July 22, 2004

FOR: ZOLL Medical Corporation

INVESTOR CONTACT: A. Ernest Whiton
Chief Financial Officer
ZOLL Medical Corporation
(978) 421-9655
PRESS CONTACT: Robert Minicucci
Corporate Communications Manager
ZOLL Medical Corporation
+1 (978) 421-9832
rminicucci@zoll.com



FOR IMMEDIATE RELEASE

ZOLL Medical Announces Record Third Quarter Revenues

Chelmsford, MA  Thursday, July 22, 2004 – ZOLL Medical Corporation (NASDAQ: ZOLL), a manufacturer of resuscitation devices and software solutions, today announced third quarter revenues of $54,454,000, an increase of 22% as compared to revenues of $44,716,000 in the third quarter of last year. Net income for the quarter was $2,572,000, or $0.28 per diluted share, compared to $2,947,000, or $0.32 per diluted share for the comparable prior year quarter, a decrease of 13%.

Third quarter sales to the North American market grew to $44.1 million, an increase of 31% as compared to the third quarter of 2003. North American hospital sales increased 60% to $21.9 million as compared to the third quarter in the previous year. This included shipments to the U.S. Military of approximately $6.3 million as compared to $2.8 million in the third quarter of 2003. Equipment sales to the North American pre-hospital market increased 15% to $17.4 million, as compared to $15.1 in the comparable prior year period. International sales decreased by 5% to $10.3 million versus the third quarter of last year. Total AED Plus™ product sales increased by 61% to $7.8 million as compared to $4.8 million in the third quarter of last year.

Richard A. Packer, President and Chief Executive Officer of ZOLL, commented, “Revenue growth for the quarter was very strong. We performed particularly well in a number of markets, including the U.S. hospital market and the worldwide AED market. Our profits were significantly better than the most recent quarter. As previously discussed, we have made significant sales, marketing and R&D investments in the first half of the year. Continued top line growth will allow us to leverage these investments and grow our profitability.”

“During the third quarter, our performance in the North American hospital market was very strong. We benefited from a number of large orders that were driven by the continued shift to ZOLL’s biphasic technology. We were particularly pleased to post a sequential increase in this business compared to Q2 despite a sequential decrease in U.S. Military business from just over $10 million to just over $6 million in Q3.” Mr. Packer added, “ In the AED business our results were also strong with sales growing 61% versus the third quarter of last year. We saw broad-based market share gains in the sale of AEDs across the Company as we believe our sales growth exceeded the market’s growth rate. We continue to be on track to grow our AED sales more than 50% during this fiscal year.”

Mr. Packer continued, “While sales growth in our pre-hospital business continued to lag other parts of the Company, we are optimistic that market growth may begin to pick up in the near future as economic conditions improve and state budget deficit pressures begin to recede. International sales continued to struggle during the third quarter, reflecting softness in our European operations. We have made a number of changes during Q3 to improve this situation. We expect International sales to improve modestly in Q4 but we do not expect to see significant growth return until 2005.”

Commenting on the future, Mr. Packer concluded, “Beyond our core business, we made good progress on our strategy to expand our business “beyond the shock.” We are building a portfolio of products in the broader area of resuscitation. During the quarter we announced an agreement with Lifecor that gives us full access to the wearable defibrillator market. We gained more momentum in Europe with the ResQPOD™ circulatory enhancer. Our partner Revivant, which we hold an option to acquire, recently announced growing acceptance of the AutoPulse product. Our vision is coming together and we are excited about our future growth prospects not only in the defibrillator business but also with emerging resuscitation technologies. We believe that ZOLL has built the distribution strength to create tremendous leverage over the long term as we add additional products.”

About ZOLL Medical Corporation
ZOLL Medical Corporation (NASDAQ: ZOLL) designs, manufactures, markets, and/or sells non-invasive resuscitation devices and software solutions. They include pacing and defibrillation devices (ZOLL’s M Series™ and AED Plus™, and Lifecor, Inc.’s LifeVest™ Wearable Defibrillator), circulatory assist devices (Advanced Circulatory Systems, Inc.’s ResQPOD™ Circulatory Enhancer and Revivant Corporation’s AutoPulse™); and a fluid resuscitation product called the Power Infuser®, manufactured by Infusion Dynamics, a division of ZOLL. These devices help healthcare professionals, emergency medical service providers, and first responders diagnose and treat victims of trauma, as well as sudden cardiac arrest.

Additionally, through its subsidiary ZOLL Data Systems, ZOLL designs and markets software that automates the collection and management of both clinical and non-clinical data. With direct operations, international offices, and business partners in all of the world’s major markets, ZOLL markets and sells its products in more than 140 countries. For more information, visit www.zoll.com or call +1 (978) 421-9655.

Certain statements contained in this press release, including statements regarding the anticipated development of the Company's business, anticipated growth in the North American EMS market, our anticipated spending levels, anticipated revenue growth in the International market and the AED market, our outlook for the remainder of the year and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements (as defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those factors discussed in the section entitled “Risk Factors” in the Company's Quarterly Report on Form 10-Q filed with the SEC on May 19, 2004, including the future performance of the direct sales operations, as well as uncertainties regarding the market acceptance and profitability of the ZOLL AED Plus, the length and severity of the current economic slowdown and its impact on capital spending budgets, the reduction in overall capital equipment expenditures in the hospital and pre-hospital markets, the impact of governmental budget restraints on the purchase of capital equipment, the continued war in the Middle East, the impact of the acquisition of Revivant in the event ZOLL elects to exercise its option, the impact of the war on terrorism, the potential disruption in the transportation industry on the Company’s supply chain and product distribution channels, and the desire or ability of other parties to purchase the Company's products.

Copyright © 2004 ZOLL Medical Corporation. All rights reserved. 269 Mill Road, Chelmsford, MA 01824-4105. AED Plus, M Series, and Power Infuser are trademarks of ZOLL Medical Corporation. The LifeVest System is a trademark of Lifecor, Inc. The ResQPOD is a trademark of Advanced Circulatory Systems, Inc. The AutoPulse Resuscitation System is a trademark of Revivant Corporation. ZOLL is a registered trademark of ZOLL Medical Corporation. All trademarks are property of their respective owners.

(Financial Results to Follow)

 ZOLL MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

   July 4,

 2004

   September 28,           2003

ASSETS

 

 

Current assets:

 

 

     Cash and cash equivalents

     $     28,872

     $   40,780 

     Short-term investments

20,382

19,992

     Accounts receivable, net

51,667

47,906

     Inventory

37,519

34,388

     Prepaid expenses and other current assets

         5,458

         5,042

Total current assets

        143,898

148,108

Property and equipment, net

          25,546

23,046         

Other assets, net

        31,874

       20,942

 

 

 $   201,318

 $  192,096

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

     Accounts payable

     $     13,289

     $    12,204

     Accrued expenses and other liabilities

       19,181

      22,399

Total current liabilities

32,470

34,603

Deferred income taxes

1,502

1,502

Total stockholders’ equity

     167,346

     155,991

 

$   201,318

 $  192,096

 

 

 

 


 

ZOLL MEDICAL CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share and share data)

 

 

 

             Three Months Ended

 

        Nine Months Ended

 

 

         July 4,

         2004

         June 29,

     2003

        July 4,

      2004

   June 29,
2003

Net sales

$      54,454

$      44,716

$    156,057  

$     134,397  

Cost of goods sold

       23,356

       19,353

67,753     

60,541     

Gross profit

31,098

25,363

88,304

73,856

Expenses:

 

 

 

 

     Selling and marketing

19,351

14,817

55,343

44,214

     General and administrative

3,703

3,088

10,440

9,298

     Research and development

4,706      

3,575      

13,726      

10,275      

     Total expenses

27,760     

21,480     

79,509    

63,787    

Income from operations

3,338

3,883

8,795

10,069

Other income

     500

     515

     1,370

     1,845

Income before taxes

3,838

4,398

10,165

11,914

Taxes

1,266      

1,451

3,354

3,931

Net income

$        2,572

$        2,947

 $      6,811    

 $      7,983    

Earnings per share:

 

 

 

 

Basic

   $          0.28

   $          0.33

 $        0.74

 $        0.89

Diluted

 $          0.28

 $          0.32

 $        0.73

 $        0.87

Weighted average common shares:

 

 

 

 

Basic

9,211,000

9,056,000

9,158,000

9,019,000

Diluted

9,316,000

9,220,000

9,283,000

9,203,000

             



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