April 26, 2007 - Second Quarter Earnings Announced

For further information contact:          A. Ernest Whiton
                                                            Chief Financial Officer
                                                            ZOLL Medical Corporation
                                                            978-421-9655
  

ZOLL Medical Corporation Announces Second Quarter Results

 Reports Record Revenues and over 50% Growth in Net Income 

Chelmsford, MA April 26, 2007 – ZOLL Medical Corporation (NasdaqGS: ZOLL), a manufacturer of resuscitation devices and software solutions, today announced revenues of $68,310,000 for the second quarter of fiscal 2007, an increase of 20% compared to revenues of $56,833,000 in the second quarter of last year.  Net income for the quarter was $3,172,000, compared to $2,082,000 in the prior-year quarter, an increase of 52%.  Diluted earnings per share were $0.15 compared to $0.11 in the prior-year quarter.  Share and per share data reflect the 2:1 stock split which became effective on February 20, 2007. Ending backlog was approximately $8.1 million. 

Second quarter sales to the North American market increased 15% to $50.6 million, compared to $44.2 million for the comparable prior-year quarter.  Sales to the North American hospital market decreased 18% to $15.0 million, compared to $18.2 million in the second quarter of last year, due to a decline in US military sales. Excluding military sales, North American hospital sales increased 6%. Military sales were $1.0 million, compared to $5.1 million in the prior-year period.  Sales to the North American pre-hospital market increased 44% to $30.4 million, compared to $21.1 million in the same period last year.  North American pre-hospital results include the results of ZOLL Lifecor, whose assets were acquired in April 2006. International sales increased 40% to $17.7 million, compared to $12.6 million for the comparable prior-year quarter. Total AutoPulse shipments were $3.3 million in the quarter, compared to $2.4 million in the second quarter of the prior year. 

Richard A. Packer, President and Chief Executive Officer of ZOLL, commented, “We experienced another successful quarter as we continue to execute our plan for fiscal 2007.  Our performance was strong in many areas of our business. North American pre-hospital results, including EMS professional defibrillators, public access AEDs, and data management products, were particularly strong.  Our International business continued to gain momentum from our strengthened product portfolio and improved execution. Strong results in these areas more than offset a low level of military business in the quarter.”

 Commenting further, Mr. Packer stated, “We are excited to have shipped the first units of the R Series, our new hospital product, this quarter.  The early customer response to the product has been strong. Our positioning of the R Series as “Simple, Smart and Ready” is resonating with customers. Clearly, our second quarter North America hospital results do not yet reflect the opportunity presented by this product and our International launch is being executed just this month. Therefore, we look forward to increased momentum with this new platform as we move through the balance of the year.” 

Highlighting progress with the AutoPulse, Mr. Packer noted, “Shipment growth in the second quarter continued at a strong rate of 36%, reflecting significant growth in the International market generally and our first shipments to Japan.  Our distribution partner in Japan, Nihon Kohden, is very excited about the potential for the AutoPulse in their market and we expect sales to ramp throughout the year.  However, sales in the US EMS market were somewhat less than we expected and we need to work to keep our sales force focused on the very large opportunity represented by the AutoPulse.”

With respect to the competitive environment, Mr. Packer noted, “With the suspension of shipments by Medtronic’s Physio Control division, our largest competitor, during the quarter, we are faced with a number of opportunities. Thus far, the Physio situation has played out as we predicted; minor short term revenue benefit in the North America market, offset by opportunistic incremental spending, with the larger potential upside being in future quarters. AED sales clearly benefited as we achieved in excess of 30% year-over-year growth. However, we could identify only a modest number of units in the EMS and hospital markets shifting to ZOLL as a result of the Physio situation. We believe that if Physio’s problems continue through the end of this year, we will see benefit in both EMS and Hospital as we move into fiscal 2008.  However, Physio Control remains a force in the market, with International sales seemingly unaffected, so our efforts continued to be focused on the execution of our new product roll-outs and the generation of continued momentum from our refreshed product portfolio.”  

Mr. Packer concluded, “Overall, the second quarter was another big step forward. We believe we have made good progress and continue to track to the plan for this year.”  

ZOLL will host a conference call on Thursday, April 26, 2007 at 10:30 a.m. EDT to discuss its second quarter financial results. This conference call will be accessible on the Company’s home page at www.zoll.com . Recorded replays of the financial results conference call will be available on the web page beginning later that day.

About ZOLL Medical Corporation

ZOLL Medical Corporation is committed to developing technologies that help advance the practice of resuscitation. With products for pacing, defibrillation, circulation, ventilation, and fluid resuscitation, ZOLL provides a comprehensive set of technologies that help clinicians, EMS professionals, and lay rescuers resuscitate sudden cardiac arrest or trauma victims. ZOLL also designs and markets software that automates the documentation and management of both clinical and non-clinical information.

ZOLL markets and sells its products in more than 140 countries. The company has direct operations, distributor networks, and business partners throughout the U.S., Canada, Latin America, Europe, the Middle East, Asia, and Australia.  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 belief regarding revenues related to AutoPulse sales,  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 February 9, 2007. You should not place undue reliance on the forward-looking statements in this press release, and the Company disavows any obligation to update or supplement those statements in the event of any changes in the facts, circumstances, or expectations that underlie those statements.

Copyright © 2007 ZOLL Medical Corporation.  All rights reserved.  269 Mill Road, Chelmsford, MA 01824-4105. R Series is a trademark of ZOLL Medical Corporation. AutoPulse and ZOLL are registered trademarks of ZOLL Medical Corporation.   

ZOLL MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)  

 

 

   April 1,

 2007

October 1,

 2006

ASSETS

 

 

Current assets:

 

 

     Cash and cash equivalents

     $     59,476

     $    42,831

     Short-term investments

19,345

20,548

     Accounts receivable, net

58,125

59,078

     Inventory

44,569

37,119

     Prepaid expenses and other current assets

         9,501

         9,010

Total current assets

        191,016

        168,586

Property and equipment, net

          28,876

          26,655

Other assets, net

        55,897

        56,245

 

 

 $   275,789

 $   251,486

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

     Accounts payable

     $     15,745

     $     13,745

     Accrued expenses and other liabilities

       40,799

       42,095

Total current liabilities

56,544

55,840

Total stockholders’ equity

     219,245

     195,646

 

$   275,789

$   251,486

 

ZOLL MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share)

 

Three Months Ended

             Six Months Ended

 

April 1,

2007

   April 2,

 2006

April 1,

2007

   April 2,

 2006

Net sales

$      68,310

$      56,833

$      132,951

$      112,293

Cost of goods sold

30,087

25,190

       58,458

       49,671

Gross profit

38,223

31,643

74,493

62,622

Expenses:

 

 

 

 

     Selling and marketing

21,059

18,502

42,120

37,851

     General and administrative

6,515

4,921

12,691

9,869

     Research and development

6,633

5,445

 13,016      

10,745      

     Total expenses

34,207

28,868

67,827      

58,465     

Income from operations

4,016

2,775

6,666

 4,157

Other income

902

430

1,563

713

Income before taxes

4,918

3,205

8,229

4,870

Taxes expense

1,746

1,123

2,705

1,656      

Net income

$        3,172

$        2,082

$        5,524

$        3,214

Earnings per share:

 

 

 

 

Basic

 $          0.16

   $          0.11

   $          0.28

   $        0.17

Diluted

 $          0.15

 $          0.11

 $          0.27

 $        0.17

Weighted average common shares:

 

 

 

 

Basic

20,310

19,250

20,043

19,248

Diluted

20,919

19,404

20,551

19,396