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Recession Leads to Sales Decline and Loss for Allied Healthcare Products in Fiscal 2010

ST. LOUIS, Aug. 30 /PRNewswire-FirstCall/ -- Recession-driven budget cuts by hospitals and governmental entities reduced sales for Allied Healthcare Products, Inc. (Nasdaq: AHPI) throughout fiscal 2010.  The company managed to offset much of the year's sales decline by cutting overhead and operating costs.  Still, the company reported a loss for the year.

For the fiscal year ending June 30, 2010, Allied sales fell about $6 million, or more than 11.7 percent, from about $52.1 million in 2009 to $46.0 million in the current fiscal year.  The cost of sales was reduced by 13.4 percent, from about $40.3 million to $34.9 million.  The company also cut its selling, general and administrative costs by about 8.5 percent, from about $13.0 million to $11.9 million in the current year.

The net loss for fiscal 2010 was $600,000, or a negative seven cents per basic and diluted share.  This compared to a loss of more than $16.8 million, or a negative $2.12 per basic and diluted share, for fiscal 2009.  The 2009 loss included the effect of a non-cash accounting charge of $16.0 million relating to the impairment of goodwill in the fourth quarter.  The 2009 goodwill impairment was caused by the decline of the Allied stock price in the year and a general downturn in orders caused by the recession.

Sales for the fourth quarter ending June 30, 2010, fell about 7.9 percent, from about $12.7 million to $11.7 million.  As it had throughout fiscal 2010, Allied reduced its cost of sales in the quarter by about 8.3 percent from approximately $9.6 million to less than $8.8 million.  The company also cut selling, general and administrative costs by about 18.2 percent, or $585,000, compared to the previous year.

Net income for the fourth quarter of fiscal 2010 was about $86,000, or one cent per basic and diluted share.  This compared to a loss in the prior year's fourth quarter of almost $16.1 million, or a negative $2.04 per basic and diluted share, reflecting the $16.0 million accounting charge for impairment of goodwill.

Despite the recession, Allied ended fiscal 2010 with an improved cash position, increasing cash on hand from $1.9 million last year to $5.3 million at the end of fiscal 2010.

"Strong execution by our operations team helped Allied offset much of the negative effects of sales declines," said Earl Refsland, president and chief executive officer. "Sales of mass casualty ventilators we introduced in the second half of fiscal 2009 also helped.  But we could not overcome the effects of unprecedented budget cuts by our customers."Surveys by Allied Healthcare Products indicate that sales declines throughout 2010 and latter 2009 were caused by the recession rather than losses of market share to competitors, Refsland said.

Sales of the new mass casualty ventilators, which cost a fraction of the price of traditional full-featured ventilators and are designed to be operated by non-professionals after brief instruction, totaled about $1.9 million for fiscal 2010, Refsland said.  As with the company's core products, sales of mass casualty ventilators were depressed by budget cuts by cash-strapped healthcare customers.

Allied Healthcare Products 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 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.CONSOLIDATED STATEMENT OF OPERATIONS(UNAUDITED)Three months ended,Twelve months ended,June 30,June 30,2010200920102009Net sales

$11,668,246$12,710,683$46,034,248$52,072,676Cost of sales

8,772,0069,595,50234,944,71440,273,089Gross profit

2,896,2403,115,18111,089,53411,799,587Selling General and administrative expenses

2,674,2233,259,50011,871,75813,041,564Impairment of goodwill

-15,979,830-15,979,830Income (loss) from operations

222,017(16,124,149)(782,224)(17,221,807)Interest income

(5,764)(11,971)(10,168)(60,277)Interest expense

1,505-4,269-Other, net

13,59913,479117,18950,0629,3401,508111,290(10,215)Income (loss) before provision for
(benefit from) income taxes

212,677(16,125,657)(893,514)(17,211,592)Provision for (benefit from) income taxes

126,412(41,854)(293,941)(449,779)Net income (loss)

$86,265($16,083,803)($599,573)($16,761,813)Net income (loss) per share - Basic

$0.01($2.04)($0.07)($2.12)Net income (loss) per share - Diluted

$0.01($2.04)($0.07)($2.12)Weighted average common shares Outstanding - Basic

8,093,3867,901,3278,066,7407,898,782Weighted average common sharesOutstanding - Diluted

8,112,3737,901,3278,066,7407,898,782ALLIED HEALTHCARE PRODUCTS, INC.CONSOLIDATED BALANCE SHEET(UNAUDITED)June 30, 2010June 30, 2009ASSETSCurrent assets:Cash and cash equivalents

,943,364Accounts receivable, net of allowances
 of $300,000

5,418,2536,172,437Inventories, net

11,155,45612,663,938Income tax receivable

877,665937,273Other current assets

221,840327,203Total current assets

22,936,53822,044,215Property, plant and equipment, net

9,661,39510,799,089Other assets, net

333,084390,627Total assets

33,233,931LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable

,633,568Other accrued liabilities

2,241,2592,316,558Deferred income taxes

429,699419,213Deferred revenue

688,200688,200Total current liabilities

5,309,6045,057,539Deferred revenue

802,9001,491,100Commitments and contingenciesStockholders' 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; 10,396,878 and 10,204,819  shares issued
 at June 30, 2010 and June 30, 2009, respectively;
 8,093,386 and 7,901,327 shares outstanding at
 June 30, 2010 and June 30, 2009, respectively

103,969102,048Additional paid-in capital

48,362,92247,632,049Accumulated deficit

(916,950)(317,377)Less treasury stock, at cost; 2,303,492 shares at
  June 30, 2010 and June 30, 2009, respectively

(20,731,428)(20,731,428)Total stockholders' equity

26,818,51326,685,292Total liabilities and stockholders' equity


SOURCE Allied Healthcare Products, Inc.
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