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Biotech / Medical : SAFESKIN -- Ignore unavailable to you. Want to Upgrade?

To: Fbk32 who wrote (797)	7/28/1999 8:40:00 AM
From: Beltropolis Boy	Respond to of 828

"stop me, oh oh oh, stop me. stop me if you think that you've heard this one before." ----- Safeskin Reports Second Quarter Results - Strong Unit Growth Continues: Revenues and Gross Margin Impacted by Industry-Wide Pricing Pressures - July 28, 1999 08:02 AM SAN DIEGO, July 28 /PRNewswire/ -- Safeskin Corporation (SFSK) today reported results for its second quarter and six months ended June 30, 1999. Second Quarter Results: Net quarterly sales rose to $59.1 million, an increase of one percent above the prior year's second quarter sales of $58.6 million. Net income for the quarter was $8.9 million, or $.16 per share (diluted), compared to $15.0 million, or $.25 per share (diluted), in the comparable period a year earlier. Gross profit margin was 47 percent of sales compared to 52 percent in the year ago quarter, reflecting lower selling prices, strengthened foreign currencies, close-down costs associated with relocating a billion gloves of annual capacity from Malaysia to Thailand and start-up costs associated with the Company's new plant in Thailand. These costs were partially offset by lower latex costs and lower manufacturing costs in the existing Thai facility compared to Malaysia, as well as favorable product mix. Operating expenses for the current quarter increased $3.3 million year over year. Of that amount, selling expenses increased approximately $2.5 million as the Company expanded its sales force in the scientific and international business units. General and administrative expenses increased approximately $0.9 million reflecting higher legal and information technology expenses. Six Month Results: Net sales for the six months were $100.8 million, a decrease of 10 percent below the prior year period sales of $111.9 million primarily attributable to the Company's lower than expected sales in the first quarter of 1999. Net income for the six months was $9.8 million, or $.17 per share (diluted), compared to $28.3 million, or $.47 per share (diluted), in the comparable period a year earlier. Company Outlook "We experienced strong unit growth for our powder-free latex and synthetic exam gloves this quarter. For the quarter, we established a new record for the total number of units sold and also achieved our most positive product mix to date. This reflects the continuing market trend of conversion to powder- free and synthetic products," said Richard Jaffe, Chairman, President and Chief Executive Officer of Safeskin. "At the same time, the industry is experiencing excess capacity and lower selling prices, which reduced our revenue growth and gross profit margin. We expect these pressures to continue through the remainder of this year. While we anticipate our earnings in the third and fourth quarters will be relatively flat compared to our second quarter results, we expect improved earnings next year and positive year over year comparisons. "We have lowered our ongoing manufacturing costs by closing down our Malaysian operations and starting-up our new state-of-the-art Thailand plant. We are absorbing the transition costs associated with these moves and consequently were only able to partially offset lower selling prices and a stronger Thai currency. Next year, we believe we will have favorable year over year manufacturing cost comparisons because we will not have 1999 close- down and start-up costs. We also believe pricing should stabilize as excess capacity is absorbed by market growth over the next six to twelve months. This growth is being driven by demand for powder-free and synthetic products in all markets including U.S. and European medical markets, scientific markets and consumer markets. "Though we face what we believe are short-term marketplace challenges, we see significant opportunities and are taking what we believe is the right course of action to build Safeskin for the long-term. We are strengthening our strategic relationships with major group purchasing organizations and key distributors and are aggressively seeking to penetrate new segments of the marketplace. We are adding new customers, continuing to lower manufacturing costs and introducing new, higher margin products, all of which can only strengthen our leadership in glove markets."