ALARIS Medical Provides Third Quarter Financial Outlook.Business Editors/Health & Medical Writers SAN DIEGO--(BW HealthWire)--Oct. 10, 2000 ALARIS Medical, Inc. (AMEX AMEX See: American Stock Exchange :AMI) indicated today it will report lower than expected revenue for the quarter ended September 30, 2000. Additionally, the sales shortfall combined with lower gross margins will result in a shortfall in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become . The Company anticipates, however, being in compliance with its bank covenants as a result of the previously announced sale of its Instromedix division, which was completed on August 31, 2000. Sales for the quarter are estimated to be between $92 million and $93 million, excluding Instromedix, which will be treated as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Several analysts had estimated the Company could post sales of $100 million or more in the quarter, including about $3 million for Instromedix. Most of the shortfall is in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. business. Gross margin is anticipated to be approximately 45 percent of sales, compared with earlier expectations in the high forties. Product mix, manufacturing variances and, to a lesser degree, the strong U.S. dollar will adversely affect margins. The combination of lower sales and lower gross margins, should result in Adjusted EBITDA for the quarter of between $19 million and $20 million compared with previous expectations of between $22 million and $24 million. Adjusted EBITDA for the quarter will exclude approximately $6 million in nonrecurring restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. previously announced by the Company. The Company had previously anticipated reporting a slight loss for the quarter. It currently appears that ALARIS Medical will report a net loss of between $0.09 and $0.11 per share. This estimate includes the gain from the sale of Instromedix of approximately $0.03 per share, and a loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the (including the restructuring charge) of between $0.12 and $0.14 per share. The sale in the quarter of the Instromedix division will add $17 million of EBITDA for bank covenant purposes to the $19 million to $20 million of Adjusted EBITDA now estimated for the quarter. For this reason, the Company anticipates being in compliance with all of its bank covenants for both the third quarter and full year 2000. The third quarter preliminary results have caused the Company to adjust its expectations for the full year. Full year sales are now estimated at about $375 million to $380 million, with Adjusted EBITDA of $80 million to $82 million, after adjusting for total restructuring charges of approximately $7 million. These results would mean approximately breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations performance on the net income line for the fourth quarter of 2000. To facilitate analysis, attached is a schedule of the Company's quarterly net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the years in which it owned the Instromedix division. The Company is scheduled to report its third quarter results on November 2nd, 2000 and will have detailed comments on its results of operations at that time. ALARIS Medical, Inc., through its operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. ALARIS Medical Systems, Inc., is known for its IMED IMED International Medical Education Directory (R) and IVAC IVAC Islington Voluntary Action Council (England, UK) IVAC Insert Valid Access Card (satellite TV hacking) IVAC International Video & Audio Convention IVAC Idle Air Control Valve (R) brand names of intravenous infusion therapy systems. The Company's principal line of business is the design, manufacture and marketing of intravenous infusion therapy products, patient monitoring instruments and related disposables. In addition to its San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. world headquarters and manufacturing facility, the Company also operates manufacturing facilities in Creedmoor, NC; Basingstoke, Hampshire, UK; and Tijuana, Mexico. Additional information on ALARIS Medical can be found at www.alarismed.com. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as defined in the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Persons reading this release are cautioned that such forward-looking statements involve risks and uncertainties, including the effect of legislative and regulatory changes affecting the health care industry, the potential of increased levels of competition, technological changes, the dependence of ALARIS Medical upon the success of new products and ongoing research and development efforts including obtaining regulatory approvals, restrictions contained in the instruments governing ALARIS Medical's indebtedness, and the significant leverage to which it is subject. Such risk factors are detailed in the Securities and Exchange Commission filings of ALARIS Medical, Inc., including Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 1999. ALARIS Medical assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.
ALARIS Medical, Inc.
Quarterly Net Sales
1998 to Date
($000s)
Quarter Quarter Quarter Quarter Year
Ended Ended Ended Ended Ended
March 31, June 30, Sept. 30, Dec. 31, Dec. 31,
1998 Sales
North America $ 56,070 $ 59,899 $ 61,107 $ 69,555 $246,631
International 30,901 30,784 29,466 33,856 125,007
------ ------ ------ ------ -------
Sales from
continuing
operations 86,971 90,683 90,573 103,411 371,638
Instromedix -- -- 3,654 4,776 8,430
Total sales as
previously ------ ------ ------ ------- -------
reported $ 86,971 $ 90,683 $ 94,227 $108,187 $380,068
1999 Sales
North America $ 57,336 $ 67,255 $ 62,804 $ 76,036 $263,431
International 31,997 28,692 28,407 35,065 124,161
------ ------ ------ ------ -------
Sales from
continuing
operations 89,333 95,947 91,211 111,101 387,592
Instromedix 4,103 3,668 2,780 3,835 14,386
Total sales as
previously ------ ------ ------ ------- -------
reported $ 93,436 $ 99,615 $ 93,991 $114,936 $401,978
2000 Sales
North America $ 58,170 $ 65,612
International 29,919 28,831
------ ------
Sales from
continuing
operations 88,089 94,443
Instromedix 3,188 3,299
Total sales as
previously ------ ------
reported $ 91,277 $ 97,742
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