July 17, 2003

FOR: ZOLL Medical Corporation

INVESTOR CONTACT: A. Ernest Whiton
Chief Financial Officer
ZOLL Medical Corporation
(978) 421-9655
PRESS CONTACT: Robert Minicucci
Corporate Communications Manager
ZOLL Medical Corporation
+1 (978) 421-9832
rminicucci@zoll.com




FOR IMMEDIATE RELEASE

ZOLL Medical Corporation Announces Record Third Quarter Results

Burlington, MA USA  Thursday, July 17, 2003 – ZOLL Medical Corporation (Nasdaq: ZOLL), a manufacturer of non-invasive cardiac resuscitation devices which provide pacing and defibrillation, today announced record third quarter revenues of $44,716,000, an increase of 29% as compared to revenues of $34,792,000 in the third quarter of last year. Net income for the quarter was $2,947,000, or $0.32 per diluted share, compared to $1,899,000, or $0.21 for the comparable prior year quarter, an increase of 55%.

The Company experienced growth in all major business segments during the third quarter. Total North American shipments increased 24% as compared to the previous year. Equipment sales to the North American hospital market increased 15% to $13.7 million, as compared to the third quarter of 2002. North American pre-hospital equipment sales increased 45% to $15.1 million over the same period a year ago. International sales increased 44% to $10.9 million as compared to the prior year quarter. Total sales of the new AED Plus product achieved $4.8 million, compared to just under $0.8 million last year.

Gross margins for the third quarter decreased slightly to 56.7% as compared to 57.4% in the prior year quarter. This decrease reflected increased shipments to the military market as compared to last year, including the balance of the US Military order and shipments to the German Army. These shipments have lower gross margins due to volume pricing.

Commenting on the third quarter results, Richard A. Packer, President and Chief Executive Officer of ZOLL, observed, “We achieved another solid quarter of growth in revenue and earnings. International investments continue to pay off as our strengthened distribution has allowed us to win new customers. In North America, while the purchasing environment continues to be challenging in our core EMS and Hospital markets, the new AED Plus and our military business have allowed us to continue to grow.”

Reviewing ZOLL’s progress in the AED market, Mr. Packer stated, “AED Plus sales increased significantly over the prior year as we were just starting to ship last year. We continue to expect to exceed $20 million in AED Plus sales this year, which would give us approximately 10% market share in our first full year. However, this market is highly competitive and we need to ramp up our level of effort if we are to continue to grow quickly. We will continue to focus on building distribution channels in this market and plan on adding significant resources to achieve our objectives. This market holds tremendous potential for ZOLL.”

Commenting on the short-term outlook, Mr. Packer said, “We expect to finish fiscal 2003 with a strong fourth quarter. Our outlook has remained unchanged. We remain cautious about the North American EMS and Hospital markets as we continue to see evidence of pressure on capital budgets. We believe International and AED’s will drive our growth.”

Mr. Packer concluded his comments, “Over the long-term, we see strong opportunities for growth across all our major markets driven by continued emphasis on the need to shorten response times to cardiac arrest and the technology shift to biphasic. New opportunities to expand our portfolio of resuscitation products, such as the ResQPOD and the Lifevest, will become increasingly important. In spite of some difficult short term market conditions, we see this as a time to invest in our future as we expand our global market presence.”


ZOLL Medical Corporation, headquartered in Burlington, MA, designs, manufactures and markets an integrated line of proprietary, non-invasive resuscitation devices and disposable electrodes. Used by health care professionals to provide both types of cardiac resuscitation – pacing and defibrillation – these products are essential in the emergency treatment of cardiac arrest victims, both inside and outside the hospital. ZOLL also designs and markets software that automates collection and management of both clinical and non-clinical data for emergency medical service providers. ZOLL has operations in the United States, Canada, United Kingdom, Germany, France, the Netherlands, and Australia, and business partners in all of the world’s major markets. For more information about ZOLL and its products, visit the ZOLL web site at www.zoll.com.

Certain statements contained in this press release, including statements regarding the anticipated development of the Company's business, the intent, belief or current expectations of the Company, its directors or its officers, primarily with respect to the Company's business model and future operating performance of the Company, including expectations regarding results in future periods, operating performance, our ability to grow AED sales, our ability to increase our International sales, our anticipation regarding second half results, our ability to capture market share and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements (as defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those factors discussed in the section entitled “Risk Factors” in the Company's Quarterly Report on Form 10-Q filed with the SEC on May 14, 2003, including the future performance of the direct sales operations, as well as uncertainties regarding the market acceptance and profitability of the ZOLL AED Plus, the length and severity of the current economic slowdown and its impact on capital spending budgets, the reduction in overall capital equipment expenditures in the hospital and pre-hospital markets, the impact of governmental budget restraints on the purchase of capital equipment, the impact on the Company’s operations during its planned move to Chelmsford, Massachusetts, the length and severity of the current SARS outbreak, or severe acute respiratory syndrome, the continued war in the Middle East, the impact of the war on terrorism, the potential disruption in the transportation industry on the Company’s supply chain and product distribution channels, and the desire or ability of other parties to purchase the Company's products.

(Financial Results to Follow)



  
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ZOLL MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

   June 29,
           2003

   September 29,
           2002

ASSETS

Current assets:

     Cash and cash equivalents

     $    56,050

     $    55,658

     Short-term investments

10,331

10,130

     Accounts receivable, net

42,288

42,927

     Inventory

35,826

29,140

     Prepaid expenses and other current assets

       3,889

       4,049

Total current assets

        148,384

        141,904

Property and equipment, net

          20,708

          19,542

Other assets, net

        8,610

        4,408

 $  177,702

 $  165,854

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

     Accounts payable

     $      7,992

         $     10,014

     Accrued expenses and other liabilities

      17,112

      12,780

Total current liabilities

25,104

22,794

Deferred income taxes

1,148

1,148

Total stockholders’ equity

     151,450

     141,912

$  177,702

$   165,854

 


ZOLL MEDICAL CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS

(in thousands, except per share and share data)

 

 

         Three Months Ended

         Nine Months Ended

         June 29,

     2003

   June 30,
2002

        June 29,

      2003

   June 30,
2002

Net sales

$      44,716

$     34,792

$     134,397  

$    102,850  

Cost of goods sold

       19,353

       14,810

60,541     

44,716     

Gross profit

25,363

19,982

73,856

58,134

Expenses:

 

 

 

 

     Selling and marketing

14,817

12,056

44,214

34,488

     General and administrative

3,088

2,997

9,298

8,015

     Research and development

3,575      

2,922      

10,275      

8,572      

     Total expenses

21,480     

17,975       

63,787    

51,075    

Income from operations

3,883

2,007

10,069

7,059

Income before taxes

4,398

2,873

11,914

8,616

Net income

$        2,947

     $      1,899

 $      7,983    

 $      5,690    

Earnings per share:

 

 

 

 

Basic

   $          0.33

 $        0.21

 $        0.89

 $        0.64

Diluted

 $          0.32

 $        0.21

 $        0.87

 $        0.62

Weighted average common shares:

 

 

 

 

Basic

9,056,000

8,929,000

9,019,000

8,912,000

Diluted

9,220,000

9,181,000

9,203,000

9,157,000

             



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