ALARIS Medical Reports Third-Quarter Financial Results.SAN DIEGO--(BUSINESS WIRE)--Nov. 3, 1999-- 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 (AMEX AMEX See: American Stock Exchange :AMI): -- North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. instrument sales continue strong -- Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. exceeds 50 percent -- Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta loss before charge for patent license agreements meets expectations ALARIS Medical Inc. (AMEX:AMI) today reported sales of $94.0 million for the quarter ended Sept. 30, 1999, which is essentially flat when compared with $94.2 million in the same period last year. The company reported a loss of $2.4 million, or $.04 per share, vs. a loss of $23.0 million, or $.39 per share, a year ago. For the nine months ended Sept. 30, 1999, the company reported a 6% growth in revenues to $287.0 million, compared with $271.9 million in the same period last year. The company reported a loss of $10.6 million, or $.18 per share, vs. a loss of $24.7 million, or $.42 per share, a year ago. Chief Executive Officer David L. Schlotterbeck said: "Our infusion therapy instrument sales in 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. were a significant bright spot this quarter, as they were up 15% from a year ago. North American instrument prices did experience some price pressure, but the increase in volume and our cost control efforts allowed us to improve overall gross margin. This sales increase was offset by lower sales in Europe and in our Instromedix(R) business. "Our pre-tax loss of $2.8 million is in line with analyst expectations when adjusted for the two recently concluded patent license agreements which resulted in a $2.8 million pre-tax charge in the quarter. Schlotterbeck continued: "We increased inventories in the third quarter in part because our customers have indicated their intention to increase fourth-quarter purchases of our disposables in line with their Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 plans. Additionally, we repaid $5 million in bank debt in excess of our normal amortization schedule. We had over $20 million in cash on the balance sheet at the end of the third quarter and do not anticipate needing to use any of our $60 million credit line in the fourth quarter." The company reported that 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 , adjusted for acquisition-related and other non-recurring charges, decreased 6% to $23.6 million from $25.0 million in the third quarter last year. Sales Sales decreased less than 1% during the quarter ended Sept. 30, 1999, as compared with the same quarter last year. An increase in North American sales for the quarter was offset by lower International and Instromedix(R) sales. North American sales increased 3% compared with the third quarter of 1998. This growth was primarily in drug infusion instrument and 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 set revenue. These increases were partially offset by lower patient monitoring instrument sales in the period. International sales decreased 4% during the quarter. Approximately half was due to a stronger U.S. dollar during the quarter as compared with the same quarter last year. The remainder was primarily due to lower drug infusion instrument sales due to the pending release of the company's new ASENA(TM) modular syringe syringe /sy·ringe/ (si-rinj´) (sir´inj) an instrument for injecting liquids into or withdrawing them from any vessel or cavity. pump that was launched in October 1999. Instromedix(R) sales decreased from $3.7 million for the third quarter of 1998 to $2.7 million for the quarter ended Sept. 30, 1999, reflecting the temporary disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in the sales support functions caused by the transition of the Instromedix(R) Division from 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 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. in early July 1999. Gross Margin Gross margin increased $.8 million, or 2%, during the quarter ended Sept. 30, 1999, as compared with the same quarter last year. The gross margin percentage increased from 50.5% in the third quarter of 1998 to 51.4% for the third quarter of 1999. The increase in gross margin percentage was primarily due to continued material cost reductions as well as increased North American sales volume resulting in lower per unit manufacturing costs. Selling and Marketing Expenses Selling and marketing expenses increased $1.0 million, or 5%, during the quarter ended Sept. 30, 1999, as compared with the same period of 1998. This increase is primarily due to 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 product strategies and planning upcoming product introductions. General and Administrative Expenses General and administrative expenses increased $1.4 million during the quarter ended Sept. 30, 1999, as compared with the same period in the prior year. The third quarter of 1998 included a reduction of bad debt reserves of approximately $.7 million, while the third quarter of 1999 did not contain such a benefit. Additionally, the third quarter of 1999 includes costs related to two international direct sales locations established in 1999. Also contributing to the increase in general and administrative expenses are information technology costs for the company's new domestic 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 1998. Research and Development Expense Research and development expense decreased $.3 million during the third quarter of 1999 as compared with the same quarter last year. This is primarily due to fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → used in research and development becoming fully depreciated Fully depreciated An asset that has already been charged with the maximum amount of depreciation allowed by the IRS for accounting purposes. fully depreciated Of or relating to a fixed asset that has been depreciated to a book value of zero. , resulting in lower depreciation as well as lower bonus expense in the third quarter of 1999 as compared with the same quarter last year. Integration and Other Non-Recurring Charges Integration and other non-recurring charges were $3.5 million during the quarter. Included in this amount is $2.8 million related to two previously announced patent license agreements related to patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. lawsuits. Also included in integration and other non-recurring charges are costs associated with the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of the Instromedix(R) Division to the company's headquarters in San Diego. Instromedix(R) integration costs were $4.1 million for the nine months ended Sept. 30, 1999, and are expected to be slightly under $5 million for the full year. Interest Expense Interest expense increased $.7 million during the third quarter of 1999 as compared with the same quarter last year. This increase is due primarily to the company's placement of its 11-1/8% Senior Discount Notes in late July 1998 related to the acquisition of Instromedix(R). 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 $538.5 million at Sept. 30, 1999, compared with $546.3 million at Dec. 31, 1998. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. increased during the first nine months of 1999 as short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying decreased $27.7 million. New Product Pipeline North American Sales -0-
-- Faster Electronic Thermometer
Four models of the TurboTemp(TM) electronic thermometer are being
sold in the United States. This feature-rich thermometer is
designed to provide clinicians with oral temperatures in
approximately 7 seconds, convenient storage of oral and rectal
probes and error codes to reduce the risk of cross contamination.
-- Modular Patient Care System
Designed to operate a multitude of medical devices, the company's
next-generation modular patient care infusion system is expected
to contribute to better asset utilization in all hospital and
critical care settings. This system was referred to as "ORION"
during the development process and will be marketed under the
name MEDLEY(TM). Extensive clinical and user preference trials
are planned in early 2000 for the MEDLEY(TM) Patient Care System.
-- MedSystems III(R) DLE Launched
The company launched the MedSystems III(R) DLE infusion pump. This
is an improved and enhanced version of the MedSystems III(R)
infusion pump, which is the smallest and lightest multi-channel
hospital infusion pump in the industry.
-- MicroLink Software Distribution Agreement
ALARIS Medical implemented an exclusive software distribution
agreement with MicroLink Software Corp. for access to Asset
Trakker(TM). Asset Trakker(TM) helps institutions improve
efficiencies, consequently reducing the costs of managing the use
of infusion pumps and other assets. Asset Trakker(TM) serves as
the cornerstone of ALARIS Medical's goal of helping customers
lower their costs through effective asset utilization.
International Sales -0-
-- New ASENA(TM) Infusion System Pump Platform Introduced
In October, the new ASENA(TM) GS and GH syringe pumps were
launched in Europe. This product is part of the first compact
integrated patient care system offering modules that both
integrate with a docking station and can be used as a stand-alone
pump. Launched with the syringe pump was the ASENA(TM) DOCStat(TM)
docking station. Henk van Rossem, vice president and general
manager, International said: "We believe the ASENA(TM) syringe
pump is one of the most accurate pumps in its class due to its
direct-drive mechanism. Order volume has been strong, and we
anticipate a successful launch."
-- Signature Edition(R) GOLD Launched
The Signature Edition(R) GOLD began its International launch in
the United Kingdom in July. It was released in four additional
countries in September, with the balance of the market to follow
in the fourth quarter.
Instromedix(R) Division
-0-
-- LifeSigns(TM) Cardiac Monitors Product shipments of LifeSigns(TM) Monitors have resumed following a marketing review of the product's potential. Twenty-four monitor units have been ordered for a pilot program by a major teaching hospital, and shipments have been made to Asia.
Outlook
As announced on Monday, Nov. 1, 1999, David L. Schlotterbeck, who
was president and COO, has been appointed CEO. It is Schlotterbeck's
intention to continue to focus the company on operating excellence,
top-line growth and improved financial results. The company indicated
that for the fourth quarter it is comfortable with Wall Street
estimates of $110 million in sales and that it should finish the year
with Adjusted EBITDA at or slightly ahead of the $94.9 reported last
year.
-0-
ALARIS MEDICAL INC. CONDENSED con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. CONSOLIDATED BALANCE SHEET consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (Dollar and share amounts in thousands, except per share data) ASSETS Sept. 30, Dec. 31, 1999 1998 (Unaudited) Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. : Cash $ 22,281 $ 29,500 Receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed , net 74,634 102,295 Inventories 84,812 79,485 Prepaid expenses Prepaid Expense An asset that arises on a balance sheet because of the payment of something in advance (prepayment). Services for the payment will be received in the near future. and other current assets 27,619 25,246 Total current assets 209,346 236,526 Net investment in sales-type leases Sales-type lease The leasing out of a firm's own equipment, such as a printing company leasing its own presses, thereby competing with an independent leasing company. , less current portion 22,050 19,111 Property, plant and equipment, net 69,158 61,990 Other non-current assets 22,926 22,388 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. , net 298,013 311,018 $ 621,493 $ 651,033 LIABILITIES AND STOCKHOLDERS' EQUITY Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. : Current portion of long-term debt Current Portion Of Long-Term Debt A portion of the balance sheet that represents the total amount of long-term debt that must be paid within the next year. The balance sheet has a liability section, which is broken down into long-term and current debt. $ 11,545 $ 15,423 Accounts payable 15,462 22,103 Accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. and other current liabilities 51,544 52,340 Total current liabilities 78,551 89,866 Long-term debt 526,988 530,867 Other non-current liabilities 18,818 21,931 Total non-current liabilities 545,806 552,798 Contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. and commitments Stockholders' equity: Common stock, authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: 75,000 shares at $.01 par value; issued and outstanding -- 59,296 shares and 59,221 shares at Sept. 30, 1999, and Dec. 31, 1998, respectively 593 592 Capital in excess of par value 148,989 148,762 Accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. deficit (146,322) (135,769) Treasury stock (2,027) (2,027) Accumulated other comprehensive loss (4,097) (3,189) Total stockholders' equity (2,864) 8,369 $ 621,493 $ 651,033 ALARIS MEDICAL INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS See Income statement. AND OTHER DATA (Unaudited) (Dollar and share amounts in thousands, except per share data) Three Months Nine Months Ended September 30, Ended September 30, 1999 1998 1999 1998 Sales $ 93,991 $ 94,227 $ 287,042 $ 271,881 Cost of sales 45,654 46,672 146,251 138,025 Gross margin 48,337 47,555 140,791 133,856 Selling and marketing expenses 18,847 17,876 57,932 52,106 General and administrative expenses 11,877 10,518 34,779 30,059 Research and development expenses 4,813 5,126 17,411 14,126 Purchased in-process research and development -- 22,800 -- 28,334 Integration and other non-recurring charges 3,500 1,112 6,938 1,112 Total operating expenses 39,037 57,432 117,060 125,737 Lease interest income 1,187 1,185 3,267 3,407 Income from operations 10,487 (8,692) 26,998 11,526 Other income (expenses): Interest income 361 511 1,124 658 Interest expense (13,751) (13,014) (40,999) (34,809) Other, net 97 14 (776) (667) Total other expense (13,293) (12,489) (40,651) (34,818) Loss before income taxes (2,806) (21,181) (13,653) (23,292) (Benefit from) provision for income taxes (400) 1,800 (3,100) 1,450 Net loss $ (2,406) $ (22,981) $ (10,553) $ (24,742) Net loss per common share assuming no dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. $ (.04) $ (.39) $ (.18) $ (.42) Net loss per common share assuming dilution $ (.04) $ (.39) $ (.18) $ (.42) Weighted average common shares outstanding assuming no dilution 58,838 58,737 58,805 58,692 Weighted average common shares outstanding assuming dilution 58,838 58,737 58,805 58,692 Income (loss) from operations $ 10,487 $ (8,692) $ 26,998 $ 11,526 Depreciation and amortization 9,570 9,565 28,062 26,037 Inventory purchase accounting adjustment -- 172 -- 172 Purchased in-process research and development -- 22,800 -- 28,334 Integration and other non-recurring charges 3,500 1,112 6,938 1,112 Adjusted EBITDA $ 23,557 $ 24,957 $ 61,998 $ 67,181
Adjusted EBITDA represents income from operations before
non-recurring non-cash purchase accounting charges, restructuring
charges, integration 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, 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 of Adjusted EBITDA may not be comparable to similar titled
measures of other companies.
ALARIS Medical Inc., through its operating company, ALARIS
Medical Systems Inc., is known for its IMED(R) and IVAC(R) brand names
of intravenous infusion therapy systems and Instromedix(R) cardiac
event recorders and pacemaker 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. The company's products are distributed to
more than 120 countries worldwide.
In addition to its San Diego world headquarters and manufacturing
facility, the company also operates manufacturing facilities in
Creedmoor, N.C.; Basingstoke, Hampshire, U.K.; and Tijuana, Mexico.
Additional information on ALARIS Medical can be found at
www.alarismed.com.
This news release contains forward-looking statements that are
based largely upon the company's expectations for demand and
acceptance of new and existing products; technologies and
opportunities; regulatory approvals; and market and industry segment
growth. Actual results could vary materially from these expected
results due to a variety of factors, including, without limitation,
changes in the market, competition, government regulation and foreign
operations. Such risk factors are detailed in the Securities and
Exchange Commission filings of ALARIS Medical Inc. including Form 10-K
for the year ended Dec. 31, 1998.
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