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Medical Action Industries Reports Third Quarter Fiscal 2013 Results

Quarter Results

Net sales for the third quarter were $109.4 million, down $3.6 million or 3.2% from net sales of $113.0 million for the third quarter of last year. This modest decrease results in part from management's efforts to focus on profitable business and to decrease or eliminate unprofitable or non-core sales. The reported gross profit of $19.1 million, or 17.5% of net sales, represents a record result for the Company while the gross margin percentage is the highest in two years. By comparison, gross profit in the prior year period amounted to $17.1 million or 15.2% of net sales. This improvement in gross profit is the result of management's cost savings initiatives, elimination of unprofitable sales, as well as a reduction in raw material costs. 

On a GAAP basis, the Company reported a net loss of $55.5 million or $3.39 per diluted share, compared to reported net income of $1.8 million or $0.11 per diluted share for the same period of fiscal 2012. The results for the third quarter were impacted by a non-recurring, non-cash goodwill impairment charge of $78.6 million and $0.5 million of professional fees related to our renegotiated credit agreement. The after-tax impact of the goodwill impairment charge was $56.8 million and $0.3 million for the professional fees. The goodwill impairment was determined as part of the Company's regular annual impairment test and had no effect on the Company's cash position. The results for the same period of fiscal 2012 benefitted from a bonus accrual reversal of $1.8 million, net of applicable taxes, related to a reduction in the Company's bonus accrual which was precipitated by the failure to meet certain operational performance objectives.

On a non-GAAP basis, the Company generated non-GAAP net income (before a goodwill impairment charge and certain professional fees) of $1.6 million (1)or $0.10 (1) per diluted share for the third quarter compared to a non-GAAP net income (before bonus accrual reversal) of less than $0.1 million (1) or $0.00 (1) per diluted share for the same period of fiscal 2012. EBITDA, as adjusted, for the third quarter was $6.1 million (2) compared to $3.8 million (2) for the same period of fiscal 2012.

Year-to-Date Results

Net sales for the nine months ended December 31, 2012 were $333.7 million, an increase of $4.6 million or 1.4% from net sales of $329.1 million for the first nine months of fiscal 2012. Our gross profit of $53.5 million or 16.0% of net sales has improved compared to the gross profit of $50.8 million or 15.4% for the first nine months of fiscal 2012. This improvement in gross profit is the result of management's cost savings initiatives, elimination of unprofitable sales, as well as a reduction in raw material costs. 

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