CMD Cantel Medical Corp

CRITICARE SYSTEMS, INC. (AMEX:CMD). Criticare Systems Inc. today announced financial results for the second quarter and six months ended December 31, 2005. Revenue was $8,770,813 for the three months ended December 31, 2005; an increase of $1,395,808, or 18.9% from $7,375,005 reported for the three months ended December 31, 2004. The Company reported net income of $606,937 or $0.05 per diluted share for the second quarter of fiscal 2006, an increase of $455,270, or 300% from $151,667 or $0.01 per diluted share for the same period of the previous fiscal year. Revenue for the six months ended December 31, 2005 was $16,443,126, an increase of $3,736,764, or 29.4% from $12,706,362 for the same period in fiscal 2005. Net income reported was $744,315 or $0.06 per diluted share for first six months of fiscal 2006 as compared to a loss of $(548,642) or $(0.05) per diluted share for the same period in fiscal 2005. Gross profit percentage was up slightly to 39.6% compared to 39.1% for the same period last year. Gross profit was impacted by one time start up manufacturing costs of a new portable cardiac monitor along with increased overhead costs directly associated with our original equipment manufacturer ("OEM") customers. Major contributors to the increased fiscal year to date sales were increases of $1,826,625 in OEM sales, $1,582,353 in acute care sales and $416,568 in international sales. Of particular note is the sales to the acute care market, which had been previously served by Alaris Medical Systems, Inc. The first six months sales level to this market through the Company's new distribution network exceeded the sales level of the comparable period of the previous fiscal year through Alaris. The initial ramp up is very encouraging and we expect the sales rate to accelerate as the network gains momentum. Operating expenses for the six months ended December 31, 2005 increased $668,163 from the same period in fiscal 2005. The primary drivers were increased sales commissions, trade show costs and product development expenses. The company's total order backlog as of December 31, 2005 was $7,629,884. As of December 31, 2005, the Company's cash balance was $3,676,963 as compared to $3,680,965 as of June 30, 2005. Criticare remains free of long-term debt and has access to a credit line of $2,000,000. 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. Criticare does not believe its backlog of any date is indicative of its future sales. 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 INCOME STATEMENTS THREE MONTHS ENDED DECEMBER 31, 2005 AND 2004 (UNAUDITED) 2005 2004 ------------- ------------- NET SALES $8,770,813 $7,375,005 COST OF GOODS SOLD 5,194,365 4,273,613 ------------- ------------- GROSS PROFIT 3,576,448 3,101,392 OPERATING EXPENSES: Sales and marketing 1,805,862 1,558,348 Research, development and engineering 673,015 633,816 Administrative 849,153 740,423 ------------- ------------- Total 3,328,030 2,932,587 INCOME FROM OPERATIONS 248,418 168,805 OTHER INCOME (EXPENSE): Interest expense (5,122) (10,366) Interest income 21,718 11,465 Other income (expense) 341,923 (18,237) ------------- ------------- Total 358,519 (17,138) INCOME BEFORE INCOME TAXES 606,937 151,667 INCOME TAX PROVISION -- -- ------------- ------------- NET INCOME $606,937 $151,667 ============= ============= NET INCOME PER COMMON SHARE: Basic $0.05 $0.01 Diluted $0.05 $0.01 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 12,027,943 11,455,344 Diluted 12,334,894 11,564,946 CRITICARE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 2005 AND 2004 (UNAUDITED) 2005 2004 ------------- ------------- NET SALES $16,443,126 $12,706,362 COST OF GOODS SOLD 9,931,378 7,733,536 ------------- ------------- GROSS PROFIT 6,511,748 4,972,826 OPERATING EXPENSES: Sales and marketing 3,292,693 2,872,833 Research, development and engineering 1,299,666 1,174,935 Administrative 1,613,900 1,490,328 ------------- ------------- Total 6,206,259 5,538,096 INCOME (LOSS) FROM OPERATIONS 305,489 (565,270) OTHER INCOME (EXPENSE): Interest expense (10,565) (17,027) Interest income 41,974 20,073 Other income 407,417 13,582 ------------- ------------- Total 438,826 16,628 INCOME (LOSS) BEFORE INCOME TAXES 744,315 (548,642) INCOME TAX PROVISION -- -- ------------- ------------- NET INCOME (LOSS) $744,315 $(548,642) ============= ============= NET INCOME (LOSS) PER COMMON SHARE: Basic $0.06 $(0.05) Diluted $0.06 $(0.05) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 11,935,933 11,453,405 Diluted 12,241,949 11,453,405 CRITICARE SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2005 AND JUNE 30, 2005 (UNAUDITED) ASSETS December 31, June 30, 2005 2005 ------------- ------------- CURRENT ASSETS: Cash and cash equivalents $3,676,963 $3,680,965 Accounts receivable, less allowance for doubtful accounts of $300,000 and $300,000, respectively 7,441,928 6,847,432 Other receivables 620,432 645,479 Inventories 6,813,934 5,551,093 Prepaid expenses 182,683 255,104 ------------- ------------- Total current assets 18,735,940 16,980,073 Property, plant and equipment - net 2,626,246 2,010,417 License rights and patents - net 66,483 69,983 ------------- ------------- TOTAL ASSETS $21,428,669 $19,060,473 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $4,054,395 $3,033,559 Accrued liabilities: Compensation and commissions 989,347 900,636 Product warranties 412,000 452,000 Obligations under capital lease 65,415 62,739 Other 152,999 191,807 ------------- ------------- Total current liabilities 5,674,156 4,640,741 LONG-TERM LIABILITIES: Obligations under capital lease 168,640 202,031 Other long-term obligations 4,610 8,561 ------------- ------------- Total long-term liabilities 173,250 210,592 TOTAL LIABILITIES 5,847,406 4,851,333 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, 12,171,961 and 11,925,086 shares issued, and 12,062,268 and 11,812,493 shares outstanding, respectively 486,878 477,003 Additional paid-in capital 25,384,798 24,775,995 Common stock held in treasury (109,693 and 112,593 shares, respectively) (381,432) (386,834) Retained earnings (accumulated deficit) (9,904,598) (10,648,912) Cumulative translation adjustment (4,383) (8,112) ------------- ------------- Total stockholders' equity 15,581,263 14,209,140 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $21,428,669 $19,060,473 ============= ============= *T