Allied Healthcare Net Declines Due to Manufacturing Delays, Higher Costs

Friday, September 5, 2008 General News
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ST. LOUIS, Sept. 4 Allied Healthcare Products,Inc. (Nasdaq: AHPI) reported that its net income for the fourth quarter endingJune 30 fell about 21 percent, from about $870,000 last year, or 11 cents pershare, to about $690,000 in the current quarter, or 9 cents per basic share,due to slight delays in manufacturing and higher material and labor costs.

Sales for the fourth quarter increased by about 4.6 percent, or almost$650,000, compared to the fourth quarter of last year. However, Allied salesfor the fiscal year tracked very closely with the previous year, totalingabout $56.4 million for 2008 and $56.5 million for 2007.

Sales revenue for 2008 included $1.2 million as a result of a 2004agreement with Abbott Laboratories to reimburse certain Research andDevelopment costs related to new CO2 absorbent techniques. Sales for 2007included about $584,000 in reimbursement from that agreement. Sales for thefourth quarter of 2008 included $525,000 in reimbursement of Research andDevelopment cost, versus $134,000 for 2007.

For the fiscal year ending June 30, Allied net income fell about 46percent, from about $1.64 million last year, or 21 cents per basic share, toabout $882,000, or 11 cents per share, in 2008.

Manufacturing delays meant that some customer orders were not filled andcould not be translated into sales revenue in 2008. Also, material costs --primarily metals and oil-based resins -- increased by about 2 percent andlabor costs by about 3.8 percent over fiscal 2007. A modest overall priceincrease by Allied could not offset the year's higher material and laborcosts.

Manufacturing productivity programs planned for fiscal 2008 were notimplemented as quickly as anticipated. However, these programs are proceedingand will result in cost reductions and improved throughput in fiscal 2009,according to Earl Refsland, Allied president and chief executive officer.

Despite problems in the year, positive cash flow of about $2.5 millionincreased Allied's cash position to about $6.1 million at the end of thefiscal year, Refsland said.

Allied Healthcare Products, Inc. is a leading manufacturer of respiratorycare products, medical gas equipment and emergency medical products used in awide range of alternate care settings.

"SAFE HARBOR" STATEMENT: Statements contained in this release that are nothistorical facts or information are "forward-looking statements." Words suchas "believe," "expect," "intend," "will," "should," and other expressions thatindicate future events and trends identify such forward-looking statements.These forward-looking statements involve risks and uncertainties that couldcause the outcome and future results of operations and financial condition tobe materially different than stated or anticipated based on the forward-looking statements. Such risks and uncertainties include both general economicrisks and uncertainties, risks and uncertainties affecting the demand for andeconomic factors affecting the delivery of health care services, and specificmatters which relate directly to the Company's operations and properties asdiscussed in its periodic filings with the Securities and Exchange Commission.The Company cautions that any forward-looking statement contained in thisreport reflects only the belief of the Company or its management at the timethe statement was made. Although the Company believes such forward-lookingstatements are based upon reasonable assumptions, such assumptions mayultimately prove inaccurate or incomplete. The Company undertakes noobligation to update any forward-looking statement to reflect events orcircumstances after the date on which the statement was made.ALLIED HEALTHCARE PRODUCTS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Three months ended, Twelve months ended,

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