Medical Action Industries Reports First Quarter Fiscal Year 2014 Results

Medical Action Industries Reports First Quarter Fiscal Year 2014 Results

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

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:
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.

(in millions, except per share data)
                                                        June 30,    March 31,
                                                         2013        2013
ASSETS                                                   (unaudited) 
Current Assets                                                     
Cash and cash equivalents                               $0.1      $0.6
Accounts receivable, less allowance for doubtful         34.2       32.6
accounts of $0.8 at June 30, 2013 and March 31, 2013
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      44.2       45.0
March 31, 2013
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 andoutstanding 16.4 shares at June 30, 2013 and  0.0        0.0
March 31, 2013
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

(in millions, except per share data)
                                                Three Months Ended June 30,
                                                2013          2012
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:                                    
Net income (loss)                                $0.02       $(0.01)
Weighted-average common shares outstanding       16.4         16.4
Net income (loss)                                $0.02       $(0.01)
Weighted-average common shares outstanding       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
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
         (631) 231-4600

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