ST. LOUIS, Feb. 8 /PRNewswire-FirstCall/ -- Allied Healthcare Products, Inc. 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.
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
