Valley Forge Scientific (NASDAQ:VLFG)
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Valley Forge Scientific Reports First Quarter Fiscal 2005
Revenues and Earnings
OAKS, Pa., Feb. 14 /PRNewswire-FirstCall/ -- Valley Forge Scientific Corp.
(NASDAQ:VLFG)(BSE:VLF), a leading developer of bipolar electrosurgical systems,
today announced revenues and earnings for the first quarter of fiscal 2005
ended December 31, 2004.
Sales for the first quarter of fiscal 2005 of $1,412,376 were 18% greater than
sales of $1,199,469 for the first quarter of fiscal 2004. Operating income was
$105,682 for the first quarter of fiscal 2005 as compared to $121,858 for the
first quarter of fiscal 2004. Net income for the first quarter of fiscal 2005
was $68,421, or $0.01 per basic and diluted share, as compared to net income of
$72,979, or $0.01 per basic and diluted share, for the first quarter of fiscal
2004.
The increase in sales in the first quarter of fiscal 2005 reflects sales to
Stryker Corporation of the lesion generator model the Company developed for the
percutaneous treatment of pain, partially offset by decreased sales to Codman &
Shurtleff, Inc. and a decrease of sales of dental products.
Sales to Stryker Corporation during the first quarter of fiscal 2005 were
$375,000, as compared to no sales in the first quarter of fiscal 2004. As
previously announced on October 25, 2004, Valley Forge Scientific entered into
a five year supply and distribution agreement with Stryker Corporation
regarding the lesion generator model for the percutaneous treatment of pain.
For the first quarter of fiscal 2005, sales of neurosurgical products to, and
repair revenue from, Codman & Shurtleff, Inc. accounted for $935,770, or 66% of
sales, as compared to $1,025,965, or 86% of sales, for the first quarter of
fiscal 2004. As previously announced, Valley Forge Scientific entered into a
new agreement with Codman & Shurtleff on October 15, 2004 for the sale of
existing products in the fields of neurocranial and neurospinal surgery, which
extends the business relationship through December 31, 2005. Under the
agreement, Codman agreed to make minimum purchases of $1 million per calendar
quarter in order to maintain its exclusive distribution rights for the period
from October 1, 2004 to March 31, 2005. Codman did not satisfy its minimum
purchase requirements for the three months ended December 31, 2004, and is
proposing increasing its minimum purchase obligations by approximately $113,000
for the quarter ending March 31, 2005 to make up for this shortfall.
For the first quarter of fiscal 2005, sales of dental products decreased to
$72,827, or 5% of sales, from $170,049, or 14% of sales, in the first quarter
of fiscal 2004. Product modifications and other strategies for dental products
are currently being considered.
Gross margin for the first quarter of fiscal 2005 and the first quarter of
fiscal 2004 remained constant at 54%.
Selling, general and administrative expenses, as a percentage of sales,
decreased from 33% for the first quarter of fiscal 2004 to 31% for first
quarter of fiscal 2005. Selling, general and administrative expenses increased
to $440,704 for the first quarter of fiscal 2005 from $398,337 for the first
quarter of fiscal 2004. The increase reflects increases in professional fees
partially offset by decreases in sales and marketing expenses.
Research and development expenses were $207,695, or 15% of sales, for the first
quarter of fiscal 2005 as compared to $113,895, or 9% of sales, for the first
quarter of fiscal 2004. The increase was primarily related to the continued
development of a new multifunction bipolar electrosurgical generator and
instrumentation and also the completion of the development of the lesion
generator model currently being sold to Stryker Corporation.
"In the first quarter of fiscal 2005, we saw a significant contribution from
sales to Stryker Corporation of the lesion generator model for the percutaneous
treatment of pain, and we anticipate that this product will continue to be an
important product for Valley Forge in the future. We plan to expand the market
for our products with our new multifunctional bipolar electrosurgical generator
and single-use hand switching bipolar instruments, new products based on our
proprietary lesion generator technology and other products and product
refinements," said Jerry Malis, President and CEO of Valley Forge Scientific
Corp.
Management of Valley Forge Scientific will discuss the first quarter of fiscal
2005 financial results on Monday, February 14, 2005 in a conference call
scheduled for 10:30 a.m. ET. Those who wish to participate in the conference
call may do so by calling (877) 356-9134 approximately 10 minutes prior to the
start time and providing confirmation code 3987956 to the conference operator.
For callers outside the United States, the number is (706) 643-3775. An
audiotape replay will be available by telephone at (800) 642-1687, confirmation
code 3987956, approximately two hours following the conclusion of the call
through February 28, 2005. International callers can access this replay at
(706) 645-9291.
Valley Forge Scientific has established itself as a leading developer and
manufacturer of bipolar electrosurgical systems and related instrumentation.
Based on its DualWave(TM) technology, these systems provide surgeons with the
ability to safely cut and coagulate tissue in the most critical areas of the
brain and spinal cord. Based on technology developed in conjunction with
Leonard I. Malis, MD, Professor and Chairman Emeritus of the Mount Sinai School
of Medicine Department of Neurosurgery, our bipolar electrosurgery systems are
considered to be the gold standard worldwide for use in the central nervous
system. For more information on DualWave(TM) technology, our bipolar
electrosurgery systems, or other Valley Forge Scientific products, please visit
our Web site at http://www.vlfg.com/.
VALLEY FORGE SCIENTIFIC CORP.
Financial Highlights
For the Three
Months Ended
(Unaudited)
12/31/04 12/31/03
Net sales $1,412,376 $1,199,469
Gross profit $764,255 $644,165
Selling, general and
administrative expenses $440,704 $398,337
Research and development
expenses $207,692 $113,895
Operating income $105,682 $121,858
Provision for income taxes ($45,367) ($54,548)
Net income $68,421 $72,979
Basic income per share $0.01 $0.01
Diluted income per share $0.01 $0.01
Common shares outstanding:
Basic 7,913,712 7,913,712
Diluted 7,975,552 7,965,977
Sales Highlights
Unaudited
The table below sets forth total sales and sales by medical field of Valley
Forge Scientific's "Generators, Irrigators and Other Products" and "Disposable
Products" for the three months ended December 31, 2004 and 2003. Sales of
"Generators, Irrigators and Other Products" in "Other fields" represent sales
to Stryker Corporation, and sales of "Disposable Products" in "Other fields"
represent sales to Boston Scientific Corporation and direct sales to hospitals.
For the Three Months
Ended December 31,
2004 2003
Generators, Irrigators
and Other Products
Neurosurgery field $481,025 $607,391
Dental field 61,509 152,039
Other fields 390,000 --
Total of all fields: $932,534 $759,430
Disposable Products
Neurosurgery field $411,810 $371,585
Dental field 11,318 18,010
Other fields 10,520 2,858
Total of all fields: $433,648 $392,453
Forward-Looking Statements
Statements in this press release regarding our expectations for our products or
products we are developing, introduction of products into the marketplace,
acceptance of our products in the marketplace, new products and alliances, and
any other statements in this press release that refer to Valley Forge
Scientific's estimated or anticipated future results are forward-looking
statements within the meaning of the Private Securities Litigation Act of 1995.
All forward-looking statements in this press release reflect Valley Forge
Scientific's current analysis of existing trends and information and represent
Valley Forge Scientific's judgment only as of the date of this press release.
Actual results may differ from current expectations based on a number of
factors affecting Valley Forge Scientific's business, including but not limited
to competitive, regulatory and market conditions; the performance of new
products and the continued acceptance of current products; the execution of
strategic initiatives and alliances; the market penetration by third parties
who distribute and sell Valley Forge Scientific's products; Valley Forge
Scientific's ability to maintain a sufficient supply of products; product
liability claims; and the uncertainties associated with intellectual property
protection for these products. In addition, matters generally affecting the
domestic and global economy can affect Valley Forge Scientific's results.
Therefore, the reader is cautioned not to rely on these forward-looking
statements. Valley Forge Scientific disclaims any intent or obligation to
update these forward-looking statements.
Additional information concerning these and other risk factors may be found in
Valley Forge Scientific's public periodic filings with the Securities and
Exchange Commission, including Valley Forge Scientific's Form 10-K for the year
ended September 30, 2004.
FROM: COMPANY CONTACT: E-MAIL:
Todd Forte Jerry Malis PHONE: (610) 666-7500
Exec. Vice President CEO and President FAX: (610) 666-7565
MCS 136 Green Tree Rd., Ste. 100 NASDAQ: VLFG
(800) 477-9626 P.O. Box 1179 BSE: VLF
Oaks, PA 19456
DATASOURCE: Valley Forge Scientific Corp.
CONTACT: Todd Forte, Exec. Vice President of MCS, 1-800-477-9626, for
Valley Forge Scientific Corp.; Jerry Malis, CEO and President of Valley Forge
Scientific Corp., +1-610-666-7500, fax - +1-610-666-7565,
Web site: http://www.vlfg.com/