Derma Sciences Announces Financial Results for the Fourth Quarter and Year Ended December 31, 2004.PRINCETON, N.J. -- Derma der·ma n. See dermis. derma the corium, or true skin. Sciences, Inc. (OTC Bulletin Board OTC Bulletin Board An electronic quotation listing of the bid and asked prices of OTC stocks that do not meet the requirements to be listed on the NASDAQ stock-listing system. : DSCI DSCI Decision Science DSCI Digital Serial Communications Interface DSCI Doctor of the Science of Creative Intelligence (Maharishi European Research University) DSCI Days Since Co-Op Incident ), a manufacturer and full line supplier of wound and skin care products, today reported financial results for its fourth quarter and year ended December 31, 2004. For the year net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 11% to $19.88 million from $17.94 million in 2003, led by an increase of 13.5% in wound care sales and an 11.1% increase in wound closure and fastener sales, partially offset by a decrease of $1,237,475 in revenues from our Dermagran Dermagran® Wound care A hydrophilic dressing for removing dead and damaged tissue from wounds used for surgical incisions, skin ulcers, pressure sores, lacerations, cuts, abrasions, diabetic ulcers, partial-thickness and hypothermia burns product line. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased $1,027,997, or 17.0%, with most of this increase related to strengthening of the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents , expenses associated with opening the Company's new distribution center in march of 2004, the creation of a marketing department in January of 2004 and investment in information technology to upgrade the Company's systems infrastructure. For the year, the Company incurred a net loss of $2,338,693, or $0.25 per-share (basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), versus net income of $22,241, or $0.00 per share (basic and diluted), in 2003. The Company had working capital of $2.8 million as of December 31, 2004. Net sales for the fourth quarter increased 2% to $4.97 million from $4.88 million in 2003, primarily driven by new private label contracts and non-adherent dressings sales from assets acquired from Kimberly-Clark in January 2004. Gross profit declined $342,091 in the fourth quarter of 2004 from the fourth quarter of 2003 and the gross margin fell to 23.8% in the fourth quarter of 2004 from 31.2% in the fourth quarter of 2003. The reduced gross profit was primarily attributable to a non-recurring fourth quarter 2003 sales promotion of the Company's Dermagran Ointment ointment /oint·ment/ (oint´ment) a semisolid preparation for external application to the skin or mucous membranes, usually containing a medicinal substance. oint·ment n. to certain of its largest distributors. The Company reported a net loss of $788,573, or $0.08 per basic and diluted share, in the fourth quarter of 2004 compared to net income of $28,541, or $0.00 per basic and diluted share in the fourth quarter of 2003. Edward J. Quilty, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Derma Sciences commented, "Though I am not pleased to report a $2.3 million loss for the year to our shareholders, we have genuine cause for optimism going forward. Our sales of wound care products increased 13.5% in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a $1 million-decrease in sales of Dermagran, a product line that has provided healthy sales and margins to Derma Sciences for over twenty years TWENTY YEARS. The lapse of twenty years raises a presumption of certain facts, and after such a time, the party against whom the presumption has been raised, will be required to prove a negative to establish his rights. 2. . We are currently working on new marketing programs to reinvigorate re·in·vig·o·rate tr.v. re·in·vig·o·rat·ed, re·in·vig·o·rat·ing, re·in·vig·o·rates To give new life or energy to. re the line. Also, I am confident that the improvements we made in our cost structure by moving operations to China, investments we've made in advanced wound care manufacturing in Toronto, and the building of a new distribution center will manifest manifest 1) adj., adv. completely obvious or evident. 2) n. a written list of goods in a shipment. MANIFEST, com. law. A written instrument containing a true account of the cargo of a ship or commercial vessel. 2. themselves more substantially in our financial results going forward. These investments will also enable us to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. contracts already in place and compete for new contracts with new and existing customers. The increase in operating expenses for 2004 were primarily investments in our future and we should realize the full benefits of some of those investments throughout this year and beyond. 2004 indeed was a challenging year of transition for us, but with that behind us I believe that we're well-positioned now to build the business by growing our revenues on top of a more efficient cost structure." About Derma Sciences, Inc. Derma Sciences, Inc. provides a full range of skin care, wound management and specialty securement devices that are used primarily in the professional markets, specifically hospitals, nursing homes and home care settings. For more information about Derma Sciences, Inc., visit its home page on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.dermasciences.com. Forward-Looking Statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements contained in this release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality gen·er·al·i·ty n. pl. gen·er·al·i·ties 1. The state or quality of being general. 2. An observation or principle having general application; a generalization. 3. of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. Readers are cautioned, that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements which may be made in this release or which are otherwise made by or on behalf of the Company. Factors which may affect the Company's results include, but are not limited to, product demand, market acceptance, impact of competitive products and prices, product development, completion of an acquisition, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements include but are not limited to, those discussed in the Company's filings with the Securities and Exchange Commission.
DERMA SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
December 31, Year ended
(Unaudited) December 31,
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2004 2003 2004 2003
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Net Sales $4,973,875 $4,876,404 $19,887,132 $17,941,451
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Cost of Sales 3,792,414 3,352,852 14,623,223 11,803,902
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Gross Profit 1,181,461 1,523,552 5,263,909 6,137,549
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Operating Expenses 1,715,571 1,589,162 7,087,513 6,059,516
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Interest Expense,
net 67,917 48,017 227,305 263,253
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Other (income)
expense, net 186,546 (142,168) 287,784 (207,461)
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Total Expenses 1,970,034 1,495,011 7,602,602 6,115,308
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Income before
provision for income
taxes (788,573) 28,541 (2,338,693) 22,241
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Provision for income
taxes - - - -
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Net Income (Loss) $(788,573) $28,541 $(2,338,693) $22,241
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Income (loss) per
common share - basic $(0.08) $0.00 $(0.25) $0.00
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Income (loss) per
common share -
diluted $(0.08) $0.00 $(0.25) $0.00
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Shares used in
computing income
(loss) per common
share - basic 9,839,600 7,462,695 9,424,191 6,108,290
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Shares used in
computing income
(loss) per common
share - diluted 9,839,600 12,371,554 9,424,191 10,795,026
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