April 26, 2005

INVESTOR CONTACT:

A. Ernest Whiton
Chief Financial Officer
ZOLL Medical Corporation
+1 (978) 421-9655

MEDIA CONTACT:

Diane Egan
ZOLL Medical Corporation
+1 (978) 421-9637
degan@zoll.com





FOR IMMEDIATE RELEASE


ZOLL Medical Corporation Announces Second Quarter Results


Chelmsford, MA  Tuesday, April 26, 2005 – Non U.S. Military Sales Grow 22% Year over Year

Chelmsford, MA, April 26, 2005 – ZOLL Medical Corporation (NASDAQ: ZOLL), a manufacturer of resuscitation devices and software solutions, today announced second quarter revenues of $52,491,000, an increase of 3% as compared to revenues of $50,761,000 for the comparable prior year quarter. Net income for the quarter decreased to $159,000 or $0.02 per diluted share as compared to $1,558,000 or $0.17 per diluted share in the second quarter of the prior year.

During the quarter, the Company shipped $2.9 million of product to the U.S. Military, an expected decline from the $10.1 million shipped in the same period last year. Excluding sales to the U.S. Military during both periods, the Company experienced sales growth of 22%.

Sales to the North American market decreased by 1% to $39.8 million as compared to $40.3 million for the comparable prior year period. North American hospital revenues decreased to $17.0 million as compared to $21.1 million in the second quarter of last year. Included in the North American hospital revenue were sales to the U.S. Military. Excluding the U.S. Military, North American sales increased 22% from $30.2 million to $36.9 million, while North American hospital revenues increased 27% from $11.1 million to $14.1 million. Sales to the North American pre-hospital market increased 26% to $17.8 million, as compared to $14.1 million in the comparable prior year period. International revenues increased by 20% to $12.7 million as compared to $10.5 million in the second quarter of last year. AED product sales, including the new AED Pro™ product which began shipping at the end of the quarter, increased by 21% to $8.4 million compared to $7.0 million in the same period last year. The Company shipped approximately $1.6 million of AutoPulse™ product during the quarter.

Richard A. Packer, President and Chief Executive Officer of ZOLL, commented, “This quarter was a small step forward for the Company. We experienced growth in multiple markets and we returned the Company to profitability during the quarter. While we saw good growth outside the military, we were not able to make up for the decline in military sales. Our inability to replace the expected drop-off in U.S. Military sales continues to hurt our comparisons to prior year quarters, the decrease in shipments to the U.S. Military was primarily due to the completion of the “Patient Movement Initiative” contract, which standardized all branches of the military’s patient transport defibrillation equipment to ZOLL.”

Mr. Packer continued, “International had another good quarter. We saw particular strength in the UK, Australia, and Latin America. While we are pleased with our progress, there is still opportunity for improvement in this area. Worldwide AED sales for the second quarter were in line with what we believe the market is growing. We continue to work on adjusting our AED strategy to achieve growth, but at the same time focusing on increased bottom line contribution.”

Mr. Packer further noted, “New unit sales of our AutoPulse product increased significantly from approximately 40 units of new sales orders in Q1 to over 100 in Q2. Our pipeline of potential sales continued to grow strongly during the quarter. However, we continue to see that potential customers’ ability to obtain funding for this piece of capital equipment causes a delay in our ability to ramp this product even faster. It is likely to take more time and resources to really get this new product on track.”

Mr. Packer concluded, “During the second quarter, we implemented tight spending controls and achieved our goal of returning to profitability. However, we have not been successful in growing our revenues sufficiently to fill the hole left by lower military sales. Also, we were unable to make progress with respect to building a reasonable backlog, which now stands at just under $2 million, even having achieved good revenue growth in many areas. Therefore, our near term outlook continues to be conservative. During the second half of 2005, we will continue our efforts to build acceptance of the AutoPulse, leverage the effort of our sales and marketing organizations, and gain traction from new defibrillation products, such as the AED Pro. But we also need to build a backlog to help remove the end of quarter effect from our factory and provide less risk to our results. As a result, with our primary financial focus on 2006, we now expect 2005 shipments to be flat with 2004, with EPS of only 25 to 30 cents for the year. While we have not written 2005 off entirely, it is clear that the challenges we face are greater than anticipated at the start of the year, and it will take us until the start of 2006 to get the pieces in place to once again significantly grow our top and bottom lines. We believe that in 2006 with the military comparisons behind us, acceleration of AutoPulse sales and renewed strength from our selling efforts, we will have a strong year in terms of both revenue growth and profitability.”

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™, AED Plus™, AED Pro™, 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, 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 10Q filed with the SEC on February 11, 2005, including the future performance of the direct sales operations, as well as uncertainties regarding the market acceptance and profitability of the ZOLL AED Plus, Power Infuser and AutoPulse, 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 for which ZOLL has exercised 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, AED Pro, 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 Announces Second Quarter Results

 

 ZOLL MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

   April 3,

 2005

   October 3,

 2004

ASSETS

 

 

Current assets:

 

 

     Cash and cash equivalents

     $     21,472

     $     40,685

     Short-term investments

17,408

18,325

     Accounts receivable, net

53,167

51,038

     Inventory

40,692

31,702

     Prepaid expenses and other current assets

         7,556

         7,273

Total current assets

        140,295

        149,023

Property and equipment, net

          24,423

          24,221

Other assets, net

        50,406

        33,948

 

 

 $   215,124

 $   207,192

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

     Accounts payable

     $       9,301

     $     12,321

     Accrued expenses and other liabilities

       25,302

       21,917

Total current liabilities

34,603

34,238

Deferred income taxes

2,008

2,008

Total stockholders’ equity

     178,513

     170,946

 

$   215,124

$   207,192

 

  ZOLL MEDICAL CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share data)

 

 

             Three Months Ended

 

       Six  Months Ended

 

 

        April  3,

         2005

         April 4,

         2004

        April 3,

      2005

        April 4,

      2004

Net sales

$      52,491

$      50,761

$    103,120

$    101,603

Cost of goods sold

       22,820

       22,258

45,020

44,397

Gross profit

29,671

28,503

58,100

57,206

Expenses:

 

 

 

 

     Selling and marketing

18,980

18,236

38,647

35,992

     General and administrative

4,624

3,552

8,897

6,737

     Research and development

5,820 

4,680

11,648

9,020

     Total expenses

29,424

26,468

59,192    

51,749    

Income (loss) from operations

247

2,035

(1,092)

5,457

Other income (expense)

(12)

     291

     332

     870

Income (loss) before taxes

235

2,326

(760)

6,327

Taxes (benefit)

76

768

(353)

2,088

Net income (loss)

$        159

$        1,558

 $         (407)    

 $      4,239    

Earnings per share:

 

 

 

 

Basic

    $        0.02

   $          0.17

 $        (0.04)

 $        0.46

Diluted

 $        0.02

 $          0.17

 $        (0.04)

 $        0.46

Weighted average common shares:

 

 

 

 

Basic

9,574

9,160

9,428

9,132

Diluted

9,651

9,339

9,428

9,278

             



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