Compex Technologies Reports Fiscal 2004 Second Quarter Results; Announces Record Quarterly Revenues.

Business Editors

NEW BRIGHTON, Minn.--(BUSINESS WIRE)--Feb. 12, 2004

Compex Technologies, Inc. (Nasdaq:CMPX) today reported results of operations for the fiscal 2004 second quarter ended December 31, 2003.

Consolidated net sales and rental revenue for the second quarter was a record $22.5 million, an increase of 20% over the prior year's second quarter revenue of $18.7 million. U.S. revenue was $13.5 million, up 9% from $12.4 million in the same period last year. International revenue was $9.0 million, an increase of 42% compared with $6.3 million in the prior year's second quarter.

The gross profit margin for the quarter was 68.1%, compared with 69.2% last year. Selling, general and administrative expenses were $12.5 million, or 55.6% of revenue, compared with $10.7 million, or 57.4% of revenue, in the fiscal 2003 second quarter.

Net income was $1.2 million, or $0.10 per diluted share, compared with $942,000, or $0.08 per diluted share in the same period last year.

For the six months ended December 31, 2003, net revenue was $41.6 million, an increase of 14% compared with total revenue of $36.5 million for the six months ended December 31, 2002. Net income for the first half of fiscal 2004 was $1.6 million, or $0.13 per diluted share, compared with net income of $1.9 million, or $0.17 per diluted share in the comparable prior-year period.

"Through the first six months of the year, every product segment we have is up over the same period last year," said Dan W. Gladney, President and CEO, "with the consumer product line up just over 35%. We ended the quarter with record revenues, up 20% over the prior year, with increased sales accounting for 12% of the gain and favorable exchange rates accounting for 8%."

Mr. Gladney continued, "International sales continue to be erratic. Of the 42% increase in revenues, 22% was generated by favorable exchange rates, 12% was due to the acquisition of Filsport, and 9% was generated by the addition of Slendertone. The underlying business, however, saw a 3% decline in volumes across Europe. Nevertheless, we expect our European business to stabilize in the remainder of fiscal 2004."

Noting that the Company completed an $8.9 million private placement during the quarter, Mr. Gladney also explained, "We have shored up the financial strength and stability of the company by using the majority of the net proceeds to reduce our short-term credit facilities and long-term debt. As a result, we ended the quarter with $6.3 million in debt, down $8.3 million from where we started the quarter."

Compex Technologies has scheduled an investor conference call at 1:00 p.m. Eastern Time on Thursday, February 12th, 2004, at which it will discuss:

-- Results of operations for the quarter ended December 31, 2003

-- Recent developments in new product initiatives, endorsements,

acquisitions and personnel changes

-- Goals and objectives for the year ending June 30, 2004.

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 26th by dialing [phone] domestically and [phone] internationally. Investors may also find investor information, including information about how to access replays of the conference call, at the Compex Technologies website at www.compextechnologies.com under the caption "About Us - Investor Relations."

Compex Technologies, Inc. is engaged in the manufacture and sale of healthcare products based upon electrical stimulation technologies designed to improve health, wellness, athletic performance and physical fitness.

Cautionary Statement: All statements other than historical facts included in this release regarding future operations, and particularly on the outlook for 2004, 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 effect of acquisitions on our results of operations;

-- The difficulties in predicting the amount and timing of

consumer acceptance of new products;

-- The increasing reliance on results of our international

operations;

-- The effect of fluctuating exchange rates on our international

results;

-- Our substantial balances of third-party billing business and

resulting accounts receivable and the sensitivity of our

results to the accuracy of its reserve for uncollectible 

receivables;

-- Changes in, and our 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 include negative publicity about electrical 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
                            June 30                 December 31
                   ------------------------- -------------------------
                       2002         2003         2002         2003
                   ------------ ------------ ------------ ------------

Net sales and
 rental revenue    $18,735,080  $22,464,599  $36,472,820  $41,620,865

Cost of sales and
 rentals             5,777,255    7,160,507   11,224,682   13,597,753
                   ------------ ------------ ------------ ------------
    Gross profit    12,957,825   15,304,092   25,248,138   28,023,112

Operating
 expenses:
  Selling, general
   and
   administrative   10,749,933   12,489,166   20,710,537   23,892,408
  Research and
   development         517,503      646,673    1,041,576    1,275,150
                   ------------ ------------ ------------ ------------
     Total
      operating
      expenses      11,267,436   13,135,839   21,752,113   25,167,558
                   ------------ ------------ ------------ ------------
    Income from
     operations      1,690,389    2,168,253    3,496,025    2,855,554

Other income
 (expense):
  Interest
   expense            (101,647)    (142,868)    (214,115)    (296,611)
  Other                 35,510       22,198       43,349       77,797
                   ------------ ------------ ------------ ------------

     Income before
      income taxes   1,624,252    2,047,583    3,325,259    2,636,740

Income tax
 provision             682,000      819,000    1,396,000    1,054,000
                   ------------ ------------ ------------ ------------
    Net income        $942,252   $1,228,583   $1,929,259   $1,582,740
                   ============ ============ ============ ============

Net income per
 common and common
 equivalent share

    Basic                $0.09        $0.11        $0.18        $0.14
                   ============ ============ ============ ============
    Diluted              $0.08        $0.10        $0.17        $0.13
                   ============ ============ ============ ============

Weighted average
 number of shares
 outstanding

     Basic          10,965,635   11,561,292   10,951,112   11,293,216
                   ============ ============ ============ ============
     Diluted        11,145,024   12,593,070   11,095,913   12,217,516
                   ============ ============ ============ ============


              COMPEX TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS

                                               June 30,   December 31,
                                                 2003         2003
                                             ------------ ------------
                   ASSETS
                   ------
Current Assets:
 Cash and cash equivalents                    $5,056,007   $2,920,406
 Receivables, less reserve of $15,200,590
  and $16,028,109                             24,955,130   27,403,202
 Inventories:
   Raw materials                               1,393,470    1,334,383
   Work in process                                33,670       33,608
   Finished goods                             10,301,198   13,798,988
 Deferred tax assets                           4,675,394    4,675,394
 Prepaid expenses                              2,378,044    2,325,397
                                             ------------ ------------
       Total current assets                   48,792,913   52,491,378

 Property, plant and equipment, net            4,536,804    4,598,704
 Goodwill, net                                10,583,287   15,691,113
 Other intangible assets, net                    883,634      750,781
 Deferred tax assets                             750,926      826,170
 Other assets                                    104,743      149,935
                                             ------------ ------------
                                             $65,652,307  $74,508,081
                                             ============ ============
    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------

Current Liabilities:
 Current maturities of long-term debt         $5,363,850   $2,208,284
 Note payable                                  4,500,000    1,000,000
 Accounts payable                              4,028,608    4,799,576

 Accrued liabilities:
   Payroll                                     1,567,710    1,869,911
   Commissions                                   679,015    1,045,199
   Income taxes                                2,725,341    1,464,689
   Other                                       3,349,986    5,249,380
                                             ------------ ------------
       Total current liabilities              22,214,510   17,637,039

Long-Term Liabilities:
 Long-term debt                                1,217,268    3,085,460
 Deferred tax liabilities                        675,885      733,527
                                             ------------ ------------
       Total liabilities                      24,107,663   21,456,026

Stockholders' Equity:
 Common stock, $.10 par value; 30,000,000
  shares authorized; issued and outstanding
  10,948,469 and 12,115,925 shares,
  respectively                                 1,094,847    1,211,592
 Preferred stock, no par value; 5,000,000
  shares authorized; none issued and
  outstanding                                         --           --
 Additional paid-in capital                   21,650,978   30,397,975
 Accumulated other non-owner changes in
  equity                                       1,870,183    2,931,112
 Retained earnings                            16,928,636   18,511,376
                                             ------------ ------------
       Total stockholders' equity             41,544,644   53,052,055
                                             ------------ ------------
                                             $65,652,307  $74,508,081
                                             ============ ============