DFIB Cardiac Science (MM)

Cardiac Science Announces 2004 Third Quarter, Nine-Month Results IRVINE, Calif., Oct. 27 /PRNewswire-FirstCall/ -- Cardiac Science, Inc. (NASDAQ:DFIB), a leading manufacturer of life-saving automated public access defibrillators (AEDs) and provider of comprehensive AED/CPR training services, today reported revenues of $14.7 million for the third quarter ended September 30, 2004, with revenues for the nine-month period totaling $47.9 million, as compared to $15.7 million and $44.3 million, respectively, reported for the same prior year periods. At quarter end, the company had approximately $575,000 in backorders due primarily to a higher than expected mix of the recently introduced Powerheart G3 Automatic. Revenue from the sale of AEDs and related services for the third quarter ended September 30, 2004 totaled $14.2 million, of which $1.8 million was attributable to the delivery of AED/CPR training services. Approximately 96 percent of the revenue in the quarter was related to the sale of AEDs and training services, as the company completed the divestiture of other product lines during the quarter. The gross profit margin for the third quarter and nine months ended September 30, 2004 was 55.0 percent and 56.2 percent, respectively, compared to 60.5 percent and 58.2 percent in the same prior year periods. The decline for the third quarter was principally due to a higher mix of international OEM sales, which have a lower gross margin when compared to domestic direct sales. Excluding a one-time gain (net of other expenses) on the sale of product lines of $797,000, operating expenses for the three months ended September 30, 2004 were $12.2 million, down sequentially compared to the $13.5 million in the second quarter of this year. The decrease was in line with the company's guidance from last quarter and was primarily due to certain cost reduction initiatives instituted during the second quarter. The operating loss for the third quarter and nine months ended September 30, 2004 was $3.3 million and $10.1 million, respectively, compared to an operating loss of $264,000 and $2.1 million in the same periods last year. The net loss for the third quarter of 2004 was $5.1 million, or $0.06 loss per share, as compared to $1.5 million, or $0.02 loss per share in the same quarter of 2003. The net loss for the nine months ended September 30, 2004 was $15.2 million, or $0.19 loss per share, compared to $6.0 million, or $0.09 loss per share, in the same period in 2003. The September 30, 2004 balance sheet showed cash and cash equivalents of $15.4 million. Cardiac Science Chairman and CEO Raymond W. Cohen said that while quarter- to-quarter revenue levels have been inconsistent and difficult to predict, management expects a concentration of large international orders to be shipped in the fourth quarter that should lead to stronger top- and bottom-line results, with revenue for the fourth quarter anticipated to be between $18 and $20 million. Cohen added the company is focused on quickly capturing the additional revenue it needs to reach operating profitability and cash flow breakeven. "We are encouraged by a number of factors as we continue into the fourth quarter. Interest in AEDs appears to be higher than at any time in the history of the product category and market acceptance of our two new Powerheart AED G3 models, the G3 Auto and the G3 Pro, and in particular, the fully-automatic version has been favorable. Demand for AEDs in the international market also appears to be growing nicely and the recent sole- supplier award from the U.K. government provides us with not only a $3 million AED contract, but we believe it also positions Cardiac Science as the market leader in the U.K. Above all, demand for Cardiac Science-manufactured product in the Japanese market is especially strong where we expect to ship over $3 million of AEDs in the fourth quarter alone," said Cohen. Conference Call Information Management will host a conference call regarding its results for the third quarter and nine-months ended September 30, 2004 which will be broadcast live on the Internet at 11:30 a.m. EDT on October 27, 2004. Management encourages shareholders and other interested parties to listen to the live webcast by going to the company's website at http://www.cardiacscience.com/. Web participants should go to the company's website at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. The online archive of the call will be available immediately following the conference call. About Cardiac Science Cardiac Science develops, manufactures and markets Powerheart(R)-brand public-access defibrillators (AEDs) and offers comprehensive AED/CPR training services that facilitate successful deployments. The company also makes the Powerheart(R) CRM(TM), the only FDA-cleared therapeutic patient monitor that instantly and automatically treats hospitalized cardiac patients who suffer life-threatening heart rhythms. Cardiac Science products are sold by its 50 person direct sales force and a network of distributors in the U.S., and through distributors in over 45 countries worldwide. Cardiac Science also manufactures its AED products on a private label basis for other leading medical companies including Nihon Kohden (Japan), Quinton Cardiology Systems and GE Healthcare. For more information, please visit http://www.cardiacscience.com/. This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time the company, or its representatives, have made or may make forward looking statements orally or in writing. The words "estimate," "potential," "intended," "expect," "anticipate," "believe," and other similar expressions or words are intended to identify forward looking statements. Such forward-looking statements include, but are not limited to the achievement of future revenue growth and other expected financial results. Cardiac Science cautions that these statements are subject to substantial risks and uncertainties and are qualified by important factors that could cause actual results to differ materially from those reflected by the forward- looking statements and should not be relied upon by investors when making an investment decision. Information on these and other factors is detailed in the company's Form 10-K for the year ended December 31, 2003, subsequent quarterly filings, and other documents filed by the company with the Securities and Exchange Commission. For further information please contact: Matt Clawson (Investors), , or Len Hall (Media), , both of Allen & Caron Inc, +1-949-474-4300, for Cardiac Science, Inc.; or Roderick de Greef, Chief Financial Officer of Cardiac Science, Inc., +1-949-797-3800, Cardiac Science, Inc. Consolidated Statement of Operations (Unaudited) In thousands, except share and per share amounts Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Revenue $14,747 $15,728 $47,860 $44,279 Cost of goods sold 6,636 6,217 20,967 18,527 Gross profit 8,111 9,511 26,893 25,752 Operating expenses: Sales and marketing 5,561 4,564 18,511 12,927 Research and development 1,373 1,444 4,498 3,939 General and administrative 4,758 3,386 13,521 9,800 Amortization of intangible assets 519 381 1,526 1,211 Gain on sale of product lines and other, net (797) -- (1,077) -- Total operating expenses 11,414 9,775 36,979 27,877 Loss from operations (3,303) (264) (10,086) (2,125) Interest and other expense, net (1,767) (1,482) (5,137) (4,366) Loss before minority interest and discontinued operations (5,070) (1,746) (15,223) (6,491) Minority interest in consolidated subsidiary -- -- -- (48) Income from discontinued operations -- 256 -- 493 Net loss $(5,070) $(1,490) $(15,223) $(6,046) Net loss per share (basic and diluted) $(0.06) $(0.02) $(0.19) $(0.09) Weighted average number of shares used in the computation of net loss per share 85,072,387 67,398,421 80,649,695 67,050,032 Cardiac Science, Inc. Condensed Consolidated Balance Sheets (Unaudited) In thousands September 30, December 31, 2004 2003 ASSETS Current assets: Cash and cash equivalents $15,415 $8,871 Accounts receivable, net 15,454 20,410 Inventory 10,140 9,575 Prepaid expenses 2,998 2,154 Total current assets 44,007 41,010 Property and equipment, net 5,133 7,003 Goodwill and other intangibles, net 150,715 151,485 Other assets 2,914 3,503 $202,769 $203,001 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $6,514 $8,955 Accrued expenses and other current liabilities 6,806 6,595 Deferred revenue 2,039 2,479 Total current liabilities 15,359 18,029 Senior secured promissory notes 49,856 46,481 Other long term liabilities 766 900 Total stockholders' equity 136,788 137,591 $202,769 $203,001 DATASOURCE: Cardiac Science, Inc. CONTACT: Matt Clawson (Investors), , or Len Hall (Media), , both of Allen & Caron Inc, +1-949-474-4300, for Cardiac Science, Inc.; or Roderick de Greef, Chief Financial Officer of Cardiac Science, Inc., +1-949-797-3800, Web site: http://www.cardiacscience.com/

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