January 16, 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 First Quarter Results

Burlington, Massachusetts  Thursday, January 16, 2003 – ZOLL Medical Corporation (Nasdaq: ZOLL), a manufacturer of non-invasive cardiac resuscitation devices which provide pacing and defibrillation, today announced record first quarter net revenues of $43,092,000, an increase of 29% as compared to net revenues of $33,345,000 for the comparable prior year quarter. Net income for the first quarter increased 20% to $2,281,000 as compared to $1,894,000 for the first quarter of the prior year. Earnings per diluted share increased to $0.25 as compared to $0.21 for the comparable prior year period.

The Company experienced growth in all markets compared to the same period in the prior year. The increase in International sales led the Company, with 90% growth from $7.4 million to $14.0 million. Shipments to the North American market increased 12% to $29.1 million from $26.0 million in the prior year quarter. North American hospital shipments increased 6% from $12.3 million to $13.0 million. North American pre-hospital shipments increased 23%, from $9.2 million to $11.3 million.

Commenting on the first quarter results, Richard A. Packer, President and Chief Executive Officer of ZOLL, observed, “Overall, this was a solid quarter for ZOLL. The strong performance in our International direct operations was highlighted by sales more than doubling in France, Germany and the U.K., and a 60% increase in Australian sales from the prior year. We have been investing significant resources in these operations and it looks like we are gaining momentum. Our distributor operations also performed very well. This strong International performance allowed us to post high revenue growth while building our backlog in North America. As previously disclosed, during the first quarter we received our single largest order in ZOLL’s history, an $8.9 million award from the United States Military to standardize their transport defibrillators to the M Series CCT, a key competitive win for ZOLL. This order remained in our backlog at the end of our first quarter and is expected to ship during the second and third quarters.”

Gross margins for the quarter decreased from 57% to 54% as compared to the prior year reflecting the disproportionate increase in International shipments relative to North American shipments. Included in shipments was an approximately $1.6 million shipment to the German Army. International shipments through both direct operations and distributors typically achieve gross margins lower than the Corporate average.

With respect to the rapidly growing public access defibrillation (PAD) market, Mr. Packer noted, “We continued to make progress in building our PAD distribution during the first quarter. AED Plus orders increased sequentially by more than 30% as compared to the fourth quarter of 2002. We are seeing success in penetrating the alternate care markets where we continued to add new distributors this quarter. In the U.S., we now have approximately 100 distributors and 40 manufacturers reps covering alternate care markets not previously covered by ZOLL’s direct sales force. We will add additional sales people to our team this quarter to further penetrate this market.”

Looking to the future, Mr. Packer commented, “In addition to the success of the core business this quarter, we also put in place new initiatives to position us for the future. The two equity investment/distribution agreements announced earlier represent new pieces of ZOLL’s future. The LIFECOR LifeVest™ System will add a key technology to our defibrillator product line, while the ResQSystems ResQPOD™ represents an important expansion of our resuscitation focus beyond the shock. Both of these products fit very closely with our current product focus and distribution strengths. Each product represents an opportunity to build a business over time that could be significant in size, while not distracting ZOLL from today’s large opportunities in defibrillation.”

Mr. Packer concluded, “Our future outlook remains positive. The International pipeline continues to look strong. We expect strong growth in the North American hospital market in the second quarter. Additionally, we believe we are still only scratching the surface of the AED market around the world. Our balance sheet and cash flow continue to be very strong. We believe we are on track to continue to grow in 2003.”

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 www.zoll.com.


Certain statements contained in this press release, including statements regarding the anticipated development of ZOLL’s business, the intent, belief or current expectations of ZOLL, its directors or its officers, primarily with respect to ZOLL’s business model and future operating performance of ZOLL, including expectations regarding results in future periods, operating performance and contributions to results from ZOLL’s new Public Access Defibrillation product, 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 ZOLL’s Annual Report on Form 10-K filed on December 30, 2002, including the future performance of the direct sales operations, as well as uncertainties regarding the market, acceptance and profitability of the ZOLL AED Plus and M Series CCT, 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 of the continued war on terrorism, the potential disruption in the transportation industry on ZOLL’s supply chain and product distribution channels, and the desire or ability of other parties to purchase ZOLL’s products.

(Financial Results to Follow)

ZOLL MEDICAL CORPORATION

CONDENSED CONSOLIDATED INCOME STATEMENTS

(in thousands except per share data)

 

 

 

 

 

 

         Three Months Ended

 

December 29,

2002

December 30,

2001

 

Net sales

$         43,092

$         33,345

Cost of goods sold

       20,042

       14,486

Gross profit

23,050

18,859

 

Expenses:

 

 

     Selling and marketing

14,229

11,112

     General and administrative

2,996

2,506

     Research and development

      3,056

       2,692

     Total expenses

     20,281

      16,310

 

Income from operations

2,769

2,549

     Other income

       635

       320

Income before taxes

3,404

2,869

      Taxes

1,123

975

 

Net income

 

 

$           2,281

 

$           1,894

Earnings per share:

 

 

Basic

 $             0.25

 $             0.21

Diluted

  $             0.25

 $             0.21

Weighted average common shares:

 

 

Basic

8,968

8,894

Diluted

9,183

9,153



 

 ZOLL MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

 

 

   December 29,
           2002

   September 29,
           2002

ASSETS

 

 

Current assets:

 

 

     Cash and cash equivalents

     $     46,018

     $     55,658

     Short-term investments

23,616

10,130

     Accounts receivable, net

41,494

42,927

     Inventory

29,952

29,140

     Prepaid expenses and other current assets

            3,944

            4,049

Total current assets

        145,024

        141,904

Property and equipment, net

          19,006

          19,542

Other assets, net

            7,901

            4,408

 

 

$    171,931

$    165,854

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

     Accounts payable

     $       11,801

     $      10,014

     Accrued expenses and other liabilities

          13,667

          12,780

Total current liabilities

25,468

22,794

Deferred income taxes

1,148

1,148

Total stockholders’ equity

         145,315

         141,912

 

$      171,931

$     165,854

 

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