ALARIS Medical Reports Financial Results Exceed Third Quarter Expectations.Business Editors and Health/Medical Writers SAN DIEGO--(BW HealthWire)--Nov. 1, 2001 ALARIS Alaris is the brand name of the regional rail network run by the Spanish national rail company RENFE that connects the major cities of Madrid and Valencia. Alaris services currently use ETR 490 trainsets. Medical Inc. (AMEX AMEX See: American Stock Exchange :AMI) today reported sales of $103.6 million for the third quarter of 2001, an increase of 13% in constant currency (11% as reported) compared with the same period in 2000. Adjusted 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 increased $1.0 million, or 5%, to $21.3 million for the quarter ended September September: see month. 30, 2001 versus $20.3 million for the same quarter in the prior year. Income from operations was $13.4 million for the third quarter of 2001 compared with $5.9 million for the same quarter in the prior year. The Company reported a net loss of $1.2 million or $.02 per share for the quarter, compared with a net loss of $6.2 million or $.11 per share a year ago. Sales were higher than previously expected for the quarter which was forecasted in the Company's second quarter earnings release of August 2, 2001 to be at or slightly above second quarter sales of $98.5 million. Adjusted EBITDA was also higher than the previously expected $18-20 million range. David L. Schlotterbeck, president and chief executive officer said, "We are very pleased to report significant growth in our business and results that exceed expectations. This is especially satisfying during this time when many companies are experiencing a general slow down and contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction of their businesses. This improved operating performance is a result of our continued focus on developing high impact, high quality products that meet our customers' needs while also improving our manufacturing effectiveness and efficiency." Sales Sales increased $10.4 million, or 13% on a constant currency basis (11% as reported) for the quarter ended September 30, 2001 compared with the same quarter last year. North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. sales were $74.5 million, an increase of $9.8 million, or 15%, compared with the third quarter of 2000. The increase was primarily due to the first sales of the Company's MEDLEY med·ley n. pl. med·leys 1. An often jumbled assortment; a mixture: "That night he dreamed he was traveling in a foreign country, only it seemed to be a medley of all the countries he'd ever been to and (TM) Patient Care System which totaled $5.5 million for the quarter as well as increased volume of drug infusion INFUSION, med. jur. A pharmaceutical operation, which consists in pouring a hot or cold fluid upon a substance, whose medical properties it is desired to extract. Infusion is also used for the product of this operation. Although infusion differs from decoction, (q.v. disposable disposable Nursing adjective Referring to that which is discarded or disposed of noun An item used in health care-related Pt contact which is discarded after use–eg masks, gloves, gowns, needles, paper products, syringes, wipes. See Biohazardous waste. administration sets. The MEDLEY(TM) System is the first product to include the Company's proprietary Guardrails(TM) Advisory System medication error medication error Malpractice An error in the type of medication administered or dosage. See Adverse effect, Error. alert software. International sales were $29.1 million, an increase of 8% in constant currency and 2% as reported. The increase was primarily due to increased volume of drug infusion disposable administration sets and patient monitoring instruments. For the nine months ended September 30, 2001, sales were $301.0 million, an increase of $24.2 million or 11% in constant currency (9% as reported) compared with $276.8 million reported for the same period in the prior year. The increase in sales is primarily due to increased volumes of both drug infusion instruments and disposable administration sets. Instrument and disposable revenues in patient monitoring also increased over the prior year comparative period. Gross Margin Gross profit increased $7.7 million, or 18%, during the quarter ended September 30, 2001 compared with the same quarter last year. This increase was due to the increase in sales and an increase in the gross margin percentage. The gross margin percentage increased to 48.1% in the third quarter of 2001, from 45.2% in the third quarter of 2000. The improved margin percentage was due to continuing manufacturing efficiencies and improvements and included the benefits of higher production volumes and lower product warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. and repair costs. Selling and Marketing Expenses Selling and marketing expense increased $2.0 million, or 12%, during the quarter ended September 30, 2001 compared with the same period in 2000 due to higher sales volume resulting in increases in sales compensation and distribution costs distribution costs distribute npl → Vertriebskosten pl . Also contributing to this increase was higher marketing expenses related to new product launch strategies. As a percentage of sales, selling and marketing expenses increased to 18.6% for the third quarter of 2001 from 18.5% in the third quarter of 2000. General and Administrative Expenses General and administrative expenses increased $2.6 million, or 28%, during the three months ended September 30, 2001 compared with the three months ended September 30, 2000. As a percentage of sales, general and administrative expenses increased to 11.5% in the third quarter of 2001 from 10.0% in the third quarter of 2000. The increase is due to higher costs for employee benefits and consulting expenses. The higher benefits costs include significantly higher bonus accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. based on the Company's turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. . A large portion of these bonuses is not anticipated to be repeated in 2002. Research and Development Expenses Research and development expenses increased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.6 million, or 32%, during the three months ended September 30, 2001 compared with the three months ended September 30, 2000. The increase is due to spending associated with new product development, including salaries, benefits and consulting costs, and is consistent with the Company's strategic plans to increase the level of investment in its new product pipeline. As a percentage of sales, spending on research and development increased to 6.3% for the third quarter of 2001, compared with 5.3% for the third quarter of 2000. Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and Non-Recurring Charges There were no restructuring or non-recurring charges in the third quarter of 2001. During the third quarter of 2000, the Company incurred $6.1 million in restructuring and non-recurring charges representing activities that involved the Company's manufacturing facilities in Creedmoor Creedmoor is the name of a number of places in the United States of America:
Income from Operations Income from operations increased $7.5 million during the three months ended September 30, 2001 compared with the three months ended September 30, 2000 due primarily to higher sales and increase in gross profit. Interest Expense Interest expense increased $0.6 million, or 4%, during the three months ended September 30, 2001 compared with the three months ended September 30, 2000 due to increased interest accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the on the Company's 11-1/8% senior discount notes as well as higher interest rates in 2001 on the Company's other outstanding debt. Other, net Other expense improved $1.6 million from expense of $1.5 million for the third quarter of 2000 to income of $0.1 million for the third quarter of 2001. This is primarily due to lower foreign currency transaction losses resulting from changes in foreign currency rates during the quarter as well as the implementation in 2001 of additional foreign currency hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. programs designed to reduce exposure to changes in currency rates. Financial Position ALARIS Medical reported long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. (including current portion) of $522.7 million at September 30, 2001 compared with $523.8 million at December December: see month. 31, 2000. Cash provided by operations was approximately $40.5 million for first nine months of 2001 compared with $25.7 million for the first nine months of 2000. The Company had $52.8 million in cash at the end of September 2001 compared with $30.6 million at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2000. Recent Key Developments -- ALARIS Medical Systems, Inc. completed a previously announced private offering of $170 million of senior secured notes due in 2006. The joint managers of the offering were UBS Warburg and Bear, Stearns & Co. Inc. The net proceeds of the offering, along with existing cash, were used primarily to eliminate the Company's bank debt. Based on strong demand, the offering was increased from its originally anticipated size of $150 million to $170 million at an interest rate of 11-5/8%. The additional funds were used primarily to repurchase $20 million aggregate principal amount of the Company's 9-3/4% subordinated notes due 2006 at a discount to par. -- On September 7, the Company announced a plan to meet in total its obligations with regard to the January 15, 2002 maturity of its $16.2 million 7-1/4% convertible debentures. With the completion of the $170 million senior secured notes financing, this plan is being implemented. -- On October 3, the Company announced a long-term agreement with McKesson Corporation to develop and co-market innovative new products designed to reduce intravenous medication errors, a significant cause of patient harm and a major factor in the rising cost of healthcare in the United States and throughout the world. -- The Company has begun the first commercial shipments of its MEDLEY(TM) Patient Care System, which include its Guardrails(TM) Advisory System software to prevent bedside medication errors involving intravenous medications. -- During the quarter, the Company released the ASENA(TM) GW large volume pump for the international market. The ASENA(TM) GW is a small, lightweight, highly-featured device for delivery of nutritional products and hydration therapy. -- The ALARIS AEP(TM) monitor was introduced to North American customers in October at the Annual Meeting of the American Society of Anesthesiologists in New Orleans. This non-invasive device is used for real-time monitoring of the level of consciousness of sedated patients. This device has FDA 510(k) clearance and will be available for sale in North America in the first quarter of 2002. Outlook As stated in the Company's press release of October October: see month. 9, 2001, fourth quarter sales are forecasted to be 8% to 10% higher than fourth quarter sales for 2000. This would result in full year 2001 sales of approximately $411 million to $413 million, an increase of approximately 9% over 2000. Adjusted EBITDA is forecasted to be $23 million to $25 million for the fourth quarter and $82 million to $84 million for the full year. The Company has not completed all of its business planning for 2002 but currently anticipates sales growth for 2002 should again be approximately 9% with Adjusted EBITDA growing slightly faster than the rate of sales growth. This planned performance would result in positive earnings per share for the full year 2002. ALARIS Medical Inc., through its wholly-owned operating company operating company A business that engages in transactions with outsiders. , ALARIS Medical Systems Inc., is a leading developer, manufacturer and provider of integrated intravenous intravenous /in·tra·ve·nous/ (-ve´nus) within a vein or veins.intrave´nously in·tra·ve·nous adj. Abbr. IV Within or administered into a vein. infusion therapy and patient monitoring instruments and related disposables, accessories and services. ALARIS Medical's primary brands, ALARIS(R), 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), are recognized throughout the world. ALARIS Medical's products are distributed to more than 120 countries worldwide. In addition to its San Diego world headquarters and manufacturing facility, ALARIS Medical also operates manufacturing facilities in Creedmoor, N.C.; Basingstoke, U.K.; and Tijuana Tijuana (tēhwä`nä), city (1990 pop. 698,752), Baja California state, NW Mexico, just south of the U.S. border. It is a gaudy border resort, noted for its racetracks and bullfights. An irrigated agricultural area surrounds the city. , Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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 (including the MEDLEY(TM) Patient Care System) and ongoing research and development efforts including obtaining regulatory approvals, restrictions contained in the instruments governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. the company's indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , and the significant leverage to which the company 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, 2000. The company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.
ALARIS MEDICAL INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollar and share amounts in thousands, except per share data)
ASSETS
September 30, December 31,
2001 2000
(Unaudited)
Current assets:
Cash $ 52,760 $ 30,630
Receivables, net 72,201 79,790
Inventories 70,580 62,324
Prepaid expenses and other current
assets 33,864 33,049
Total current assets 229,405 205,793
Net investment in sales-type leases, less
current portion 25,818 25,920
Property, plant and equipment, net 55,230 59,988
Other non-current assets 27,531 28,481
Intangible assets, net 241,087 249,803
$ 579,071 $ 569,985
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
debt $ 45,478 $ 19,871
Accounts payable 24,552 22,077
Accrued expenses and other current
liabilities 58,105 46,262
Total current liabilities 128,135 88,210
Long-term debt 477,236 503,974
Other non-current liabilities 19,936 13,535
Total non-current liabilities 497,172 517,509
Contingent liabilities and commitments
Stockholders' equity:
Common stock, authorized 75,000
shares at $.01 par value; issued
59,297 and 59,296 shares at
September 30, 2001 and December
31, 2000, respectively 593 593
Capital in excess of par value 148,992 148,992
Accumulated deficit (183,805) (175,753)
Treasury stock (2,027) (2,027)
Accumulated other comprehensive
loss (9,989) (7,539)
Total stockholders' equity (46,236) (35,734)
$ 579,071 $ 569,985
ALARIS MEDICAL INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER DATA
(Unaudited)
(Dollar and share amounts in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Sales $ 103,624 $ 93,214 $ 300,983 $ 276,795
Cost of sales 53,776 51,089 154,756 149,125
Gross margin 49,848 42,125 146,227 127,670
Selling and marketing
expenses 19,301 17,254 57,679 54,036
General and administrative
expenses 11,944 9,320 36,836 28,921
Research and development
expenses 6,480 4,911 20,108 15,899
Restructuring and other non-recurring
charges -- 6,067 6,899 6,602
Total operating
expenses 37,725 37,552 121,522 105,458
Lease interest income 1,252 1,300 3,905 3,753
Income from
operations 13,375 5,873 28,610 25,965
Other income (expenses):
Interest income 454 345 1,674 834
Interest expense (15,693) (15,057) (44,981) (43,648)
Other, net 56 (1,503) (1,084) (361)
Total other expense (15,183) (16,215) (44,391) (43,175)
Loss before income
taxes (1,808) (10,342) (15,781) (17,210)
Benefit from income
taxes (592) (2,818) (3,992) (4,300)
Loss from continuing
operations (1,216) (7,524) (11,789) (12,910)
Discontinued operations:
Loss from operations of discontinued business
(net of tax ) -- (526) -- (1,308)
Gain on disposal of business (net of
tax) -- 1,839 3,737 1,839
Total income from discontinued
operations -- 1,313 3,737 531
Net loss $ (1,216) $ (6,211) $ (8,052) $ (12,379)
Loss per common share from continuing
operations $ (.02) $ (.13) $ (.20) $ (.22)
Discontinued
operations $ -- $ .02 $ .06 $ .01
Net loss per common
share $ (.02) $ (.11) $ (.14) $ (.21)
Weighted average common shares outstanding
assuming no dilution 58,845 58,845 58,845 58,845
Weighted average common shares outstanding
assuming dilution 58,845 58,845 58,845 58,845
Income from
operations $ 13,375 $ 5,873 $ 28,610 $ 25,965
Depreciation and
amortization 7,889 8,358 23,547 24,386
Restructuring and other
non-recurring charges -- 6,067 6,899 6,602
Adjusted EBITDA $ 21,264 $ 20,298 $ 59,056 $ 56,953
Adjusted EBITDA represents income from operations before restructuring, integration and other non-recurring charges and depreciation and amortization. Adjusted EBITDA does not represent net income or cash flows from operations, as these terms are defined under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , and should not be considered as an alternative to net income as an indicator of the company's operating performance or to cash flows as a measure of liquidity. The company has included information concerning Adjusted EBITDA herein because it understands that such information is used by certain investors as one measure of an issuer's historical ability to service debt. Restructuring and other one time non-recurring charges are excluded from Adjusted EBITDA as the company believes that the inclusion of these items would not be helpful to an investor's understanding of the company's ability to service debt. The company's computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. of Adjusted EBITDA may not be comparable to similar titled measures of other companies. |
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