EXHIBIT 99.1
VALLEY FORGE SCIENTIFIC REPORTS
FIRST QUARTER FISCAL 2005 REVENUES AND EARNINGS
OAKS, Pa., February 14, 2005 -- Valley Forge Scientific Corp. (NASDAQ: VLFG;
BSE: VLF), a leading developer of bipolar electrosurgical systems, today
announced revenues and earnings for the first quarter of fiscal 2005 ended
December 31, 2004.
Sales for the first quarter of fiscal 2005 of $1,412,376 were 18%
greater than sales of $1,199,469 for the first quarter of fiscal 2004. Operating
income was $105,682 for the first quarter of fiscal 2005 as compared to $121,858
for the first quarter of fiscal 2004. Net income for the first quarter of fiscal
2005 was $68,421, or $0.01 per basic and diluted share, as compared to net
income of $72,979, or $0.01 per basic and diluted share, for the first quarter
of fiscal 2004.
The increase in sales in the first quarter of fiscal 2005 reflects
sales to Stryker Corporation of the lesion generator model the Company developed
for the percutaneous treatment of pain, partially offset by decreased sales to
Codman & Shurtleff, Inc. and a decrease of sales of dental products.
Sales to Stryker Corporation during the first quarter of fiscal 2005
were $375,000, as compared to no sales in the first quarter of fiscal 2004. As
previously announced on October 25, 2004, Valley Forge Scientific entered into a
five year supply and distribution agreement with Stryker Corporation regarding
the lesion generator model for the percutaneous treatment of pain.
For the first quarter of fiscal 2005, sales of neurosurgical products
to, and repair revenue from, Codman & Shurtleff, Inc. accounted for $935,770, or
66% of sales, as compared to $1,025,965, or 86% of sales, for the first quarter
of fiscal 2004. As previously announced, Valley Forge Scientific entered into a
new agreement with Codman & Shurtleff on October 15, 2004 for the sale of
existing products in the fields of neurocranial and neurospinal surgery, which
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extends the business relationship through December 31, 2005. Under the
agreement, Codman agreed to make minimum purchases of $1 million per calendar
quarter in order to maintain its exclusive distribution rights for the period
from October 1, 2004 to March 31, 2005. Codman did not satisfy its minimum
purchase requirements for the three months ended December 31, 2004, and is
proposing increasing its minimum purchase obligations by approximately $113,000
for the quarter ending March 31, 2005 to make up for this shortfall.
For the first quarter of fiscal 2005, sales of dental products
decreased to $72,827, or 5% of sales, from $170,049, or 14% of sales, in the
first quarter of fiscal 2004. Product modifications and other strategies for
dental products are currently being considered.
Gross margin for the first quarter of fiscal 2005 and the first quarter
of fiscal 2004 remained constant at 54%.
Selling, general and administrative expenses, as a percentage of sales,
decreased from 33% for the first quarter of fiscal 2004 to 31% for first quarter
of fiscal 2005. Selling, general and administrative expenses increased to
$440,704 for the first quarter of fiscal 2005 from $398,337 for the first
quarter of fiscal 2004. The increase reflects increases in professional fees
partially offset by decreases in sales and marketing expenses.
Research and development expenses were $207,695, or 15% of sales, for
the first quarter of fiscal 2005 as compared to $113,895, or 9% of sales, for
the first quarter of fiscal 2004. The increase was primarily related to the
continued development of a new multifunction bipolar electrosurgical generator
and instrumentation and also the completion of the development of the lesion
generator model currently being sold to Stryker Corporation.
"In the first quarter of fiscal 2005, we saw a significant contribution
from sales to Stryker Corporation of the lesion generator model for the
percutaneous treatment of pain, and we anticipate that this product will
continue to be an important product for Valley Forge in the future. We plan to
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expand the market for our products with our new multifunctional bipolar
electrosurgical generator and single-use hand switching bipolar instruments, new
products based on our proprietary lesion generator technology and other products
and product refinements," said Jerry Malis, President and CEO of Valley Forge
Scientific Corp.
Management of Valley Forge Scientific will discuss the first quarter of
fiscal 2005 financial results on Monday, February 14, 2005 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 3987956 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 3987956, approximately two hours following the conclusion of the call
through February 28, 2005. 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.
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VALLEY FORGE SCIENTIFIC CORP.
Financial Highlights
For the Three
Months Ended
--------------------------------
(Unaudited)
12/31/04 12/31/03
----------- -----------
Net sales $ 1,412,376 $ 1,199,469
Gross profit $ 764,255 $ 644,165
Selling, general and
administrative expenses $ 440,704 $ 398,337
Research and development expenses $ 207,692 $ 113,895
Operating income $ 105,682 $ 121,858
Provision for income taxes $ (45,367) $ (54,548)
Net income $ 68,421 $ 72,979
Basic income per share $ 0.01 $ 0.01
Diluted income per share $ 0.01 $ 0.01
Common shares outstanding:
Basic 7,913,712 7,913,712
Diluted 7,975,552 7,965,977
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Sales Highlights
Unaudited
The table below sets forth total sales and sales by medical field of Valley
Forge Scientific's "Generators, Irrigators and Other Products" and "Disposable
Products" for the three months ended December 31, 2004 and 2003. Sales of
"Generators, Irrigators and Other Products" in "Other fields" represent sales to
Stryker Corporation, and sales of "Disposable Products" in "Other fields"
represent sales to Boston Scientific Corporation and direct sales to hospitals.
For the Three Months
Ended December 31,
--------------------------
2004 2003
----------- -----------
Generators, Irrigators and Other Products
- -----------------------------------------
Neurosurgery field $ 481,025 $ 607,391
Dental field 61,509 152,039
Other fields 390,000 --
----------- -----------
Total of all fields: $ 932,534 $ 759,430
=========== ===========
Disposable Products
- -------------------
Neurosurgery field $ 411,810 $ 371,585
Dental field 11,318 18,010
Other fields 10,520 2,858
----------- -----------
Total of all fields: $ 433,648 $ 392,453
=========== ===========
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 refer 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, 2004.
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