic waveform to reach 100% efficacy. The monophasic waveform
requires nearly 50 amperes, while Zoll's biphasic waveform only
requires approximately 15 amperes to achieve efficacy.

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A second randomized trial of 165 patients compared the efficacy of our
biphasic waveform to a conventional monophasic waveform for cardioversion of
atrial fibrillation. Our investigators reported a 68% first shock efficacy for
our waveform compared to just 21% for a conventional monophasic waveform.
Overall, 94% of the patients randomized to our biphasic waveform were
successfully cardioverted as compared to 79% of the patients treated with a
monophasic waveform. To our knowledge, no other competitor has published results
relating to their biphasic waveform in atrial fibrillation.

CARDIOVERSION EFFICACY FOR ATRIAL FIBRILLATION

Shown here in the printed form of this prospectus is a
vertical bar graph which depicts the comparative percent efficacy
for cardioversion of atrial fibrillation of each of: a first shock
using a monophasic waveform versus a first shock using ZOLL's
biphasic waveform; and a cumulative shock using a monophasic
waveform versus a cumulative shock using ZOLL's biphasic waveform.
The bar graph depicts graphically the results described in the
preceding paragraph.

We have received six U.S. patents covering various aspects of our novel
biphasic waveform technology. One U.S. patent is still pending as are several
corresponding foreign patents.

DISPOSABLE ELECTRODES

We offer a variety of single-patient-use, proprietary disposable electrodes
for use with our resuscitation devices. Among our primary competitors, we are
the only company to engineer and manufacture our own electrodes. We have
continually innovated and upgraded our electrode product line, and in 1999 we
introduced pro-padz(TM) Cardiology Specialty Multi-function Electrodes that
utilize a new conductive liquid gel to carry the energy from a conductive plate
to the patient. Our sales of electrodes in the North American market grew 8%
from 1997 to 1998 and 17% from 1998 to 1999. Our margins for electrodes are
generally higher than our margins for devices. We hope to sell more disposable
electrodes in the future as more customers recognize the benefits of electrodes,
which are safer for an operator of a defibrillator than traditional paddles.
Another factor that might lead to higher electrode sales is the use of
interpretive algorithms for automated defibrillation. The monitoring required to
assess the patient's condition can only be achieved with electrodes and not with
the traditional defibrillation paddles. Accordingly, we believe that the
defibrillator industry is moving toward a greater relative use of electrodes.

OTHER EXTERNAL DEFIBRILLATORS/PACEMAKERS

We also manufacture and sell four other product lines of portable and
stand-alone defibrillators with advisory capability, semi-automatic and manual
operation as well as ancillary accessories and chargers.

MARKET OVERVIEW

We divide the market for noninvasive cardiac resuscitation equipment into
three principal markets: the hospital, pre-hospital and public access
defibrillation markets. The hospital market consists of doctors, nurses and
other medical personnel who use defibrillators in a hospital setting. The
pre-hospital market consists of care providers such as paramedics, ambulance
operators, emergency medical technicians, medically-trained firefighters and
other "first response" emergency medical personnel. The public access
defibrillation market includes non-traditional providers such as police,
non-medically trained firefighters,

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security officers, and other non-medically trained first responders. We estimate
that the size of the worldwide market for external defibrillator products was
approximately $525 million in 1999.

OUR CURRENT MARKET

U.S. Hospital Market. The U.S. hospital market consists of approximately
6,000 acute care community hospitals and 1,000 additional hospitals. Presently,
we are the only company whose defibrillators are used at each of the top 12
cardiac hospitals in the United States as listed by U.S. News and World Report
in July 1999.

Hospitals have traditionally been the largest users of cardiac
resuscitation equipment, both for patients admitted with sudden cardiac arrest
and for patients at risk of sudden cardiac arrest undergoing other treatments.
Many hospital procedures such as surgery, cardiac catheterization, stress
testing and general anesthesia may induce arrhythmias or sudden cardiac arrest,
and hospitals frequently use cardiac resuscitation devices on a standby basis in
connection with these procedures. Since immediate treatment is the critical
factor for successful cardiac resuscitation, hospitals typically place
resuscitation devices throughout their facilities, including the cardiac and
critical care units, emergency rooms, operating rooms, electrophysiology
laboratories and, increasingly, general wards. Hospitals also use portable
devices during in-hospital transportation of cardiac patients.

We believe that the M Series defibrillators have allowed us to
significantly increase our market share in the U.S. hospital market. Our
revenues in the capital equipment device market in 1999 increased at a rate of
52% compared to the market's growth which we estimate to be between 3% and 5%.
We hope to capitalize on the success of our M Series defibrillators to further
expand our share of the U.S. hospital market.

U.S. Pre-hospital Market. Most sudden cardiac arrests and heart attacks
occur outside of the hospital. Due to the importance of immediate treatment,
there is a substantial market for portable cardiac resuscitation equipment
designed for use by various emergency responders. The most highly trained
segment of the pre-hospital market is comprised of paramedics, who are all
authorized and trained to use defibrillators to treat sudden cardiac arrest. In
addition, paramedics are becoming increasingly aware of external pacing as a
standard of care for the treatment of bradycardia. We believe that as
noninvasive temporary pacing becomes more widely accepted in the hospital
market, the use of combination pacemakers/defibrillators will become more
widespread in the pre-hospital setting as well. Paramedics are also able to use
more advanced diagnostics, such as diagnostic 12 lead. Emergency medical
technicians, who are authorized to use automated external defibrillators,
comprise a significant portion of the potential pre-hospital market as well.

We believe the opportunity for growth in the underpenetrated pre-hospital
market is large. Presently, approximately 50% of the estimated 35,000 ambulances
in the United States are equipped with defibrillators. We believe that the
percentage of ambulances equipped with defibrillators will grow, and that
ambulances and other first response emergency vehicles will represent an
increasingly important market for cardiac resuscitation equipment as the medical
community places increased priority on providing such equipment and the
necessary training to all first responders. Additionally, we believe that growth
of our sales in the pre-hospital market has been constrained in the recent past
due to the absence of 12 lead technology in our defibrillators. With our recent
introduction of diagnostic 12 lead in the M Series defibrillators, we intend to
increase our sales in the pre-hospital market and take greater market share
within the paramedic segment of the pre-hospital market.

International Market. The international market for defibrillators is less
developed than the market in the United States. In the international market,
unlike the U.S. market, the administration of pacing and defibrillation in
hospitals is generally viewed as a skill reserved for physicians. Few other
staff members are trained to administer such treatment. The international market
for defibrillators for use outside of hospitals varies considerably from country
to country and is somewhat less developed than the market in North America.

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We believe that the international market for defibrillators will grow for a
number of reasons.

- The international hospital market for defibrillators is expected to grow
as more hospitals are built and existing hospitals modernize and update
their approaches to cardiac and emergency care.

- Emerging standards of care and the acceptance of automated equipment
could result in increased use of cardiac resuscitation equipment by a
broader range of health care personnel in the international market.

- The European Resuscitation Council, the British Heart Foundation and
virtually all cardiac-oriented organizations in Europe as well as the
Australian Resuscitation Council have strongly supported initiatives to
expand the availability of defibrillators as a major public health
initiative.

- External pacing is used much less frequently in Europe and other parts of
the world than it is in the United States, but many countries are
beginning to implement cardiac life support protocols which incorporate
external pacing as a standard component. Because most international
defibrillators do not presently feature external pacing, the move to
defibrillators with external pacing could drive the international demand
for defibrillators generally.

We believe that we are positioned to take advantage of the growth in the
international market for defibrillators, based on the recent success of the M
Series defibrillators, our superior biphasic waveform, and the multiple language
and other capabilities of the M Series defibrillators.

We believe that there are significant opportunities to increase sales in
the international market through the use of direct sales. Historically, we have
used distributors instead of a direct sales force to sell our products
internationally. We believe using a direct sales force could increase our
revenues and market share in many countries. For example, we doubled our sales
in the United Kingdom in 1999, which we believe was at least partially due to
the efforts of our direct sales force established four years ago. In addition,
Germany, which is second only to the United States in market size, may be a
strong market for future growth. We are establishing a direct sales force in
Germany and expect to expand this sales force in the coming year. In addition,
we are beginning to fulfill our largest sales contract ever, a multi-year
agreement with the German Army to supply up to 1,500 defibrillators. We intend
to further expand our direct selling efforts in the coming years.

OUR MARKET OPPORTUNITIES

PUBLIC ACCESS DEFIBRILLATION USING AEDs

Public access defibrillation, or PAD, involves providing low cost automated
external defibrillators, or AEDs, to persons outside a hospital setting who are
not medically trained. Automated defibrillators use an algorithm to determine if
a patient's heart requires defibrillation and prompt the operator to deliver the
shock. Although we presently offer AEDs in the hospital and pre-hospital
markets, we are seeking to develop a low cost AED specifically targeted to the
needs of the PAD market. Traditionally, defibrillators have only been used by
personnel in hospitals and trained emergency medical service personnel in the
pre-hospital market. As mentioned above, time from onset of sudden cardiac
arrest to defibrillation is the most important factor in successfully treating
sudden cardiac arrest. Victims are likely to die if they are not defibrillated
within four to eight minutes of the onset of sudden cardiac arrest. This need
for immediate treatment of cardiac arrest suggests that if more automated
defibrillators can be deployed outside of the hospital setting, the likelihood
of defibrillating a victim in the critical time frame will increase. Potential
customers for such devices in this broad market include police and fire
departments, office buildings and any other location where a large number of
people congregate. Ultimately, AEDs could be marketed to private homes, where
approximately 70% of cardiac arrests occur. In addition, we expect that demand
for AEDs could increase as public awareness of the time constraints inherent in
treating cardiac arrest grows and as more AEDs are introduced into highly
visible, public places.

Some of our competitors offer cardiac resuscitation equipment in the PAD
market. We have not yet entered the PAD market due to its early stage of
development and the high selling costs inherent to such a market. We do not
believe the current AED manufacturers have generated profitable operations from
the PAD market in the past. We believe, however, that this market is now
expanding to the point where

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AEDs can be profitably sold. More distributors are requesting and selling AEDs.
In addition, the recent passage of federal good samaritan legislation increases
the likelihood that non-medically trained personnel will be providing care to
victims of sudden cardiac arrest. Good samaritan legislation generally protects
persons who render emergency assistance to others from liability for negligence
in connection with their rendering of assistance. At least one state,
Massachusetts, has amended its good samaritan law to specifically cover the use
of AEDs by the general public. In addition, the AHA has begun to actively
advocate PAD as a critical link in the "Chain of Survival," which refers to the
four crucial links in the treatment of cardiac arrest. The AHA and virtually all
corresponding international organizations have established programs to try to
bring early defibrillation to every community. Early defibrillation is now
included in AHA CPR training for all healthcare personnel and some lay persons.
We believe that these developments, together with the introduction of AEDs in
highly visible places, will lead to a larger market for AEDs.

Because we expect the PAD market to mature, we intend to produce and sell
low-cost AEDs in this market. We estimate that in calendar year 2000 the market
for low-cost AEDs will exceed $63 million. We expect to introduce our low-cost
AED within approximately 12 to 24 months. The device will monitor the patient's
ECG and automatically prompt the operator throughout the defibrillation process.
We intend to use a direct sales force to sell our AEDs wherever it proves cost
effective to do so, and will sell through alternate distribution, such as
distributors or manufacturers' representatives, in those markets that are too
small to support a direct sales force. In addition, we expect that this market
can be serviced by other alternative distribution methods, such as e-commerce,
that can supplement and reduce our need for an expensive sales force. We also
intend to use our experience of selling to emergency medical service personnel
in our future efforts to sell AEDs to police and fire departments.

EMS DATA MANAGEMENT SOLUTIONS

We are developing a product called RescueNet(TM) to address what we
consider to be a growing need in the EMS market for an integrated data
management system. RescueNet(TM) will combine existing technologies developed by
two of our subsidiaries with data collected from our cardiac resuscitation
devices. This will allow our customers to purchase a single data management
system that integrates dispatch, resuscitation information, data collection,
data transfer, billing and quality assurance functions. Today, most EMS data is
entered by hand on clipboards and then distributed or reentered manually into
databases or to meet regulatory and insurance reporting requirements. The
timeliness, accuracy and efficiency of this process is a key factor in the
receipt of payments from third party payors. Nevertheless, a significant amount
of revenue is lost due to data entry errors, misplaced paperwork or data, and
additional time is lost duplicating data entries. As a result, we believe that
the market for electronic field data collection is significant and relatively
unpenetrated. Of the estimated 35,000 ambulances in the United States today, we
estimate that less than 5,000 of them have any type of computer in place for the
routine entry of data. Based upon our experience market interest in electronic
field data collection is very high in part because EMS organizations are
increasingly pressured to become more efficient.

Using RescueNet(TM), caller information collected by the dispatcher would
first be organized and compared to existing databases in the system. Almost
immediately, useful information on the patient such as the patient's previous
medical history, the closest ambulance to the patient's address, the patient's
insurance numbers from previous service, and the patient's personal physician
would be provided to the ambulance or EMS system through the use of wireless
communications and radio links that already exist in most EMS systems. Data
collected by EMS personnel on the road, including simple data such as arrival
time at a scene or transport time to the hospital, as well as clinical data
derived from our defibrillators such as the number of shocks given, when those
shocks were given and at what energy levels, could be immediately shared via
wireless connection with the hospital to which the patient is being brought.
Information regarding services provided to the patient could be stored
electronically for billing and record-keeping purposes. Such seamless
information sharing would allow for better integration of information with the
dispatcher and with the hospital to which the patient is being transported,
while eliminating duplicative information collection.

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Ease-of-use and the need for efficiency in the use of information in
billing, case review, training and operations analysis are the fundamental
factors that we believe could drive the market for an integrated data management
system in the pre-hospital market. Although we plan to sell RescueNet(TM)
through a dedicated sales force, we intend to utilize our existing relationships
with purchasing decision-makers in the EMS market who have purchased our
defibrillators in the past and to obtain sales efficiencies and synergies
through cross-selling.

Our competition in dispatch, billing and mobile computing solutions
consists of mostly smaller software companies. We believe we have a competitive
advantage over other software companies due to our familiarity with the
information collected and stored by our defibrillators. Our ability to analyze,
store and retrieve this clinically important data could make our electronic
field data collection products more attractive.

We expect that the EMS data management business will be a significant part
of our long-term growth strategy. We believe that this market could expand
rapidly and that we are particularly well-positioned to become a significant
competitor in this business.

COMPETITION

Our principal competitors in the United States are Physio-Control
Corporation and Agilent Technologies, Inc. Physio-Control is a subsidiary of
Medtronic, Inc., a leading medical technology company, and Agilent, which now
includes Heartstream, Inc., was formerly part of Hewlett-Packard Company. Both
Physio-Control and Agilent compete across our entire defibrillator product line.
We also compete with Medical Research Labs, Inc. and SurVivaLink, Inc. in
specific geographic areas and markets. In the international market we compete
with both Physio-Control and Agilent, as well as approximately 12 other
companies depending upon the country. Physio-Control is generally the market
leader in the industry.

We believe that the principal competitive factors in the hospital market
for cardiac resuscitation equipment are clinical efficacy, reliability,
portability, ease-of-use and standardization. In the pre-hospital market, in
addition to the foregoing considerations, durability, a reliable battery system,
and availability of 12 lead ECG capability are significant competitive factors.
We believe that our products compete favorably with respect to each of these
factors. Noninvasive temporary pacemakers and external defibrillators, such as
those we sell, are used in emergency situations and, accordingly, do not compete
with permanent, implantable pacemakers or defibrillators that are used to treat
chronic arrhythmias. In fact, the products are complementary, because emergency
cardiac resuscitation is often required during the implantation of a permanent
device.

The business of developing and marketing software for data collection,
billing and management in the EMS market is competitive. Competitors in this
business include PAD Systems, Healthware Technologies, Inc., Tritech Software
Systems, Sweet Computer Services, Inc., RAM Software Systems, Inc., Intergraph
Corporation and AmbPac, Inc. None of these competitors currently have a product
that provides an integrated solution comparable to the RescueNet(TM) product
currently in development.

RESEARCH AND DEVELOPMENT

Our research and development strategy is to improve and expand our product
line through the application of our proprietary technology to both devices and
electrodes. We pursue a multi-disciplinary approach to product design. We are
currently focusing our research and development program in mechanical, software
and electronic engineering, including both digital (microprocessor) and analog
(high voltage) design. We hope to develop an inexpensive, easy-to-operate AED
for the PAD market. We are also seeking to expand the M Series features and
parameters and to develop further efficiencies in our M Series production,
leading to lower costs. In addition, we are continuing our work on the
development of the RescueNet(TM) product.

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MANUFACTURING

Our facilities are located in Burlington, Massachusetts and Pawtucket,
Rhode Island. Our executive headquarters are located at the Burlington facility,
where we also conduct our device manufacturing operations and all of our
research and development other than electrode and EMS data management research
and development. We generally assemble our devices from components produced to
our specifications by our suppliers. We own a 33,000 square foot building in
Rhode Island, where we manufacture our electrode products and conduct related
research and development. We own a 17,500 square foot building in Boulder,
Colorado where our data management software business offices are located. We
lease approximately 90,000 square feet of office and assembly space in
Burlington under a lease expiring in August 2003, and 2,685 square feet of
office space in Vancouver, British Columbia, under a lease expiring in 2002. We
also have administrative offices in Manchester, England and Cologne, Germany.

PATENTS AND PROPRIETARY INFORMATION

Six U.S. patents have now been issued covering various aspects of our
unique biphasic waveform technology. One U.S. patent relating to this waveform
technology is still pending as are several corresponding foreign patents.

During fiscal 1999, we filed several U.S. and foreign patent applications
covering novel technology related to our pacing and defibrillation electrodes.
These pending patents supplement other electrode patents issued or pending in
the United States, Europe and Japan.

A number of U.S. patents covering technologies incorporated into our other
products have been issued. Foreign patents related to some of these technologies
are pending.

EMPLOYEES

As of October 2, 1999, we employed 423 people on a full-time basis, 388 in
the United States and 35 internationally. We also employed six part-time
employees. None of our employees are subject to collective bargaining
agreements. We believe that our relations with our employees are excellent.

MARKETING AND SALES

We use a direct sales force in the United States. In 1998, we split our
sales force into dedicated groups, focused on the hospital and pre-hospital
markets. Our total sales force was increased by 20% in both 1998 and 1999. We
sell our RescueNet(TM) product through a separate dedicated sales force. In the
United States, we currently have 48 sales representatives calling on hospitals,
33 calling on pre-hospital accounts and six selling our data management
products. We have four sales representatives in Canada, five in the United
Kingdom and two in Germany. We are in the process of hiring three additional
sales representatives for the German market.

GOVERNMENT REGULATION

The manufacture and sale of our products are subject to extensive
regulation by numerous governmental authorities, principally by the FDA and
corresponding foreign agencies. The FDA administers the Federal Food, Drug and
Cosmetic Act and the regulations promulgated thereunder. We are subject to the
standards and procedures with respect to the manufacture of medical devices and
are subject to inspection by the FDA for compliance with such standards and
procedures.

The FDA classifies medical devices into one of three classes depending on
the degree of risk associated with each medical device and the extent of control
needed to ensure safety and effectiveness. Our manual defibrillation and pacing
products have been classified by the FDA as Class II devices. Our AED products
have been classified as Class III devices. These devices must secure either a
510(k) pre-market notification clearance or an approved pre-market approval
application before they can be introduced into the United States market. The
process of obtaining 510(k) clearance typically takes several months and may
involve the submission of limited clinical data supporting assertions that the
product is substantially equivalent to another medical device on the market
prior to 1976. The pre-market

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approval process typically requires substantially more time than does 510(k)
clearance and requires the submission of significant quantities of clinical data
and supporting information.

Every company that manufactures or assembles medical devices is required to
register with the FDA and to adhere to certain "good manufacturing practices
(per the FDA's Quality System Regulation)" which regulate the manufacture of
medical devices and prescribe record keeping procedures and provide for the
routine inspection of facilities for compliance with such regulations. The FDA
also has broad regulatory powers in the areas of clinical testing, marketing and
advertising of medical devices.

Medical device manufacturers are routinely subject to periodic inspections
by the FDA. If the FDA believes that a company may not be operating in
compliance with applicable laws and regulations, it can:

- place the company under observation and reinspect the facilities;

- issue a warning letter apprising of violative conduct;

- detain or seize products;

- mandate a recall;

- enjoin future violations; and

- assess civil and criminal penalties against the company, its officers or
its employees.

We are also subject to regulation in each of the foreign countries in which
we sell our products. Many of the regulations applicable to our products in such
countries are similar to those of the FDA. However, the national health or
social security organizations of certain countries require our products to be
qualified before they can be marketed in those countries.

LEGAL PROCEEDINGS

In the normal course of operations, we are involved in litigation arising
from commercial disputes and claims of former employees and other matters. We do
not believe any of these current claims will have a material impact on our
financial position or results of operations.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table shows information about our executive officers and
directors as of February 22, 2000:

[Enlarge/Download Table]

NAME AGE POSITION
------------------------------------------ --- ------------------------------------------

Richard A. Packer......................... 42 Chairman of the Board of Directors and
Chief Executive Officer
Donald R. Boucher......................... 48 Vice President -- Research and Development
Steven K. Flora........................... 48 Vice President -- North American Sales
Ward M. Hamilton.......................... 52 Vice President -- Marketing
E.J. Jones................................ 57 Vice President -- International Sales
A. Ernest Whiton.......................... 38 Vice President -- Administration and Chief
Financial Officer
James W. Biondi........................... 43 Director
Willard M. Bright......................... 85 Director
Thomas M. Claflin, II..................... 58 Director
M. Stephen Heilman........................ 66 Director
Daniel M. Mulvena......................... 51 Director
Benson F. Smith........................... 52 Director

Richard A. Packer joined the Company in 1992 and in November 1999, was
appointed Chairman of the Board of Directors and Chief Executive Officer. Mr.
Packer served as President, Chief Operating Officer and Director from May 1996
to his appointment as CEO. Since 1992 he has served as Chief Financial Officer
and Vice President of Operations of the Company. From 1987 to 1992, Mr. Packer
served as Vice President of various functions for Whistler Corporation, a
consumer electronics company. Prior to this, Mr. Packer was a manager with the
consulting firm of PRTM/KPMG, specializing in operations of high technology
companies. Mr. Packer has received B.S. and M. Eng. degrees from the Rensselaer
Polytechnic Institute and an M.B.A. from the Harvard Graduate School of Business
Administration.

Donald R. Boucher joined the Company as Vice President of Research and
Development in December 1993. Prior to joining the Company, Mr. Boucher served
from 1977 to 1993, with Corometrics Medical Systems, Inc., a manufacturer of
fetal and neonatal monitors, most recently as Vice President of Engineering. Mr.
Boucher received an M.B.A. from the University of Connecticut, an M.S.E. in
bioengineering from the University of Pennsylvania, and a B.S. in engineering
from Northeastern University.

Steven K. Flora joined the Company as Vice President of North American
Sales in September 1998. Prior to joining the Company, Mr. Flora served from
1981 to 1998 in various positions with Marquette Medical systems, a manufacturer
of cardiovascular and physiological monitoring systems, most recently as Vice
President of Sales. Mr. Flora received his B.S. in Biology from the University
of Illinois.

Ward M. Hamilton joined the Company as Vice President of Marketing in
February 1992. Prior to this time, Mr. Hamilton served from 1985 to 1991 as
Director of New Business Development and Director of Marketing for ACLS products
for Laerdal Medical Corporation, a manufacturer of portable automated
defibrillators, and from 1977 to 1985 as Marketing Manager for defibrillators
and noninvasive blood pressure monitors for Datascope Corporation. Mr. Hamilton
received a B.A. in political science from Hartwick College and an M.P.A. in
public administration from the University of Southern California.

E.J. Jones joined the Company as Vice President of International Sales in
November 1999. Prior to joining the Company, Mr. Jones was Vice President of
Operations with Apple Medical Corporation. He

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also spent 15 years with Millipore Corporation, holding various positions in
Domestic and International Sales. Mr. Jones holds a B.S. in
Microbiology/Biochemistry from the University of Illinois and is a graduate of
the Advanced Management Program from the Harvard Business School.

A. Ernest Whiton joined the Company as Vice President of Administration and
Chief Financial Officer in January 1999. Prior to joining the Company, Mr.
Whiton was Vice President and Chief Accounting officer of Ionics, Inc., a global
separations technology company, which he joined in 1993. Prior to Ionics, he was
a manager at Price Waterhouse. Mr. Whiton has received a B.S. in Accounting from
Bentley College and an M.B.A. from the Harvard Graduate School of Business
Administration.

James W. Biondi joined the Company as a Director in 1999. Dr. Biondi has
served as Chairman of Cardiopulmonary Corp. since its founding in 1988, and
Chief Executive Officer and President since 1992. Cardiopulmonary Corp. designs,
develops, and assembles advanced software driven ventilators used for the
treatment of anesthesia and intensive care patients. Since 1992, Dr. Biondi has
been an Adjunct Assistant Professor of Medicine at Yale University School of
Medicine. Dr. Biondi also serves as director of Ivy Biomedical Systems, Inc.

Willard M. Bright joined the Company in 1983, and previously served as the
Chairman of the Board of Directors of the Company. Prior to joining the Company,
Dr. Bright served as President and Chief Executive Officer of The Kendall
Company and Boehringer Mannheim Corporation, medical products manufacturers, and
President and director of Curtiss-Wright Corp., an aerospace and industrial
products manufacturer. Dr. Bright is a director of MacroChem Corporation.

Thomas M. Claflin, II joined the Company as a Director in 1980. Mr. Claflin
is a principal of Claflin Capital Management, Inc., a venture capital firm, and
general partner of its venture capital partnerships.

M. Stephen Heilman joined the Company as a Director in 1996. Dr. Heilman
founded and has served as Chairman and Chief Executive Officer of Lifecor, Inc.,
a medical device company, since its inception in 1986. Dr. Heilman also founded
and has served as Chairman and Chief Executive Officer of Vascor, Inc. since its
inception in 1986, and also founded Medrad Inc. in 1964. Dr. Heilman is a
director of SkyMark Corporation, Medrad Inc. and Precision Therapeutics.

Daniel M. Mulvena joined the Company as a Director in 1998. Mr. Mulvena is
the owner of Commodore Associates, Inc., a consulting company. From 1992 to
1995, Mr. Mulvena was a Group Vice President of Boston Scientific Corporation.
Mr. Mulvena serves as Chairman of the Board of Directors of Echo-cath, Inc. and
Magna Lab, Inc. He is also a director of Thoratec Laboratories, Inc. and
Cambridge Heart, Inc.

Benson F. Smith joined the Company as a Director in 2000. Prior to joining
the Company, Mr. Smith was formerly President, Chief Operating Officer and a
member of the Board of Directors of C.R. Bard, Inc. Mr. Smith worked at C.R.
Bard, Inc. in various capacities for 25 years until his retirement in 1998. Mr.
Smith currently serves as a board member for a variety of academic and
health-related organizations.

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PRINCIPAL STOCKHOLDERS

The following table shows information regarding beneficial ownership of our
common stock as of January 25, 2000 by:

- each of our directors and executive officers;

- all directors and officers as a group; and

- each person known by us to be the beneficial owner of 5% or more of our
common stock.

[Enlarge/Download Table]

PERCENT OF
COMMON STOCK
NUMBER OF BENEFICIALLY OWNED
SHARES -------------------
BENEFICIALLY BEFORE AFTER
NAME OF BENEFICIAL OWNER OWNED OFFERING OFFERING
----------------------------------------------------- ------------ -------- --------

Richard A. Packer(1)................................. 51,550 * *
Steven K. Flora(2)................................... 13,800 * *
Ward M. Hamilton(3).................................. 53,500 * *
E.J. Jones(4)........................................ 10,100 * *
A. Ernest Whiton(5).................................. 10,000 * *
James W. Biondi(6)................................... 3,500 * *
Willard M. Bright(7)................................. 119,200 1.7% 1.4%
Thomas M. Claflin, II(8)............................. 69,245 1.0 *
M. Stephen Heilman(9)................................ 56,500 * *
Daniel M. Mulvena(10)................................ 2,500 * *
Benson Smith(11)..................................... 0 * *
All executive officers and directors as a group (11
persons)(12)....................................... 389,895 5.5 4.6
The Kaufmann Fund, Inc.(13).......................... 725,000 10.6 8.7
140 E. 45th St., 43rd Floor
Suite 2624
New York, New York 10017
Pilgrim Baxter & Associates, Ltd.(14)................ 502,600 7.3 6.0
825 Duportail Road
Wayne, Pennsylvania 19087
Dimensional Fund Advisors Inc.(15)................... 415,200 6.1 5.0
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401

---------------
* Less than 1%.

(1) Includes 38,250 shares of common stock issuable upon exercise of stock
options which are exercisable within 60 days after January 25, 2000. Does
not include options to purchase 103,750 shares of common stock which are not
exercisable within 60 days after January 25, 2000.

(2) Includes 10,000 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after January 25, 2000. Does not
include options to purchase 30,000 shares of common stock which are not
exercisable within 60 days after January 25, 2000.

(3) Represents 53,500 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after January 25, 2000. Does not
include options to purchase 7,500 shares of common stock which are not
exercisable within 60 days after January 25, 2000.

(4) Includes 10,000 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after January 25, 2000. Does not
include options to purchase 30,000 shares of common stock which are not
exercisable within 60 days after January 25, 2000.

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(5) Represents 10,000 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after January 25, 2000. Does not
include options to purchase 30,000 shares of common stock which are not
exercisable within 60 days after January 25, 2000.

(6) Includes 2,500 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after January 25, 2000. Does not
include options to purchase 7,500 shares of common stock which are not
exercisable within 60 days after January 25, 2000.

(7) Represents 111,700 shares of common stock held by the Willard M. Bright
Revocable Inter Vivos Trust dated August 2, 1990 and 7,500 shares of common
stock issuable upon exercise of options which are exercisable within 60
days after January 25, 2000. Does not include options to purchase 7,500
shares of common stock which are not exercisable within 60 days after
January 25, 2000.

(8) Includes 229 shares of common stock held by Mr. Claflin's spouse and 3,278
shares held by various Claflin Capital Management, Inc. partnership
entities, as to which Mr. Claflin disclaims beneficial ownership, and 5,000
shares of common stock issuable upon exercise of options which are
exercisable within 60 days after January 25, 2000. Does not include options
to purchase 5,000 shares of common stock which are not exercisable within
60 days after January 25, 2000.

(9) Includes 7,500 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after January 25, 2000. Does not
include options to purchase 5,000 shares of common stock which are not
exercisable within 60 days after January 25, 2000.

(10) Includes 2,500 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after January 25, 2000. Does not
include options to purchase 7,500 shares of common stock which are not
exercisable within 60 days after January 25, 2000.

(11) Does not include options to purchase 10,000 shares of common stock which
are not exercisable within 60 days after January 25, 2000.

(12) Includes 146,750 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after January 25, 2000. Does not
include options to purchase 243,750 shares of common stock which are not
exercisable within 60 days after January 25, 2000.

(13) Based on information set forth in a Schedule 13F-HR filed under the
Exchange Act on January 19, 2000.

(14) Based on information set forth in a Schedule 13G filed under the Exchange
Act on January 7, 2000.

(15) Based on information set forth in a Schedule 13G filed under the Exchange
Act on February 11, 1999.

RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

M. Stephen Heilman is Founder, Chairman and Chief Executive Officer of
Lifecor, Inc., in which we have made a $2 million investment. Pursuant to an
agreement entered into in connection with such investment, we have agreed to Dr.
Heilman serving as a director of the Company, and a representative of the
Company serving as a director of Lifecor, Inc.

On January 7, 1999, we entered into an agreement with Elliott Associates,
L.P. and Westgate International, L.P., shareholders of the Company who together
owned approximately 15.4% of our Common Stock as of such date. Pursuant to the
terms of the agreement, Elliott and Westgate proposed, and we agreed, that the
Board of Directors would be expanded to eight members and Dr. James W. Biondi
would be elected as a Director to fill the resulting vacancy. On January 7,
1999, Dr. Biondi became a Director. Elliott and Westgate are no longer
significant shareholders of the Company.

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UNDERWRITING

Subject to the terms and conditions stated in the underwriting agreement,
each underwriter named below has severally agreed to purchase, and we have
agreed to sell to such underwriter, the number of shares set forth opposite the
name of such underwriter.

[Download Table]

NUMBER
NAME OF SHARES
---- ---------

Salomon Smith Barney Inc. .................................. 606,000
U.S. Bancorp Piper Jaffray, Inc. ........................... 472,500
Adams, Harkness & Hill, Inc. ............................... 270,000
Banc of America Securities LLC.............................. 22,500
Chase H&Q................................................... 22,500
Donaldson, Lufkin & Jenrette Securities Corporation......... 22,500
Robert W. Baird & Co. Incorporated.......................... 12,000
William Blair & Company, L.L.C. ............................ 12,000
Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated.............................................. 12,000
Gerard Klauer Mattison & Co., Inc. ......................... 12,000
Pacific Growth Equities, Inc................................ 12,000
Ryan, Beck & Co. ........................................... 12,000
Tucker Anthony Cleary Gull.................................. 12,000
---------
Total.................................................. 1,500,000
=========

The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in this offering are subject to
approval of legal matters by counsel and to other conditions, including receipt
of certificates from us, receipt of letters from our accountants, the status of
the trading of our common stock on Nasdaq or securities on the New York Stock
Exchange or Nasdaq and the absence of a banking moratorium, hostilities or a
crisis. The underwriters are obligated to purchase all the shares (other than
those covered by the over-allotment option described below) if they purchase any
of the shares.

The underwriters propose to offer some of the shares directly to the public
at the public offering price set forth on the cover page of this prospectus and
some of the shares to certain dealers at the public offering price less a
concession not in excess of $1.44 per share. The underwriters may allow, and
such dealers may reallow, a concession not in excess of $0.10 per share on sales
to other dealers. If all the shares are not sold at the initial offering price,
the representatives may change the public offering price and the other selling
terms.

We have granted to the underwriters a 30-day option to purchase up to an
additional 225,000 shares to cover over-allotments, if any, at the public
offering price less the underwriting discount. The underwriters may exercise
this option solely for the purpose of covering over-allotments, if any, in
connection with this offering. To the extent this option is exercised, each
underwriter will be obligated, subject to the conditions stated above, to
purchase a number of additional shares approximately proportionate to such
underwriter's initial purchase commitment.

We, our officers and directors and some of our non-institutional
stockholders have agreed that, for a period of 90 days from the date of this
prospectus, they will not, without the prior written consent of Salomon Smith
Barney Inc., dispose of or hedge any shares of our common stock or any
securities convertible into, or exercisable or exchangeable for common stock.
Salomon Smith Barney Inc. in its sole discretion may release any of the
securities subject to these lock-up agreements at any time without notice.

The common stock is quoted on the Nasdaq National Market under the symbol
"ZOLL."

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The following table shows the underwriting discounts and commissions to be
paid to the underwriters by us in connection with this offering. These amounts
are shown assuming both no exercise and full exercise of the underwriters'
option to purchase additional shares of common stock.

[Enlarge/Download Table]

PAID BY ZOLL
----------------------------
NO EXERCISE FULL EXERCISE
----------- -------------

Per share................................................... $ 2.40 $ 2.40
Total....................................................... $3,600,938 $4,141,078

In connection with this offering Salomon Smith Barney Inc., on behalf of
the underwriters, may purchase and sell shares of common stock in the open
market. These transactions may include over-allotment, syndicate covering
transactions and stabilizing transactions. Over-allotment involves syndicate
sales of common stock in excess of the number of shares to be purchased by the
underwriters in this offering, which creates a syndicate short position.
Syndicate covering transactions involve purchases of the common stock in the
open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids for
or purchases of common stock made for the purpose of preventing or retarding a
decline in the market price of the common stock while this offering is in
progress.

The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases shares originally sold by that syndicate
member.

Any of these activities may cause the price of the common stock to be
higher than the price that otherwise would exist in the open market in the
absence of such transactions. These transactions may be effected on the Nasdaq
National Market or in the over-the-counter market, or otherwise and, if
commenced, may be discontinued at any time.

In addition, in connection with this offering, the underwriters (and
selling group members) may engage in passive market making transactions in the
common stock on the Nasdaq National Market, prior to the pricing and completion
of the offering. Passive market making consists of displaying bids on the Nasdaq
National Market no higher than the bid prices of independent market makers and
making purchases at prices no higher than those independent bids and effected in
response to order flow. Net purchases by a passive market maker on each day are
limited to a specified percentage of the passive market maker's average daily
trading volume in the common stock during a specified period and must be
discontinued when such limit is reached. Passive market making may cause the
price of the common stock to be higher than the price that otherwise would exist
in the open market in the absence of such transactions. If passive market making
is commenced, it may be discontinued at any time.

We estimate that the total expenses, excluding underwriting discounts and
commissions, of this offering will be $600,000.

We have agreed to indemnify the underwriters against liabilities to which
they may become subject, including liabilities that may arise under the
Securities Act of 1933, the Securities Exchange Act of 1934 or other federal or
state statutory law or regulation, at common law or otherwise or to contribute
to payments the underwriters may be required to make in respect of any of those
liabilities.

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LEGAL MATTERS

The validity of the common stock offered in this prospectus will be passed
upon for Zoll by Goodwin, Procter & Hoar LLP, Boston, Massachusetts. Other legal
matters in connection with this offering will be passed upon for the
underwriters by Cravath, Swaine & Moore, New York, New York.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at September 26, 1998 and October 2, 1999, and for each of
the three years in the period ended October 2, 1999, as set forth in their
report which is included in this prospectus and elsewhere in the registration
statement. Ernst & Young LLP have also audited our consolidated financial
statements and schedule included in our Annual Report on Form 10-K for the year
ended October 2, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. We
have both included our consolidated financial statements and incorporated by
reference our consolidated financial statements and schedule in this prospectus
and elsewhere in the registration statement in reliance on Ernst & Young LLP's
reports, given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission, or the SEC. You may
read and copy any document we file at the public reference facilities of the SEC
located at 450 Fifth Street, N.W., Washington D.C. 20549. You may obtain
information on the operation of the SEC's public reference facilities by calling
the SEC at 1-800-SEC-0330. You can also access copies of such material
electronically on the SEC's home page on the World Wide Web at
http://www.sec.gov.

This prospectus is part of a registration statement (Registration No.
333-94793) we filed with the SEC. The SEC permits us to "incorporate by
reference" the information that we file with them, which means that we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file with the SEC after the date of this
prospectus will automatically update and supersede this information. We
incorporate by reference the following documents filed by us with the SEC (File
No. 000-20225). We also incorporate by reference any future filings made with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, as amended, after the date of this prospectus until the termination of
this offering:

1. Our Annual Report on Form 10-K for the fiscal year ended October 2,
1999.

2. Our Proxy Statement dated January 10, 2000 filed in connection with our
Annual Meeting of Shareholders to be held on February 8, 2000.

3. The description of our common stock which is contained in our
registration statement on Form 8-A filed under the Exchange Act on May
15, 1992, including any amendments or reports filed for the purpose of
updating such description.

If you request a copy of any or all of the documents incorporated by
reference, we will send to you the copies requested at no charge. However, we
will not send exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents. You should direct requests for such
copies to: Zoll Medical Corporation, 32 Second Avenue, Burlington, Massachusetts
01803, Attention: Chief Financial Officer. Our telephone number is (781)
229-0020.

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[THIS PAGE INTENTIONALLY LEFT BLANK]

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ZOLL MEDICAL CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

[Download Table]

Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets................................. F-3
Consolidated Income Statements.............................. F-4
Consolidated Statements of Stockholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7

F-1

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REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
ZOLL Medical Corporation

We have audited the consolidated balance sheets of ZOLL Medical Corporation
as of October 2, 1999 and September 26, 1998 and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended October 2, 1999. These consolidated financial
statements are the responsibility of the management of ZOLL Medical Corporation.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of ZOLL Medical Corporation at October 2, 1999 and September
26, 1998, and the consolidated results of its operations and its cash flows for
each of the three years in the period ended October 2, 1999, after giving
retroactive effect to the merger of Pinpoint Technologies, Inc., as described in
the notes to the consolidated financial statements, in conformity with
accounting principles generally accepted in the United States.

ERNST & YOUNG LLP

Boston, Massachusetts
November 12, 1999

F-2

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ZOLL MEDICAL CORPORATION

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

[Enlarge/Download Table]

SEPTEMBER 26, OCTOBER 2, JANUARY 1,
1998 1999 2000
------------- ---------- ------------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents............................. $ 5,521 $ 1,821 $ 1,284
Accounts receivable, less allowance of $940 at
September 30, 1998, $2,096 at October 2, 1999 and
$2,439 at January 1, 2000.......................... 14,630 25,464 26,265
Inventories:
Raw materials...................................... 3,990 5,332 6,604
Work-in-process.................................... 1,735 2,623 3,295
Finished goods..................................... 3,680 5,241 5,605
------- ------- -------
9,405 13,196 15,504
Prepaid expenses and other current assets............. 3,257 2,296 2,371
------- ------- -------
Total current assets.................................... 32,813 42,777 45,424
Property and equipment at cost:
Land and building..................................... 1,032 3,432 3,437
Machinery and equipment............................... 12,791 15,382 16,476
Construction in progress.............................. 1,162 477 412
Tooling............................................... 2,225 2,695 2,979
Furniture and fixtures................................ 712 883 931
Leasehold improvements................................ 737 737 749
------- ------- -------
18,659 23,606 24,984
Less accumulated depreciation........................... 8,187 10,875 11,637
------- ------- -------
Net property and equipment.............................. 10,472 12,731 13,347
Other assets, net of accumulated amortization of $496 at
September 26, 1998, $711 at October 2, 1999 and $771
at January 1, 2000.................................... 3,371 4,179 4,249
------- ------- -------
$46,656 $59,687 $63,020
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable...................................... $ 2,902 $ 8,404 $ 9,636
Accrued expenses and other liabilities................ 7,724 6,389 6,168
Current maturities of long-term debt.................. 116 164 163
Deferred revenue...................................... 393 1,092 1,017
------- ------- -------
Total current liabilities............................... 11,135 16,049 16,984
Deferred income taxes................................... 288 347 347
Long-term debt.......................................... 446 2,069 2,029
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, authorized 1,000
shares, none issued and outstanding................ -- -- --
Common stock, $.02 par value, authorized 19,000
shares, 6,602, 6,772 and 6,844 issued and
outstanding at September 26, 1998, October 2, 1999
and January 1, 2000, respectively.................. 132 136 137
Capital in excess of par value........................ 20,683 22,439 23,697
Retained earnings..................................... 13,972 18,647 19,826
------- ------- -------
Total stockholders' equity.............................. 34,787 41,222 43,660
------- ------- -------
$46,656 $59,687 $63,020
======= ======= =======

See notes to consolidated financial statements.

F-3

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ZOLL MEDICAL CORPORATION

CONSOLIDATED INCOME STATEMENTS

[Enlarge/Download Table]

YEAR ENDED THREE MONTHS ENDED
-------------------------------------------- --------------------------
SEPTEMBER 27, SEPTEMBER 26, OCTOBER 2, JANUARY 2, JANUARY 1,
1997 1998 1999 1999 2000
------------- ------------- ---------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)

Net sales....................... $57,833 $57,520 $78,682 $16,056 $24,435
Cost of goods sold.............. 25,372 24,268 32,486 6,532 10,843
------- ------- ------- ------- -------
Gross profit.................... 32,461 33,252 46,196 9,524 13,592
Expenses:
Selling and marketing......... 18,484 20,152 24,364 5,415 7,674
General and administrative.... 6,749 6,239 7,422 1,630 1,952
Research and development...... 6,430 6,583 6,916 1,603 1,731
------- ------- ------- ------- -------
Total expenses.................. 31,663 32,974 38,702 8,648 11,357
------- ------- ------- ------- -------
Income from operations.......... 798 278 7,494 876 2,235
Investment income............... 432 487 124 78 10
Interest expense................ 77 74 169 12 80
------- ------- ------- ------- -------
Income before income taxes...... 1,153 691 7,449 942 2,165
Provision for income taxes...... 266 18 2,010 240 801
------- ------- ------- ------- -------
Net income...................... $ 887 $ 673 $ 5,439 $ 702 $ 1,364
======= ======= ======= ======= =======
Basic earnings per common
share......................... $ 0.13 $ 0.10 $ 0.82 $ 0.11 $ 0.20
======= ======= ======= ======= =======
Weighted average common shares
outstanding................... 6,602 6,602 6,656 6,628 6,794
Diluted earnings per common and
equivalent share.............. $ 0.13 $ 0.10 $ 0.79 $ 0.10 $ 0.19
======= ======= ======= ======= =======
Weighted average common and
equivalent shares
outstanding................... 6,650 6,647 6,893 6,730 7,196

UNAUDITED PRO FORMA INFORMATION (NOTE B):

[Enlarge/Download Table]

Historical income before income taxes............................. $ 7,449 $ 942
Pro forma incremental operating costs........................... 272 65
------- -------
Pro forma income before income taxes............................ 7,177 877
Pro forma provision for income taxes............................ 2,402 300
------- -------
Pro forma net income............................................ $ 4,775 $ 577
======= =======
Pro forma diluted earnings per share............................ $ 0.69 $ 0.09
======= =======

See notes to consolidated financial statements.

F-4

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ZOLL MEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

[Enlarge/Download Table]

CAPITAL IN TOTAL
COMMON EXCESS OF RETAINED STOCKHOLDERS'
SHARES AMOUNT PAR VALUE EARNINGS EQUITY
------ ------ ---------- -------- -------------
(IN THOUSANDS)

BALANCE AT SEPTEMBER 28, 1996.............. 6,543 $131 $20,533 $12,950 $33,614
Exercise of stock options................ 18 59 59
Tax benefit realized upon exercise of
stock options......................... 43 43
Distributions by Pinpoint Technologies,
Inc................................... (140) (140)
Net income............................... 887 887
----- ---- ------- ------- -------
BALANCE AT SEPTEMBER 27, 1997.............. 6,561 131 20,635 13,697 34,463
Issuance of common stock by Pinpoint
Technologies, Inc. (See Note A)....... 41 1 48 49
Adjustments to conform pooled companies
fiscal year-ends...................... (140) (140)
Distributions by Pinpoint Technologies,
Inc................................... (258) (258)
Net income............................... 673 673
----- ---- ------- ------- -------
BALANCE AT SEPTEMBER 26, 1998.............. 6,602 132 20,683 13,972 34,787
Exercise of stock options................ 147 3 1,129 1,132
Tax benefit realized upon exercise of
stock options......................... 628 628
Initial capitalization of Pinpoint
Property Management, LLC (See Note
A).................................... 23 1 (1) --
Contributions by Pinpoint Technologies,
Inc. shareholders..................... 550 550
Distribution by Pinpoint Technologies,
Inc................................... (1,314) (1,314)
Net income............................... 5,439 5,439
----- ---- ------- ------- -------
BALANCE AT OCTOBER 2, 1999................. 6,772 $136 $22,439 $18,647 $41,222
Exercise of stock options (unaudited).... 69 1 537 538
Tax benefit realized upon exercise of
stock options (unaudited)............. 644 644
Stock compensation (unaudited)........... 3 77 77
Distribution by Pinpoint Technologies,
Inc. (unaudited)...................... (185) (185)
Net income (unaudited)................... 1,364 1,364
----- ---- ------- ------- -------
BALANCE AT JANUARY 1, 2000 (UNAUDITED)..... 6,844 $137 $23,697 $19,826 $43,660
===== ==== ======= ======= =======

See notes to consolidated financial statements.

F-5

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ZOLL MEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

[Enlarge/Download Table]

YEAR ENDED THREE MONTHS ENDED
------------------------------------------ -----------------------
SEPTEMBER 27, SEPTEMBER 26, OCTOBER 2, JANUARY 2, JANUARY 1,
1997 1998 1999 1999 2000
------------- ------------- ---------- ---------- ----------
(IN THOUSANDS) (UNAUDITED)

Operating activities:
Net income.................................. $ 887 $ 673 $ 5,439 $ 702 $ 1,364
Charges not affecting cash:
Depreciation and amortization............... 1,418 1,478 3,035 723 886
Issuance of common stock for services....... -- 49 1,294 -- --
Accounts receivable allowances.............. 361 243 -- (24) (343)
Inventory reserve........................... 318 53 129 (2) (32)
Provision for warranty expense.............. 275 (43) 180 22 (6)
Deferred income taxes....................... (898) 188 (339) -- --
In-process research and development......... 1,000 -- -- -- --
Changes in current assets and liabilities:
Accounts receivable......................... 1,102 114 (12,129) (2,562) (458)
Inventories................................. (408) (1,982) (3,920) (1,381) (2,276)
Prepaid expenses and other current assets... (23) (1,715) 1,358 1,572 (79)
Accounts payable and accrued expenses(2).... 1,739 1,133 4,556 (994) 1,021
Deferred revenue............................ 116 79 130 (150) (75)
------- ------- -------- ------- -------
Cash provided by (used for) operating
activities.................................. 5,887 270 (267) (2,094) 2
Investing activities:
Additions to property and equipment......... (1,801) (4,493) (2,930) (1,135) (1,442)
Investment in marketable securities......... (2,575) (2,675) (419) -- (1,096)
Redemption of marketable securities......... 5,262 2,953 419 -- 1,096
Other assets................................ (166) (62) (1,002) (14) (53)
Acquisition of assets from Westech
Information Systems, Inc.................. (1,558) (3) -- -- --
------- ------- -------- ------- -------
Cash used for investing activities............ (838) (4,280) (3,932) (1,149) (1,495)
Financing activities:
Exercise of stock options, including income
tax benefits.............................. 102 -- 1,760 68 1,182
Distributions to stockholders............... (140) (258) (1,314) -- (185)
Contributions from stockholders............. -- -- 550 -- --
Repayment of long-term debt................. (160) (127) (497) (41) (41)
------- ------- -------- ------- -------
Cash provided by (used for) financing
activities.................................... (198) (385) 499 27 956
------- ------- -------- ------- -------
Net increase (decrease) in cash............... 4,851 (4,395) (3,700) (3,216) (537)
Cash and cash equivalents at beginning of
year(1)..................................... 5,107 9,916 5,521 5,521 1,821
------- ------- -------- ------- -------
Cash and cash equivalents at end of year...... $ 9,958 $ 5,521 $ 1,821 $ 2,305 $ 1,284
======= ======= ======== ======= =======

---------------
(1) Pinpoint Technologies, Inc.'s December 31 year-end was changed to conform
with ZOLL Medical Corporation's September 26, 1998 year-end (see Note A)

(2) Includes payment of approximately $880,000 of accounts payable during the
first quarter of fiscal 2000 related to the 1999 purchase of our new
Enterprise Resource Planning information technology system from Oracle
Corporation.

[Enlarge/Download Table]

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year:
Income taxes................................ $ 551 $ 1,002 $ 555 $ 44 $ 431
Interest.................................... 77 74 169 12 80
Non-cash transaction:
Long-term debt incurred in purchase of
assets.................................... $ 1,800

See notes to consolidated financial statements.

F-6

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

Description of Business: ZOLL Medical Corporation (the Company) designs,
manufactures and markets an integrated line of proprietary, non-invasive cardiac
resuscitation devices and disposable electrodes. The Company's products are used
for the emergency resuscitation of cardiac arrest victims. The Company also
designs and markets software, which automates collection and management of both
clinical and non-clinical data for emergency medical service providers.

Basis of Presentation: On October 15, 1999, the Company acquired Pinpoint
Technologies, Inc. and Pinpoint Property Management LLC (Pinpoint individually
and collectively) in a business combination accounted for as a pooling of
interests. Pinpoint, which creates, develops and manufactures advanced
information technology software, exclusively focused on the emergency medical
services (EMS)market, became a wholly owned subsidiary of the Company through
the exchange of approximately 433,000 shares of the company's common stock for
all of the outstanding stock of Pinpoint. In January 1999, Pinpoint distributed
cash to the stockholders of Pinpoint. All of the cash distributed was
contributed to newly formed Pinpoint Property Management LLC, and used to fund
the equity needed to acquire an office building (See Note G). The accompanying
consolidated financial statements are presented on the basis that the companies
were combined for all periods presented, and financial statements of prior years
have been restated to give effect to the combination. Prior to the combination,
Pinpoint had a December 31 fiscal year end. Subsequent to the combination
Pinpoint changed its year-end to the Saturday closest to September 30, to
conform with that of the Company. The accompanying consolidated financial
statements reflect the combined historical results of the Company for the
periods ended September 27, 1997, September 26, 1998 and October 2, 1999, and
the results of Pinpoint for December 31, 1997, September 26, 1998, and October
2, 1999. An adjustment for $140,000 was reflected in the Consolidated Statements
of Stockholders' Equity to eliminate the effect of including Pinpoint's results
of operations for the three months ended December 31, 1997, in both the years
ended September 27, 1997 and September 26, 1998.

Unaudited Interim Financial Statements: The Consolidated Balance Sheet as
of January 1, 2000, the Consolidated Income Statements for the three months
ended January 1, 2000 and January 2, 1999, and the Consolidated Statements of
Cash Flows for the three months ended January 1, 2000 and January 2, 1999 are
unaudited, but in the opinion of management include all adjustments, consisting
of normal recurring items, necessary for a fair presentation of results for
these interim periods. The results for the interim periods are not necessarily
indicative of the results to be expected for the entire year.

Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries and Pinpoint
Technologies, Inc. and Pinpoint Property Management LLC. All significant
intercompany accounts and transactions have been eliminated.

Fiscal Year: The Company's fiscal year ends on the Saturday closest to
September 30. The year ended October 2, 1999 included 53 weeks and the years
ended September 26, 1998 and September 27, 1997 included 52 weeks.

Cash and Cash Equivalents: The Company considers all highly liquid
instruments with an original maturity of three months or less to be cash
equivalents. Substantially all cash and cash equivalents are invested in a money
market investment account. These amounts are stated at cost which approximates
market.

Inventories: Inventories, principally purchased parts, are valued at the
lower of first-in, first-out (FIFO) cost or market. Market is replacement value
for raw materials and net realizable value, after allowance for estimated costs
of completion and disposal, for work-in-process and finished goods.

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Intangible Assets: Patents and software are stated at cost and amortized
using the straight-line method. The excess of cost over fair value of the net
assets acquired is amortized on a straight-line basis over 15 years. Prepaid
license fees are amortized over the term of the related contract, once
commercialization of the related product begins.

Property and Equipment: Property and equipment are stated at cost and are
depreciated using the straight-line method over the estimated economic useful
lives of the assets (forty years for buildings, three to ten years for machinery
and equipment, and five to seven years for tooling and furniture and fixtures).
Leasehold improvements and equipment under capital leases are being amortized
over the life of the lease.

Revenue Recognition: Revenue from product sales is recognized upon
shipment of the product and recorded net of estimated returns. The Company
licenses software under the non-cancelable license agreements and provides
services including training, installation, consulting and maintenance,
consisting of product support services and periodic updates. Revenue from the
sale of software is recognized in accordance with the American Institute of
Certified Public Accountants (AICPA) Statement of Position (SOP) 97-2, Software
Revenue Recognition. License fee revenues are generally recognized when a non-
cancelable license agreement has been signed, the software product has been
shipped, there are no uncertainties surrounding product acceptance, the fees are
fixed and determinable, and collection is considered probable. For customer
license agreements, which meet these recognition criteria, the portion of the
fees related to software licenses will generally be recognized in the current
period, while the portion of the fees related to services is recognized as the
services are performed. The Company allocates a portion of contractual license
fees to post-contract support activities covered under the contract including
first year maintenance, installation assistance and limited training services.
In addition, the Company also allocates a portion of the contractual license
fees to future unspecified upgrade rights. Revenues from maintenance agreements
and upgrade rights are recognized ratably over a three month period, and a one
year period, respectively.

Advertising Costs: Advertising costs are expensed as incurred and totaled
$381,000, $409,000 and $481,000 in 1997, 1998 and 1999, respectively.

Product Warranty: Expected future product warranty costs, included in
accrued expenses and other liabilities, are recognized at the time of sale for
all products covered under warranty. Warranty periods range from one to five
years.

Foreign Currency: The financial position and results of operations of the
Company's foreign subsidiaries are measured using the U.S. dollar as the
functional currency. All material translation and transaction gains and losses
are recorded in the income statement.

Earnings Per Share: In 1998, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share," which requires the
presentation of basic and diluted earnings per share amounts. All periods
presented have been restated to reflect adoption of this statement.

The shares used for basic earnings per common share and diluted earnings
per common share are reconciled as follows (in thousands):

[Enlarge/Download Table]

THREE MONTHS ENDED
------------------------
JANUARY 2, JANUARY 1,
1997 1998 1999 1999 2000
----- ----- ----- ---------- ----------

Average shares outstanding for basic
earnings per share.................. 6,602 6,602 6,656 6,628 6,794
Dilutive effect of stock options...... 48 45 237 102 402
----- ----- ----- ----- -----
Average shares outstanding for diluted
earnings per share.................. 6,650 6,647 6,893 6,730 7,196
===== ===== ===== ===== =====

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Reclassifications: Certain reclassifications have been made to the prior
years' consolidated financial statements to conform to the 2000 presentation.

Use of Estimates: The preparation of the 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.

Stock Option Plans: The Company accounts for its stock compensation awards
under the provisions of APB No. 25, "Accounting for Stock Issued to Employees,"
and will continue to do so in the future.

Segment Reporting: Effective October 2, 1999, the Company adopted
Statement of Financial Accounting Standards No. 131, "Disclosure about Segments
of an Enterprise and Related Information" (SFAS 131). This statement supersedes
Statement No. 14, "Financial Reporting for Segments of a Business Enterprise."
SFAS 131 establishes standards for the way that public companies report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. SFAS 131 also establishes standards for disclosures
about products and services, geographic areas and major customers. The adoption
of SFAS 131 did not affect results of operations or financial position, but did
affect the disclosure of segment information. See Note N.

Comprehensive Income: In June 1997, the Financial Accounting Standards
Board issued Statement of Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." SFAS 130 establishes standards for reporting and
displaying comprehensive income. Comprehensive income is equal to net income for
each fiscal year presented.

Recent Accounting Pronouncements: In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Financial Instruments and for Hedging Activities,"
which provides a comprehensive and consistent standard for the recognition and
measurement of derivatives and hedging activities. SFAS 133 is effective for
years beginning after June 15, 2000 and is not anticipated to have a material
effect on the Company's financial statements when adopted.

NOTE B -- MERGER:

Summarized results of operations of the separate companies for the
preceding three years are as follows (in thousands):

[Download Table]

ZOLL PINPOINT COMBINED
------- -------- --------

Year ended September 27, 1997
Net sales........................................... $56,336 $1,497 $57,833
Net income.......................................... 515 372 887
Year ended September 26, 1998
Net sales........................................... $55,080 $2,440 $57,520
Net income.......................................... 43 630 673
Year ended October 2, 1999
Net sales........................................... $73,977 $4,705 $78,682
Net income.......................................... 4,081 1,358 5,439

Sales and net income of $579,000 and $140,000, respectively, for the
quarter ended December 31, 1997 were included in the years ended September 27,
1997 and September 26, 1998.

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following unaudited pro forma information has been prepared assuming
Pinpoint had been acquired as of the beginning of the periods presented. The pro
forma information is presented for informational purposes only and is not
necessarily indicative of what would have occurred if the acquisition had been
made as of those dates. In addition, the pro forma information is not intended
to be a projection of future results and does not reflect synergies expected to
result from the integration of Pinpoint and the Company's Westech business.

The pro forma income tax adjustment assumes Pinpoint was a taxable entity
subject to tax at ZOLL's incremental tax rate for the periods presented. The pro
forma operating costs are expected to be incurred as a result of the merger.

[Download Table]

1997 1998 1999
---- ---- ------
(IN THOUSANDS)

Combined net income......................................... $887 $673 $5,439
Pro forma income tax adjustment on Pinpoint's S Corporation
earnings.................................................. 149 248 392
Pro forma incremental operating costs....................... -- -- 272
---- ---- ------
Pro forma net income........................................ $738 $425 $4,775
==== ==== ======

NOTE C -- INVESTMENTS

During 1996, the Company invested $2 million in the common stock of
Lifecor, Inc., which represents approximately 6% of Lifecor's outstanding common
stock. The Company accounts for this investment at cost, which approximates
market. This investment is included in other assets on the balance sheet.

NOTE D -- PREPAID EXPENSES AND OTHER CURRENT ASSETS

Current assets consisted of:

[Enlarge/Download Table]

SEPTEMBER 26, OCTOBER 2,
1998 1999
------------- ----------
(IN THOUSANDS)

Deferred income taxes....................................... $1,124 $1,522
Insurance proceeds receivable -- See Note L................. 1,674 --
Other....................................................... 459 774
------ ------
Total prepaid expenses and other current assets............. $3,257 $2,296
====== ======

NOTE E -- STOCKHOLDERS' EQUITY

Preferred Stock: The Board of Directors is authorized to fix the
designations, relative rights, preferences and limitations on the Preferred
Stock at the time of issuance.

On June 8, 1998, the Company's Board of Directors adopted a Shareholder
Rights Plan. In connection with the Shareholder Rights Plan, the Board of
Directors declared a dividend distribution of one Preferred Stock purchase right
for each outstanding share of Common Stock to stockholders of record as of the
close of business day on June 9, 1998. Initially, these rights will not be
exercisable and will trade with the shares of the Company's Common Stock. Under
the Shareholder Rights Plan, the rights generally become exercisable if a person
becomes an "acquiring person" by acquiring 15% or more of the Common Stock of
the Company, if a person who owns 10% or more of the Common Stock of the Company
is determined to be an "adverse person" by the Board of Directors or if a person
commences a tender offer

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

that would result in that person owning 15% or more of the Common Stock of the
Company. Under the Shareholder Rights Plan, a shareholder of the Company who
beneficially owns 15% or more of the Company's Common Stock as of June 9, 1998
generally will be deemed an "acquiring person" if such shareholder acquires
additional shares of the Company's Common Stock. In the event that a person
becomes an "acquiring person" or is declared an "adverse person" by the Board,
each holder of a right (other than the acquiring person or the adverse person)
would be entitled to acquire such number of shares of Preferred Stock which are
equivalent to the Company's Common Stock having a value of twice the
then-current exercise price of the right. If the Company is acquired in a merger
or other business combination transaction after any such event, each holder of a
right would then be entitled to purchase, at the then-current exercise price,
shares of the acquiring company's common stock having a value twice the exercise
price of the right.

Stock Purchase Rights: On September 25, 1995, Pinpoint granted an employee
stock purchase rights which entitled the employee to obtain 3% of the then
existing shares at a nominal price. The stock purchase rights vest 25% at the
end of one year of employment, another 25% vesting over the next three years,
and the remaining 50% vesting over the next six years. The rights to purchase
12,650 shares of common stock automatically vested upon the acquisition of
Pinpoint. As of October 2, 1999, none of the stock purchase rights had been
exercised.

Stock Option Plans: The Company's 1983 and 1992 stock option plans provide
for the granting of options to officers and other key employees to purchase the
Company's Common Stock at a purchase price, in the case of incentive stock
options, at least equal to the fair market value per share of the outstanding
Common Stock of the Company at the time the option is granted, as determined by
the Compensation Committee of the Board of Directors. Options are no longer
granted under the 1983 plan. The options become exercisable ratably over two or
four years and have maximum duration of 10 years. The Company's Non-employee
Director Stock Option Plan provides for the granting of options to purchase
shares of Common Stock to Directors of the Company who are not also employees of
the Company or any subsidiary of the Company. The options vest in four equal
annual installments over a four year period. The options may be exercised at a
price equal to the fair market value of the Common Stock on the date the option
is granted.

The number of shares authorized for these plans was 2,210,000.
Approximately 1,208,000 shares of Common Stock are reserved for issuance under
the Company's stock option plans as of October 2, 1999.

The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 (FAS 123), "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized with
respect to the Company's stock option grants. Had compensation cost for this
plan been determined based on the fair value methodology prescribed by FAS 123,
the Company's net earnings and earnings per share would have been reduced to the
pro forma amounts indicated below.

[Enlarge/Download Table]

1997 1998 1999
-------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)

Net income -- as reported.................................. $ 887 $ 673 $5,439
Net income -- pro forma.................................... 641 313 4,956
Basic earnings per common and equivalent share-as
reported................................................. $0.13 $0.10 $ 0.82
Diluted earnings per common and equivalent share-as
reported................................................. $0.13 $0.10 $ 0.79
Basic earnings per common and equivalent share-pro forma... $0.10 $0.05 $ 0.74
Diluted earnings per common and equivalent share-pro
forma.................................................... $0.10 $0.05 $ 0.72

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The above pro forma amounts may not be representative of the effects on
reported net earnings for future years. The fair value of each option grant is
estimated on the date of the grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions used for grants in 1999 and
1998:

[Download Table]

1997 1998 1999
------- ------- -------

Dividend yield.......................................... 0% 0% 0%
Expected volatility..................................... 4.84% 6.48% 6.56%
Risk-free interest rate................................. 5.98% 4.53% 5.11%
Expected lives.......................................... 5 years 5 years 5 years

Activity as to stock options under the two plans is as follows:

[Enlarge/Download Table]

1997 1998 1999
------------------ ------------------ ------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------ --------- ------ --------- ------ ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Outstanding at beginning of year............ 731 $11.19 793 $11.02 909 $ 7.23
Granted during the year..................... 86 9.76 214 7.08 253 10.11
Exercised during the year................... (18) 3.43 -- -- (147) 7.70
Cancelled during the year................... (6) 12.55 (98) 9.05 (149) 6.06
---- ------ --- ------ ---- ------
Outstanding at end of year.................. 793 $11.02 909 $ 7.23 866 $ 7.98
---- ------ --- ------ ---- ------
Available for grant at end of year.......... 161 145 341
---- --- ----
Weighted-average fair value of options
granted during the year................... $ 4.48 $ 4.12 $ 6.83
Weighted-average exercise price of options
exercisable at end of year................ $10.08 $ 7.20 $ 7.14

The following table summarizes information about stock options outstanding
at October 2, 1999.

[Enlarge/Download Table]

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------- ----------------------------------
NUMBER WEIGHTED-AVERAGE NUMBER
OUTSTANDING AT REMAINING WEIGHTED-AVERAGE EXERCISABLE AT WEIGHTED-AVERAGE
RANGE OF EXERCISE PRICE OCTOBER 2, 1999 CONTRACTUAL LIFE EXERCISE PRICE OCTOBER 2, 1999 EXERCISE PRICE
----------------------- --------------- ---------------- ---------------- --------------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

$3.687 - $6.875 429 7.54 Years $ 6.54 142 $5.89
$7.000 - $8.750 248 7.76 Years 8.27 95 8.50
$9.000 - $10.000 72 7.92 Years 9.60 18 9.77
$10.750 - $12.313 117 9.66 Years 11.70 -- --
--- ---
$3.687 - $12.313 866 255
=== ===

Under the Company's 1992 stock option plan, 417,850 options ranging in
option price from $10.00 to $14.75 per share were repriced to $6.88 per share
during 1998. This repricing was accomplished by canceling the existing options
and issuing new options at new prices with vesting schedules recommencing as of
the date of reprice. The purpose of this transaction was to restore the
incentive effect of such options. In all other respects, the Plan remained
unchanged.

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE F -- ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued liabilities consist of:

[Enlarge/Download Table]

SEPTEMBER 26, OCTOBER 2,
1998 1999
------------- ----------
(IN THOUSANDS)

Accrued salaries and wages and related expenses............. $3,375 $2,588
Accrued warranty expense.................................... 953 1,133
Accrued income taxes........................................ -- 1,164
Accrued shareholder litigation settlement cost -- see Note
L......................................................... 1,400 --
Other accrued expenses...................................... 1,996 2,073
------ ------
Total accrued expenses and other liabilities................ $7,724 $6,958
====== ======

NOTE G -- INDEBTEDNESS

The Company maintains an unsecured working capital line of credit with its
bank. This line of credit bears interest at the bank's base rate (8.5% at
October 2, 1999 and September 26, 1998). The full amount of the line ($6.0
million) was available to the Company at October 2, 1999. On November 5, 1999,
the Company increased its line of credit to $12.0 million.

In 1994, the Company purchased land and building, which replaced leased
operating facilities, for $900,000. The land and building are mortgaged under a
$900,000 bank note bearing interest at 8.2%. The carrying value of the land and
building at September 26, 1998 and October 2, 1999 amounted to $948,000 and
$915,000, respectively. The mortgage requires equal monthly principal payments
of $7,500 plus interest over seven years, with a final payment of $270,000 due
in July 2001. The carrying amount of the long-term debt approximates the fair
value. The mortgage contains various covenants including minimum levels of net
worth, working capital and pre-tax earnings. The Company is in compliance with
all covenants of the agreement. As of October 2, 1999 the outstanding balance of
the note amounted to approximately $442,000.

Also, included in long-term debt is a promissory note (the Note) entered
into in March 1999 by Pinpoint in order to acquire an office building. The Note
bears interest at 7.95% per annum, is due in monthly installments of
approximately $18,000 with final payment due March 2014. As of October 2, 1999
the outstanding balance of the Note amounted to approximately $1,791,000.

Long-term debt consisted of:

[Enlarge/Download Table]

SEPTEMBER 26, OCTOBER 2,
1998 1999
------------- ----------
(IN THOUSANDS)

Mortgage note payable....................................... $533 $2,233
Capital lease obligations................................... 29 --
---- ------
Total long-term debt........................................ 562 2,233
Less current portion........................................ 116 164
---- ------
$446 $2,069
==== ======

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The schedule of principal payments on long term debt is as follows:

[Download Table]

2000................................................ $ 164
2001................................................ 435
2002................................................ 90
2003................................................ 98
2004................................................ 106
Thereafter.......................................... 1,340
------
$2,233
======

NOTE H -- INCOME TAXES

The provision for income taxes consists of the following:

[Download Table]

1997 1998 1999
----- ----- ------
(IN THOUSANDS)

Federal:
Current................................................. $ 942 $(277) $1,941
Deferred................................................ (722) 194 (58)
----- ----- ------
220 (83) 1,883
State:
Current................................................. 222 107 370
Deferred................................................ (176) (6) (18)
----- ----- ------
46 101 352
Foreign:
Current................................................. -- -- 37
Deferred................................................ -- -- (262)
----- ----- ------
-- -- (225)
----- ----- ------
$ 266 $ 18 $2,010
===== ===== ======

The following table shows income before income taxes:

[Download Table]

1997 1998 1999
------ ----- ------
(IN THOUSANDS)

Domestic.................................................. $1,137 $ 821 $6,479
Foreign................................................... 16 (130) 970
------ ----- ------
$1,153 $ 691 $7,449
====== ===== ======

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The income taxes recorded differed from the statutory federal income tax
rate due to:

[Download Table]

1997 1998 1999
---- ---- ------
(IN THOUSANDS)

Statutory income taxes...................................... $265 $ 21 $2,132
Tax credits, federal and state.............................. -- -- (48)
State income taxes, net of federal benefit.................. 31 32 229
Unbenefitted (benefitted) foreign losses.................... 13 -- (262)
Permanent differences....................................... (20) 35 35
Other....................................................... (23) (70) (76)
---- ---- ------
$266 $ 18 $2,010
==== ==== ======

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. The valuation allowance
decreased $262,000 as a result of the utilization of foreign net operating
losses.

Significant components of the Company's deferred tax assets and liabilities
are as follows:

[Enlarge/Download Table]

SEPTEMBER 26, OCTOBER 2,
1998 1999
------------- ----------
(IN THOUSANDS)

Deferred tax assets:
Accounts receivable and inventory......................... $ 625 $ 999
Net operating loss carryforwards.......................... 365 68
Product warranty accruals................................. 373 408
Purchased research and development........................ 336 297
Other liabilities......................................... 379 258
Valuation allowance for deferred tax assets............... (262) --
------ ------
Total deferred tax assets.............................. 1,816 2,030
Deferred tax liabilities:
Accelerated tax depreciation.............................. 731 712
Prepaid expenses.......................................... 248 143
------ ------
Total deferred tax liabilities......................... 979 855
------ ------
Net deferred tax asset................................. $ 837 $1,175
====== ======

Prior to the merger Pinpoint elected to be taxed under the Subchapter S
provisions of the Internal Revenue Code. Accordingly, Pinpoint's income or loss
is included in the stockholders' individual income tax returns.

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE I -- LEASES

The Company leases certain office and manufacturing space under operating
leases. Listed below are the future minimum rental payments required under
operating leases with non-cancelable terms in excess of one year at October 2,
1999.

[Download Table]

(IN THOUSANDS)

2000........................................... $ 414
2001........................................... 371
2002........................................... 353
2003........................................... 281
------
$1,419
======

Pinpoint is obligated under a lease agreement for formerly occupied
facilities under a lease, which expires February 1, 2000. The lease provides for
the Company to pay an annual base rent plus expenses, totaling approximately
$43,000, which increases each year as determined by the Consumer Price Index.
Effective March 11, 1999, the Company subleased this space to an unrelated
company on a full-cost pass-through basis, whereby the sublease tenant pays the
landlord directly. The Company remains obligated on the lease payments to the
extent that the sublease tenant defaults on its payments.

The Company's office leases are subject to adjustments based on actual
floor space occupied. The leases also require payment of real estate taxes and
operating costs. In addition to the office leases, the Company leases
automobiles for business use by a portion of the sales force. Total rental
expense under operating leases for 1997, 1998 and 1999 was approximately
$625,000, $728,000 and $907,000, respectively.

NOTE J -- EMPLOYEE BENEFIT PLAN

Defined contribution retirement plan -- Zoll has a defined contribution
retirement plan which contains a "401(k)" program for all employees with six
months of service who have attained 21 years of age. The Company may make a
discretionary contribution and an additional discretionary profit sharing
contribution. The Company made a $100,000 contribution to the plan in fiscal
1997, 1998 and 1999.

401(k) Salary Deferral Plan -- Beginning in 1998, Pinpoint has maintained a
retirement savings plan (the Plan) pursuant to which eligible employees may
defer compensation for income tax purposes under section 401(k) of the Internal
Revenue Code of 1986. Participants in the Plan may contribute up to 15% of their
eligible compensation which are matched by the Company at 50% of the employee
contribution up to 6% of eligible compensation. The Company may make
discretionary matching contributions to the Plan in an amount determined by its
Board of Directors. The Company recorded expense related to the Plan of
approximately $11,000 and $29,000 for the year ended September 26, 1998 and
October 2, 1999, respectively.

NOTE K -- CONCENTRATION OF CREDIT RISK

The Company sells its products primarily to hospitals, emergency care
providers and universities. The Company performs periodic credit evaluations of
its customers' financial condition and does not require collateral.

In addition, the Company sells its products to the international market.
Although the Company does not foresee a credit risk associated with these
receivables, repayment is dependent upon the financial stability of the national
economies of the customer to which it sells. In order to hedge the risk of loss
in geographical areas with historical credit risks, in some cases the Company
requires letters of credit from its

F-16

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

foreign customers. Export sales accounted for 21%, 18% and 19% of the Company's
total revenues in 1997, 1998 and 1999, respectively.

The Company maintains reserves for potential trade receivable credit
losses, and such losses have been within management's expectations.

Certain materials and components used in the Company's devices and
electrodes are purchased from various single sources. Although the Company
believes that alternative sources of supply for such materials and components
could be developed over a relatively short period of time, the failure to secure
such alternative sources when needed could have a material adverse effect on the
Company's business.

NOTE L -- CONTINGENCIES

In the course of normal operations, the Company is involved in litigation
arising from commercial disputes and claims from former employees which
management believes will not have a material impact on the Company's financial
position or its results of operations.

During the quarter ended December 28, 1996, the Company incurred a charge
of approximately $1,300,000 to cover the litigation costs to defend itself in a
shareholder lawsuit initiated in 1994. On July 9, 1998, the Company announced an
agreement in principle concerning the settlement of the lawsuit against it and
certain officers. The settlement, amounting to $1,500,000, was approved by the
court on October 5, 1998. There was no financial impact as a result of the
settlement. Included in accrued expenses at September 26, 1998 is the unpaid
settlement cost and remaining accrued legal fees related to the litigation. A
similar amount due from the insurance company is included in other current
assets at September 26, 1998. In November 1998, the Company received the
insurance reimbursements for the claim and legal costs and paid the remaining
settlement due to the shareholders.

NOTE M -- ACQUISITION

On November 6, 1996, the Company acquired the assets of the mobile
computing business of Westech Information Systems, Inc. for approximately
$1,500,000 in cash. The acquisition was accounted for as a purchase and the
purchase price was allocated to the assets acquired and liabilities assumed
based on their respective fair values at the date of acquisition. The excess of
the cost over the fair value of net assets acquired is being amortized over
fifteen years. In connection with the acquisition, the Company incurred a
non-recurring charge of $1,000,000 for acquired in-process research and
development which was charged to operations because in management's opinion,
technological feasibility for the acquired research and development had not been
established. The Company's combined results of operations include the operations
of the mobile computing business of Westech Information Systems, Inc. from
November 1996.

The following unaudited pro forma information for fiscal year 1997 shows
the results of operations as if the transaction occurred at the beginning the
year of acquisition (in thousands, except per share amounts):

[Download Table]

Net sales................................................... $57,935
Net income.................................................. 876
Basic earnings per common share............................. $ 0.13
Diluted earnings per common and equivalent share............ $ 0.13

The pro forma results of operations are not necessarily indicative of the
actual results of operations that would have occurred had the purchase actually
been made at the beginning of the respective periods and is not necessarily
indicative of results that may be obtained in the future.

F-17

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE N -- SEGMENT AND GEOGRAPHIC INFORMATION

Segment information: The Company reports revenue information to the chief
operating decision maker for four operating segments, determined on the type of
customer or product. These segments include the sale of cardiac resuscitation
devices and accessories and data collection management software to the hospital
market and to the prehospital market in North America, the sale of
disposable/other products and the sale of cardiac resuscitation devices and
accessories and disposable electrodes to the international market. Each of these
segments has similar characteristics, manufacturing processes, distribution and
marketing strategies, as well as a similar regulatory environment.

In order to make operating and strategic decisions, the Company's chief
operating decision maker evaluates revenue performance based on the worldwide
revenues of each segment and, due to shared infrastructures, profitability based
on an enterprise-wide basis. Net sales by segment were as follow:

[Download Table]

1997 1998 1999
------- ------- -------
(IN THOUSANDS)

Hospital Market -- North America devices.............. $21,562 $19,962 $30,868
Pre-hospital Market -- North America devices.......... 12,721 14,914 19,115
Other -- North America................................ 11,855 12,841 15,035
International Market -- excluding North America....... 11,695 9,803 13,664
------- ------- -------
$57,833 $57,520 $78,682
======= ======= =======

The Company reports assets on a combined basis to the chief operating
decision maker.

Geographic information: Net sales by major geographical area, determined
on the basis of destination of the goods, are as follow:

[Download Table]

1997 1998 1999
------- ------- -------
(IN THOUSANDS)

United States......................................... $45,523 $46,952 $63,838
Foreign............................................... 12,310 10,568 14,844
------- ------- -------
$57,833 $57,520 $78,682
======= ======= =======

In each of the years in the three year period ended October 2, 1999, no
single customer represented over 10% of the Company's combined net sales.

NOTE O -- QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data for 1998 and 1999 is as follows:

[Enlarge/Download Table]

QUARTER ENDED
------------------------------------------------------
DECEMBER 27, MARCH 28, JUNE 27, SEPTEMBER 26,
1997 1998 1998 1998
------------ --------- -------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

1998
Net sales.................................... $13,019 $14,354 $13,326 $16,821
Gross profit................................. 7,447 8,450 7,706 9,649
Income (loss) from operations................ 273 734 (1,148) 419
Net income (loss)............................ 305 743 (730) 355
Basic earnings (loss) per common share....... $ 0.05 $ 0.12 $ (0.12) $ 0.06
Diluted earnings (loss) per common and
equivalent share........................... $ 0.05 $ 0.11 $ (0.11) $ 0.05

F-18

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ZOLL MEDICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

[Enlarge/Download Table]

QUARTER ENDED
-----------------------------------------------
JANUARY 2, APRIL 3, JULY 3, OCTOBER 2,
1999 1999 1999 1999
---------- -------- ------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

1999
Net sales......................................... $16,056 $17,941 $20,813 $23,872
Gross profit...................................... 9,524 10,502 12,314 13,856
Income from operations............................ 876 1,283 2,073 3,262
Net income........................................ 702 936 1,534 2,267
Basic earnings per common share................... 0.11 0.14 0.23 0.34
Diluted earnings per common and equivalent
share........................................... 0.10 0.14 0.22 0.32

F-19

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--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1,500,000 SHARES
[ZOLL LOGO]
ZOLL MEDICAL CORPORATION

COMMON STOCK

---------------------------------
PROSPECTUS

FEBRUARY 22, 2000
---------------------------------

SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY
ADAMS, HARKNESS & HILL, INC.

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

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B4’ Filing	Date	First	Last	Other Filings

	9/30/00	19		10-K405
	6/15/00	55
	2/28/00	1
Filed on:	2/23/00			S-3MEF
	2/22/00	1	67	S-3/A
	2/8/00	45		DEF 14A
	2/1/00	62
	1/25/00	41	42
	1/19/00	42
	1/10/00	45		DEF 14A
	1/7/00	42		SC 13G/A
	1/1/00	6	53	10-Q
	11/12/99	48
	11/5/99	59
	10/15/99	22	53	8-K, 8-K/A
	10/2/99	19	64	10-K405
	3/11/99	62
	2/11/99	42		SC 13G
	1/7/99	42
	1/2/99	21	53	10-Q
	10/5/98	63
	9/30/98	49
	9/26/98	19	63	10-K405
	7/9/98	63
	6/9/98	56	57
	6/8/98	56		8-K
	12/31/97	53	55
	9/27/97	7	55	10-K
	12/28/96	63		10-Q
	11/6/96	63
	9/28/96	51		10-K
	9/25/95	57
	7/16/92	19
	5/15/92	45
				List all Filings

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Filing Submission 0000950135-00-001023 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Zoll Medical Corp – ‘424B4’ on 2/23/00

On: Wednesday, 2/23/00 · Accession #: 950135-0-1023 · File #: 333-94793

Prospectus — Rule 424(b)(4)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Prospectus — Rule 424(b)(4)
Filing Table of Contents