BRENTWOOD, N.Y., Aug. 1, 2013 (GLOBE NEWSWIRE) -- Medical Action Industries Inc. (the "Company") (Nasdaq:MDCI), a leading supplier of medical and surgical disposable products, today reported financial results for the first quarter ended June 30, 2013, including net sales of $107.2 million and gross profit of $17.7 million or 16.5% of net sales. The Company generated net income of $0.3 million or $0.02 per diluted share and EBITDA, as adjusted of $4.5 million. The reported gross profit, net income and EBITDA, as adjusted results represent increases versus the comparable results for the same period of fiscal year 2013.

Paul D. Meringolo, Chief Executive Officer, said, "As in recent quarters, our cost savings initiatives, the elimination of unprofitable sales and a reduction in raw material costs continue to be the key drivers behind the profitability improvements we are reporting today. I am extremely pleased at our management team's ability to manage these improvements without compromising their focus on delivering exceptional service and value to our customers. I continue to be excited about the numerous obtainable profit improvement initiatives we have identified which should yield further near-term improvement in financial results and continue to enhance stockholder value."

First Quarter Results of Fiscal Year 2014

Net sales for the first quarter of fiscal year 2014 were $107.2 million, down $5.0 million or 4.5% from net sales of $112.2 million for the first quarter of fiscal year 2013. This 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 $17.7 million, or 16.5% of net sales, represents an improvement over the gross profit reported in the prior year period of $16.9 million or 15.1% of net sales. This improvement in gross profit is the result of management's cost savings initiatives, elimination of unprofitable sales and a reduction in raw material costs.

Net income for the first quarter of fiscal year 2014 was $0.3 million or $0.02 per diluted share, compared to a reported net loss of $0.1 million or $0.01 per diluted share for the same period of fiscal year 2013. The after-tax results for the first quarter of fiscal year 2014 were negatively impacted by a non-recurring, non-cash write-off of deferred financing costs of $0.4 million related to the repayment and cancellation of all amounts owed under the Company's Prior Credit Agreement, as defined below.

Liquidity and Capital Resources

On May 17, 2013, the Company entered into a credit agreement (the "New Credit Agreement") consisting of term and revolving loans with Wells Fargo Bank, National Association. A portion of the proceeds from the New Credit Agreement was used to repay and cancel all amounts owed under the Company's prior credit agreement (the "Prior Credit Agreement"). The New Credit Agreement removed certain restrictive covenants and other obligations to which the Company was subject under the Prior Credit Agreement and will generally result in lower interest rates.

The New Credit Agreement provides for a maximum borrowing capacity of $65.0 million, consisting of the following loans: (i) a $11.5 million secured term loan with $11.4 million outstanding at June 30, 2013, (ii) $5.0 million in secured delayed draw term loans which had not been drawn upon by the Company as of June 30, 2013 and (iii) up to $53.5 million in secured revolving loans with $42.0 million outstanding at June 30, 2013, which secured revolving loans may be reduced by the amount of any outstanding delayed draw term loans drawn upon by the Company. The Company's outstanding debt under the New Credit Agreement of $53.4 million at June 30, 2013, represented an increase of $0.7 million from outstanding debt under the Prior Credit Agreement at March 31, 2013. As of June 30, 2013, (i) the Company had $10.5 million available for additional borrowing under the New Credit Agreement and (ii) the Company was in compliance with all covenants and financial ratios applicable under the New Credit Agreement.

Cash and cash equivalents were $0.1 million at June 30, 2013, which represents a decrease of $0.4 million from March 31, 2013. The Company believes that the anticipated future cash flow from operations, coupled with the Company's cash on hand and available funds under the New Credit Agreement will be sufficient to meet working capital requirements for the next twelve months.

Investors Conference Call

The Company invites its stockholders and other interested parties to attend its conference call at 10:00 a.m. (ET) on August 1, 2013. You may listen to the conference call by calling (888) 868-9080 (domestic) or (973) 935-8511 (international); conference ID #21854663. The conference call will be simultaneously web cast on the Company's website: www.medical-action.com. The complete call and discussion will be available for replay on the Company's website beginning at 1:00 p.m. (ET) on August 1, 2013 until August 1, 2014.

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. The Company'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. The Company's common stock trades on the NASDAQ Global Select Market under the symbol MDCI and is included in the Russell 2000® 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 the Company 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 the Company's suppliers, potential delays in obtaining regulatory approvals, product recalls, product liability claims, the Company's inability to successfully manage growth through acquisitions, the Company's failure to comply with governing regulations, risks of international procurement of raw materials and finished goods, market acceptance of the Company's products, market price of the Company's Common Stock, foreign currency fluctuations, resin volatility and other factors referred to in the Company's 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-Q, 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
(in millions, except per share data)
June 30,
2013 		March 31,
2013
ASSETS (unaudited)
Current Assets 
Cash and cash equivalents   $ 0.1  $ 0.6
Accounts receivable, less allowance for doubtful accounts of $0.8 at June 30, 2013 and March 31, 2013   34.2  32.6
Inventories, net   50.2  53.0
Prepaid expenses   2.2  1.4
Deferred income taxes   1.4  1.4
Prepaid income taxes   1.0  1.0
Other current assets   2.2  2.3
 Total current assets  91.3  92.3
Property, plant and equipment, net of accumulated depreciation of $38.3 at June 30, 2013 and $38.1 at March 31, 2013  44.2  45.0
Goodwill   30.0  30.0
Other intangible assets, net   35.9  36.6
Other assets, net   7.3  3.0
 Total assets  $ 208.8  $ 206.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities 
Accounts payable   $ 16.1  $ 13.5
Accrued expenses  19.1  25.1
Current portion of capital lease obligations   0.2  0.2
Current portion of long-term debt   1.4  1.4
 Total current liabilities  36.7  40.2
Other long-term liabilities  4.8  0.6
Deferred income taxes   6.4  6.4
Capital lease obligations, less current portion   13.4  13.5
Long-term debt, less current portion   52.0  51.3
 Total liabilities   113.4  112.0
Stockholders' Equity: 
Common stock 40.0 shares authorized, $.001 par value; issued and outstanding 16.4 shares at June 30, 2013 and March 31, 2013  0.0  0.0
Additional paid-in capital  35.7  35.5
Accumulated other comprehensive loss   (0.8)  (0.8)
Retained earnings   60.5  60.2
 Total stockholders' equity   95.4  94.9
 Total liabilities and stockholders' equity  $ 208.8  $ 206.9
MEDICAL ACTION INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Three Months Ended June 30,
2013 2012
 (Unaudited)
Net sales  $ 107.2  $ 112.2
Cost of sales  89.5  95.3
Gross profit  17.7  16.9
Selling, general and administrative expenses  15.6  15.9
Operating income  2.1  1.0
Interest expense, net  1.7  1.2
Income (loss) before income taxes  0.5  (0.2)
Income tax expense (benefit)  0.2  (0.1)
Net income (loss)  $ 0.3  $ (0.1)
Earnings (loss) per share:
Basic
Net income (loss)  $ 0.02  $ (0.01)
Weighted-average common shares outstanding (basic)  16.4  16.4
Diluted
Net income (loss)  $ 0.02  $ (0.01)
Weighted-average common shares outstanding (diluted)  16.5  16.4

Reconciliation of net income (loss) to EBITDA and EBITDA, as adjusted

The press release includes the use of non-GAAP financial measures that are not prepared in accordance with U.S. generally accepted accounting principles. These non-GAAP financial measures should not be considered a substitute for measures of financial performance prepared in accordance with GAAP and have been used in this press release because management believes it is useful to investors by providing greater transparency to the Company's operating performance.

(in millions) Three Months Ended
June 30,
2013 2012
(Unaudited)
Net income (loss)  $ 0.3  $ (0.1)
Interest expense  1.7  1.2
Income tax expense (benefit)  0.2  (0.1)
Depreciation  1.2  1.3
Amortization  0.9  1.0
EBITDA  $ 4.3  $ 3.3
Stock-based compensation  $ 0.2  $ 0.2
Professional fees related to Prior Credit Agreement  --   0.3
EBITDA, as adjusted  $ 4.5  $ 3.8

EBITDA is defined as earnings (loss) before interest (including the write-off of deferred financing costs of $0.7 million during the three months ended June 30, 2013), income taxes, depreciation and amortization.  EBITDA is a non-GAAP financial measure.

EBITDA, as adjusted, represents EBITDA as defined above adjusted for stock-based compensation and certain professional fees which were related to our Prior Credit Agreement. Stock-based compensation represents compensation expenses associated with stock options and restricted stock.

Management believes EBITDA and EBITDA, as adjusted, to be meaningful indicators of our performance that provides useful information to investors regarding our financial condition and results of operations. Presentations of EBITDA and EBITDA, as adjusted, are non-GAAP financial measures commonly used by financial analysts and our lender to measure operating performance. While management considers EBITDA and EBITDA, as adjusted, to be important measures of comparative operating performance, they should be considered in addition to, but not as a substitute for, net income and other measures of financial performance reported in accordance with GAAP. EBITDA and EBITDA, as adjusted do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA or EBITDA, as adjusted in the same manner and the measure as presented may not be comparable to similarly-titled measures presented by other companies.

CONTACT: Brian Baker - Vice President of Finance
         and Principal Accounting Officer
         MEDICAL ACTION INDUSTRIES INC.
         (631) 231-4600
Medical Action Industries Inc.
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