EXHIBIT 99.1
VALLEY FORGE SCIENTIFIC REPORTS
THIRD QUARTER/NINE MONTH FISCAL 2004 OPERATING RESULTS OAKS, Pa., August
12, 2004 -- Valley Forge Scientific Corp. (NASDAQ: VLFG; BSE: VLF), a
leading developer of bipolar electrosurgical systems, today announced
operating results for the third quarter and first nine months of fiscal 2004
ended June 30, 2004.
Sales for the quarter of $1,274,389 were 18% greater than sales of
$1,081,872 for the third quarter of fiscal 2003. Net income for the quarter
was $65,006, or $0.01 per basic and diluted share, as compared to $37,353,
or $0.01 per basic and diluted share, for the third quarter of fiscal 2003.
Sales for the first nine months of $3,606,629 were 6% greater than sales
of $3,390,950 for the first nine months of fiscal 2003. Net income for the
first nine months was $145,564, or $0.02 per basic and diluted share, as
compared to net income of $107,085, or $0.01 per basic and diluted share,
for the first nine months of fiscal 2003.
Sales for the quarter reflect an increase in the sales volume of
neurosurgical products to Codman & Shurtleff, Inc. and an increase in sales
volume of dental products through direct sales to customers and through
dental product dealers. Sales for the quarter and nine months also reflect
sales to Stryker Corporation of $120,000 and $135,000, respectively, as
compared to no sales in fiscal 2003.
For the quarter, sales to Codman & Shurtleff, Inc. accounted for
$1,040,814, or 82% of sales, as compared to $1,007,700, or 93% of sales, for
the comparable period of fiscal 2003. For the first nine months, sales to
Codman & Shurtleff, Inc. were $3,041,790, or 84% of sales, as compared to
$3,200,225, or 94% of sales, for the first nine months of fiscal 2003.
Included in sales to Codman & Shurtleff, Inc. for the first nine months of
fiscal 2004 is a one-time payment of $57,920 in the second quarter of fiscal
2004 that Codman & Shurtleff, Inc. made to satisfy its minimum purchase
obligation under the first three month extension of an existing distribution
agreement.
For the quarter, sales of dental products increased to $109,697, or 9%
of sales, from $48,951, or 5% of sales, for the comparable period in fiscal
2003. For the first nine months, sales volume for dental products was
$398,563, or 11% of sales, as compared to $135,659, or 4% of sales, for the
comparable period in fiscal 2003.
For the quarter, gross margin was 51% of sales, as compared to 54% of
sales for the third quarter of fiscal 2003, and gross margin was 53% of
sales for the first nine months as compared to 51% of sales for the
comparable period of fiscal 2003. The difference in gross margin as a
percentage of sales is attributable to an increase in sales of dental
products and changes in product mix, and for the nine months ended June 30,
2004, the $57,920 payment by Codman & Shurtleff, Inc. in the second quarter
of fiscal 2004.
Selling, general and administrative (SG&A) expenses for the quarter were
$417,699, or 33% of sales, as compared to $378,932, or 35% of sales, for the
third quarter of fiscal 2003. For the nine months, SG&A expenses were
$1,286,244, or 36% of sales, as compared to $1,194,982, or 35% of sales, for
the comparable period in fiscal 2003.
Research and development (R&D) expenses were $114,754, or 9% of sales,
for the quarter as compared to $151,513, or 14% of sales, for the third
quarter of the 2003 fiscal year. For the first nine months, R&D expenses
were $355,662, or 10% of sales, as compared to $361,020, or 11% of sales,
for the comparable period in fiscal 2003. The reduction in research and
development expenses in the third quarter of fiscal 2004 was primarily due
to the completion of a new neurosurgical irrigator, which was introduced
into the market in the first quarter of fiscal 2004.
"In the third quarter of fiscal 2004, we saw sales volume increases in
our neurosurgical products and dental products as compared to the comparable
periods in fiscal 2003. We also saw a contribution from sales to Stryker
Corporation for evaluation samples of a new product we developed pursuant to
a development agreement, and in the third quarter, we received 510(k)
approval from the Food and Drug Administration to market this new product,"
said Jerry Malis, President and CEO of Valley Forge Scientific Corp.
"In conjunction with our planning for fiscal 2005 and beyond, we are
reviewing alternatives to broaden the markets for our products as well as
increase market penetration and shareholder value. We expect to reach a
conclusion and report to our shareholders before the end of our September
30, 2004 fiscal year."
Management of Valley Forge Scientific will discuss the third quarter and
first nine months of the 2004 fiscal year and financial results on Thursday,
August 12, 2004 in a conference call scheduled for 10:30 a.m. ET. Those who
wish to participate in the conference call may do so by calling (877)
356-9134 approximately 10 minutes prior to the start time and providing
confirmation code 9184721 to the conference operator. For callers outside
the United States, the number is (706) 643-3775. An audiotape replay will be
available by telephone at (800) 642-1687, confirmation code 9184721,
approximately two hours following the conclusion of the call through August
26, 2004. International callers can access this replay at (706) 645-9291.
Valley Forge Scientific has established itself as a leading developer
and manufacturer of bipolar electrosurgical systems and related
instrumentation. Based on its DualWave(TM) technology, these systems provide
surgeons with the ability to safely cut and coagulate tissue in the most
critical areas of the brain and spinal cord. Based on technology developed
in conjunction with Leonard I. Malis, MD, Professor and Chairman Emeritus of
the Mount Sinai School of Medicine Department of Neurosurgery, our bipolar
electrosurgery systems are considered to be the gold standard worldwide for
use in the central nervous system. For more information on DualWave(TM)
technology, our bipolar electrosurgery systems, or other Valley Forge
Scientific products, please visit our Web site at http://www.vlfg.com.
-------------------
VALLEY FORGE SCIENTIFIC CORP.
Financial Highlights
Unaudited
For the Three For the Nine
Months Ended Months Ended
----------------------- -----------------------
6/30/04 6/30/03 6/30/04 6/30/03
---------- ---------- ---------- ----------
Net sales $1,274,389 $1,081,872 $3,606,629 $3,390,950
Gross profit $ 652,321 $ 583,749 $1,917,393 $1,735,837
$ 417,699 $ 378,932 $1,286,244 $1,194,982
Selling, general and
administrative expenses
Research and development
expenses $ 114,754 $ 151,513 $ 355,662 $ 361,020
Operating income $ 109,721 $ 43,230 $ 245,191 $ 149,611
Provision for income taxes $ 50,583 $ 12,680 $ 116,553 $ 65,141
Net income $ 65,006 $ 37,353 $ 145,564 $ 107,085
Basic income per share $ 0.01 $ 0.01 $ 0.02 $ 0.01
Diluted income per share $ 0.01 $ 0.01 $ 0.02 $ 0.01
Common shares outstanding:
Basic 7,913,712 7,938,302 7,913,712 7,976,503
Diluted 7,994,955 7,963,052 7,979,467 8,000,052
Sales Highlights
Unaudited
The table below sets forth total sales and sales by medical field of our
"Generators, Irrigators and Other Products" and our "Disposable
Accessories" for the three and nine months ended June 30, 2004, as
compared to the three and nine months ended June 30, 2003. Sales of
"Generators, Irrigators and Other Products" in "Other Fields" represent
sales to Stryker Corporation, and sales of "Disposable Accessories" in
"Other Fields" represent sales to Boston Scientific Corporation and
direct sales to hospitals.
For the Three For the Nine
Months Ended Months Ended
----------------------- -----------------------
6/30/04 6/30/03 6/30/04 6/30/03
---------- ---------- ---------- ----------
Generators, Irrigation and
Other Products
- --------------
Neurosurgery Field $ 503,852 $ 543,349 $1,552,478 $1,611,085
Dental Field $ 85,125 $ 48,751 $ 341,755 $ 129,960
Other Fields $ 120,000 -- $ 135,000 --
---------- ---------- ---------- ----------
Total: $ 708,977 $ 592,100 $2,029,233 $1,741,045
========== ========== ========== ==========
Disposable Accessories
- ----------------------
Neurosurgery Field $ 508,306 $ 406,532 $1,313,030 $1,385,168
Dental Field $ 24,572 $ 200 $ 56,809 $ 6,907
Other Fields $ 1,963 $ 18,980 $ 30,218 $ 40,252
---------- ---------- ---------- ----------
Total: $ 534,841 $ 425,712 $1,400,057 $1,432,327
========== ========== ========== ==========
Forward-Looking Statements
Statements in this press release regarding our expectations for our
products or products we are developing, introduction of products into
the marketplace, acceptance of our products in the marketplace, new
products and alliances, and any other statements in this press release
that refers to Valley Forge Scientific's estimated or anticipated future
results are forward-looking statements within the meaning of the Private
Securities Litigation Act of 1995. All forward-looking statements in
this press release reflect Valley Forge Scientific's current analysis of
existing trends and information and represent Valley Forge Scientific's
judgment only as of the date of this press release. Actual results may
differ from current expectations based on a number of factors affecting
Valley Forge Scientific's business, including but not limited to
competitive, regulatory and market conditions; the performance of new
products and the continued acceptance of current products; the execution
of strategic initiatives and alliances; the market penetration by third
parties who distribute and sell Valley Forge Scientific's products;
Valley Forge Scientific's ability to maintain a sufficient supply of
products; product liability claims; and the uncertainties associated
with intellectual property protection for these products. In addition,
matters generally affecting the domestic and global economy can affect
Valley Forge Scientific's results. Therefore, the reader is cautioned
not to rely on these forward-looking statements. Valley Forge Scientific
disclaims any intent or obligation to update these forward-looking
statements.
Additional information concerning these and other risk factors may be
found in Valley Forge Scientific's public periodic filings with the
Securities and Exchange Commission, including Valley Forge Scientific's
Form 10-K for the year ended September 30, 2003.