ALARIS Medical Systems Reports Strong Gains in First Quarter Performance.Business Editors/Health/Medical Writers SAN DIEGO--(BUSINESS WIRE)--April 28, 2004 Highlights Include Four-Fold Adj. 1. four-fold - having four units or components; "quadruple rhythm has four beats per measure"; "quadruplex wire" quadruple, quadruplex, quadruplicate, fourfold Increase in Net Income, 25% Growth in Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and Double Digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" Revenue Growth; Full Year Earnings Per Share Guidance Raised 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 Systems, Inc. (NYSE NYSE See: New York Stock Exchange :AMI), developer of products for the safe delivery 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. (IV) medications, today reported that net income for the first quarter ended March 31, 2004 increased to $11.6 million, or $.15 per share, compared with $2.5 million, or $.04 per share, a year ago. Operating income of $24.9 million was up 25% from the comparable figure of $19.9 million, while revenues reached a record first quarter level of $134.2 million, a gain of 11% over the year-ago period. The earnings results were at the high end of the Company's guidance for the period and reflected continuing improvement in ALARIS's gross margin as well as substantially lower interest expense. David L. Schlotterbeck, president and chief executive officer, said, "We are gratified grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. to see that our strategies of accelerating ALARIS's technological and product leadership combined with our dramatically strengthened capital structure are beginning to have a visible impact on performance. The productivity gains now embedded Inserted into. See embedded system. in our operations should be a key and sustainable source of operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. as revenues increasingly benefit from our planned introduction of new products." In mid- mid- pref. Middle: midbrain. 2003, the Company undertook a recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. that lowered its total debt by more than 20%, reduced its average annual interest rate from over 11% to under 6%, and lowered its interest expense from $57 million to $24 million per year. Schlotterbeck continued, "Our advanced, error-reducing Guardrails(R) Safety Software is becoming the standard of care that we believe will promote significant improvement in the delivery of acute care services throughout the world. While revenue growth during the quarter was modestly below our expectations, order rates in March and April indicate that hospitals in the U.S. and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). are moving ahead
with commitments to put our market-leading medication medication /med·i·ca·tion/ (med?i-ka´shun)1. medicine (1). 2. impregnation with a medicine. 3. administration of a medicine or other remedy. safety systems at the patient's bedside." First Quarter 2004 Results Sales. For the quarter ended March 31, 2004, sales were $134.2 million, an increase of $13.0 million, or 11%, over the same period in the prior year. If currency exchange rates for the first quarter of 2004 had prevailed during 2003, sales would have been $127.6 million for the quarter ended March 31, 2003. Thus, the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. effect of currency changes on revenues was $6.4 million. Higher volumes of 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) Medication Safety Systems and our proprietary Guardrails(R) Safety Software 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 sets, as well as increased sales of professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. , were the primary factors leading to the increase 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. sales of $7.0 million, or 9%, over the first quarter of 2003. These increases were partially offset by a decrease in sales volume of other 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. instruments, as well as a decrease in sales of patient monitoring products. North America infusion instrument sales during the first quarter of 2003 included $4.0 million of sales to support the U.S. government war readiness, that were not repeated in 2004. Additionally, an order for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2 million of infusion instruments was shipped but not recognized during the first quarter of 2004. Revenues from professional services, most frequently sold with our safety products, increased $1.3 million over the first quarter in the prior year as a result of the growth in sales of Medley(TM) Systems and Guardrails(R) Safety Software. We believe that the increase in dedicated disposables was due to the continuing growth in our installed base of infusion devices infusion device Therapeutics A device used to administer therapeutics–eg, analgesics, antimicrobials, blood products, chemotherapy, nutrients. See Elastomeric infusion device, Electronic syringe infusion device, Mechanical infusion pump, Minibag. . The growth in other disposables was due to an increase of approximately $1.9 million in sales of SmartSite(R) Needle-Free Systems. International sales for the quarter ended March 31, 2004 increased $6.0 million, or 15%, compared with the same period in the prior year. This increase was due to higher syringe syringe /sy·ringe/ (si-rinj´) (sir´inj) an instrument for injecting liquids into or withdrawing them from any vessel or cavity. pump volumes, strong sales of dedicated disposable administration sets, and higher volumes of SmartSite(R) Needle-Free Systems and services compared with the same period in the prior year. These increases were partially offset by a decrease in sales of large volume pumps and patient monitoring products. If currency exchange rates for the quarter ended March 31, 2004 had prevailed during the same period in 2003, International sales would have been $47.2 million for the quarter ended March 31, 2003. Gross Profit. Gross profit increased $12.8 million, or 20%, for the quarter ended March 31, 2004, compared with the same period in 2003. The gross margin percentage increased to 56.6% for the first quarter of 2004, from 52.1% for the first quarter of 2003. If currency exchange rates for the quarter ended March 31, 2004 had prevailed during the same period in 2003, the gross margin percentage for the quarter ended March 31, 2003 would have been 53.1%. Our increased gross margin is primarily due to growth in the sales of our disposables and change in the product mix which included more higher margin sales than in the prior year. Disposables carry a higher margin than instruments, and our strong disposables growth has had a positive impact on gross margin. The sales growth of our Medley(TM) Medication Safety System and Guardrails(R) Safety Software has also contributed to the increase in gross profit in the first quarter of 2004 over the same period in 2003, as these software-enabled safety products carry higher margins than equipment without advanced medication-error reducing software. Product quality and manufacturing efficiencies have been a primary focus for us, and lower 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. repair rates have resulted from these efforts. Additionally, increased volumes have resulted in lower per-unit product costs. Selling and Marketing Expenses. Selling and marketing expenses increased $3.6 million, or 15%, for the quarter ended March 31, 2004, compared with the same period in 2003, primarily due to increased selling costs associated with higher sales volume in the first quarter of 2004 and due to the continued investment in developing our International selling and marketing functions to support our International medication safety strategy. Both our North America and International business units incurred higher sales and marketing costs related to increased personnel, travel and related activities supporting the continued expansion of our medication safety strategy. As a percentage of sales, selling and marketing expenses increased to 20.8% for the quarter ended March 31, 2004 compared with 20.0% for the same period in 2003. The effect of unfavorable changes in foreign currency exchange rates on selling and marketing expenses was $1.4 million. General and Administrative Expenses. General and administrative expenses increased $1.7 million, or 15%, for the quarter ended March 31, 2004, compared with the same period in 2003. As a percentage of sales, general and administrative expenses increased to 9.6% for the quarter ended March 31, 2004 compared with 9.2% for the same period in 2003. The effect of unfavorable changes in foreign currency exchange rates on general and administrative expenses was $.4 million. Increases in administrative expenses were largely due to higher legal and other professional services, insurance, and additional personnel and related payroll tax Payroll Tax Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee. In most countries, including the U.S., both state and federal authorities collect some form of payroll tax. expenses over the prior year. Research and Development Expenses. Research and development expenses increased approximately $2.2 million, or 25%, for the quarter ended March 31, 2004, compared with the same period in 2003. The increase was due to spending associated with new product development primarily related to our medication safety strategy, including increased spending on new products for international markets. This higher spending was primarily in the form of additional personnel, outside consulting and project supplies. The effect of unfavorable changes in foreign currency exchange rates on research and development expenses was $.2 million. Research and development expenses increased to 8.2% of sales for the quarter ended March 31, 2004, compared with 7.3% of sales for the same period in 2003. Interest Income from Sales-Type Capital Leases. Interest income from sales-type capital leases decreased $.3 million, or 30%, for the quarter ended March 31, 2004, compared with the same period in 2003 due to a decrease in the contract 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 portfolio as more customers continue to utilize third party financing. Interest Income. Interest income decreased $.1 million due to lower interest rates earned and lower cash balances invested during 2004 compared with 2003. Interest Expense. Interest expense decreased $8.4 million, or 58%, for the quarter ended March 31, 2004, compared with the same period in 2003. Included in interest expense in the first quarter of 2004 is $.5 million of debt-issue cost write-offs related to $20 million in prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. made under the Credit Facility. The decrease in interest expense resulted from the 2003 recapitalization, which reduced the principal amount of outstanding debt and lowered interest rates on debt under the Credit Facility and the Notes compared with the interest rates on the debt which was refinanced in the recapitalization. Recapitalization Expenses. In connection with our 2003 recapitalization, we recorded a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of $1.5 million ($.9 million, net of tax) for the quarter ended March 31, 2003. This charge includes a premium of $1.2 million, representing the purchase price over the then accreted carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of $23.8 million of senior discount notes, and 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 related unamortized debt issuance costs of $.3 million. Excluding this charge, for the quarter ended March 31, 2003, net income would have been $3.5 million and net income per common share, on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, would have been $.05. On a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, assuming the recapitalization had occurred on January January: see month. 1, 2003, and excluding the charge relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of debt that we recorded in the first quarter of 2003, net income for the quarter ended March 31, 2003 would have been $8.4 million and net income per common share, on a fully diluted basis, would have been $.11. (See "Supplemental Schedule Reconciling GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Data to Pro Forma Non-GAAP Data" at the end of this release for a reconciliation of net income and net income per common share to this pro forma data, which are non-GAAP financial measures, as well as a discussion of the reasons that management believes the presentation of such information is useful for investors.) Other, Net. Other, net expenses increased $.9 million for the quarter ended March 31, 2004, compared with the same period in 2003 primarily due to an increase in realized and unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on foreign currency transactions, fees related to amending and lowering the interest rate on our Credit Facility and lower miscellaneous income. Financial Position At March 31, 2004, ALARIS Medical Systems reported total debt of $338.2 million. This represents a $20.6 million reduction in total debt since December December: see month. 31, 2003, and a $170 million reduction over the last twelve months. Utilizing cash from operations and existing cash on hand, we made two principal prepayments of $10 million each during the first quarter of 2004 against our Credit Facility term loan. The Company had a $30 million undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely credit line and $31.7 million in cash on the balance sheet at March 31, 2004. Recent Key Developments: -- In March 2004, the Company announced the limited release of the Medley(TM) Patient-Controlled Analgesia patient-controlled analgesia Pain management A method for self-administration of narcotic-analgesics via a programmable pump; PCA is used for pain of terminal CA, postsurgery, angina pectoris, L&D Agents Fentanil, meperidine, morphine, sufentanil; PCA is (PCA (tool, programming) PCA - A dynamic analyser from DEC giving information on run-time performance and code use. ) Module with the Guardrails(R) Safety Software. Adventist Adventist Member of any of a group of Protestant churches that arose in the U.S. in the 19th century and believe that the Second Coming of Christ is close at hand. Adventism was founded during a period marked by millennialism by William Miller (1782–1849), a former U. Medical Center in Portland Portland, town, England Portland, town (1991 pop. 12,945), Dorset, S England. It is on the Isle of Portland, a small rocky peninsula. Portland stone has been used in St. Paul's Cathedral and other important London buildings. Lobsters and crabs are harvested. , 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. has implemented 50 Medley(TM) PCA Modules throughout the institution. The Medley(TM) PCA Module for the administration of pain management drugs is the latest addition to the expanding Medley(TM) Medication Safety System. ALARIS Medical Systems is the only provider of harm-prevention software in a modular medication safety system. The Company's proprietary Medley(TM) System offers coverage for all infusions on one platform and includes PCA, large volume delivery, patient monitoring and syringe delivery. -- ALARIS demonstrated its enterprise-wide networked solutions for the Medley(TM) Medication Safety System February February: see month. 23rd at the Healthcare Information and Management Systems Society Founded in 1961, the Healthcare Information and Management Systems Society (HIMSS) is a healthcare industry membership organization exclusively focused on providing leadership for the optimal use of medical informatics technology and management systems. (HIMSS HIMSS Healthcare Information and Management Systems Society ) in Orlando, Florida The city of Orlando is a major city in central Florida and is the county seat of Orange County, Florida. According to the 2000 census, the city population was 185,951. A 2006 U.S. . This network and server-based applications are currently being used on patients at several institutions across the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . -- On February 11th, Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. upgraded the rating on the Company's Senior Secured Term Loan facility to Ba3 from B1, and its Senior Subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. Notes to B2 from B3. -- Also on February 11th, ALARIS announced a four-year renewal of its mandatory Peremptory; obligatory; required; that which must be subscribed to or obeyed. Mandatory statutes are those that require, as opposed to permit, a particular course of action. Blanket blanket, sheet, usually of heavy woolen, or partly woolen, cloth, for use as a shawl, bed covering, or horse covering. The blanketmaking of primitive people is one of the finest remaining examples of early domestic artwork. Purchase Agreement with the Department of Veterans Affairs Veterans Affairs is a term of the business that deals with the relation between a government and its veteran communities, usually administered by the designated government agency. to provide the SmartSite(R) Needle-Free System to 50 States, the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. . Outlook For the full year 2004, we continue to forecast sales growth of 14% to 16% over the $533.9 million reported for the full year 2003. As a result of improved gross margins, our earnings per share forecast for 2004 has been increased to between $.69 and $.75 compared with a prior range of approximately $.67 to $.71. Actual sales results could be at the low end of the range should the U.S. dollar continue to show its current strength. However, earnings per share are anticipated to remain within the indicated range due in part to the natural hedge from our costs and expense incurred in foreign currencies combined with our 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. For the second quarter of 2004, we expect sales growth of approximately 16% to 18% over the $127.8 million reported for the second quarter of 2003. The earnings forecast for the quarter is $.16 to $.18 per share. About ALARIS Medical Systems, Inc. ALARIS Medical Systems, Inc. (NYSE:AMI) develops and markets products for the safe delivery of intravenous (IV) medications. Our IV medication and infusion therapy delivery systems, software applications, needle-free disposables and related monitoring equipment are marketed in the United States and internationally. Our "smart" pumps, with the proprietary Guardrails(R) Safety Software, help to reduce the risks and costs of medication errors medication error Malpractice An error in the type of medication administered or dosage. See Adverse effect, Error. , help to safeguard patients and clinicians and gather and record clinical information for review, analysis and interpretation. We provide our products, professional and technical support and training services to over 5,000 hospital and health care systems, as well as alternative care sites, in over 100 countries through our direct sales force and distributors. Headquartered in San Diego, California “San Diego” redirects here. For other uses, see San Diego (disambiguation). San Diego is a coastal Southern California city located in the southwestern corner of the continental United States. As of 2006, the city has a population of 1,256,951. , we employ approximately 3,000 people worldwide. Additional information on ALARIS Medical Systems can be found at http://www.alarismed.com. The Company's 2004 first quarter conference call with investors will be available online at: http://www.alarismed.com. The live webcast will begin at 8:00 a.m. Pacific Time on Wednesday Wednesday: see week. , April 28, 2004, with the replay beginning shortly after the completion of the live call. The replay of the conference will also be accessible by telephone at (800) 406-7489 (for domestic callers) and (402) 220-9099 (for international callers) beginning shortly after the completion of the live call. Both the online and telephone replay will be available through May 14th. 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, without limitation, 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 historic seasonality of the Company's sales, the long sales cycle on large capital equipment sales in North America, the difficulty to precisely predict when hospital capital budgets will permit investment in capital equipment, the potential of increased levels of competition, technological changes, the dependence of ALARIS Medical Systems upon the success of new products (including its proprietary Guardrails(R) Safety Software, the Medley(TM) Medication Safety System and the Asena Asena is the name of a female wolf in Turkic mythology. It is associated with a Göktürk ethnogenic myth "full of shamanic symbolism".[1] The legend runs as follows. (TM) infusion platform) 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. These and other risk factors are described in the Securities and Exchange Commission filings of ALARIS Medical Systems, Inc., formerly known as 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 Dec. 31, 2003, and other filings. On June June: see month. 30, 2003, the two companies were merged. Subsequent SEC filings are available only for ALARIS Medical Systems, Inc. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.
ALARIS MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(Dollar and share amounts in thousands, except per share data)
Three Months Ended
March 31,
2004 2003
--------- ---------
Sales $134,206 $121,174
Cost of sales 58,193 58,000
--------- ---------
Gross profit 76,013 63,174
--------- ---------
Selling and marketing expenses 27,878 24,242
General and administrative expenses 12,854 11,142
Research and development expenses 11,018 8,798
--------- ---------
Total operating expenses 51,750 44,182
--------- ---------
Interest income from sales-type capital leases 611 873
--------- ---------
Income from operations 24,874 19,865
--------- ---------
Other income (expenses):
Interest income 127 222
Interest expense (6,123) (14,556)
Recapitalization expenses - (1,545)
Other, net (728) 189
--------- ---------
Total other expense (6,724) (15,690)
--------- ---------
Income before income taxes 18,150 4,175
Provision for income taxes 6,534 1,628
--------- ---------
Net income $11,616 $2,547
========= =========
Net income per common share, basic $.16 $.04
========= =========
Net income per common share, diluted $.15 $.04
========= =========
Weighted average common shares outstanding, basic 71,800 59,772
========= =========
Weighted average common shares outstanding,
diluted 75,966 63,776
========= =========
ALARIS MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
(Dollar and share amounts in thousands, except per share data)
ASSETS
March 31, Dec. 31,
2004 2003
----------- ----------
Current assets: (Unaudited)
Cash and cash equivalents $31,700 $45,914
Receivables, net 80,940 92,403
Inventories 58,091 52,149
Deferred tax assets, net, current 27,910 31,420
Prepaid expenses and other current assets 7,315 6,866
----------- ----------
Total current assets 205,956 228,752
Net investment in sales-type capital leases,
less current portion 7,580 9,219
Property, plant and equipment, net 76,910 69,897
Other non-current assets 35,950 37,256
Goodwill 143,984 143,984
Intangible assets, net 87,331 87,877
----------- ----------
$557,711 $576,985
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $2,450 $2,450
Accounts payable 26,953 22,760
Accrued expenses and other current liabilities 56,959 76,446
----------- ----------
Total current liabilities 86,362 101,656
----------- ----------
Long-term debt 335,713 356,325
Other non-current liabilities 27,644 27,221
----------- ----------
Total non-current liabilities 363,357 383,546
----------- ----------
Contingencies and litigation
Stockholders' equity:
Non-redeemable preferred stock, authorized 9,000
shares, issued and outstanding: none - -
Common stock, authorized 85,000 shares at $.01 par
value; issued and outstanding: 72,201 and 71,320
shares at March 31, 2004 and December 31, 2003,
respectively 722 713
Capital in excess of par value 278,147 274,109
Accumulated deficit (173,264) (184,880)
Accumulated other comprehensive income 2,387 1,841
----------- ----------
Total stockholders' equity 107,992 91,783
----------- ----------
$557,711 $576,985
=========== ==========
ALARIS MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
2004 2003
----------------
Cash flows from operating activities:
Net income $11,616 $2,547
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,181 6,299
Net loss on disposal of property, plant and
equipment 76 246
Debt discount and issue costs amortization and
write-offs 863 668
Accretion of bond interest - 4,599
Recapitalization expenses - 1,545
(Increase) decrease in assets:
Receivables, net 11,680 18,439
Inventories (5,946) (2,198)
Prepaid expenses and other current assets 5,381 2,332
Net investment in sales-type capital leases,
non-current portion 1,639 947
Other non-current assets (73) 224
Increase (decrease) in liabilities:
Accounts payable 4,314 2,430
Accrued expenses and other current liabilities (19,374) 669
Other non-current liabilities 423 (210)
----------------
Net cash provided by operating activities 17,780 38,537
----------------
Cash flows from investing activities:
Capital expenditures (12,736) (7,012)
Patents, trademarks and other (233) (113)
Proceeds from disposal of property, plant and
equipment 5 -
----------------
Net cash used in investing activities (12,964) (7,125)
----------------
Cash flows from financing activities:
Repurchase of debt and related costs - (25,000)
Principal payments on long-term debt (20,613) -
Proceeds from exercise of stock options 1,743 1,615
----------------
Net cash used in financing activities (18,870)(23,385)
----------------
Effect of exchange rate changes on cash (160) 191
----------------
Net (decrease) increase in cash (14,214) 8,218
Cash and cash equivalents at beginning of period 45,914 69,739
----------------
Cash and cash equivalents at end of period $31,700 $77,957
================
ALARIS MEDICAL SYSTEMS, INC.
SCHEDULE OF SUPPLEMENTAL FINANCIAL DATA (Unaudited)
(Dollars in millions)
Sales data:
Three Months Ended March 31,
---------------------------------
2004 2003 incr/
(decr)
---------------------------------
(dollars in millions)
North America
Infusion Instruments $17.3 (1) $19.0 (2) (9%)
Dedicated Disposables 40.3 35.9 12%
Other Disposables 19.0 15.6 22%
Service and other 5.1 3.9 31%
-------------------------
Subtotal 81.7 74.4 10%
Patient Monitoring 5.3 5.6 (5%)
-------------------------
North America Total $87.0 $80.0 9%
-------------------------
International
Infusion Instruments $14.1 $13.9 1%
Dedicated Disposables 24.4 20.6 18%
Other Disposables 4.3 2.9 48%
Service and other 3.4 2.7 26%
-------------------------
Subtotal 46.2 40.1 15%
Patient Monitoring 1.0 1.1 (9%)
-------------------------
International Total $47.2 $41.2 15%
-------------------------
ALARIS Medical Systems Total $134.2 $121.2 11%
=========================
(1) Excludes one order of approximately $2.0 million that was
shipped but not recognized during the quarter.
(2) Includes $4.0 million of sales to support the U.S. government
war readiness that were not repeated in 2004.
ALARIS MEDICAL SYSTEMS, INC.
SUPPLEMENTAL SCHEDULE
RECONCILING GAAP DATA TO PRO FORMA NON-GAAP DATA
(Dollar and share amounts in thousands, except per share data)
The following table sets forth a reconciliation of our reported
net income and net income per common share for the three months
ended March 31, 2003 to our net income and net income per share on
a pro forma basis as if the recapitalization had occurred on
January 1, 2003, which pro forma amounts are non-GAAP financial
measures. The pro forma data exclude the effect of the pre-tax
charges of $1.5 million and the related tax effects we recorded in
the first quarter of 2003.
The pro forma data assume that the following transactions occurred
on January 1, 2003: (i) the sale of 10 million shares of common
stock; (ii) the sale of $175 million aggregate principal amount of
Notes; (iii) borrowings of a $245 million term loan under the
Credit Facility at an annual interest rate of 4.05%; (iv) the
repurchase of all of our outstanding indebtedness pursuant to
tender offers as described in note 2 to the Consolidated Financial
Statements contained in our Annual Report on Form 10-K for the
year ended December 31, 2003; and (v) other debt repurchases made
in the first half of 2003.
The pro forma data are being presented to give management and
investors an enhanced understanding of the effect of the
recapitalization on our operating results. Management believes
that the significant reduction in future interest expense
resulting from the recapitalization is material to an
understanding of our business and will have a significant impact
on cash flow and earnings. We have excluded the effect of the
recapitalization expenses from the pro forma data because such
expenses will not have a continuing impact on the Company. The pro
forma data are not necessarily indicative of the results of
operations that would have been achieved had the transactions
reflected therein been consummated prior to the period presented.
Three Months Ended
March 31, 2003
------------------
(dollars and share amounts in thousands)
Net income, as reported $2,547
Adjustments to exclude recapitalization expenses:
Recapitalization expenses 1,545
Income tax benefit (600)
-------
Net income, excluding recapitalization expenses 3,492
Pro forma adjustments:
Interest expense 8,125
Other, net (37)
Provision for taxes (3,156)
-------
Net income, pro forma $8,424
=======
Net income per common share, diluted, as reported $.04
=======
Net income per common share, diluted, excluding
recapitalization expenses $.05
=======
Net income per common share, diluted, pro forma $.11
=======
Weighted average common shares outstanding, diluted,
as reported 63,776
Pro forma adjustment:
Weighted average effect of sale of common stock 10,000
-------
Weighted average common shares outstanding, diluted, pro forma 73,776
=======
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