ALARIS Medical Reports First Quarter Financial Results; Completes First Regulatory Milestone.Business/Medical Editors SAN DIEGO--(BUSINESS WIRE)--May 3, 2000 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 $91.3 million for the quarter ended March 31, 2000, a decrease of $2.2 million, or 2 percent, when compared with the same period in 1999. The decrease in sales was primarily due to lower International sales. The Company believes that first quarter work-down by customers of Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 safety stock of dedicated disposables adversely affected sales worldwide. Income from operations was $7.7 million for the first quarter of 2000, compared with $9.6 million for the same quarter in the prior year. 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 decreased $4.8 million to $16.1 million for the first quarter of 2000 versus $20.9 million for the same period in the prior year. First quarter 1999 income from operations included $2.1 million for non-recurring integration charges which was excluded from that period's Adjusted EBITDA. The Company reported a net loss of $5.2 million or $.09 per share for the quarter, compared with a net loss of $.7 million or $.01 per share a year ago. The sales, Adjusted EBITDA and net loss per share were all in line with the Company's expectations for the quarter. David L. Schlotterbeck, president and chief executive officer, commented, "Consistent with other multinational companies, our international sales for the quarter were adversely impacted by the increasing strength of the U.S. dollar against the Euro. We also carried an above-average backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of international pump orders into the second quarter, as we work to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale our production of new products in the United Kingdom." Schlotterbeck continued, "In the U.S., we are pleased with our continued growth of instrument placements. We also continue to focus on improving regulatory compliance and the overall quality of our product offerings." The Company estimates that during the first quarter of 2000, Company personnel devoted over 150,000 hours toward resolving regulatory compliance issues associated with the warning letter the Company received from the U.S. Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) in October October: see month. 1999. In April 2000, as requested by the agency, independent regulatory experts audited the Company's progress to date. Based on the audit, on April 29, 2000 David L. Schlotterbeck certified See certification. to the FDA that, to the best of his knowledge, ALARIS Medical has initiated or completed all corrections called for in the report issued by the independent consultant. ALARIS Medical is now awaiting the FDA's review of its progress. While the Company is not able to determine if or when the FDA will be satisfied with the Company's actions, ALARIS Medical looks forward to continuing to work with the FDA to ensure resolution of this matter as quickly as possible. Sales Sales decreased $2.2 million, or 2 percent, for the quarter ended March 31, 2000, as 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 increased $.8 million, or 2 percent, compared with the first quarter of 1999. North America drug infusion instrument revenue increased by approximately $2.9 million as instrument placements increased 46 percent over the unusually low first quarter of 1999. The increase in North America instrument sales was significantly offset by a decrease in sales of drug infusion 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. Disposable set revenue was lower than a year ago in major markets worldwide. The Company estimates that about $3 million of its dedicated disposable sets were purchased in 1999 as safety stock in anticipation of possible Y2K problems Y2K problem or Y2K bug: see Year 2000 problem. (Year 2000 problem) The inability of older hardware and software to recognize the century change in a date. at year-end. The Company believes that most of this inventory was worked off in the first quarter of 2000. The increase in total North America sales in the first quarter was more than offset by a decrease in International sales of $2.1 million, or 7 percent, compared with the first quarter of 1999. Sales decreased approximately $3.3 million in the UK, the Company's largest international market. The Company believes the UK decrease was due in part to the Y2K disposables issue described above and in part to a limitation in governmental funds available for healthcare expenditures in this quarter, which was the final quarter of the UK's fiscal year. Additionally, foreign currency rate changes had an adverse effect on International sales in the first quarter of 2000. The majority of the Company's international sales are denominated in foreign currency. Due to a stronger U.S. dollar in 2000 compared with the actual foreign currency exchange rates in effect during 1999, translation of 2000 International sales were adversely impacted by $1.6 million, or 5 percent. Using constant exchange rates, International sales decreased 2 percent. Instromedix sales decreased $.9 million during the quarter to $3.2 million, compared with a strong first quarter a year ago of $4.1 million. Gross Margin Gross margin decreased $5.2 million, or 11 percent, during the quarter ended March 31, 2000, compared with the same quarter last year. The gross margin percentage decreased to 46.6 percent in the first quarter of 2000, from 51.2 percent in the first quarter of 1999. The margin percentage for the first quarter of 1999 was unusually high due to low instrument placement during that period. Contributing to the margin decrease in 2000 was the overall worldwide mix of increased instrument sales and lower disposables sales, lower international sales which typically carry higher margins than U.S. sales, as well as less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. production cost in the first quarter of 2000 compared with the same quarter last year. Selling and Marketing Expense Selling and marketing expense decreased $.4 million, or 2 percent, during the quarter ended March 31, 2000, compared with the same period in 1999 due to lower sales volume and the effect of spending controls initiated in the second quarter of last year. As a percentage of sales, selling and marketing expenses remained constant at 21.3 percent for the first quarter of 2000 and 1999. General and Administrative Expense General and administrative expense decreased $1.1 million, or 10 percent, during the quarter ended March 31, 2000, compared with the same period in the prior year. This decrease is primarily due to lower amortization expense in 2000 as a result of the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of certain Instromedix intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. during the fourth quarter of 1999 and from other intangibles becoming fully amortized during the prior year. These decreases were partially offset by increased information technology costs for the Company's new international operating system operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. implemented in late 1999. Research and Development Expense Research and development expense increased approximately $.3 million, or 5 percent, during the quarter ended March 31, 2000, primarily due to increased activities associated with the later development stages of various international engineering projects. Interest Expense Interest expense increased $.7 million, or 5 percent, during the quarter ended March 31, 2000, compared with the same period in the prior year 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 percent senior discount notes as well as higher interest rates in 2000 on the Company's other outstanding debt. 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 $541.1 million at March 31, 2000, compared with $540.9 million at December 31, 1999. Cash provided by operations was approximately $8 million for the quarter. The Company had $22.2 million in cash on the balance sheet at March 31, 2000, compared with $23.6 million at year-end 1999, and is in compliance with all of its bank covenants. 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 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 systems and Instromedix(R) cardiac event cardiac event Coronary event Cardiology Any severe or acute cardiovascular condition including acute MI, unstable angina, or cardiac mortality recorders and pacemaker pacemaker Source of rhythmic electrical impulses that trigger heart contractions. In the heart's electrical system, impulses generated at a natural pacemaker are conducted to the atria and ventricles. follow-up follow-up, n the process of monitoring the progress of a patient after a period of active treatment. follow-up subsequent. follow-up plan 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 Hampshire, county (1991 pop. 1,511,900), 1,503 sq mi (3,893 sq km), S central England. Winchester is the county town. The terrain is undulating and is crossed by two chalk downs, rising in places to more than 800 ft (244 m). , 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. , which are based largely upon the Company's expectations and involve risks and uncertainties, including, without limitation, the effect of legislative and regulatory changes affecting the health care industry; the potential of increased levels of competition; technological changes; the dependence of the Company upon the success of new products and ongoing research and development efforts; 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. ; the significant leverage to which the Company is subject; and other matters referred to in this release. 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, INC
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollar and share amounts in thousands, except per share data)
ASSETS
March 31, December 31,
2000 1999
(Unaudited)
Current assets:
Cash $ 22,180 $ 23,559
Receivables, net 76,842 84,889
Inventories 79,736 76,769
Prepaid expenses
and other current assets 26,762 25,086
Total current assets 205,520 210,303
Net investment in sales-type
leases, less current portion 24,773 24,407
Property, plant and equipment, net 66,610 68,480
Other non-current assets 29,714 28,157
Intangible assets, net 272,115 275,443
$ 598,732 $ 606,790
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 16,169 $ 13,769
Accounts payable 22,252 25,169
Accrued expenses
and other current liabilities 45,769 44,606
Total current liabilities 84,190 83,544
Long-term debt 524,922 527,082
Other non-current liabilities 17,157 17,115
Total non-current liabilities 542,079 544,197
Contingent liabilities and
commitments
Common stock and other
stockholders' equity:
Common stock, authorized 75,000 shares
at $.01 par value; issued
and outstanding - 59,296 shares
and 59,295 shares at March 31, 2000
and December 31, 1999, respectively 593 593
Capital in excess of par value 148,992 148,991
Accumulated deficit (169,391) (164,195)
Treasury stock (2,027) (2,027)
Accumulated other comprehensive loss (5,704) (4,313)
Total common stock and
other stockholders' equity (27,537) (20,951)
$ 598,732 $ 606,790
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
March 31,
2000 1999
Sales $ 91,277 $ 93,436
Cost of sales 48,714 45,634
Gross profit 42,563 47,802
Selling and marketing expenses 19,474 19,917
General and administrative expenses 10,161 11,235
Research and development expenses 6,331 6,047
Integration and other non-recurring
charges -- 2,099
Total operating expenses 35,966 39,298
Lease interest income 1,130 1,061
Income from operations 7,727 9,565
Other income (expenses):
Interest income 223 322
Interest expense (14,315) (13,653)
Other, net (1,331) (459)
Total other expense (15,423) (13,790)
Loss before income taxes (7,696) (4,225)
Benefit from income taxes (2,500) (3,500)
Net loss $ (5,196) $ (725)
Net loss per common share
assuming no dilution $ (.09) $ (.01)
Net loss per common share
assuming dilution $ (.09) $ (.01)
Weighted average common shares
outstanding assuming no dilution 58,845 58,777
Weighted average common shares
outstanding assuming dilution 58,845 58,777
Income from operations $ 7,727 $ 9,565
Depreciation and amortization 8,375 9,194
Integration and other
non-recurring charges -- 2,099
Adjusted EBITDA $ 16,102 $ 20,858
Adjusted EBITDA represents income from operations before 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). , integration and other non-recurring charges, non-cash purchase accounting 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. Integration 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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