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Medical Action Industries Reports Third Quarter Fiscal 2013 Results

Stocks in this article: MDCI

The Company's outstanding debt on its credit facility was $54.4 million at December 31, 2012, down $21.3 million from March 31, 2012. The credit facility consists of; (i) a term loan with $49.0 million outstanding at December 31, 2012 and (ii) a revolving credit facility with $5.3 million outstanding at December 31, 2012. As of December 31, 2012, the Company is in compliance with all covenants and financial ratios applicable under our credit facility. Furthermore, we believe that the anticipated future cash flow from operations, coupled with our cash on hand and available funds under our revolving credit facility will be sufficient to meet working capital requirements.

Investors Conference Call

Medical Action invites its stockholders and other interested parties to attend its conference call at 10:00 a.m. (ET) on February 11, 2013. You may listen to the conference call by calling (888) 868-9080 (domestic) or (973) 935-8511 (international); conference ID #97614083. The conference call will be simultaneously web cast on our website: www.medical-action.com . The complete call and discussion will be available for replay on our website beginning at 1:00 p.m. (ET) on February 11, 2013.

About Medical Action Industries Inc.

Medical Action Industries Inc. (Nasdaq:MDCI), is a diversified manufacturer and distributor of disposable medical devices and a leader in many of the markets where it competes. Its products are marketed primarily to acute care facilities in domestic and certain international markets. The Company has expanded its target market to include physician, dental and veterinary offices, out-patient surgery centers, long-term care facilities and laboratories. Medical Action's products are marketed nationally by its direct sales personnel and extensive network of healthcare distributors. The Company has preferred vendor agreements with national and regional distributors, as well as sole and multi-source agreements with group purchasing organizations. Medical Action's common stock trades on the NASDAQ Global Select Market under the symbol MDCI and is included in the Russell Microcap ® Index.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended All statements other than statements of historical fact are forward-looking statements for purposes of these provisions, including any projections of earnings, revenues or other financial items, any statements of the plans and objectives for management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. All forward-looking statements included in this news release are made as of the date hereof and are based on information available to us as of such date. The Company assumes no obligation to update any forward-looking statement. In some cases, forward-looking statements can be identified by the use of terminology such as "may," "will," "expects," "plans," "anticipates," "intends," "believes," "estimates," "potential," or "continue," or the negative thereof or other comparable terminology. Although the Company believes that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct, and actual results could differ materially from those projected or assumed in the forward-looking statements. Future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, including manufacturing inefficiencies, termination or interruption of relationships with our suppliers, potential delays in obtaining regulatory approvals, product recalls, product liability claims, our inability to successfully manage growth through acquisitions, our failure to comply with governing regulations, risks of international procurement of raw materials and finished goods, market acceptance of our products, market price of our Common Stock, foreign currency fluctuations, resin volatility and other factors referred to in our press releases and reports filed with the Securities and Exchange Commission (the "SEC").  Please see the Company's filings with the SEC, including, without limitation, the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Qs, which identify specific factors that would cause actual results or events to differ materially from those described in the forward-looking statements.

MEDICAL ACTION INDUSTRIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions, except per share data)
 
  December 31,  March 31, 
  2012 2012
  (Unaudited)  
  ASSETS    
Current Assets     
Cash and cash equivalents   $ 0.2  $ 5.4
Accounts receivable, less allowance for doubtful accounts of $0.8 at December 31, 2012 and $0.8 at March 31, 2012  28.7  30.8
Inventories, net   54.4  53.8
Prepaid expenses   2.1  1.8
Deferred income taxes   3.4  3.1
Prepaid income taxes   0.5  1.3
Other current assets   2.0  1.9
Total current assets   91.2  98.2
     
Property, plant and equipment, net of accumulated depreciation of $36.9 million at December 31, 2012 and $35.3 million at March 31, 2012  46.5  49.1
Goodwill   29.2  107.8
Other intangible assets, net   37.2  39.2
Other assets, net   2.4  2.9
Total assets   $ 206.6  $ 297.1
     
  LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities     
Accounts payable   $ 14.4  $ 11.3
Accrued expenses  22.5  18.1
Current portion of capital lease obligation  0.2  0.1
Current portion of long-term debt   7.3  8.0
Total current liabilities   44.4  37.6
     
Deferred income taxes   7.7  29.5
Capital lease obligation, less current portion   13.5  13.7
Long-term debt, less current portion   47.1  67.7
Total liabilities   112.6  148.3
     
Stockholders' equity:     
Common stock 40.0 shares authorized, $.001 par value; issued and outstanding 16.4 shares at December 31, 2012 and March 31, 2012  0.0  0.0
Additional paid-in capital  35.3  34.5
Accumulated other comprehensive loss   (0.7)  (0.7)
Retained earnings   59.5  115.0
Total stockholders' equity   94.0  148.8
Total liabilities and stockholders' equity   $ 206.6  $ 297.1
 
MEDICAL ACTION INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
 
  Three Months Ended December 31,  Nine Months Ended December 31, 
  2012 2011 2012 2011
  (Unaudited) (Unaudited)
         
Net sales  $ 109.4  $ 113.0  $ 333.7  $ 329.1
Cost of sales  90.3  95.8  280.2  278.3
Gross profit  19.1  17.1  53.5  50.8
         
Selling, general and administrative expenses  15.9  13.3  48.0  44.1
Goodwill impairment charge  78.6  --   78.6  -- 
Operating income (loss)  (75.4)  3.8  (73.1)  6.7
         
Interest expense, net  1.1  1.2  3.6  3.4
         
Income (loss) before income taxes and extraordinary item  (76.6)  2.6  (76.7)  3.3
Income tax expense (benefit)  (21.1)  0.8  (21.1)  1.1
Extraordinary gain, net of tax expense  --   --   --   0.4
         
Net income (loss)  $ (55.5)  $ 1.8  $ (55.6)  $ 2.6
         
Per share basis:        
Basic        
Income (loss) before extraordinary item  $ (3.39)  $ 0.11  $ (3.39)  $ 0.13
Extraordinary gain, net of tax expense  --   --   --   0.03
Net income (loss)  $ (3.39)  $ 0.11  $ (3.39)  $ 0.16
Weighted-average common shares outstanding (basic) 16.4 16.4 16.4 16.4
         
Diluted        
Income (loss) before extraordinary item  $ (3.39)  $ 0.11  $ (3.39)  $ 0.13
Extraordinary gain, net of tax expense  --   --   --   0.03
Net income (loss)  $ (3.39)  $ 0.11  $ (3.39)  $ 0.16
Weighted-average common shares outstanding (diluted) 16.4 16.4 16.4 16.4

Footnotes

The press release includes the use of non-GAAP financial measures that are not prepared in accordance with U.S. generally accepted accounting principles and that exclude the effects of a goodwill impairment charge recognized during the three months ended December 31, 2012 and professional fees related to our renegotiated credit agreement incurred during the three and nine months ended December 31, 2012 as well as a bonus accrual reversal and extraordinary gain reported during the comparable prior periods of fiscal 2012. These non-GAAP financial measures should not be considered a substitute for measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures have been used in this press release because management believes they are useful to investors by providing greater transparency to Medical Action's operating performance.

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