Medical Action Industries Inc. (MAI) (NASDAQ NM: MDCI) develops, manufactures and distributes a variety of disposable, surgical-related products. The company has made its mark through offering highest-quality products at competitive prices and through excellent service. MAI's products are marketed primarily to acute care facilities in domestic and certain international markets, and the company is expanding its end-user base to include physician, dental and veterinary offices. MAI is the leading manufacturer and distributor of sterile laparotomy sponges and sterile operating room towels in the U.S. Its products are marketed through an extensive network of independent distributors, direct sales personnel and manufacturers' representatives. MAI enjoys preferred vendor agreements with national distributors, as well as sole source and/or committed contracts with nearly every major group purchasing alliance. The company also manufactures its products under private label programs with other distributors and medical suppliers. With headquarters in Hauppauge, N.Y., the company's manufacturing, packaging and warehousing activities are conducted in its Arden, N.C. and Clarksburg, W.V. facilities 

http://www.medical-action.com/

HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Nov. 6, 2008--Medical Action Industries Inc. (NASDAQ/MDCI), a leading supplier of medical and surgical disposable products, today reported higher revenue for the three and six months ended September 30, 2008.

Net sales for the second quarter amounted to $73,824,000, an increase of $1,539,000, or 2% over the $72,285,000 in net sales reported for the three months ended September 30, 2007. Net income for the second quarter was $480,000, or $.03 per basic and diluted share, a decrease of $2,788,000, or 85%, as compared with $3,268,000, or $.21 per basic share ($.20 per diluted share), reported for the three months ended September 30, 2007.

Net sales for the six months ended September 30, 2008 amounted to $151,219,000, an increase of $8,688,000 or 6% over the $142,531,000 in net sales reported for the six months ended September 30, 2007. Net income for the six months ended September 30, 2008 amounted to $3,026,000 or $.19 per basic and diluted share, a decrease of $3,754,000 or 55%, as compared with $6,780,000 or $.43 per basic share ($.42 per diluted share) reported for the comparable six months in fiscal 2008.

"While second quarter and six month revenues reached record levels, our primary focus is the effective management of three challenges to our profitability: higher resin prices, increased costs for Chinese produced products and the efficiency of our Tennessee plant," said Paul D. Meringolo, Chief Executive Officer and President of Medical Action Industries Inc. "We've discussed these issues for some time, including their potential impact on gross margins. Recently we have seen declines in resin prices which will not benefit the company until the fourth quarter as a result of significant purchases made in June and July of 2008 at higher than current market prices."

"To address higher raw material and product costs from China," he added, "we've continued to implement prudent, strategic price increases that maintain our unique competitive position and a sound, loyal customer base. Volatile oil prices, higher Chinese labor costs and currency fluctuations have had a significant impact on the entire medical products industry. We'll continue to monitor those factors and their potential effect on future performance."

"In Tennessee," Meringolo said, "we moved ahead with our plant upgrades during the second quarter, including installation of additional injection molding machines and robotic equipment. As we've stated previously, we expect this work to continue through fiscal 2009. Long-term, our aim is to reduce costs and expand our ability to manufacture and deliver an even broader range of highly competitive, resin-based products."

Meringolo said that the total cost of these three challenges was approximately $6,578,000 and $11,310,000 for the three and six months ended September 30, 2008, respectively. Of this total, increased resin costs contributed $2,402,000 and $4,128,000, respectively. Chinese product expenses were approximately $1,841,000 and $3,312,000 and efficiency related costs at the Tennessee plant were approximately $2,335,000 and $3,870,000 for the three and six months ended September 30, 2008, respectively. "We continue to work diligently on eliminating these inefficiencies, which will provide opportunities for us in the future," said Paul D. Meringolo, Chief Executive Officer and President of Medical Action Industries Inc.