ALARIS Medical Reports Second Quarter Financial Results; Company Also Reports Regulatory Progress.Business Editors and Health/Medical Writers SAN DIEGO--(BUSINESS WIRE)--Aug. 2, 2000 ALARIS Medical, Inc., (AMEX AMEX See: American Stock Exchange :AMI) today reported 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 $2.6 million, or 15%, to $20.2 million for the quarter ended June 30, 2000 versus $17.6 million for the same quarter in the prior year. Sales were $97.7 million for the second quarter of 2000, a decrease of $1.9 million, or 2%, when compared with the same period in 1999. Income from operations was $11.1 million for the second quarter of 2000 compared with $6.9 million for the same quarter in the prior year. The Company reported a net loss of $1.0 million or $.02 per share for the quarter, compared with a net loss of $7.4 million or $.13 per share a year ago. President and Chief Executive Officer David L. Schlotterbeck said, "While we have made progress this quarter in reducing the backorder on our products, particularly in Europe, a strong U.S. dollar continues to adversely impact our reported sales and profits. As we announced on July 7, our first half performance has led us to accelerate plans to restructure parts of our worldwide operations to achieve cost savings. We plan to take charges totaling approximately $6.5 million for this project. When fully implemented, we estimate that this 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). will save us $6.0 million annually." Schlotterbeck continued, "Our continued focus on improving our regulatory compliance is having a positive impact. We were recently informed by 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. ) that they will no longer defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. approval of premarket submissions or export certificates related to our products." The Company had previously reported that new product approvals, clearances and certificates for device export, including renewals, had been suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. following an October 1999 warning letter received from FDA. On April 29, 2000 the Company filed the first periodic certification as to its state of compliance as requested by FDA. Sales Sales decreased $1.9 million, or 2%, for the quarter ended June 30, 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 decreased $1.6 million, or 2%, compared with the second quarter of 1999. An increase in North America drug infusion disposable administration set revenue approximately offset a decrease in sales of drug infusion instruments. A decrease versus prior year in patient monitoring equipment and service revenue accounted for $1.5 million of the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. revenue decline. International sales decreased approximately $0.2 million, or 1%. This decrease in European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sales was primarily the result of foreign currency exchange rate fluctuations. 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 $2.2 million. Using constant exchange rates, International sales increased approximately 7% compared with the second quarter of 1999. Instromedix sales decreased $0.1 million during the quarter to $3.3 million compared with $3.4 million for the same quarter last year. For the six months ended June 30, 2000, sales were $189.0 million, a decrease of 2% compared with the $193.1 million reported for the same period last year. On a constant currency basis, sales were essentially flat for the first six months of 2000 compared with the first half of 1999. Gross Margin Gross margin decreased $0.4 million, or 1%, during the quarter ended June 30, 2000 compared with the same quarter last year. The gross margin percentage increased to 45.3% in the second quarter of 2000, from 44.8% in the second quarter of 1999. Prior year second quarter margins were adversely impacted by a $2.5 million one-time charge related to manufacturing issues. Second quarter 2000 costs of sales were negatively impacted by higher production costs due, in part, to lower than planned volumes in both the U.S. and UK manufacturing plants. These higher production costs, as well as the effect of a stronger U.S. dollar, served to reduce gross margins. Selling and Marketing Expense Selling and marketing expense decreased $0.9 million, or 5%, during the quarter ended June 30, 2000 compared with the same period in 1999 due to lower sales volume, reduced distribution costs distribution costs distribute npl → Vertriebskosten pl and the effect of spending controls. Additionally, the 1999 results included costs of approximately $.5 million that were not repeated in 2000 for management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects fees associated with developing and validating val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. product strategies. As a percentage of sales, selling and marketing expenses decreased to 18.7% for the second quarter of 2000 from 19.2% in the second quarter of 1999. General and Administrative Expense General and administrative expense decreased $1.6 million, or 14%, during the quarter ended June 30, 2000 compared with the same period in the prior year. This decrease is primarily due to lower amortization expense in 2000 resulting both from 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. becoming fully amortized and from a 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 during the fourth quarter of 1999. As a percent of sales, general and administrative expense decreased to 10.3% in the second quarter of 2000 from 11.7% in the second quarter of 1999. Research and Development Expense Research and development expense decreased approximately $0.9 million, or 13%, during the quarter ended June 30, 2000 as the second quarter of 1999 contained significant material costs for the development of prototype instruments that were not repeated in 2000. Restructuring and Integration Charges Restructuring and integration charges decreased $0.8 million during the quarter ended June 30, 2000 compared with the same period in the prior year. The 2000 costs represent the first portion of previously announced restructuring activities the Company has initiated which are anticipated to total approximately $6.5 million this year. These actions, which were announced by the Company on July 7, are intended to save approximately $6 million per year when fully implemented and involve facilities in Creedmoor, N.C., Basingstoke, England and 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. . The primary focus of this activity is in the Creedmoor manufacturing operation. This plant will be restructured to include disposables engineering, automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. manufacturing of selected products and distribution operations. Manual assembly operations will be relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. to the Company's facilities in Tijuana, Mexico, and certain operations will be outsourced. Additionally, the Basingstoke and San Diego operations will be matched to the mix of requirements resulting from current and future product line rationalization rationalization, in psychology: see defense mechanism. efforts. The 1999 costs represent integration costs associated with the movement of the Company's Instromedix business from Portland, Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. to San Diego. These activities were completed in 1999. Interest Expense Interest expense increased $0.7 million, or 5%, during the quarter ended June 30, 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% senior discount notes as well as higher interest rates in 2000 on the Company's other outstanding debt. Other Income (Expense) Other income (expense) increased to $2.5 million of income during the quarter ended June 30, 2000 compared with $0.4 million of expense for the same period in the prior year. The increase was primarily due to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. resolution of two tradename disputes which resulted in payments to ALARIS of approximately $2.8 million in the second quarter of 2000. 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 $541.2 million at June 30, 2000 compared with $540.9 million at December 31, 1999. Cash provided by operations was approximately $8.3 million for the quarter. The Company had $22.5 million in cash at the end of June 2000 compared with $23.6 million at year-end 1999 and is in compliance with all of its bank covenants. 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 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 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 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 the Company upon the success of new products 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, 1999. 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
June 30, December 31,
2000 1999
(Unaudited)
Current assets:
Cash $ 22,509 $ 23,559
Receivables, net 78,421 84,889
Inventories 74,247 76,769
Prepaid expenses and other current
assets 24,888 25,086
Total current assets 200,065 210,303
Net investment in sales-type leases, less
current portion 24,412 24,407
Property, plant and equipment, net 65,106 68,480
Other non-current assets 30,102 28,157
Intangible assets, net 268,793 275,443
$ 588,478 $ 606,790
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 18,147 $ 13,769
Accounts payable 20,335 25,169
Accrued expenses and other current
liabilities 40,270 44,606
Total current liabilities 78,752 83,544
Long-term debt 523,041 527,082
Other non-current liabilities 15,816 17,115
Total non-current liabilities 538,857 544,197
Contingent liabilities and commitments
Stockholders' equity:
Common stock, authorized 75,000 shares
at $.01 par value; issued and
outstanding -- 59,296 shares and 59,295
shares at June 30, 2000 and December
31, 1999, respectively 593 593
Capital in excess of par value 148,992 148,991
Accumulated deficit (170,363) (164,195)
Treasury stock (2,027) (2,027)
Accumulated other comprehensive loss (6,326) (4,313)
Total stockholders' equity (29,131) (20,951)
$ 588,478 $ 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 June 30, Six Months Ended June 30,
2000 1999 2000 1999
Sales $ 97,742 $ 99,615 $ 189,019 $ 193,051
Cost of
sales 53,469 54,963 102,183 100,597
Gross margin 44,273 44,652 86,836 92,454
Selling and
marketing
expenses 18,244 19,168 37,717 39,085
General and
administrative
expenses 10,068 11,667 20,229 22,902
Research and
development
expenses 5,676 6,551 12,008 12,598
Restructuring and
integration
charges 535 1,339 535 3,438
Total operating
expenses 34,523 38,725 70,489 78,023
Lease interest
income 1,323 1,019 2,453 2,080
Income from
operations 11,073 6,946 18,800 16,511
Other income (expenses):
Interest
income 266 441 489 763
Interest
expense (14,284) (13,595) (28,599) (27,248)
Other, net 2,473 (414) 1,142 (873)
Total other
expense (11,545) (13,568) (26,968) (27,358)
Loss before
income
taxes (472) (6,622) (8,168) (10,847)
Provision for
(benefit from)
income taxes 500 800 (2,000) (2,700)
Net loss $ (972) $ (7,422) $ (6,168) $ (8,147)
Net loss per
common share
assuming no
dilution $ (.02) $ (.13) $ (.11) $ (.14)
Net loss per
common share
assuming
dilution $ (.02) $ (.13) $ (.11) $ (.14)
Weighted average
common shares
outstanding
assuming no
dilution 58,845 58,800 58,845 58,789
Weighted average
common shares
outstanding
assuming
dilution 58,845 58,800 58,845 58,789
Income from
operations $ 11,073 $ 6,946 $ 18,800 $ 16,511
Depreciation and
amortization 8,600 9,298 16,975 18,492
Restructuring and
integration
charges 535 1,339 535 3,438
Adjusted
EBITDA $ 20,208 $ 17,583 $ 36,310 $ 38,441
Adjusted EBITDA represents income from operations before restructuring, 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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