Criticare Systems, Inc. Reports Fiscal 2007 Year To Date and Second Quarter Results.

MILWAUKEE -- CRITICARE SYSTEMS, INC. (AMEX:CMD). Criticare Systems, Inc. today announced financial results for the second quarter and six months ended December 31, 2006.

For the second year in a row, the Company reported record net sales for the first six months of any fiscal year, as net sales of $16,669,334 for the six months ended December 31, 2006 eclipsed the previous record net sales for the first six months of $16,443,126 in fiscal 2006. Income from operations for the first six months of fiscal 2007 was $641,537 compared to $305,489 for the same period in fiscal 2006. The Company also reported net income of $683,609 for the six months ended December 31, 2006, compared with net income of $744,315 for the same period in fiscal 2006. Fiscal 2006 net income included a one-time patent license fee of $300,000. Operating expenses for the first six months ended December 31, 2006 decreased $310,602 from the same period in fiscal 2006. This decrease occurred in spite of a $268,445 increase in administrative expenses due to $362,693 of expenses incurred during the first six months of fiscal 2007 in connection with the two consent solicitation actions initiated by BlueLine Partners. Without this added expense the Company's income from operations and net income for the first six months fiscal 2007 would have been $362,693 higher. This would have resulted in near record income from operations for the first six months of any fiscal year in the history of the Company.

Net sales were $8,462,740 for the three months ended December 31, 2006 compared to $8,770,813 for the same period in fiscal 2006. The small decrease in net sales was made up of a $116,564 increase in domestic alternate care sales which was offset by a $398,503 decrease in international and OEM sales. Income from operations for the three months ended December 31, 2006 was $315,096 compared to $248,418 for the same period in fiscal 2006. Net income for the first three months of fiscal 2007 was $350,733 compared to $606, 937 for the same period in fiscal 2006. As previously stated, fiscal 2006 net income included a one-time patent license fee of $300,000. Operating expenses for the three months ended December 31, 2006 decreased $227,006 from the same period in fiscal 2006. This decrease occurred in spite of an increase of $176,964 in administrative expenses due to $271,153 of expenses incurred during the second quarter of fiscal 2007 in connection with the two consent solicitation actions initiated by BlueLine Partners. Absent this expense the Company's second quarter net income would have increased by an additional $271,153.

The Company continued to focus on the balance sheet fundamentals during the second quarter of fiscal 2007, as cash and equivalents increased 47.5% from $2,675,450 as of September 30, 2006 to $3,947,297 as of December 31, 2006. Additionally, inventories decreased 13.3% from $9,311,435 to $8,077,732, accounts payable decreased 46.6% from $5,900,109 to $3,148,887 and accounts receivable decreased 27.0% from $8,441,194 to $6,161,894. The Company continues to operate with no long-term bank debt and has an unused line of credit of $2,000,000.

Going forward, the Company expects to release a new product line, which supports the growing practice of conscious sedation, in the fourth quarter of fiscal 2007. This will be marketed under the Criticare label on a worldwide basis. Additionally, Criticare has begun development to integrate its MR monitoring technology, including respiratory gas, into a leading product line that carries global recognition. The Company anticipates the product launch to be during fiscal 2008.

Criticare will hold a quarterly conference call on Thursday, February 8, 2007 at 10:00 am central standard time to discuss the year to date and second quarter results of fiscal 2007. Dialing 1-877-407-0782 can access the call.

Criticare (www.csiusa.com) designs, manufactures, and markets cost-effective patient monitoring systems and noninvasive sensors for a wide range of hospitals and alternate health care environments throughout the world.

This press release contains forward-looking statements. Such statements refer to the Company's beliefs and expectations. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those described. Such uncertainties include, but are not limited to, the timely completion of new products, regulatory approvals for new products, the risk of new and better technologies, risks relating to international markets, as well as general conditions and competition in the Company's markets. Criticare does not believe its backlog of any date is indicative of its future sales. Other risks are set forth in Criticare's reports and documents filed from time to time with the Securities and Exchange Commission.

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