Valley Forge Scientific (NASDAQ:VLFG)
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Valley Forge Scientific Reports Fiscal 2004 and Fourth Quarter
Operating Results
OAKS, Pa., Dec. 22 /PRNewswire-FirstCall/ -- Valley Forge Scientific Corp.
(NASDAQ:VLFG)(BSE:VLF), a leading developer of bipolar electrosurgical systems,
today announced operating results for fiscal 2004 and fourth quarter ended
September 30, 2004.
Sales for the 2004 fiscal year of $4,756,439 were 6% greater than sales of
$4,474,308 for the 2003 fiscal year. Net income for fiscal 2004 was $111,420,
or $0.01 per basic and diluted share, as compared to net income of $108,925, or
$0.01 per basic and diluted share, for fiscal 2003.
Sales for the fourth quarter of fiscal 2004 of $1,149,810 were 6% greater than
sales of $1,083,358 for the fourth quarter of fiscal 2003. Net loss for the
quarter was $34,144, or $0.00 per basic and diluted share, as compared to net
income of $1,840, or $0.00 per basic and diluted share, for the fourth quarter
of fiscal 2003.
While sales volume of neurosurgical products decreased slightly in fiscal 2004,
sales of dental products increased and a contribution from sales to Stryker
Corporation for demonstration units further contributed to sales volume. As
announced on October 25, 2004, Valley Forge Scientific entered into a five year
supply and distribution agreement with Stryker Corporation regarding the lesion
generator for the percutaneous treatment of pain.
For the 2004 fiscal year, sales to Codman & Shurtleff, Inc. accounted for
$4,099,000, or 86% of sales, as compared to $4,231,000, or 95% of sales, for
fiscal 2003. Included in sales to Codman & Shurtleff, Inc. for fiscal 2004 is a
one-time payment of $57,920 in the second quarter of fiscal 2004 that Codman &
Shurtleff, Inc. made to satisfy its minimum purchase obligation under the first
three month extension of an existing distribution agreement.
For the 2004 fiscal year, sales of dental products increased to approximately
$422,000, or 9% of sales, from approximately $185,000, or 4% of sales, in
fiscal 2003. Sales of dental products of $35,250 in the fourth quarter of
fiscal 2004, however, decreased as compared to sales in the third quarter of
fiscal 2004 as more resources were directed towards the completion of a new
lesion generator for the percutaneous treatment of pain and the distribution
arrangement with Stryker Corporation for that product. For fiscal 2005,
product modifications and other strategies for dental products are being
considered.
Sales for the fiscal 2004 year and fourth quarter of fiscal 2004 also reflect
sales to Stryker Corporation, which includes sales of demonstration units of
the lesion generator for the percutaneous treatment of pain, in the amounts of
$189,160 and $52,500, respectively, as compared to no sales in fiscal 2003.
For fiscal 2004, gross margin was 51% of sales, as compared to 49% of sales for
fiscal 2003. The difference in gross margin is primarily attributable to an
increase in sales.
Selling, general and administrative expenses for fiscal 2004 were $1,713,325,
or 36% of sales, as compared to $1,523,751, or 34% of sales, for fiscal 2003.
This increase reflects increased expenses incurred in connection with
implementing the sales and marketing plan, commenced in fiscal 2003, for dental
products and increased transactional legal fees incurred during the fourth
quarter of fiscal 2004.
Research and development expenses were $508,287, or 11% of sales, for fiscal
2004 as compared to $489,930, or 11% of sales, for fiscal 2003. The increase
was primarily related to the continued development of a new multifunction
bipolar electrosurgical generator and instrumentation and the completion of the
lesion generator for use in the percutaneous treatment of pain.
As previously announced, in conjunction with planning for fiscal 2005 and
beyond, 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 continues
to be the exclusive worldwide distributor of Valley Forge Scientific's existing
products through March 31, 2005 and the nonexclusive distributor until December
31, 2005, as those terms may be extended by mutual agreement of the parties.
Valley Forge Scientific also entered into an option agreement with Dr. Leonard
I. Malis, which provides the right to acquire his Malis(R) trademark over a
period of up to five years. Valley Forge Scientific is also in process of
negotiating a lease for new office space to consolidate operations into a
single location.
"In fiscal 2005 and beyond, 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. We feel the
new agreements we have entered into and other strategies and alliances we are
pursuing will propel our Company to greater heights in fiscal 2005 and beyond,"
said Jerry Malis, President and CEO of Valley Forge Scientific Corp.
Management of Valley Forge Scientific will discuss fiscal fourth quarter, and
fiscal year ending September 30, 2004 financial results on Wednesday, December
22, 2004 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 2818955 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 2818955, approximately two hours
following the conclusion of the call through January 4, 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 Fiscal For the Three
Year Ended Months Ended
(Audited) (Unaudited)
9/30/04 9/30/03 9/30/04 9/30/03
Net sales $4,756,439 $4,474,308 $1,149,810 $1,083,358
Gross profit $2,440,135 $2,209,406 $522,742 $473,569
Selling, general
and administrative
expenses $1,713,325 $1,523,751 $427,081 $328,769
Research and
development
expenses $508,287 $489,930 $152,625 ($128,910)
Operating income
(loss) $178,054 $155,426 ($67,137) $5,816
Provision for
income taxes $89,664 $57,953 ($26,869) ($7,188)
Net income $111,420 $108,925 ($34,144) $1,840
Basic income
per share $0.01 $0.01 $0.00 $0.00
Diluted income
per share $0.01 $0.01 $0.00 $0.00
Common shares
outstanding:
Basic 7,913,712 7,960,676 7,913,712 7,913,712
Diluted 7,976,833 7,986,448 7,970,238 7,945,075
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 fiscal year ended September 30, 2004, as compared to the
fiscal year ended September 30, 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 Fiscal
Year Ended
9/30/04 9/30/03
Generators, Irrigators and Other Products
Neurosurgery field $2,115,536 $2,092,830
Dental field $366,795 $168,338
Other fields $187,750 --
Total of all fields: $2,670,081 $2,261,108
Disposable Products
Neurosurgery field $1,754,276 $1,894,743
Dental field $68,810 $16,160
Other fields $31,929 $23,505
Total of all fields: $1,855,015 $1,934,408
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
Senior 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, Senior Vice President of MCS, 1-800-477-9626; or
Jerry Malis, CEO and President, +1-610-666-7500, or fax, +1-610-666-7565,
Web site: http://www.vlfg.com/