Three months ended March 31, 2009 compared to three months ended March 31, 2008

Gross profit for the three months ended March 31, 2009 was $2.5 million, or 20.2% of net sales, compared to $3.2 million, or 23.0% of net sales, for the three months ended March 31, 2008.

Selling, general and administrative expenses for the three months ended March 31, 2009 were $3.2 million compared to selling, general and administrative expenses of $3.0 million for the three months ended March 31 2008. Salaries and benefits increased approximately $0.2 million.

Loss from operations was $0.7 million for the three months ended March 31, 2009 compared to income from operations of $0.2 million for the three months ended March 31, 2008. Interest income was $5,041 for the three months ended March 31, 2009 compared to interest income of $13,928 for the three months ended March 31, 2008. Allied had loss before benefit from income taxes in the third quarter of fiscal 2009 of $0.7 million, compared to income before provision for income taxes in the third quarter of fiscal 2008 of $0.2 million. The company recorded a tax benefit of $0.3 million for the three-months ended March 31, 2009 compared to a tax provision of $0.1 million for the three months ended March 31, 2008.

Nine months ended March 31, 2009 compared to nine months ended March 31, 2008

Allied had net sales of $39.4 million for the nine months ended March 31, 2009, down $2.3 million, or 5.5%, from net sales of $41.7 million in the prior year same period. Customer orders were $2.1 million lower than in the prior year same period, and customer purchase order releases were $2.7 million lower than in the prior year same period. Purchase order release times depend on the scheduling practices of individual customers and do vary over time.

Sales for the nine months ended March 31, 2008 include $348,750 for the recognition into income of payments resulting from the agreement with Abbott Laboratories to cease the production and distribution of Baralyme.

Domestic sales were down 4.8% from the first nine months of the prior year, while international business, which represented 19.3% of the first nine months of sales, was down 8.6%. Orders for the company’s products for the nine months ended March 31, 2009 of $38.1 million were $2.2 million or 5.5% lower than orders for the prior year same period of $40.3 million. International orders, which represented 20.3% of the first nine months of orders, are up 6.9% over the prior year same period while domestic orders are down 8.0% over the prior year same period. At this time, the company believes this decrease is due to market conditions and does not represent a decrease in the company’s market share.

Gross profit for the nine months ended March 31, 2009 was $8.7 million, or 22.1% of net sales, compared to $9.2 million, or 22.1% of net sales, for the nine months ended March 31, 2008. Cost of sales for the nine months ended March 31, 2009 also include $94,000 as a result of product development of a new carbon dioxide absorption product.

Selling, general and administrative expenses for the nine months ended March 31, 2009 were $9.8 million, a net increase of $0.8 million, or 8.9%, from $9.0 million for the nine months ended March 31, 2008. Salaries and benefits increased by $0.6 million from the prior year primarily due to open employee positions in the prior fiscal year and normal increases in the cost of fringe benefits.

Loss from operations was $1.1 million for the nine months ended March 31, 2009 compared to income from operations of $0.3 million for the nine months ended March 31, 2008. Interest income was $54,155 for the nine months ended March 31, 2009 compared to interest income of $92,874 for the nine months ended March 31, 2008. Allied had loss before benefit for income taxes for the first nine months of fiscal 2009 of $1.1 million, compared to income before provision for income taxes for the first nine months of fiscal 2008 of $0.3 million. The company recorded a tax benefit of $0.4 million for the nine-month period ended March 31, 2009, versus a tax provision of $0.1 million for the nine-month period ended March 31, 2008.

In fiscal 2009, the net loss for the first nine months was $0.7 million or $0.09 per basic and diluted share compared to net income of $0.2 million or $0.02 per basic and diluted share for the first nine months of fiscal 2008. The weighted average number of common shares outstanding, used in the calculation of basic earnings per share for the first nine months of fiscal 2009 and 2008 were 7,897,937 and 7,883,577 shares, respectively. The weighted average number of common shares outstanding used in the calculation of diluted earnings per share for the first nine months of fiscal 2009 and fiscal 2008 were 7,897,937 and 8,117,684 shares, respectively.

Allied is a manufactures a variety of respiratory products used in the healthcare industry in a range of hospital and alternate site settings, including sub-acute care facilities, home healthcare and emergency medical care.