The Company experiences some seasonality in its revenues, with the first and
fourth quarter of its fiscal year historically being its lowest and highest
revenue quarters, respectively. The Company experiences additional variability
in each quarter due to a number of factors, including customer budget cycles,
product introductions, Company sales incentive programs, general economic
conditions and the timing of customer orders.
Table of Contents
Quarterly Comparisons of Operations
The following paragraphs discuss the Company's performance for the fiscal three-month periods ended
Revenues Total revenues from continuing operations for the three months ended
July 31, 2013increased 15% compared to the same period in fiscal 2012. Domestic revenue for the three months ended July 31, 2013increased by 12%, primarily related to strong pulmonary equipment sales. International revenue increased by 29% from prior year period levels, primarily from the stronger performance in the Canadian and Latin American regions. Gross Margin
Gross margin percentage for the three months ended
July 31, 2013was 55.4%, increased from 53.7% in the same period in 2012. Volume increases from revenue growth drove most of this increase, with additional support due to product mix, higher average selling prices for domestic pulmonary equipment and higher service margins. Gross margin for equipment, supplies and accessories was 52.3% for the quarter, compared to 51.8% in the prior year's quarter. Gross margin for services increased to 70.8% for the quarter, compared to 65.3% for the prior year's quarter primarily as a result of improved pricing and service mix. We expect that combined gross margin levels will continue in the mid-50% range for the remaining fiscal 2013 quarter. Selling and Marketing Selling and marketing expenses increased by 1% to $2.2 millionfor the three months ended July 31, 2013from $2.1 millionfor the comparable period of fiscal 2012. Expenses as a percent of revenues decreased to 27.1%, compared to 30.9% for the same period last year. Expenses increased primarily due to increased selling commissions and group purchasing organization fees of $166,000, attributable to the 15% increase in revenues, increased travel, trade shows and meetings expenses of $39,000, and increased costs of new sales management tools of $26,000, offset by net personnel cost and incentive compensation decreases of $199,000. General and Administrative General and administrative expenses for the three months ended July 31, 2013increased by 7%, or $60,000, to $1.0 millioncompared to $0.9 millionin 2012. Expenses as a percent of revenues decreased to 12.3%, compared to 13.2% for the same period last year. Much of the increase is due to the current year cost accruals versus prior year cost reversals resulting in increases of $40,000and $23,000related to consultant stock-based incentive accruals and travel costs, respectively. Research and Development
Research and development expenses for the three months ended
July 31, 2013decreased by 28%, or $234,000, to $0.6 millioncompared to $0.8 millionin the comparable period in fiscal 2012. Expenses as a percent of revenues decreased to 7.5%, compared to 12.0% for the same period last year. The decrease resulted primarily from $249,000of reduced net personnel and consulting expenses and stock-based compensation costs, as consultants were replaced by full-time, internal personnel and executive personnel costs were reduced. These savings were partially offset by a $31,000net increase in project-related costs from the Company's expansion of its investment in new product hardware and software development. Internal software development costs capitalized totaled $153,000and $216,000in the three months ended July 31, 2013and 2012, respectively.