MEDTOX Scientific Announces Results for Fourth Quarter and Year-End

MEDTOX Scientific Announces Results for Fourth Quarter and Year-End 


ST. PAUL, Minn., March 2  /PRNewswire-FirstCall/ -- MEDTOX Scientific, Inc. 
announced today fourth-quarter and year-end revenues and earnings for the
periods ending December 31, 2003.  For the three-month period, revenues were
$12,277,000, compared to $12,123,000 from the prior-year period. The Company
recorded income from operations for the quarter of $167,000 compared to a loss
from operations of ($107,000) for the prior-year period. The Company recorded a
net loss of ($238,000) for the three-month period compared to a net loss of
($1,076,000) for the prior-year period. For the twelve-month period, revenues
were $51,473,000, compared to $52,024,000 for the prior-year period. The Company
recorded a net loss of ($308,000) for 2003 compared to net income of $11,737,000
for 2002.  The Company recorded a $10,150,000 non-cash tax benefit as part of
net income in 2002.

"We are encouraged by the results of the quarter," said Dick Braun, chief
executive officer of MEDTOX.  "Sample volume from the Company's existing
workplace drug testing clients, though not yet at the previous year's level,
showed improvement again this quarter.  Volume from new workplace drugs of abuse
clients also continued to be strong in the quarter, resulting in an increase in
workplace drugs of abuse sample volume of 3.7% over the fourth quarter last
year.

"Additionally, we continued to see positive net results from our LEAN projects,
staff reductions andexpense control measures," said Braun.  "In spite of
$249,000 in LEAN consulting and severance expense in the quarter, gross margin
for the quarter improved to 38.2% compared to 36.0% for the same period in 2002,
and selling, general and administrativeexpenses improved to 31.3% of revenues,
or $3,844,000, compared to 34.4% of revenues, or $4,165,000 for the prior-year,
a reduction in spending of 7.7%.  R&D expenses of $677,000 in the quarter
continued to run higher than the previous year and included recruiting and
hiring costs associated with the addition of Dr. Robert C. Bohannon as Vice
President of Technology, Research and Development in our Diagnostic Product
Division, as well as severance and other costs associated with reorganization of
thedepartment.  R&D expenses are expected to run between $450,000 and $500,000
per quarter for 2004."

The Company's steps to reduce costs and improve operating efficiencies
positively impacted the second half of 2003.  Although revenues remained level
at$25.8 million compared to $25.6 million for the six-month periods ended
December 31, 2003 and June 30, 2003, respectively, the Company experienced an
improved gross margin rate of 1% and an increase in income from operations to
$1,069,000 in the last six months of the year from $252,000 in the first half of
the year, or 324%.

Operating improvements in 2003 have also positively impacted the Company's
balance sheet at December 31, 2003 compared to December 31, 2002.  With a 1%
differential in year over year annual sales, accounts receivable have been
reduced from $9,398,000 to $8,367,000, or 11%; inventories have also been
reduced from $4,395,000 to $3,564,000, or 19%; and long-term obligations have
been reduced from $9,007,000 to $7,639,000, a reduction of $1,368,000 or 15%.
Cash flow generated by operating activities was $3,157,000 in 2003.

Margin improvement and a lower operating expense rate should have a positive
impact in 2004.  With the prospects of the strengthening economy creating an
opportunity for job growth, coupled with continuing new sales growth, the
Company is optimistic with respect to 2004 results.

MEDTOX will hold a teleconference to discuss fourth quarter and year-end results
today at 9:30 a.m. Central Time (10:30 a.m. Eastern).  Dialing 800-387-5648 a
few minutes prior to the scheduled start time on March 2 will access a
listen-only broadcast of the teleconference. International callers may access
the call by dialing 706-634-5527.  Callers should ask for the MEDTOX quarterly
conference call, hosted by Dick Braun, president and CEO of MEDTOX.  A
simultaneous webcast of the conference call will be available on the MEDTOX
website in the "investors" section at http://www.medtox.com/.  An audio replay
of the conference call will be available through March 9 at 800-642- 1687
Conference ID # 5489284. International callers may access the replay at
706-645-9291 with the same Conference ID #.

MEDTOX Scientific, Inc., headquartered in St. Paul, Minn., is a provider of high
quality specialized laboratory and on-site/point-of-collection (POC) devices.
The company also supports customers with complete logistics, data and program
management services. MEDTOX develops and manufactures diagnostic devices for
quick and economical on-site/point-of-collection analysis for drugs of abuse,
therapeutic drugs and biological and agricultural toxins and provides employment
drug screening and occupational health testing. MEDTOX is a leader in providing
esoteric laboratory testing servicesto hospitals and laboratories nationwide.
This includes both central laboratory and bio- analytical testing for
pharmaceutical clinical trials. For more information see http://www.medtox.com/
.

Note: Forward-looking statements contained in this press release are made under
the Private Securities Reform Act of 1995. Actual results may differ due to a
number of factors including a change in the employment pattern of client
companies, the ability of MEDTOX to acquire new business, and changes in the
competitive environment. Further discussions of factors that may cause such
results to differ are identified on page three of the Company's 2002 annual
report on Form 10-K and incorporated herein by reference.

                         MEDTOX SCIENTIFIC, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
             (Dollars in thousands except per share amounts)
                               (unaudited)

                                   Three Months Ended   Twelve Months Ended
           December 31,          December 31,
                                    2003       2002       2003       2002

  REVENUES:
    Laboratory services            $9,414     $9,234    $39,424    $39,673
    Product sales            2,863      2,889     12,049     12,351
                                   12,277     12,123     51,473     52,024

  COST OF REVENUES:
    Cost of services                6,351      6,608     26,357     26,792
    Cost of sales                   1,238      1,145      5,163      4,684
                                    7,589      7,753     31,520     31,476

  GROSS PROFIT                      4,688      4,370     19,953     20,548

  OPERATING EXPENSES:
    Selling, general
     and administrative             3,844      4,165     16,722     16,317
    Research and development          677        312      1,910      1,217
                                    4,521      4,477     18,632     17,534

  INCOME (LOSS) FROM OPERATIONS       167     (107)     1,321      3,014

  OTHER INCOME (EXPENSE):
    Interest expense, net            (271)      (319)    (1,147)    (1,344)
    Other expense, net               (119)       (17)      (482)       (83)
                                     (390)   (336)    (1,629)    (1,427)

  INCOME (LOSS) BEFORE INCOME
   TAX BENEFIT (EXPENSE)             (223)      (443)      (308)     1,587

  INCOME TAX BENEFIT (EXPENSE)        (15)      (633)         -     10,150

  NET INCOME (LOSS)                 $(238)   $(1,076)     $(308)   $11,737

  BASIC EARNINGS (LOSS) PER
   COMMON SHARE                    $(0.05)    $(0.22)    $(0.06)     $2.45

  DILUTED EARNINGS (LOSS) PER
   COMMON SHARE                    $(0.05)    $(0.22)    $(0.06)     $2.34

  WEIGHTED AVERAGE NUMBER
   OF SHARES OUTSTANDING:
      Basic                     4,979,655  4,811,340  4,942,617  4,798,098
      Diluted                   4,979,655  4,811,340  4,942,617  5,011,330


                         MEDTOX SCIENTIFIC, INC.
      CONSOLIDATED BALANCE SHEETS
                          (Dollars in thousands)
                               (unaudited)

                                              December 31,  December 31,
                                          2003          2002
  ASSETS
    Cash and cash equivalents                      $711          $439
    Accounts receivable                           8,367         9,398
    Inventories                                   3,564         4,395
    Other current assets                          2,664         2,018
      Total current assets                       15,306        16,250

    Building, equipment and improvements, net    15,092        14,769

    Other assets                                26,120        27,036
      Total assets                              $56,518       $58,055

  LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                         $13,809       $14,164

    Long-term obligations                         7,639         9,007

    Stockholders' equity                         35,070        34,884
      Total liabilities and stockholders'
       equity                                   $56,518       $58,055


DATASOURCE: MEDTOX Scientific, Inc.



CONTACT: Stephen Anderson of MEDTOX Scientific, Inc., [phone]



Web site:  http://www.medtox.com/ 

Copyright