CMD Cantel Medical Corp

CRITICARE SYSTEMS, INC. (AMEX:CMD). Criticare Systems Inc today released financial results for its fiscal third quarter and the first nine months of fiscal 2005, ended March 31, 2005. Net sales for the third quarter of fiscal 2005 were $6,054,370 compared to $6,571,171 for the same quarter of 2004. Gross profit was $2,429,971 (40.1% as a percentage of net sales) for the third quarter of fiscal 2005 compared to $2,809,022 (42.7% as a percentage of net sales) for the same period of fiscal 2004. Operating expenses were $2,733,421 for the third quarter of fiscal 2005 compared to $3,290,236 for the comparable quarter of 2004. This reflects the outcome of cost reduction activities launched earlier in the fiscal year. Net loss for the third quarter of fiscal 2005 was $(244, 871) compared to $(412,607) for the same quarter of fiscal 2004. The net loss for the third quarter of fiscal 2005 includes a $200,000 additional reserve for obsolete inventory. Net sales for nine months ended March 31, 2005 were $18,760,733 compared to $21,923,864 for the same period of fiscal 2004. Gross profit was $7,402,799 (39.5% as a percentage of net sales) for the nine months ended March 31, 2005 compared to $9,068,036 (41.4% as a percentage of net sales) for the same period of fiscal 2004. Operating expenses for the nine months ended March 31, 2005 were $8,271,520 compared to $9,611,816 for the same period of fiscal 2004, again the result of company-wide cost reduction programs. Net loss for first nine months of fiscal 2005 was $(793,514) compared to $(391,913), for the same period of fiscal 2004. The end of the quarter cash balance remained strong at $3,731,417 as of March 31, 2005, compared to $3,738,825 as of June 30, 2004. Net sales in the first nine months of fiscal 2005, as previously stated, have been impacted by (1) a reduction in sales levels from the Company's long standing OEM partner, Alaris Medical, due to Alaris being acquired by Cardinal Health and (2) the disruption of three major oral surgery sales conferences during the first fiscal quarter 2005 due to hurricane activity in the southeast. To address the Alaris event, during this past quarter Criticare hired a seasoned sales executive, from a competitive monitoring company, to create a dedicated sales team for this market. This sales initiative will have the benefit of launching a new, advanced featured transport monitor into the existing customer base. Alaris is assisting by formally turning over their installed monitoring customer base and service requirements to Criticare. In a previous announcement the Company indicated that production and shipments of the MRI monitoring system began in late March 2005. To date, market response has exceeded initial expectations resulting in the largest backorder in the company's history. Criticare anticipates this revolutionary product line will not only be a major revenue driver, but become a platform for additional offerings in the MR suite. Criticare (www.csiusa.com) designs, manufactures, and markets cost-effective patient monitoring systems and noninvasive sensors for a wide range of hospitals and alternate health care environments throughout the world. This press release contains forward-looking statements. Such statements refer to the Company's beliefs and expectations. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those described. Such uncertainties include, but are not limited to, the timely completion of new products, regulatory approvals for new products, the risk of new and better technologies, risks relating to international markets, as well as general conditions and competition in the company's markets. Other risks are set forth in Criticare's reports and documents filed from time to time with the Securities and Exchange Commission. -0- *T CRITICARE SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 2005 AND JUNE 30, 2004 (UNAUDITED) ASSETS March 31, June 30, 2005 2004 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $3,731,417 $3,738,825 Accounts receivable, less allowance for doubtful accounts of $300,000 and $260,000, respectively 6,345,700 6,489,884 Other receivables 446,233 359,806 Inventories 5,478,645 6,418,135 Prepaid expenses 190,913 364,375 ------------ ------------ Total current assets 16,192,908 17,371,025 Property, plant and equipment - net 1,640,645 2,094,330 License rights and patents - net 71,733 76,985 ------------ ------------ TOTAL ASSETS $17,905,286 $19,542,340 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $2,844,321 $3,237,405 Accrued liabilities: Compensation and commissions 844,926 863,113 Product warranties 486,000 444,000 Liability under guarantees -- 490,000 Out of court settlement -- 200,000 Obligations under capital lease 61,442 57,712 Other 146,731 174,395 ------------ ------------ Total current liabilities 4,383,420 5,466,625 LONG-TERM LIABILITIES: Obligations under capital lease 218,211 264,770 Other long-term obligations 13,171 21,646 ------------ ------------ Total long-term liabilities 231,382 286,416 TOTAL LIABILITIES 4,614,802 5,753,041 STOCKHOLDERS' EQUITY: Preferred stock - $.04 par value, 500,000 shares authorized, no shares issued or outstanding -- -- Common stock - $.04 par value, 15,000,000 shares authorized, 11,696,649 and 11,574,749 shares issued, respectively, and 11,581,766 and 11,450,021 shares outstanding, respectively 467,865 462,990 Additional paid-in capital 24,237,384 23,965,900 Common stock held in treasury (114,883 and 124,728 shares, respectively) (391,099) (409,439) Retained earnings (accumulated deficit) (11,020,184) (10,226,670) Cumulative translation adjustment (3,482) (3,482) ------------ ------------ Total stockholders' equity 13,290,484 13,789,299 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,905,286 $19,542,340 ============ ============ CRITICARE SYSTEMS, INC. CONSOLIDATED INCOME STATEMENTS THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED) 2005 2004 ------------ ------------ NET SALES $6,054,370 $6,571,171 COST OF GOODS SOLD 3,624,399 3,762,149 ------------ ------------ GROSS PROFIT 2,429,971 2,809,022 OPERATING EXPENSES: Sales and marketing 1,358,781 1,944,077 Research, development and engineering 724,817 586,419 Administrative 649,823 759,740 ------------ ------------ Total 2,733,421 3,290,236 LOSS FROM OPERATIONS (303,450) (481,214) OTHER INCOME (EXPENSE): Interest expense (6,064) -- Interest income 18,238 8,748 Other income 46,405 59,859 ------------ ------------ Total 58,579 68,607 LOSS BEFORE INCOME TAXES (244,871) (412,607) INCOME TAX PROVISION -- -- ------------ ------------ NET LOSS $(244,871) $(412,607) ============ ============ NET LOSS PER COMMON SHARE: Basic $(0.02) $(0.04) Diluted $(0.02) $(0.04) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 11,501,085 11,326,283 Diluted 11,501,085 11,326,283 CRITICARE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS NINE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED) 2005 2004 ------------ ------------ NET SALES $18,760,733 $21,923,864 COST OF GOODS SOLD 11,357,934 12,855,828 ------------ ------------ GROSS PROFIT 7,402,799 9,068,036 OPERATING EXPENSES: Sales and marketing 4,231,575 5,316,293 Research, development and engineering 1,899,752 1,810,732 Administrative 2,140,193 2,484,791 ------------ ------------ Total 8,271,520 9,611,816 LOSS FROM OPERATIONS (868,721) (543,780) OTHER INCOME (EXPENSE): Interest expense (23,091) -- Interest income 38,311 29,496 Other income 59,987 122,371 ------------ ------------ Total 75,207 151,867 LOSS BEFORE INCOME TAXES (793,514) (391,913) INCOME TAX PROVISION -- -- ------------ ------------ NET LOSS $(793,514) $(391,913) ============ ============ NET LOSS PER COMMON SHARE: Basic $(0.07) $(0.04) Diluted $(0.07) $(0.04) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 11,469,066 11,173,768 Diluted 11,469,066 11,173,768 *T