ALI Reports First Quarter 2001 Fiscal Results.

Business Editors

VANCOUVER, B.C.--(BUSINESS WIRE)--FEB. 9, 2001

A.L.I. TECHNOLOGIES (TSE: ALT.)

-- Record Sales in Radiology Image Management --

-- $0.03 Earnings per Share Before Restructuring and Goodwill --

(C$000)                      Revenue Net Income   EPS





				

				
				 
				


                                       (loss)

Q1-01 - Earnings Prior to
 Goodwill and Restructuring   $8,812    $316      $0.03
Q1-01 - Three months to
 December 31, 2000            $8,812   ($690)    ($0.06)
Q1-00 - Three months to
 December 13, 1999            $9,334    $892      $0.08

A.L.I. Technologies Inc. (ALI) announces its financial results for the first quarter - fiscal 2001 (Q1-01) ended December 31, 2000.

ALI reported sales of $8.8 million in the quarter, up 7% from the prior quarter and up 17% from the $7.7 million previously reported for the same quarter last year. Q1-00 revenues as restated due to the Company's change in revenue recognition policy were $9.3 million. Net income was $316,000 or $0.03 per share excluding the amortization of goodwill and a re-structuring charge on European operations.

ALI's strong first quarter results reflect continuing strong growth and record sales in the enterprise image management applications for radiology. During this quarter, ALI implemented radiology image management systems at the University of Wisconsin Hospital and Clinics in Madison, WI; San Antonio Community Hospital in Upland, CA; Rice Memorial Hospital in Willmar, MN; and the second phase of a project at Frankford Hospitals (Jefferson Health System) in Philadelphia, PA.

Greg Peet, Chairman and CEO said, "Our strong first quarter revenue reflects strong customer satisfaction and increasing demand for our large-scale radiology systems. Customer awareness of our product capabilities is growing as a result of successful projects with our current customers. Sales growth is also indicative of the healthcare industry's increased adoption of digital image management technology to address the need for lower costs, higher productivity and improved patient care. We are encouraged by a recent acceleration of sales proposal activity for enterprise-wide opportunities. Our exhibit at the Radiology Society of North America trade show in November 2000 introduced us to a record number of new customer opportunities and provided a forum for customers to complete their final diligence and selection."

The Company is restructuring its business in Europe. ALI wrote off the Company's investment in its European operations and is currently negotiating a distribution and license arrangement with ALI's European management group.

During Q1-01, ALI installed 9 new customer sites and expanded or upgraded 22 existing sites to support 82 new imaging devices (33 ultrasound and 49 other modalities). As of December 31, 2000, ALI's customer installed base under warranty or service contract was represented by 1,602 imaging devices (a 28% increase over Q1-00) at 426 customer sites (up 15% over the prior year), including 55 multi-site enterprise networks. Our business transition toward large-scale systems is reflected in an increasing number of medical devices per new system installed.

Financial Results

The Company adopted new accounting policies in respect of revenue recognition effective for fiscal 2000 and applied retroactively to restate prior year results. The new policy recognizes revenue upon customer acceptance of installation rather than the date of shipment. The change is expected to cause greater variability in quarterly revenue due to reduced management control over the date of revenue recognition.

Revenues for Q1-01 of $8.8 million were 7% higher than the prior quarter. Restated revenues for Q1-00 of $9.3 million included $3.2 million derived from two projects for which revenue recognition was deferred from the fourth quarter of fiscal 1999. Operating profits for the current quarter were $0.3 million or 3.4% of sales. The Company reserved $900 thousand to restructure European operations, including $375,000 for write-down of intellectual property. Net income excluding this restructuring charge and amortization of goodwill was $316,000 or $0.03 per share. A net loss of $690,000 or $.06 per share was recorded in Q1-01 compared to earnings of $892,000 or $0.08 per share in the prior year.

Operating margins were 53% in Q1-01 compared to 50% in the same quarter last year, and a significant improvement over the 48% recorded in the prior quarter. Operating expenses increased $0.6 million versus Q1-00 due to a strategic focus on marketing programs and continuing investment in research and development. Interest income of $107 thousand declined on reduced money-market assets. A foreign exchange loss of $127 thousand was realized due to a stronger Canadian dollar against the US dollar.

Cash and money market assets of $10.0 million increased by $1.1 million this quarter due to faster collection of accounts receivable and inventory reductions. The Company's financial position and liquidity remains healthy.

In Summary

ALI's Q1-01 results provide considerable improvement in the fundamentals of the business. Changing the business arrangement in Europe has eliminated any business risk from these operations.

The Company is projecting continuing growth and improved profitability, especially in the second half of this fiscal year.

ALI will hold its quarterly analysts' teleconference on Monday, February 12, 2001 at 8:00 am PST or 11:00 am EST. Audio playback of this information may be accessed by calling (416) 695-9731 after 9:30 am PST or 12:30 pm EST on February 12, 2001 and will be available until Sunday, February 25, 2001.

The statements contained in this news release that are forward-looking are based on current expectations that are subject to a number of uncertainties and risks, and actual results may differ materially. These uncertainties and risks include, but are not limited to: the management of the growth of the Company, dependence on key personnel of the Company, competitive pressures (including price competition), changes in market activity, risks associated with international operations, the development of new products and services, the enhancement of existing products and services, the introduction of competing products having technological and/or other advantages, the dependence on key customers, regulatory changes to the health care industry, economic and political conditions and adequate protection of the proprietary interests of the Company.

A.L.I. TECHNOLOGIES INC.
(Consolidated - expressed in thousands of dollars)
                                                       % Change
                                  Dec.31/00 Dec.31/99     Yr/Yr
                                  --------- ---------  --------
Condensed Balance Sheets (CDN$):
Cash and cash equivalents            $1,901      $642      196%
Cash held in escrow                       -       581        NM
Short-term investments                8,121    13,576      -40%
Accounts receivable                   7,064     3,735       89%
Inventories                           4,481     7,203      -38%
Prepaid expenses                        513       601      -15%
Future income taxes                     105       815        NM
                                  --------- ---------  --------
Current assets                       22,185    27,153      -18%

Capital and other assets              7,387     9,536      -23%
                                  --------- ---------  --------
                                    $29,572   $36,689      -19%
                                  ========= =========  ========

Current liabilities                   6,929     6,473        7%
Long-term liabilities                   145       168      -14%
Shareholders' equity                 22,498    30,048      -25%
                                  --------- ---------  --------
                                    $29,572   $36,689      -19%
                                  ========= =========  ========


Condensed Statement of Operations         Three Months Ended
                                  Dec.31/00 Dec.31/99     Yr/Yr

Sales                                 8,812     9,334       -6%

Gross profit                          4,641     4,624        0%

Amortization                            392       384        2%
Sales and marketing                   1,710     1,541       11%
General and administrative              703       683        3%
Research and development (net)        1,492     1,122       33%
                                  --------- ---------  --------
Operating expenses                    4,297     3,730       15%
                                  --------- ---------  --------
Earnings from operations                344       894      -62%

Interest income                         107       168      -36%
Foreign exchange loss                  (127)      (88)       NM
Other items                            (898)         -       NM

Income (loss)  before amortization
of goodwill & income tax               (574)      974        NM
Income tax expense (recovery)             8       (28)       NM
                                  --------- ---------  --------
Income (loss) before amortization
 of goodwill                         $(582)    $1,002        NM
Amortization of goodwill              (108)      (110)       NM
                                  --------- ---------  --------
Net income (loss)                    $(690)      $892        NM
                                  ========= =========  ========

Net income (loss) per share before
amortization of goodwill            $(0.05)     $0.09        NM
                                  ========= =========  ========
Net income (loss) per share         $(0.06)     $0.08        NM
                                  ========= =========  ========

NM=Not Meaningful