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Allied Healthcare Reports Second Quarter Loss

ST. LOUIS, Feb. 10 /PRNewswire-FirstCall/ -- Allied Healthcare Products Inc. (Nasdaq: AHPI) reported that its net income for the second quarter ending December 31, 2008, declined from about $6,500, or zero cents per share in the prior year period, to a loss of about $436,000, or a negative 6 cents per share, primarily because of lower sales volume in the current year period.

Net sales for the second quarter fell about 8 percent, or almost $1.1 million, to about $12.5 million. The sales decline reflects two major factors. The first factor is order timing and order releases for a few major customers. The second factor is the end of reimbursement payments by Abbott Labs for certain research and development costs incurred by Allied. Abbott made no payments in the second quarter of this fiscal year versus payments totaling $451,000 for the second quarter of last year. Abbott made no payments this year because it had completed its funding agreement with Allied.

For the first half of the fiscal year, Allied net income declined from about $93,500, or 1 cent per share in the prior year period, to a loss of about $227,000, or a loss of about 3 cents per share in the current year period. Net sales for the first two quarters declined by about 3 percent, or about $750,000, to about $27 million. Again, $451,000 of the $750,000 decline resulted from the end of reimbursement payments by Abbott.

"Our analysis of first half sales results indicates an anomaly of order and order release timing by long-time customers," said Earl Refsland, Allied President and Chief Executive Officer. "We expect these orders to be restored in the second half of the fiscal year."

Allied is tracking economic changes for effects on its results, Refsland said, but historically its business has not suffered as much as the overall economy in recessions.

The company incurred one-time production, testing and material costs totaling about $420,000 associated with the introduction of new products in the first two quarters.

In the second quarter, prices for commodity materials such as brass and plastics began to decline and cost-reduction efforts on non-commodity materials started to show positive results. Allied believes that the benefits of these lower costs will further enhance its margins in the second half of the fiscal year.

Allied Healthcare Products, Inc. manufactures a variety of respiratory products used in the healthcare industry in a range of hospital and alternate care settings including sub-acute facilities, home healthcare and emergency medical care. Allied's product lines include respiratory care products, medical gas equipment and emergency medical products. Allied products are marketed to hospitals, hospital equipment dealers, hospital construction contractors, home healthcare dealers and emergency medical products dealers.

"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.

                             Three months ended,        Six months ended,
                                 December 31,              December 31,
                              2008         2007         2008         2007

    Net sales              $12,531,342  $13,626,016  $26,972,353  $27,727,634
    Cost of sales            9,821,746   10,714,172   20,761,703   21,648,777
    Gross profit             2,709,596    2,911,844    6,210,650    6,078,857

    Selling General and
     expenses                3,400,342    2,932,428    6,583,929    5,975,398
    Income (loss) from
     operations               (690,746)     (20,584)    (373,279)     103,459

    Interest income            (18,455)     (38,177)     (49,114)     (78,946)
    Interest expense             5,849           --        5,849           --
    Other, net                  11,112       11,113       23,179       26,263
                                (1,494)     (27,064)     (20,086)     (52,683)

    Income (loss) before
     provision for (benefit
     from) income taxes       (689,252)       6,480     (353,193)     156,142

    Provision for (benefit
     from) income taxes       (253,158)          --     (125,456)      62,597
    Net income (loss)        ($436,094)      $6,480    ($227,737)     $93,545

    Net income (loss) per
     share - Basic and
     diluted                    ($0.06)       $0.00       ($0.03)       $0.01

    Weighted average
     common shares
    Outstanding - Basic      7,901,327    7,883,577    7,896,279    7,883,577

    Weighted average
     common shares
    Outstanding - Diluted    7,901,327    8,130,901    7,896,279    8,122,607

                       ALLIED HEALTHCARE PRODUCTS, INC.
                          CONSOLIDATED BALANCE SHEET

                                             December 31, 2008  June 30, 2008
    Current assets:
      Cash and cash equivalents                 $4,212,532        $6,149,015
      Accounts receivable, net of allowances
       of $300,000                               4,642,668         6,441,683
      Inventories, net                          13,700,766        12,046,450
      Other current assets                         495,210           394,975
          Total current assets                  23,051,176        25,032,123
      Property, plant and equipment, net        11,040,808        10,542,573
      Goodwill                                  15,979,830        15,979,830
      Other assets, net                            697,206           703,328
          Total assets                         $50,769,020       $52,257,854

    Current liabilities:
      Accounts payable                          $2,626,340        $2,590,804
      Other accrued liabilities                  1,900,964         2,960,334
      Deferred income taxes                        518,489           500,238
      Deferred revenue                             690,000           690,000
          Total current liabilities              5,735,793         6,741,376

    Deferred revenue                             1,832,950         2,177,500

    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;
       10,204,819 and 10,188,569  shares
       issued at December 31, 2008 and
       June 30, 2008, respectively; 7,901,327
       and 7,885,077 shares outstanding at
       December 31, 2008 and June 30, 2008,
       respectively                                102,048           101,886
      Additional paid-in capital                47,612,958        47,524,084
      Retained earnings                         16,216,699        16,444,436
      Less treasury stock, at cost;
       2,303,492 shares at December 31, 2008
       and June 30, 2008, respectively         (20,731,428)      (20,731,428)
          Total stockholders' equity            43,200,277        43,338,978
          Total liabilities and stockholders'
           equity                              $50,769,020       $52,257,854

SOURCE Allied Healthcare Products Inc.
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