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MEDIQ REPORTS SHARPLY HIGHER OPERATING EARNINGS FOR YEAR AND FOURTH QUARTER AND $22 MILLION IN RESTRUCTURING CHARGES

 PENNSAUKEN, N.J., Dec. 18 /PRNewswire/ -- MEDIQ Incorporated (AMEX: MED) today reported sharply higher operating income for the fourth quarter and year ended Sept. 30, 1992, with outstanding performances by MEDIQ/PRN and the Diagnostic Imaging Services Group.
 The company also reported charges of $22 million in connection with the previously announced proposed tax free spin-off of a subsidiary to shareholders and an investment in a real estate limited partnership.
 Since November 1990, MEDIQ has been undergoing an aggressive program to enhance shareholder value by more narrowly focusing its activities, monetizing its interests in subsidiaries, selling others and reducing debt. "Our program has been impressively successful as this year's operating results underscore," said Bernard J. Korman, president and chief executive officer. "During the past two years we have taken major steps to strengthen and simplify the company in order to benefit shareholders. We have contracted from 29 profit centers to five core units of which one is proposed to be spun-off to shareholders tax free. Principally from divestitures, we eliminated over $650 million in debt, and in recognition of improved cash flow, we paid, in July 1992, special cash dividends of $.055 per share on common stock and $.033 per share on Series A Preferred Stock, and reinstated the quarterly cash dividends to both common and Preferred Stock. While some work remains to be done, we have largely accomplished our goals and the company is well positioned to move forward and capitalize on its improved balance sheet and highly promising businesses."
 For the year ended Sept. 30, 1992, revenues advanced 11 percent, to $182.1 million, from $166.6 million in the prior year, on the restated basis. Operating income for the year almost tripled, to $14.5 million, from $5.4 million. Income from continuing operations rose to $6.5 million or $.27 per share vs. a loss last year of $1.6 million or $.07 per share.
 Results this year and last reflect investments in two less-than- majority-owned public companies, PCI Services, Inc. (NASDAQ: PCIS) and NutraMax Products, Inc. (NASDAQ: NMPC), using the equity method of accounting. MEDIQ this year recognized a $14.5 million pre-tax gain in connection with the initial public offering of common shares in PCI Services, now 42 percent owned, a leading provider of packaging services for the pharmaceutical industry. The company reclassified as a discontinued operation Mental Health Management, Inc., an operator of psychiatric departments in acute care hospitals, which, pending a favorable IRS tax ruling, MEDIQ has proposed spinning off to its shareholders. In anticipation of the spin-off, MEDIQ recorded a net charge of $15.3 million in connection with the company's investment in Mental Health Management. It also recorded a $6.4 million net charge as a result of the establishment of a reserve against the investment in a real estate limited partnership. Reflecting these non-operating adjustments, the net loss for the year was $14.6 million or $.61 per share, against year-earlier earnings of $4.4 million, or $.18 per share.
 For the three months ended Sept. 30, 1992, revenues amounted to $48.4 million, against $42.9 million in the corresponding year-ago period. Operating income totalled $3.4 million, against a year-ago loss of $3.1 million. Net income amounted to a loss of $23.6 million, or $.99 per share, compared with a loss of $356,000, or $.01 per share last year.
 In addition to its equity interests in PCI Services and NutraMax, MEDIQ's remaining continuing businesses include MEDIQ/PRN, the nation's largest supplier of critical care and life support equipment to hospitals and home care providers on a rental basis, and the Diagnostic Imaging Services Group, which provides ultrasound, nuclear scanning and X-ray services in both portable and fixed site locations.
 MEDIQ INCORPORATED AND SUBSIDIARIES
 Consolidated Operating Results
 (in thousands, except per-share data)
 Periods ended Three months Fiscal year
 Sept. 30 1992 1991(A) 1992 1991(A)
 Revenues $48,441 $42,887 $182,147 $166,583
 Operating income (loss) 3,383 (3,137) 14,460 5,434
 Income (loss) from
 continuing operations
 before income taxes (12,617)(B) 129 5,992 (4,777)
 Income (loss) from
 continuing operations (7,324)(B) (106) 6,579 (1,657)
 Income (loss) from
 discont. operations (15,382)(C) (250) (14,450) 6,011
 Extraordinary item (D) (932) --- (6,682) ---
 Net income (loss) (23,638) (356) (14,553) 4,354
 Earnings (loss) per share:
 Continuing operations $(.31) --- $.27 $(.07)
 Discontinued operations (.64) $(.01) (.60) .25
 Extraordinary item (.04) --- (.28) ---
 Net income (loss) (.99) (.01) (.61) .18
 Average shares
 outstanding 23,903 23,777 24,007 23,808
 (A) Restated to report equity investments (PCI Services, Inc. and NutraMax Products, Inc.) on the equity method and to reclassify Mental Health Management, Inc. ("MHM") to discontinued operations.
 (B) Includes a reserve of $10,589,000 ($6,353,000 net of tax) against the company's investment in a real estate limited partnership.
 (C) Includes a charge of $15,273,000, net of tax, for the write down of the company's investment in MHM in connection with its previously announced plan to spin off MHM to shareholders.
 (D) Charge for early extinguishment of debt.
 /delval/
 -0- 12/18/92
 /CONTACT: Michael F. Sandler, senior vp-finance of MEDIQ, 609-665-9300/
 (MED PCIS NMPC)


CO: MEDIQ Incorporated ST: New Jersey IN: HEA SU: ERN RCN

MK-LJ -- PH025 -- 8349 12/18/92 15:40 EST
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Date:Dec 18, 1992
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