Cardiac Science Announces Third Quart...(r a temporary ship hold the Company's ma...),Health

Date:11/9/2009

r a temporary ship hold, the Company's manufacturing and quality teams performed well, filling the vast majority of open orders that had accumulated during the ship hold. Cardiac monitoring revenue decreased 15% compared to the prior year period, driven by slowed demand in the hospital and physician office markets.

The Company recorded a charge of $18.5 million for estimated costs relating to an initiative to improve the reliability of approximately 300,000 AEDs in the field. The Company has determined that, in very rare instances, AEDs may fail to deliver therapy due to a suspect component. The Company has improved its manufacturing process to enhance component reliability in forward production and has elected to undertake an initiative to further strengthen the reliability of field units. The initiative is expected to cost $18.5 million, but the Company is still in discussion with the FDA and other stakeholders to determine the final scope and details. Actual costs may be more or less than the amount of the estimated charge, based on a number of factors.

In addition, the Company's third quarter results reflect a charge to earnings of $44.0 million to increase its valuation allowance against deferred income tax assets. In light of recent losses, including the $18.5 million charge relating to the anticipated field initiative, the Company has made an assessment that the realization of the benefit of its deferred tax assets, primarily comprised of income tax loss and tax credit carry-forwards, is not "more likely than not" in accordance with applicable GAAP guidelines and has therefore increased its valuation allowance against those assets. This is a non-cash charge that has no impact on the Company's liquidity and the tax loss and credit carry-forwards remain available to offset future cash income taxes when the Company regains profitability.

"Gaining clarity on the financial impact of the component issue will allow all of our stake
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SOURCE Cardiac Science Corporation Copyright©2009 PR Newswire. All rights reserved

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