SOURCE: Vital Signs Inc.

August 09, 2005 16:05 ET

Vital Signs, Inc. Announces 15% Increase in Quarterly Earnings per Share From Continuing Operations

TOTOWA, NJ -- (MARKET WIRE) -- August 9, 2005 -- Vital Signs, Inc. (NASDAQ: VITL) highlights for the third quarter of fiscal 2005:

--  Earnings per share from continuing operations increased 15% to $0.54
--  Anesthesia net revenues increased 16.0%, fueled by successful
    integration of the acquisition of the Baxter Disposable Airway product line
--  Net cash provided from operations totaled $9.0 million
--  Modifies guidance to $2.06 to $2.10 per share
    
Vital Signs, Inc. (NASDAQ: VITL) today announced sales and earnings for the quarter ended June 30, 2005.

For the third quarter of fiscal 2005, earnings per share from continuing operations increased 15% to $.54 per share, compared to $.47 per share for the third quarter of fiscal 2004. Earnings from continuing operations increased to $6,891,000 compared to $6,029,000 for the third quarter of fiscal 2004.

Net revenues for the third quarter of fiscal 2005 increased 6.6% to $48,692,000 compared to $45,671,000 in the comparable period last year. Following are the net revenues by business segment for the third quarter of fiscal 2005 compared to the third quarter of fiscal 2004 (in thousands of dollars):

                          NET REVENUES BY BUSINESS SEGMENT
                          -----------------------------------
                          FOR THE THREE MONTHS ENDED JUNE 30,
                          -----------------------------------
                              2005        2004       PERCENT
                                                     CHANGE
                          -----------------------------------
Anesthesia                 $  24,038   $  20,716      16.0%
Respiratory/Critical Care     10,515      10,132       3.8%
Sleep                         10,331      10,976      (5.9)%
Pharmaceutical Technology
 Services                      3,808       3,847      (1.0)%
                          -----------------------------------
Net Revenues               $  48,692   $  45,671       6.6%
                          ===================================
Anesthesia net revenues increased 16.0% resulting from $2,480,000 of additional sales generated by the acquisition of the Baxter disposable airway management product line and a 41.7% increase in sales of Limb-O™, our patented anesthesia circuit. Respiratory/Critical Care net revenues increased 3.8%. The most significant factors were increases in sales of our ABG and Broselow-Luten System products.

Net revenues in the Sleep business segment declined 5.9%. Net revenues at Sleep Services of America (SSA), the Company's domestic sleep disorder diagnostic business, decreased 1.9%. However diagnostic revenues (which account for 90% of SSA's revenue) returned to the same levels as the third quarter of fiscal 2004. SSA has experienced a 17.0% sales increase in the continuing sleep diagnostic centers over the same period last year. Revenues for Breas, our European manufacturer of personal ventilators and CPAP devices, decreased 8.6%. Breas revenues were negatively affected by the inability to receive a critical component in sufficient quantity creating shipping delays. Revenues from these new products are expected to begin in the quarter ending September 30, 2005.

Revenues in the Pharmaceutical Technology Services segment remained consistent with the $3.8 million realized in the comparable period last year.

Net income increased 15.1% to $7,018,000 for the three month period ended June 30, 2005, compared to $6,098,000 for the comparable period last year. Fully diluted earnings per share were $.55 per share in the three month period ended June 30, 2005, and $.48 per share for the comparable period last year.

For the three months ended June 30, 2005, the Company re-purchased 31,700 shares of its common stock for $1,342,000. Net cash provided from operations for the three months ended June 30, 2005, was approximately $9.0 million.

Terry Wall, Chief Executive Officer of Vital Signs, commented, "We are pleased by the progress on integration of the Baxter disposable airways product line into our core anesthesia segment, which along with the continued performance of our traditional anesthesia products gave us a 16% revenue increase over last year. We are also encouraged by the 3.8% increase in our Respiratory/Critical Care segment, which has reversed a trend of declines in previous quarters. Despite a decrease in the overall performance of our Sleep segment, the performance at Sleep Services of America has improved as diagnostic revenues have returned to historical levels with profitability improvements. However, delays in bringing the new Breas products to market have caused a decrease in Breas revenues over the comparable quarter last year. "

Net revenues for the nine month period ended June 30, 2005, increased 3.9% to $141,418,000 as compared to $136,156,000 in the comparable period last year. Following are the net revenues by business segment for the nine month period ended June 30, 2005, compared to the nine month period ended June 30, 2005 (in thousands of dollars):

                          NET REVENUES BY BUSINESS SEGMENT
                          -----------------------------------
                          FOR THE NINE MONTHS ENDED JUNE 30,
                          -----------------------------------
                              2005        2004       PERCENT
                                                     CHANGE
                          -----------------------------------
Anesthesia                 $  65,489   $  58,715      11.5%
Respiratory/Critical Care     31,714      31,919      (0.6)%
Sleep                         31,862      34,152      (6.7)%
Pharmaceutical Technology
 Services                     12,353      11,370       8.6%
                          -----------------------------------
Net Revenues               $ 141,418   $ 136,156       3.9%
                          ==================================
Net income increased 12.1% to $18,576,000 for the nine month period ended June 30, 2005, compared to $16,565,000 for the comparable period last year. Fully diluted earnings per share were $1.45 per share in the nine month period ended June 30, 2005, and $1.28 per share for the comparable period last year.

Terry Wall, CEO, of Vital Signs, commented: "We have modified our guidance on fully diluted earnings per share from continuing operations for fiscal 2005 to be between $2.06 and $2.10 per share, which would be approximately a 20% to 22% increase over fiscal 2004 results."

On August 4, 2005, the Board approved a quarterly dividend of $0.07 per share, payable on August 31, 2005, to shareholders of record on August 24, 2005.

All statements in this press release (including without limitation our guidance with respect to projected full-year 2005 results, the timing of the introduction and the market acceptance for the new Breas and other products and the impact of the Baxter acquisition), other than historical statements, constitute Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from such statements as a result of a variety of risks and uncertainties, including risks associated with unanticipated delays in bringing products to market, regulatory approvals of new products, market conditions, and competitive responses as well as other factors referred to by Vital Signs in its Annual Report on Form 10-K for the year ended September 30, 2004.

Vital Signs, Inc. and its subsidiaries design, manufacture and market primarily single-use medical products for the anesthesia, respiratory/critical care and sleep/ventilation markets, achieving the number one market share position in five of its major product categories. In addition, Vital Signs provides pharmaceutical technology services to the pharmaceutical and medical device industry. Vital Signs is ISO 9001 certified and has CE Mark approval for its products.


                           VITAL SIGNS, INC.
                          FINANCIAL HIGHLIGHTS
                          STATEMENT OF INCOME

                (In Thousands, Except Per Share Amounts)
                              (Unaudited)

                                                     THREE MONTHS ENDED
                                                          JUNE 30,
                                                  ------------------------
                                                     2005          2004
                                                  ----------    ----------
Net Revenues:
  Net product sales                               $   40,499    $   37,355
  Service revenue                                      8,193         8,316
                                                  ----------    ----------

Net revenues                                          48,692        45,671
Cost of goods sold and services provided              23,420        21,807
                                                  ----------    ----------
Gross profit                                          25,272        23,864

Expenses:
  Selling, general and administrative                 13,211        12,300
  Research and development                             1,923         1,868
  Restructuring charge                                  (136)            -
  Interest and other (income)/expense, net              (654)           71
                                                  ----------    ----------
Income from continuing operations before income
 taxes and minority interest                          10,928         9,625
Provision for income taxes                             3,846         3,477
                                                  ----------    ----------
Income from continuing operations before minority
 interest                                              7,082         6,148
Minority interest                                        191           119
                                                  ----------    ----------
Income from continuing operations                      6,891         6,029
Discontinued operations, net                             127            69
                                                  ----------    ----------
Net income                                        $    7,018    $    6,098
                                                  ==========    ==========

Earnings per common share:
Basic:
  Income per share from continuing operations     $     0.55    $     0.47
  Discontinued operations                               0.01          0.01
                                                  ----------    ----------
  Net earnings                                    $     0.56    $     0.48
                                                  ==========    ==========
Diluted:
  Income per share from continuing operations     $     0.54    $     0.47
  Discontinued operations                               0.01          0.01
                                                  ----------    ----------
  Net earnings                                    $     0.55    $     0.48
                                                  ==========    ==========
Basic weighted average number of shares               12,627        12,739
Diluted weighted average number of shares             12,806        12,830


                           VITAL SIGNS, INC.
                          FINANCIAL HIGHLIGHTS
                          STATEMENT OF INCOME

                (In Thousands, Except Per Share Amounts)
                              (Unaudited)

                                                     NINE MONTHS ENDED
                                                          JUNE 30,
                                                  ------------------------
                                                     2005          2004
                                                  ----------    ----------
Net Revenues:
  Net product sales                               $  116,916    $  111,833
  Service revenue                                     24,502        24,323
                                                  ----------    ----------

Net revenues                                         141,418       136,156
Cost of goods sold and services provided              70,023        67,040
                                                  ----------    ----------
Gross profit                                          71,395        69,116

Expenses:
  Selling, general and administrative                 37,815        37,370
  Research and development                             5,589         5,407
  Restructuring charge                                   224             -
  Interest and other (income)/expense, net            (1,375)          (68)
                                                  ----------    ----------
Income from continuing operations before income
 taxes and minority interest                          29,142        26,407
Provision for income taxes                            10,242         9,367
                                                  ----------    ----------
Income from continuing operations before minority
 interest                                             18,900        17,040
Minority interest                                        419           373
                                                  ----------    ----------
Income from continuing operations                     18,481        16,667
Discontinued operations, net                              95          (102)
                                                  ----------    ----------
Net income                                        $   18,576    $   16,565
                                                  ==========    ==========

Earnings (loss) per common share:
Basic:
  Income per share from continuing operations     $     1.46    $     1.30
  Discontinued operations                               0.01         (0.01)
                                                  ----------    ----------
  Net earnings                                    $     1.47    $     1.29
                                                  ==========    ==========

Diluted:
  Income per share from continuing operations     $     1.45    $     1.29
  Discontinued operations                               0.00         (0.01)
                                                  ----------    ----------
  Net earnings                                    $     1.45    $     1.28
                                                  ==========    ==========
Basic weighted average number of shares               12,619        12,822
Diluted weighted average number of shares             12,783        12,946


                           VITAL SIGNS, INC.
                          FINANCIAL HIGHLIGHTS

                       BALANCE SHEET HIGHLIGHTS:
                                                      (In Thousands)
                                                        (Unaudited)
                                                          June 30,
                                                  ------------------------
                                                     2005          2004
                                                  ----------    ----------

Cash and cash equivalents                         $   78,900    $   72,530
Accounts Receivable                                   30,640        27,043
Inventory                                             17,277        19,408
Current Assets                                       132,115       123,435
Total Assets                                      $  246,742    $  228,941
                                                  ==========    ==========

Current Liabilities                               $   16,856    $   15,273
Total Liabilities                                     16,856        15,273
Shareholders' equity                              $  226,295    $  202,222
                                                  ==========    ==========

Contact Information

  • FOR FURTHER INFORMATION, CONTACT:
    Terry D. Wall, President or
    William Craig, Chief Financial Officer
    (973) 790-1330
    http://www.vital-signs.com