AHPI Allied Healthcare Products Inc

-- Fourth quarter 2006 decline due to favorable 2005 tax adjustment, higher material costs ST. LOUIS, Sept. 7 /PRNewswire-FirstCall/ -- Allied Healthcare Products, Inc. (NASDAQ:AHPI) reported that its net income fell about 58 percent to $629,000, or 8 cents per share, in the fourth quarter ended June 30, 2006, versus $1.5 million, or 19 cents per share, in the fourth quarter of 2005. For the year, net income declined about 30 percent to $1.6 million, or 21 cents per share, compared to $2.3 million, or 30 cents per share, for fiscal 2005. Although sales for the quarter increased slightly, to about $14.5 million from $14.2 million the previous year, orders for the fourth quarter of 2006 slipped by about 2.6 percent compared to the 2005 period. Sales for fiscal 2006 increased by almost $1.4 million to about $57.5 million from $56.1 million the previous year. Orders for 2006 fell about 6 percent from 2005 levels. The comparison of fourth quarter 2006 to previous year quarterly results is distorted by the effects of a tax adjustment taken in 2005's fourth quarter and a subsequent tax adjustment in 2006's fourth quarter. The 2005 adjustment accounted for a 12 cent increase in earnings per share for the fourth quarter of 2005. The subsequent tax adjustment in 2006's fourth quarter, resulting from a favorable settlement of state tax contingencies, was of smaller magnitude and added 4 cents earnings per share. Increased material costs were the second largest drag on fourth quarter results. Led by a 77 percent jump in the price of copper, which is a major component of the brass fittings used in many Allied products, material costs in the fourth quarter increased more than 7 percent over those of 2005. Higher material costs accounted for 5 cents of the quarter's decline in earnings per share. Calling 2006 results "disappointing, particularly because of our poor sales performance," Allied President and CEO Earl Refsland said the company would emphasize increased sales in 2007 and seek to recover higher costs through price adjustments where possible. The company's operations focus in 2007 will be automation and other projects that reduce operating costs, Refsland said. 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 hospital and 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 Twelve months ended June 30, June 30, 2006 2005 2006 2005 Net sales $14,462,919 $14,184,419 $57,545,589 $56,120,150 Cost of sales 11,161,944 10,285,548 43,292,746 41,669,290 Gross profit 3,300,975 3,898,871 14,252,843 14,450,860 Selling, general and administrative expenses 2,918,066 2,844,236 12,112,624 11,843,037 Income from operations 382,909 1,054,635 2,140,219 2,607,823 Interest expense - 4,849 - 123,076 Interest income (17,002) - (52,988) - Other, net 8,904 10,041 37,758 42,604 (8,098) 14,890 (15,230) 165,680 Income before provision (benefit) for income taxes 391,007 1,039,745 2,155,449 2,442,143 Provision (benefit) for income taxes (238,345) (473,644) 506,845 100,779 Net income $629,352 $1,513,389 $1,648,604 $2,341,364 Basic earnings per share $0.08 $0.19 $0.21 $0.30 Diluted earnings per share $0.08 $0.19 $0.20 $0.29 Weighted average shares outstanding - basic 7,852,077 7,829,577 7,840,858 7,821,943 Weighted average shares outstanding - diluted 8,081,626 8,085,599 8,066,311 8,080,890 ALLIED HEALTHCARE PRODUCTS, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) June 30, 2006 June 30, 2005 ASSETS Current assets: Cash and cash equivalents $2,696,324 $317,775 Short-term investments - - Accounts receivable, net of allowances of $430,000 and $565,000, respectively 7,429,355 7,215,799 Inventories, net 11,491,305 10,775,550 Other current assets 224,853 168,431 Total current assets 21,841,837 18,477,555 Property, plant and equipment, net 11,252,934 11,308,866 Goodwill 15,979,830 15,979,830 Other assets, net 255,845 330,969 Total assets $49,330,446 $46,097,220 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,208,699 $2,110,599 Other accrued liabilities 2,834,495 2,940,763 Deferred income taxes 689,942 711,416 Deferred revenue 465,000 465,000 Total current liabilities 7,198,136 6,227,778 Deferred revenue 1,472,500 1,007,500 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; 10,155,569 shares issued at June 30, 2006 and 10,133,069 shares issued at June 30, 2005; 7,852,077 outstanding at June 30, 2006 and 7,829,577 shares outstanding June 30, 2005, respectively 101,556 101,331 Additional paid-in capital 47,258,182 47,109,143 Retained earnings 14,031,500 12,382,896 Less treasury stock, at cost; 2,303,492 shares at June 30, 2006 and June 30, 2005, respectively (20,731,428) (20,731,428) Total stockholders' equity 40,659,810 38,861,942 Total liabilities and stockholders' equity $49,330,446 $46,097,220 DATASOURCE: Allied Healthcare Products, Inc. CONTACT: Daniel C. Dunn, Chief Financial Officer of Allied Healthcare Products, +1-314-771-2400 Web site: http://www.alliedhpi.com/

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