CCS Medical Frequently Asked Questions

1. What was announced today?
   
   Today we announced that we have reached agreement with certain holders of our first-lien loan,
   which will significantly reduce our debt and improve our capital structure. To facilitate our financial restructuring, today CCS Medical chose to file what is commonly known as a “pre-arranged” restructuring under Chapter 11 of the U.S. Bankruptcy Code. We expect the filing
   to have little impact on our operations, which should continue without interruption during what we expect will be an expeditious restructuring process.
   
   
2. Why does CCS Medical need a financial restructuring?
   
   The fundamentals of CCS Medical’s business remain solid. Our business is strong and demand for our quality products, services and single source convenience continues to grow. However, like many other businesses our existing capital structure was put in place during a different time with different assumptions. We determined that it was in CCS Medical’s best interest to pursue a financial restructuring in order to align our capital structure with our operations. A “pre-arranged” Chapter 11 will provide the most efficient way to effectuate a restructuring while our business continues as normal.
   
   
3. What is Chapter 11?
   
   Chapter 11 is the section of the United States Bankruptcy Code that is designed to effectuate
   corporate reorganizations. A Chapter 11 filing is a legal and financial process designed to help
   companies continue to operate while they develop plans to reorganize their finances. Chapter 11
   permits, and even encourages, daily business operations to continue as usual.
   
   
4. What is a “pre-arranged” Chapter 11 filing?
   
   A “pre-arranged” filing means we have the terms of a plan to reorganize our Company and restructure our debt in place. Therefore, we expect to complete the restructuring process on an accelerated basis. We are confident that the terms of the restructuring will allow us to emerge better positioned for continued growth and success.
   
   
5. Is CCS Medical staying in business?
   
   Yes. This is a financial restructuring and Chapter 11 is a legal tool that is specifically designed to allow companies to continue to operate while they develop plans to reorganize their finances.
   Importantly, the fundamentals of CCS Medical’s business remain solid. Our operations are strong and demand for our quality products, services and single source convenience continues to grow. We expect that business will continue as usual while we work to align our capital structure with our operations.
   
   
6. What happens during the restructuring process?
   
   Keep in mind that this is a financial restructuring, not an operational restructuring. This means that CCS Medical will continue to do business as the Company moves through the restructuring process. Importantly, we have already worked out the terms of a plan to restructure our capital structure and have the support of certain of our first-lien lenders. We will continue to provide high quality products, services with single source convenience, and we expect to emerge better positioned for continued growth and success.
   
   
7. How long will this process take?
   
   Although it is difficult to predict exactly how long this process will take, by reaching an agreement
   regarding the terms of a restructuring that has the support of certain holders of the Company’s firstlien loan, we expect to complete our restructuring on an accelerated basis.
   
   
8. How did CCS Medical end up in this position? Why couldn’t the Company work out an
   agreement with its lenders?
   
   Our recent challenges were not caused by operational problems and the fundamentals of our business remain solid. CCS Medical’s operations are strong and demand for our quality products, services and single source convenience continue to grow. However, our current capital structure was put in place during a different time with different assumptions. The agreement to support the proposed terms of a plan of reorganization that we finalized with certain
   holders of the Company’s first-lien loan is an important step forward for our company and
   underscores our lenders’ confidence in our business. As you know, over the last several months we have been engaged in discussions with our lenders to reach a mutually acceptable solution to enhance our financial flexibility and improve our capital structure. We decided to take this action because we determined that a pre-arranged Chapter 11 will provide the most efficient way to effectuate a restructuring while our business continues as normal.
   
   
9. Does CCS Medical have enough cash to operate the business?
   
   We have ample cash on hand that, when combined with cash generated from ongoing operations, we believe will be sufficient to support the business during the restructuring process. We also received a commitment from a group of our existing lenders for $10 million in a specialized type of financing for companies in our situation, known as debtor-in-possession (DIP) financing, which we can use to support the business as necessary.
   
   
10. What is debtor-in-possession (DIP) financing?
    
    DIP financing is a specialized short-term type of financing used by companies in our position to help provide funding for our operating needs during the reorganization process. We are pleased to say that we have ample cash on hand which, when combined with cash generated from ongoing operations, we believe will be sufficient to support the business during the restructuring process.
    
    
11. Will senior management change as a result of the restructuring process?
    
    We do not expect any significant changes to the senior leadership team. We are working with our lender groups to reduce the Company’s debt and improve its capital structure. We remain confident in our company and in our future.
    
    
12. What other companies have gone through a Chapter 11 reorganization?
    
    Many well-known companies have successfully emerged from Chapter 11, including United Airlines, Macy’s, the Southland Corp. (7-Eleven), Winn-Dixie and Kmart, to name just a few.
    
    
13. Where was the case filed?
    
    The petitions were filed in the United States Bankruptcy Court for the District of Delaware.
    
    
14. Where can I get further information?
    
    Additional information about CCS Medical’s restructuring, including the disclosure statement is
    available on the Company’s website www.ccsmed.com. For access to Court documents and other general information about our restructuring, please visit http://chapter11.epiqsystems.com/CCSMedical.