Derma Sciences Announces Second Quarter 2003 Results.Business Editors/Health/Medical WritersPRINCETON, N.J.--(BUSINESS WIRE)--Aug. 14, 2003 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 .OB), a manufacturer and full line supplier of wound and skin care products, today reported financial results for its second quarter and six months ended June 30, 2003. 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 for the second quarter of 2003 increased 120.5%, or $2.5 million, to $4.6 million compared to $2.1 million in the second quarter of 2002. Sales for the first half of 2003 increased $4.6 million, or 108.7%, to $8.9 million from $4.2 million in 2002. The sales increase for the first half of 2003 were driven primarily by the acquisition of Dumex Medical (Dumex) in August 2002. Gross profit increased 43.4% to $1,686,529 from $1,176,046 for the quarter and 37.3% to $3,213,539 from $2,340,583 for the first half of 2003. Overall gross margin percent for the first quarter of 2003 decreased to 36.3% versus 55.2% for the same period in 2002. The decline in gross profit was due to the change in the Company's product mix with the inclusion of the lower margin Dumex wound care products. Net income for the second quarter improved to $81,367 or $0.01 per 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. common shares from $8,387 in the first quarter of 2003. For the first six months of the year, net income was $89,437, or $0.01 per diluted common share, compared to $72,602, or $0.01, per diluted common share, in 2002. The Company's consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. continues to strengthen with a current ratio of 2.76:1, $1,478,487 of cash and cash equivalents and working capital of approximately $4.9 million as of June 30, 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, "We are pleased with our second quarter's performance. Sales and net income improved over the first quarter and the launch of our Dumex wound care product line in the U.S. is now generating new customers each month. "Our U.S. strategy, implemented on January 1, 2003, to focus primarily on Group Purchasing Organizations A group purchasing organization is an entity that leverages the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members. Many GPOs are funded by administrative fees that are actually paid by the vendors. (GPO's) and Hospital Systems Contracts, as well as manufacturing partnerships with key suppliers, is showing the results we had anticipated. Our contract announced this quarter with MedAssets HSCA HSCA House Select Committee on Assassinations HSCA Harvard-Smithsonian Center for Astrophysics HSCA Hawaii State Chiropractic Association HSCA Hazardous Substances Control Act HSCA High School Culinary Arts , the third largest GPO in the U.S., was the first of what we believe will be many such agreements that are expected to improve U.S. sales and profits. "In Canada, where we are the wound care product market leader, our new contract with the two largest GPO's is expected to add new customers and increase sales during the second half of 2003. In addition, we believe the backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of elective elective non-urgent; at an elected time, e.g. of surgery. elective adjective Referring to that which is planned or undertaken by choice and without urgency, as in elective surgery, see there noun Graduate education noun surgical procedures Surgical procedures have long and possibly daunting names. The meaning of many surgical procedure names can often be understood if the name is broken into parts. For example in splenectomy, "ectomy" is a suffix meaning the removal of a part of the body. "Splene-" means spleen. that has occurred due to the SARS epidemic epidemic, outbreak of disease that affects a much greater number of people than is usual for the locality or that spreads to regions where it is ordinarily not present. in the first part of 2003 will increase the demand for our products in Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. hospitals in the months ahead. "Sales of our most profitable product, 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 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. , a product utilized primarily in nursing homes, has continued to face competitive sales and pricing pressures. Earlier this month we completed the acquisition of Genesis Ointment, a major competitor, from Gericare Inc. We believe this acquisition will strengthen our market position." 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 at http://www.dermasciences.com. Statements contained in this release that are not statements of historical fact may be deemed to be forward-looking statements 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. . 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
(Unaudited)
Three months ended Six months ended
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June 30, June 30,
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2003 2002 2003 2002
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Net Sales $4,636,189 $2,102,207 $8,852,428 $4,242,664
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Cost of Sales 2,949,660 926,161 5,638,889 1,902,081
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Gross Profit 1,686,529 1,176,046 3,213,539 2,340,583
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Operating Expenses 1,545,895 1,071,692 3,000,992 2,057,213
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Interest Expense, net 57,047 6,723 170,486 131,098
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Other (income) expense,
net 2,220 89,244 (47,376) 79,670
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Total Expenses 1,605,162 1,167,659 3,124,102 2,267,981
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Income before provision
for income taxes 81,367 8,387 89,437 72,602
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Provision for income
taxes - - - -
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Net Income $81,367 $8,387 $89,437 $72,602
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Income per common share -
basic $0.02 $0.00 $0.02 $0.02
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Income per common share -
diluted $0.01 $0.00 $0.01 $0.01
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Shares used in computing
income per common
share - basic 5,000,507 3,854,609 4,815,892 3,438,970
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Shares used in computing
income per common
share - diluted 10,154,959 7,154,322 8,664,538 6,814,264
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