Exhibit 99.1
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 | |
