Compex Technologies Reports Fiscal 2003 Second Quarter Results; Announces Licensing Agreement with Bio-Medical Research.

Business Editors

NEW BRIGHTON, Minn.--(BUSINESS WIRE)--Feb. 12, 2003

Compex Technologies, Inc. (Nasdaq:CMPX) today reported results of operations for the fiscal second quarter ended December 31, 2002.

Consolidated net sales and rental revenue for the second quarter was $18.7 million, an increase of 5% over the prior year's second quarter revenue of $17.8 million. U.S. revenue was $12.4 million, up 8% from $11.5 million in the same period last year. International revenue was $6.3 million compared with $6.2 million in the prior year's second quarter.

The gross profit margin for the quarter was 69.2%, compared with 65.5% last year. Selling, general and administrative expenses were $10.8 million, or 57% of revenue, compared with $8.7 million in the fiscal 2002 quarter. This amount includes a $233,000 one-time charge for accrued executive compensation for a former officer of the Company.

Net income was $942,000, or $0.08 per diluted share, compared with $1.4 million, or $0.12 per diluted share in the same period last year. Excluding the one-time charge for accrued compensation, EPS would have been $0.10 per share in the quarter.

For the six months ended December 31, 2002, net revenue was $36.5 million, an increase of 6% compared with total revenue of $34.3 million for the six months ended December 31, 2001. Net income for the first half of fiscal 2003 was $1.9 million, or $0.17 per diluted share, compared with net income of $2.6 million, or $0.23 per diluted share in the comparable prior-year period.

"Through the first six months of the year, every product line we have is up over the same period last year," said Dan W. Gladney, President and CEO. "Revenue is up in the U.S. and in every country internationally, with the exception of Italy. Gross margins are also significantly higher thanks to our strategy of introducing new, higher-priced products into the market."

Gladney noted, however, that "because we invested heavily in growth in European markets and in our direct sales force, our administrative expenses increased disproportionately during the six months ended December 31, 2002. Our sales in Italy of consumer products, affected by the global economy as well as a buildup of inventory by the Italian distributor, were disappointing and did not offset these investments as we had anticipated. Nevertheless, we expect these investments to generate favorable returns in the future as our sales force becomes fully engaged and Italian sales recover."

Noting that the Company expects to maintain its investment in research and development as a percentage of revenue, Gladney also explained that "we continue to invest in new product development and in expanding our distribution of electrical stimulation products."

As part of the expansion of its distribution and product line, Compex announced that it has acquired the U.S. licensing rights for the Slendertone FLEX Abs Belt product from Bio Medical Research Ltd. (BMR), a company formed under the laws of Ireland.

"BMR has over 30 years of experience with muscle stimulation exercisers," Mr. Gladney commented. "They have more than 540 employees in over 15 countries worldwide, and they recently received FDA marketing clearance to sell the Abs Belt product in the United States. BMR chose to partner with Compex because of our expertise with muscle stimulation in the United States and our own recent FDA marketing clearance for the Compex Sport."

"The introduction of this product will further strengthen our move into the over-the-counter consumer market," Mr. Gladney continued. "We will continue to search for additional business development and strategic opportunities where possible."

Compex Technologies has scheduled an investor conference at 1:00 p.m. Eastern Time today to discuss these developments as well as:

-- revenue and earnings expectations for the remainder of fiscal 2003,

-- progress in the US product launch and distribution relationships for the Compex Sport, and

-- steps that will be taken to better align SG&A expenses with growth.

To participate in the live call, please dial [phone] and reference Conference ID Compex. International callers please dial [phone] and use the same Conference ID. A telephone replay will be available until 11:00 p.m. Eastern Time on February 14th by dialing [phone] domestically and [phone] internationally.

Compex Technologies, Inc. is a leading designer, manufacturer and provider of electromedical products used for pain management, rehabilitation and sports training in clinical, home health care, sports and occupational medicine settings.

Cautionary Statement: All statements other than historical facts included in this release regarding future operations, and particularly on the outlook for 2003, are subject to the risks inherent in predictions and "forward looking statements." These statements are based on the beliefs and assumptions of management of Compex Technologies and on information currently available to management. Nevertheless, these forward-looking statements should not be construed as guarantees of future performance. They involve risks, uncertainties, and assumptions identified in Compex Technologies filings with the SEC, including:

-- The increasing reliance on results of international

operations;

-- The effect of fluctuating exchange rates on international

results;

-- Compex Technologies substantial balances of third-party

billing business and resulting accounts receivable and the

sensitivity of its results to the accuracy of its reserve for

uncollectible receivables;

-- Changes in, and Compex Technologies compliance with,

regulation and industry practice that affects the rates at

which its products are reimbursed, the way it manufactures its

products, and the documentation which it submits for

reimbursement;

Other factors that affect the industry in which Compex Technologies functions, including negative publicity about electro-medical stimulation products for medical and fitness applications, and world events that affect the economies of the countries in which its products are sold.

              COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS



                      Three Months Ended         Six Months Ended
                         December 31               December 31
                   ------------------------- -------------------------
                       2001         2002         2001         2002
                   ------------ ------------ ------------ ------------

Net sales and
 rental revenue    $17,831,717  $18,735,080  $34,330,221  $36,472,820

Cost of sales and
 rentals             6,145,886    5,777,255   11,438,709   11,224,682
                   ------------ ------------ ------------ ------------

     Gross profit   11,685,831   12,957,825   22,891,512   25,248,138


Operating expenses:
   Selling, general
    and
    administrative   8,650,676   10,749,933   16,929,388   20,710,537
   Research and
    development        459,957      517,503    1,102,263    1,041,576
                   ------------ ------------ ------------ ------------
     Total
      operating
      expenses       9,110,633   11,267,436   18,031,651   21,752,113
                   ------------ ------------ ------------ ------------
    Income from
     operations      2,575,198    1,690,389    4,859,861    3,496,025


Other income (expense):
   Interest expense   (180,049)    (101,647)    (415,200)    (214,115)
   Other                 5,815       35,510       10,326       43,349
                   ------------ ------------ ------------ ------------

    Income before
     income taxes    2,400,964    1,624,252    4,454,987    3,325,259

Income tax
 provision           1,009,000      682,000    1,872,000    1,396,000
                   ------------ ------------ ------------ ------------
   Net income       $1,391,964     $942,252   $2,582,987   $1,929,259
                   ============ ============ ============ ============

Net income per
 common and common
 equivalent
 share

     Basic               $0.13        $0.09        $0.24        $0.18
                   ============ ============ ============ ============
     Diluted             $0.12        $0.08        $0.23        $0.17
                   ============ ============ ============ ============

Weighted average
 number of shares
 outstanding

      Basic         10,825,500   10,965,635   10,820,723   10,951,112
                   ============ ============ ============ ============
      Diluted       11,183,703   11,145,024   11,105,191   11,095,913
                   ============ ============ ============ ============



              COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS



                                               June 30,   December 31,
                                                 2002         2002
                                             ------------ ------------
            ASSETS
            ------
Current Assets:
 Cash and cash equivalents                    $2,086,650   $3,608,560
 Receivables, less reserve of $12,891,864     23,629,117   23,002,787
  and $12,921,387
 Inventories -
   Raw materials                               2,368,203    2,196,369
   Work in process                                80,265       76,837
   Finished goods                              6,522,790    6,173,597
 Deferred tax assets                           4,655,631    4,655,631
 Prepaid expenses                              1,641,378      964,173
                                             ------------ ------------
       Total current assets                   40,984,034   40,677,954

 Property, plant and equipment, net            4,679,778    5,035,378
 Goodwill, net                                 9,833,090    9,833,090
 Other intangible assets, net                  1,150,652    1,017,143
 Deferred tax assets                             702,567      740,004
 Other assets                                    127,615      120,234
                                             ------------ ------------
                                             $57,477,736  $57,423,803
                                             ============ ============
    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------

Current Liabilities:
 Current maturities of long-term debt         $2,520,775   $2,521,892
 Note payable                                       ----      700,000
 Accounts payable                              3,312,767    2,680,798
 Accrued liabilities -
   Payroll                                       607,409      576,398
   Commissions                                   437,530      430,186
   Income taxes                                2,670,766    2,158,850
   Other                                       5,656,988    4,782,323
                                             ------------ ------------
       Total current liabilities              15,206,235   13,850,447


Long-Term Liabilities:
 Long-term debt                                6,455,209    5,179,183
 Deferred tax liabilities                        535,102      574,421
                                             ------------ ------------
       Total liabilities                      22,196,546   19,604,051

Stockholders' Equity:
 Common stock, $.10 par value; 30,000,000      1,092,262    1,096,563
  shares authorized; issued and outstanding
  10,922,618 and 10,965,635 shares,
  respectively
 Preferred stock, no par value; 5,000,000           ----         ----
  shares authorized; none issued and
  outstanding
 Additional paid-in capital                   21,564,096   21,695,679
 Unearned compensation on restricted stock       (77,813)     (23,438)
 Accumulated other non-owner changes in
  equity                                         735,564    1,154,608
 Retained earnings                            11,967,081   13,896,340
                                             ------------ ------------
       Total stockholders' equity             35,281,190   37,819,752
                                             ------------ ------------
                                             $57,477,736  $57,423,803
                                             ============ ============