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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
  þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended December 31, 2006
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Action of 1934
 For the transition period from  to
 Commission File Number 0-19266
 ALLIED HEALTHCARE PRODUCTS, INC.
 
  þ o
  o o þ
  o þ




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INDEX
 PageNumberPart I 
    
    Financial InformationItem 1.
    
    Financial StatementsConsolidated Statement of Operations  three
months and six months ended December 31,
2006 and 2005 (Unaudited)
    
    
    3Consolidated Balance Sheet  December
31, 2006 (Unaudited) and
June 30, 2006
    
    
    4 - 5Consolidated Statement of Cash Flows  Six
months ended December 31, 2006 and 2005
(Unaudited)
    
    
    6Notes to Consolidated Financial Statements
    
    
    7 - 10Item 2.
    
    Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    10 - 15Item 3.
    
    Quantitative and Qualitative Disclosure
about Market Risk
    
    
    16Item 4.
    
    Controls and Procedures
    
    
    16Part II 
    
    Other InformationItem 4.
    
    Submission
of Matters to a Vote of Security HoldersItem 6.
    
    Exhibits
    
    
    17Signature
    
    
    18CertificationCertificationCertificationCertificationPress Release
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 ALLIED HEALTHCARE PRODUCTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
 Three months ended
    
    
    Six months endedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    14,273,950
    
    
    $
    13,339,789
    
    
    $
    28,751,392
    
    
    $
    28,326,070Cost of sales
    
    
    10,757,222
    
    
    
    9,766,848
    
    
    
    21,715,111
    
    
    
    20,778,612Gross profit
    
    
    3,516,728
    
    
    
    3,572,941
    
    
    
    7,036,281
    
    
    
    7,547,458Selling, general and
administrative expenses
    
    
    3,091,418
    
    
    
    3,032,153
    
    
    
    6,282,415
    
    
    
    6,202,112Income from operations
    
    
    425,310
    
    
    
    540,788
    
    
    
    753,866
    
    
    
    1,345,346Interest income
    
    
    (28,059
    )
    
    
    (18,718
    )
    
    
    (56,228
    )
    
    
    (26,675
    )Other, net
    
    
    (53,182
    )
    
    
    8,924
    
    
    
    (43,878
    )
    
    
    19,993(81,241
    )
    
    
    (9,794
    )
    
    
    (100,106
    )
    
    
    (6,682
    )Income before provision
for income taxes
    
    
    506,551
    
    
    
    550,582
    
    
    
    853,972
    
    
    
    1,352,028Provision for income taxes
    
    
    213,395
    
    
    
    233,328
    
    
    
    359,183
    
    
    
    568,933Net income
    
    $
    293,156
    
    
    $
    317,254
    
    
    $
    494,789
    
    
    $
    783,095Basic and diluted earnings
per share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.06
    
    
    $
    0.10Weighted average shares
outstanding  basic
    
    
    7,877,120
    
    
    
    7,832,186
    
    
    
    7,868,512
    
    
    
    7,830,881Weighted average shares
outstanding  diluted
    
    
    8,059,573
    
    
    
    8,050,069
    
    
    
    8,064,650
    
    
    
    8,041,758
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ALLIED HEALTHCARE PRODUCTS, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
 (Unaudited)December 31,
    
    
    June 30,2006
    
    
    2006Current assets:Cash and cash equivalents
    
    $
    2,842,638
    
    
    $
    2,696,324Accounts receivable, net of allowances of
$400,000 and $430,000, respectively
    
    
    7,357,596
    
    
    
    7,429,355Inventories, net
    
    
    12,187,592
    
    
    
    11,491,305Other current assets
    
    
    498,154
    
    
    
    224,853Total current assets
    
    
    22,885,980
    
    
    
    21,841,837Property, plant and equipment, net
    
    
    10,902,795
    
    
    
    11,252,934Goodwill
    
    
    15,979,830
    
    
    
    15,979,830Other assets, net
    
    
    253,222
    
    
    
    255,845Total assets
    
    $
    50,021,827
    
    
    $
    49,330,446
  (CONTINUED)
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ALLIED HEALTHCARE PRODUCTS, INC.
CONSOLIDATED BALANCE SHEET
(CONTINUED)
LIABILITIES AND STOCKHOLDERS EQUITY
 (Unaudited)December 31,
    
    
    June 30,2006
    
    
    2006Current liabilities:Accounts payable
    
    $
    3,666,116
    
    
    $
    3,208,699Deferred income taxes
    
    
    677,188
    
    
    
    689,942Deferred revenue
    
    
    465,000
    
    
    
    465,000Other accrued liabilities
    
    
    2,670,374
    
    
    
    2,834,495Total current liabilities
    
    
    7,478,678
    
    
    
    7,198,136Deferred revenue
    
    
    1,240,000
    
    
    
    1,472,500Commitments and contingenciesStockholders equity:Preferred stock; $0.01 par value; 1,500,000 shares
authorized; no shares issued and outstanding
    
    
    
    
    
    
    Series A preferred stock; $0.01 par value; 200,000 shares
authorized; no shares issued and outstanding
    
    
    
    
    
    
    Common stock; $0.01 par value; 30,000,000 shares
authorized; 10,187,069 shares issued at December 31, 2006
and 10,155,569 shares issued at June 30, 2006: 7,883,577
shares outstanding at December 31, 2006 and 7,852,077
shares outstanding June 30, 2006, respectively
    
    
    101,871
    
    
    
    101,556Additional paid-in capital
    
    
    47,406,417
    
    
    
    47,258,182Retained earnings
    
    
    14,526,289
    
    
    
    14,031,500Less treasury stock, at cost; 2,303,492 shares at
December 31, 2006 and June 30, 2006, respectively
    
    
    (20,731,428
    )
    
    
    (20,731,428
    )Total stockholders equity
    
    
    41,303,149
    
    
    
    40,659,810Total liabilities and stockholders equity
    
    $
    50,021,827
    
    
    $
    49,330,446
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ALLIED HEALTHCARE PRODUCTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
 Six months endedDecember 31,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    494,789
    
    
    $
    783,095Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    605,260
    
    
    
    576,924Stock based compensation
    
    
    39,036
    
    
    
    35,341Provision for (benefit from) doubtful accounts
    
    
    (36,231
    )
    
    
    102,728Deferred income taxes
    
    
    (12,754
    )
    
    
    (14,322
    )Changes in operating assets and liabilities:Short-term investments
    
    
    
    
    
    
    (1,250,000
    )Accounts receivable
    
    
    107,990
    
    
    
    356,550Inventories
    
    
    (696,287
    )
    
    
    (562,434
    )Other current assets
    
    
    (273,301
    )
    
    
    (247,944
    )Accounts payable
    
    
    457,417
    
    
    
    1,123,727Deferred revenue
    
    
    (232,500
    )
    
    
    (232,500
    )Other accrued liabilities
    
    
    (164,121
    )
    
    
    182,222Net cash provided by operating activities
    
    
    289,298
    
    
    
    853,387Cash flows from investing activities:Capital expenditures
    
    
    (252,498
    )
    
    
    (514,836
    )Net cash used in investing activities
    
    
    (252,498
    )
    
    
    (514,836
    )Cash flows from financing activities:Stock options exercised
    
    
    81,090
    
    
    
    42,750Excess tax benefit from exercise of stock options
    
    
    28,424
    
    
    
    18,000Net cash provided by financing activities
    
    
    109,514
    
    
    
    60,750Net increase in cash and equivalents
    
    
    146,314
    
    
    
    399,301Cash and cash equivalents at beginning of period
    
    
    2,696,324
    
    
    
    317,775Cash and cash equivalents at end of period
    
    $
    2,842,638
    
    
    $
    717,076
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ALLIED HEALTHCARE PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 1.
    
    Unaudited Consolidated Financial Statements
  Recent Accounting Pronouncements
   7




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2.
    
    Inventories
 
  December 31, 2006
    
    
    June 30, 2006Work-in progress
    
    $
    837,685
    
    
    $
    715,643Raw materials and component parts
    
    
    8,961,787
    
    
    
    8,820,622Finished goods
    
    
    3,458,092
    
    
    
    3,123,435Reserve for obsolete and excess
inventory
    
    
    (1,069,972
    )
    
    
    (1,168,395
    )$
    12,187,592
    
    
    $
    11,491,305
 3.
    
    Earnings per share
  4.
    
    Commitments and Contingencies
  8




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5.
    
    Financing
 
    6.
    
    Stock Repurchase Arrangement
  7.
    
    Baralyme® Agreement
  9




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Three Months ended
    
    
    Six Months endedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Beginning balance
    
    $
    1,821,250
    
    
    $
    1,356,250
    
    
    $
    1,937,500
    
    
    $
    1,472,500Payment Received from
Abbott Laboratories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Revenue recognized
as net sales
    
    
    (116,250
    )
    
    
    (116,250
    )
    
    
    (232,500
    )
    
    
    (232,500
    )1,705,000
    
    
    
    1,240,000
    
    
    
    1,705,000
    
    
    
    1,240,000Less  Current
portion
of deferred revenue
    
    
    (465,000
    )
    
    
    (465,000
    )
    
    
    (465,000
    )
    
    
    (465,000
    )$
    1,240,000
    
    
    $
    775,000
    
    
    $
    1,240,000
    
    
    $
    775,000
 ®
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 RESULTS OF OPERATIONS
 Three Months ended December 31, 2006 compared to three months ended December 31, 2005.
  10




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®
 ® th ® ® ®
    11




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Six Months ended December 31, 2006 compared to six months ended December 31, 2005.
  ®
 ® th ®
 12




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® ®
     13




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LIQUIDITY AND CAPITAL RESOURCES
     14




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Litigation and Contingencies
  Recent Accounting Pronouncements
  15




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Item 3. Quantitative and Qualitative Disclosure about Market Risk
   
 Item 4. Controls and Procedures
    
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  16




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For
    
    WithheldJudy Graves
    
    
    7,085,418.9
    
    
    
    29,990.75Wm. Peck, MD
    
    
    7,107,218.9
    
    
    
    8,190.75E. Refsland
    
    
    7,105,851.11
    
    
    
    9,558.64J. Root
    
    
    7,083,014.9
    
    
    
    32,394.75J. Weil
    
    
    7,083,418.9
    
    
    
    31,990.75
   For: 6,136,757.2
    
    Against: 47,375.4
    
    Abstain: 6,807.98
 
 Item 6. Exhibits
 (a)
    
    Exhibits:
 31.1
    
    Certification of Chief Executive Officer (filed herewith)31.2
    
    Certification of Chief Financial Officer (filed herewith)32.1
    
    Sarbanes-Oxley Certification of Chief Executive Officer (furnished herewith)*32.2
    
    Sarbanes-Oxley Certification of Chief Financial Officer (furnished herewith)*99.1
    
    Press Release dated February 7, 2006 announcing second quarter earnings*
 17




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*
    
    Notwithstanding any incorporation of this Quarterly Report on Form 10-Q in any other filing by the
Registrant, Exhibits furnished herewith and designated with an asterisk (*) shall not be deemed
incorporated by reference to any other filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 unless specifically otherwise set forth therein. 
   ALLIED HEALTHCARE PRODUCTS, INC./s/ Daniel C. DunnDaniel C. DunnChief Financial Officer
Date: February 7, 2007 18