EX-99.1 2 v102821_ex99-1.htm
Exhibit 99.1
 
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Contact: Daniel C. Dunn     
Chief Financial Officer
314/771-2400

Allied Healthcare’s Net Suffers
On Flat Sales, Performance Issues

ST. LOUIS, February 8, 2008 - Allied Healthcare Products, Inc. (NASDAQ: AHPI) reported today that its net income in the second quarter ending December 31 fell almost 98 percent from $293,000 last year, or 4 cents per share, to about $6,500 in the current quarter, or zero cents per share.
 
For the first half of the 2008 fiscal year ending December 31, net income fell about 81 percent, from about $495,000 last year, or six cents per share, to about $93,500, or one cent per share, in the current fiscal year.
 
Customer orders for the first two quarters of fiscal 2008 were consistent with those of the prior year, declining only about $235,000. Sales, however, which depend on customer purchase order releases, declined about $1,000,000 or 3.6 percent, for the first two quarters of this fiscal year. Customer release rates are expected to return to more normal levels in the second half of the year, Allied said.
 
The sharp decline in net income resulted from gross margins that fell by about $960,000 compared to last year. Low production levels, caused by lower sales, combined with decreases in inventory to result in lower absorption of fixed costs. Also, cost reduction programs to offset higher labor and material costs did not take effect as planned in the first two quarters.
 
 
Material costs increased by 2.2 percent and labor costs by 4.5 percent compared to the previous year, Allied said. “Those increases should have been offset by cost reduction efforts, but we failed to execute in the first two quarters,” said Earl Refsland, Allied president and chief executive officer. Difficulties in introducing a new product contributed to production delays, Refsland said.
 
“We know what we have to do to correct problems we encountered,” Refsland said. “We just have to focus on the basics and execute.”
 
Despite difficulties, Allied once again improved its cash position, Refsland said. The company had a cash balance of about $4.7 million at the end of the first half of the fiscal year, an increase of more than 17 percent over the previous quarter and 30 percent over the previous year end.
 
Allied Healthcare Products, Inc. is a leading manufacturer of respiratory care products, medical gas equipment and emergency medical products used in a wide range of alternate care settings.
 
“SAFE HARBOR” STATEMENT: Statements contained in this release that are not historical facts or information are “forward-looking statements.” Words such as “believe,” “expect,” “intend,” “will,” “should,” and other expressions that indicate future events and trends identify such forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause the outcome and future results of operations and financial condition to be materially different than stated or anticipated based on the forward-looking statements. Such risks and uncertainties include both general economic risks and uncertainties, risks and uncertainties affecting the demand for and economic factors affecting the delivery of health care services, and specific matters which relate directly to the Company’s operations and properties as discussed in its periodic filings with the Securities and Exchange Commission. The Company cautions that any forward-looking statement contained in this report reflects only the belief of the Company or its management at the time the statement was made. Although the Company believes such forward-looking statements are based upon reasonable assumptions, such assumptions may ultimately prove inaccurate or incomplete. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement was made.

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ALLIED HEALTHCARE PRODUCTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED) 
 
   
Three months ended,
  
Six months ended,
  
   
December 31,
  
December 31,
  
   
2007
  
2006
  
2007
  
2006
  
                   
Net sales
  
$
13,626,016
  
$
14,273,950
  
$
27,727,634
  
$
28,751,392
  
Cost of sales
    
10,714,172
   
10,757,222
   
21,648,777
   
21,715,111
 
Gross profit
    
2,911,844
   
3,516,728
   
6,078,857
   
7,036,281
 
                       
                           
Selling General and administrative expenses
    
2,932,428
   
3,091,418
   
5,975,398
   
6,282,415
 
Income (loss) from operations
    
(20,584
)
  
425,310
   
103,459
   
753,866
 
                           
                           
Interest income
    
(38,177
)
  
(28,059
)
  
(78,946
)
  
(56,228
)
Other, net
    
11,113
   
(53,182
)
  
26,263
   
(43,878
)
     
(27,064
)
  
(81,241
)
  
(52,683
)
  
(100,106
)
                           
Income before provision
                          
for income taxes
    
6,480
   
506,551
   
156,142
   
853,972
 
                           
Provision for income taxes
    
-
   
213,395
   
62,597
   
359,183
 
Net income
  
$
6,480
  
$
293,156
  
$
93,545
  
$
494,789
  
                           
Net income per share - Basic
                          
and diluted
  
$
0.00
  
$
0.04
  
$
0.01
  
$
0.06
  
                           
                           
Weighted average common shares
                  
Outstanding - Basic
    
7,883,577
   
7,877,120
   
7,883,577
   
7,868,512
 
                           
Weighted average common shares
                  
Outstanding - Diluted
    
8,130,901
   
8,059,573
   
8,122,607
   
8,064,650
 


ALLIED HEALTHCARE PRODUCTS, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

   
December 31,
2007
  
June 30,
2007
  
ASSETS
          
Current assets:
          
Cash and cash equivalents
  
$
4,732,692
  
$
3,638,870
  
Accounts receivable, net of allowances
              
of $325,000 and $460,000, respectively
    
6,190,756
   
7,251,767
 
Inventories, net
    
11,810,149
   
12,999,472
 
Other current assets
    
523,486
   
275,254
 
Total current assets
    
23,257,083
   
24,165,363
 
Property, plant and equipment, net
    
10,267,716
   
10,677,000
 
Goodwill
    
15,979,830
   
15,979,830
 
Other assets, net
    
562,161
   
496,127
 
Total assets
  
$
50,066,790
  
$
51,318,320
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
              
Accounts payable
  
$
2,719,389
  
$
3,040,313
  
Other accrued liabilities
    
1,945,603
   
2,508,820
 
Deferred income taxes
    
726,861
   
882,001
 
Deferred revenue
    
465,000
   
465,000
 
Total current liabilities
    
5,856,853
   
6,896,134
 
               
Deferred revenue
    
1,705,000
   
1,937,500
 
               
Commitments and contingencies
              
               
Stockholders' equity:
              
Preferred stock; $0.01 par value; 1,500,000 shares
              
authorized; no shares issued and outstanding
    
-
   
-
 
Series A preferred stock; $0.01 par value; 200,000 shares
              
authorized; no shares issued and outstanding
    
-
   
-
 
Common stock; $0.01 par value; 30,000,000 shares
              
authorized; 10,187,069 shares issued at December 31, 2007
              
and June 30, 2007; 7,883,577 shares outstanding at
              
December 31, 2007 and June 30, 2007
    
101,871
   
101,871
 
Additional paid-in capital
    
47,479,012
   
47,441,163
 
Retained earnings
    
15,655,482
   
15,673,080
 
Less treasury stock, at cost; 2,303,492 shares at
              
December 31, 2007 and June 30, 2007, respectively
    
(20,731,428
)
  
(20,731,428
)
Total stockholders' equity
    
42,504,937
   
42,484,686
 
Total liabilities and stockholders' equity
  
$
50,066,790
  
$
51,318,320