omniture

China Linen Textile Industry, Ltd. Announces $17.6 million in Revenue and $0.20 in EPS for the First Half of 2010

    LANXI COUNTY, China, Aug. 31 /PRNewswire-Asia-FirstCall/ -- China Linen Textile Industry, Ltd. (OTC Bulletin Board: CTXIF) ("China Linen" or the "Company"), a China-based company engaged in the production and sale of linen yarn and various types of linen fabric, today announced its first and second quarter 2010 financial results.

    -- Six-month 2010 revenue increased 26.9% to 17.6 million over the same 
       period in 2009. 
    -- Six-month net income increased 50.3% to $4.0 million with EPS of $0.20 
       vs. $0.13 during the same period in 2009.
    -- Reiterates 2010 revenue guidance of $38.1 million and 2010 net income 
       guidance of $9.3 million, representing anticipated year-over-year 
       growth of approximately 29.6% and 63.2%, respectively. 


    SUMMARY FINANCIALS

    First Quarter 2010 Results (unaudited) 
                              
                                       Q1 2010        Q1 2009       CHANGE    
    Net Sales                        $8.8 million  $5.5 million     +58.7%
    Gross Profit                     $2.7 million  $1.1 million    +139.0%
    Net Income                       $2.1 million  $1.1 million     +89.8%
    EPS (Diluted)                           $0.10         $0.06     +89.1%


    Second Quarter 2010 Results (unaudited)     
                         
                                       Q2 2010        Q2 2009       CHANGE    
    Net Sales                        $8.8 million  $8.3 million      +5.7%
    Gross Profit                     $2.7 million  $2.5 million      +7.4%
    Net Income                       $1.9 million  $1.6 million     +22.5%
    EPS (Diluted)                           $0.10         $0.08     +21.8%


    Six-Month 2010 Results (unaudited)                   
                
                                     6-Month 2010  6-Month 2009    CHANGE    
    Net Sales                       $17.6 million $13.9 million    +26.9%
    Gross Profit                     $5.4 million  $3.7 million    +48.3%
    Net Income                       $4.0 million  $2.7 million    +50.3%
    EPS (Diluted)                           $0.20         $0.13    +49.6%


    First Quarter Ended March 31, 2010 Financial Results
    Revenue for the first quarter of 2010 increased 58.7% to approximately $8.8 million, compared to $5.5 million for the first quarter of 2009.  The increase was primarily due to increased marketing efforts which resulted in an increase in sales of linen fabric of $3.8 million, or 77.0%. The Company focused on linen fabric which generated 100% of revenue during the first quarter of 2010, while linen fabric contributed 90.0% of revenue in the first quarter of 2009 with 10% revenue generated from subcontracting linen fabric and linen yarn to fully utilize the Company's production capacity.  
    Cost of goods sold for the three months ended March 31, 2010 was approximately $6.1 million or 69.1% of revenue, as compared to $4.4 million or 79.5% of revenue for the three months ended March 31, 2009. Gross profit for the first quarter of 2010 was $2.7 million with gross margins of 30.9%, compared to $1.1 million in gross profit and gross margins of 20.5% for the first quarter of 2009. The increase in gross profit was due to the increased sales volumes of higher margin linen fabric in the first quarter of 2010.  
    Operating expenses for the three months ended March 31, 2010 were approximately $0.5 million, an increase of 69.0% compared to the same period in 2009. The increase was primarily due to the increased expenses in connection with its public company compliance efforts.
    Operating income for the first quarter of 2010 totaled approximately $2.2 million, a 165.9% increase from $0.8 million reported for the first quarter of 2009. Operating margins were 24.8% and 14.8% for the first quarter of 2010 and 2009, respectively. The improvement in our operating margin was due to increased revenue and improved expense management.
    Other income totaled $0.5 million for the first quarter of 2010, as compared to $0.7 million in the same period of 2009, representing a decrease of $0.2 million, or approximately 19.4%.  This decrease is mainly due to a decrease of $0.2 million in government subsidies received by the Company in the first quarter of 2010, as compared to the same period in 2009.  
    Net income was approximately $2.1 million for the first quarter of 2010, an 89.8% increase from $1.1 million reported for the first quarter of 2009. The increase in net income was primarily attributable to an increase of $3,250,024 in revenue as compared to the same period in 2009. Diluted earnings per share increased 89.1% to $0.10 for the first quarter of 2010 compared to $0.06 for the first quarter of 2009, based upon 20.2 million and 20.1 million diluted common shares outstanding, respectively. The increase in diluted earnings per share was attributable to an increase of $1 million in net income as compared to the same period in 2009.

    Second Quarter Ended June 30, 2010 Financial Results
    Revenue for the second quarter of 2010 increased 5.7% to $8.8 million compared to $8.3 million for the second quarter of 2009, primarily resulting from an increase in sales of linen fabric of $643,473 (8%). The increase in sales of our linen fabric can be attributed to our increased efforts in marketing such fabric. For the second quarter of 2010, the sales of linen fabric increased $0.7 million, or approximately 8% as compared to the same period in 2009. 
    For the three months ended June 30, 2010, cost of goods sold was $6.1 million, compared to $5.8 million in the second quarter of 2009, and gross profit was $2.7 million, compared to gross profit of $2.5 million in the second quarter of 2009. Second quarter 2010 gross margins were 30.8% compared to 30.3% in the second quarter of 2009. 
    Operating expenses for the second quarter of 2010 were approximately $0.4 million, compared to $0.1 million in the year ago period. General and administrative expenses were higher in the second quarter of 2010 mainly due to costs associated with being a public company. Operating income for the second quarter of 2010 totaled $2.3 million compared to operating income of $2.4 million in the second quarter of 2009, representing an operating margin of 26.0% and 29.0%, respectively.
    Net income for the second quarter of 2010 increased 22.5% to $1.9 million, compared to second quarter 2009 net income of $1.6 million. The increase in net income was primarily attributable to an increase of $475,886 in revenue as compared to the same period in 2009. Diluted earnings per share increased 21.8% to $0.10 for the second quarter of 2010 compared to $0.08 for the second quarter of 2009, based upon 20.2 million and 20.1 million diluted common shares outstanding, respectively.
    "We are pleased to report strong revenue and earnings growth during the first half of the year, which resulted from our increased marketing efforts, higher average selling prices for linen fabric, and the strong demand for our linen fabric in both domestic and international markets," stated Mr. Gao Ren, Chairman and President of China Linen. "We have seen an increase in demand from domestic and international customers this year due to the recovery of the global economy and the increasing awareness of the benefits of natural textiles, such as linen, among consumers."

    Six Months Ended June 30, 2010 Financial Results
    For the six months ended June 30, 2010, revenue increased approximately 26.9% to $17.6 million compared to the same period in 2009, primarily resulting from an increase in sales of linen fabric of $4.4 million (33.4%). The increase in sales of our linen fabric can be attributed to our increased efforts in marketing such fabric. Gross profit was approximately $5.4 million for the first six months of 2010, representing an increase of 48.3% from the first six months of 2009. Gross margins improved 440 basis points to 30.8% for the first six months of 2010 compared to the year ago period
    Income from operations was $4.5 million for the first six months of 2010, representing an increase of 38.1% over the first six months of 2009. Operating margins were 25.4% for the first six months of 2010, compared to 23.3% for the first six months of 2009. The improvement of operating margin was due to increased revenue and improved expense management.
    Net income was $4.0 million for the six months ended June 30, 2010, an increase of approximately 50.3% from the same period in 2009. The increase in net income was primarily attributable to an increase of $3,725,910 in revenue as compared to the same period in 2009. Fully diluted earnings per share increased 49.6% to $0.20 for the first six months of 2010, compared to $0.13 for the first six months of 2009, based up on 20.2 million and 20.1 million fully diluted shares outstanding, respectively.

    Balance Sheet and Cash Flow
    Cash and cash equivalents totaled $3.9 million on June 30, 2010, compared to $2.3 million on December 31, 2009. Accounts receivable balance was approximately $10.9 million on June 30, 2010, versus approximately $8.8 million on December 31, 2009. Days sales outstanding (DSO) for the first six months of 2010 were at 113 days, compared to 136 days for the same period in 2009. The decrease was primarily due to increased efforts in collecting the outstanding payment. The Company had a current ratio of 2.3 to 1 and stockholders' equity of $25.7 million, with total assets of $40.2 million versus total liabilities of $14.6 million on June 30, 2010.
    For the first six months of 2010, the Company generated $2.1 million in cash from operations versus $1.4 million for the same period in 2009.
    "Our enhanced international market expansion is anticipated to introduce more customers and orders to generate incremental revenues for the balance of 2010. The addition of new production capacity from the lease agreement signed in July 2010 enables us to fulfill more of those orders and improve our 2010 financial performance. Combined with our increased marketing efforts, higher average selling prices for linen fabric, and the strong demand for our linen fabric in both domestic and international markets, these expansion efforts give us confidence in meeting our 2010 revenue and earnings guidance."

    About China Linen Textile Industry, Ltd.
    China Linen Textile Industry, Ltd. ( http://www.chinalinen.cc/ ) is principally engaged in the production and sale of linen yarn and various types of linen fabric. The Company is also involved in consultation and R&D related to linen technology and linen products. The Company carries on all of its business activities through its subsidiary, Heilongjiang Lanxi Sunrise Linen Textile Industry Co., Ltd. ("Lanxi Sunrise"), established in June 2002 and located in Lanxi County, the "Homeland of Flax in China," near Harbin City in China. Lanxi Sunrise has one yarn-spinning factory and two fabric weaving factories in its 28,000 square meters of building area with a staff of 1,500 and 310 sets of world-class, advanced production machinery. Annual production capacity totals approximately 1,600 tons with 50 different types of yarn and 8 million meters of fabric with 110 types. Approximately 55 percent of its products are exported to more than 10 countries.

    Forward-looking Statements
    The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances, and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.

    For further information, contact:

    China Linen Textile Industry, Ltd.
     Mr. James Shaofeng Qi, CFO
     Tel:   +86-139-1093-4932

     Mr. Xiao Weixing, IR Manager
     Tel:   +86-137-9600-2690
     Email: xiaoweixing@chinalinen.cc

    HC International, Inc.
     Scott Powell, Vice-President
     Tel:   +1-917-721-9480
     Email: scott.powell@hcinternational.net
	Web:   http://www.hcinternational.net


CHINA LINEN TEXTILE INDUSTRY, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2010 and December 31, 2009
(Stated in US Dollars)
 
                                                  March 31,      December 31, 
                                                     2010            2009 
                                                  Unaudited         Audited 
                                                      $                $ 
    ASSETS                                                               
    Current assets                                                       
    Cash                                          6,986,300        2,320,656 
    Bank checks and commercial paper                     --        1,921,610 
    Accounts receivable, net                     10,541,195        8,762,516 
    Inventory                                     5,393,878        4,862,855 
    Prepaid expenses                              2,661,413        2,183,219 
    Other receivables                               167,083          100,165 
    Due from related parties                      1,447,715        2,576,579 
    Governmental subsidy receivable                 542,535        1,449,331 
    Deferred tax assets                             245,660          228,794 
    Total current assets                         27,985,779       24,405,725 
    Non-current assets                                                       
    Property, plant and equipment, net            9,055,240        9,195,907 
    Land use right, net                             406,000          408,134 
    Governmental subsidy receivable,                                     
     non-current                                  3,070,395        1,882,593 
    Deferred tax assets, non-current                235,732          238,600 
    TOTAL ASSETS                                 40,753,146       36,130,959 
                                                                             
    LIABILITIES AND STOCKHOLDERS' EQUITY                                     
    Current Liabilities                                                      
    Bank loans                                    5,428,324        4,048,583 
    Accounts payable                              4,154,612        2,565,188 
    Accrued expenses and other payables           1,422,801        1,101,571 
    Taxes payable                                 1,998,172        3,729,506 
    Deferred revenue                                474,628          423,153 
    Deferred governmental subsidy                    89,009           88,995 
    Due to related parties                          747,173           74,888 
    Deferred tax liabilities                        369,240          362,333 
    Total current liabilities                    14,683,959       12,394,217 
    Non-current liabilities                                                  
    Deferred governmental subsidy,                                       
     non-current                                  1,939,237        1,792,482 
    Deferred tax liabilities, non-current           529,238          470,648 
    TOTAL LIABILITIES                            17,152,434       14,657,347 
                                                                             
    STOCKHOLDER'S EQUITY                                                     
    Common stock                                                             
    $0.002 par value, 500,000,000 shares                                 
     authorized; 20,215,003 shares and                                                         
     20,200,003 issued outstanding as                                                      
     of March 31, 2010 and December 31,                                  
     2009                                            42,304           42,274 
    Additional paid-in capital                    3,119,586        3,093,816 
    Statutory reserves                            1,593,559        1,593,559 
    Retained earnings                            17,157,712       15,060,004 
    Accumulated other comprehensive                                      
     income                                       1,687,551        1,683,959 
    TOTAL STOCKHOLDER'S EQUITY                   23,600,712       21,473,612 
    TOTAL LIABILITIES AND STOCKHOLDERS'                                  
    EQUITY                                       40,753,146       36,130,959 


CHINA LINEN TEXTILE INDUSTRY, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended March 31, 2010 and 2009
(Stated in US Dollars)

                                                     Three months ended       
                                                          March 31,           
                                                     2010             2009 
                                                       $                $ 
    Revenues                                                                 
    Net sales                                     8,787,093        5,537,069 
    Costs of goods sold                           6,073,682        4,401,836 
    Gross profit                                  2,713,411        1,135,233 
    Operating expenses                                                       
    Selling expenses                                140,207          123,563 
    General and administrative expenses             394,494          192,459 
    Total operating expenses                        534,701          316,022 
    Operating income                              2,178,710          819,211 
    Other income (expense)                                                   
    Interest income                                  51,952           63,017 
    Interest expense                                (81,274)         (98,885)
    Government subsidies                            532,723          692,019 
    Other income/(expense)                           22,251           (4,077)
    Total other income                              525,652          652,074 
    Income before tax                             2,704,362        1,471,285 
    Income tax                                      606,654          366,033 
    Net income                                    2,097,708        1,105,252 
    Other comprehensive income                                               
    Effects of foreign currency                                          
     conversion                                       3,592            9,253 
    Comprehensive income                          2,101,300        1,114,505 
                                                                             
    Basic and diluted earnings per share              0.104            0.055 



CHINA LINEN TEXTILE INDUSTRY, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31, 2010 and 2009
(Stated in US Dollars)

                                                     Three months ended      
                                                           March 31,          
                                                      2010            2009   
    Cash Flows from Operating Activities                                
    Net income                                     $2,097,708     $1,105,252 
    Adjustments to reconcile net income to net                           
     cash provided by operating activities:                                                    
    Fair value of common stock expensed for                              
     services                                          25,800             --
    Impairment loss on property, plant and                               
     equipment                                             --          4,077 
    Depreciation                                      148,792        110,526 
    Amortization                                        2,201          2,197 
    Deferred income taxes                              51,441         52,657 
    Changes in:                                                              
    Bank checks and commercial paper                1,920,220        263,620 
    Accounts receivable                            (1,784,242)    (2,709,528) 
    Inventory                                        (534,144)     2,323,903 
    Prepaid expenses                                 (479,513)    (1,457,282) 
    Other receivables                                 (66,978)      (330,772) 
    Governmental subsidy, net                        (135,170)      (171,205) 
    Accounts payable                                1,590,974        285,970 
    Accrued expenses and other payables               321,973        375,057 
    Taxes payable                                  (1,728,784)      (118,675) 
    Deferred revenue                                   22,551        120,684 
    Due to/from related parties                     1,828,586      1,479,807 
    Net cash provided by operating activities      $3,281,415     $1,336,288 
                                                                             
    Cash Flows from Investing Activities                                     
    Purchase of property, plant and equipment         $(6,652)      $(77,636) 
    Net cash used in investing activities             $(6,652)      $(77,636)



CHINA LINEN TEXTILE INDUSTRY, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2010 and December 31, 2009
(Stated in US Dollars)

                                                      June 30,   December 31, 
                                                        2010         2009 
                                                     Unaudited      Audited 
                                                          $            $ 
    ASSETS                                                               
    Current assets                                                           
    Cash                                              3,944,211    2,320,656 
    Bank checks and commercial paper                         --    1,921,610 
    Accounts receivable, net                         10,884,145    8,762,516 
    Inventory                                         6,794,826    4,862,855 
    Prepaid expenses                                  2,691,841    2,183,219 
    Other receivables                                   185,605      100,165 
    Due from related parties                          1,976,962    2,576,579 
    Governmental subsidy receivable                     810,937    1,449,331 
    Deferred tax assets                                 246,655      228,794 
    Total current assets                             27,535,182   24,405,725 
    Non-current assets                                                       
    Property, plant and equipment, net                8,973,345    9,195,907 
    Land use right, net                                 405,435      408,134 
    Governmental subsidy receivable,                                     
     non-current                                      3,082,833    1,882,593 
    Deferred tax assets, non-current                    236,687      238,600 
    TOTAL ASSETS                                     40,233,482   36,130,959 
                                                                             
    LIABILITIES AND STOCKHOLDERS' EQUITY                                     
    Current Liabilities                                                      
    Bank loans                                        3,535,339    4,048,583 
    Accounts payable                                  3,411,624    2,565,188 
    Accrued expenses and other payables               1,576,245    1,101,571 
    Taxes payable                                     2,351,840    3,729,506 
    Deferred revenue                                    812,656      423,153 
    Deferred governmental subsidy                        96,246       88,995 
    Due to related parties                                   --       74,888 
    Deferred tax liabilities                            363,859      362,333 
    Total current liabilities                        12,147,809   12,394,217 
    Non-current liabilities                                                  
    Deferred governmental subsidy,                                       
     non-current                                      1,983,501    1,792,482 
    Deferred tax liabilities, non-current               472,631      470,648 
    TOTAL LIABILITIES                                14,603,941   14,657,347 
                                                                             
    STOCKHOLDER'S EQUITY                                                     
    Common stock $0.002 par value,                                       
     500,000,000 shares authorized;                                      
     20,215,003 shares and 20,200,003                              
     shares issued outstanding as of                                              
     June 30, 2010 and December 31, 2009                 42,304       42,274 
    Additional paid-in capital                        3,119,586    3,093,816 
    Statutory reserves                                1,593,559    1,593,559 
    Retained earnings                                19,085,193   15,060,004 
    Accumulated other comprehensive income            1,788,899    1,683,959 
    TOTAL STOCKHOLDER'S EQUITY                       25,629,541   21,473,612 
    TOTAL LIABILITIES AND STOCKHOLDERS'                                  
     EQUITY                                          40,233,482   36,130,959 



CHINA LINEN TEXTILE INDUSTRY, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the six months ended June 30, 2010 and 2009
(Stated in US Dollars)

                                Three months ended      Six months ended    
                                      June 30,               June 30,        
                                  2010       2009        2010       2009 
                                   $          $           $          $ 
    Revenues                                                               
    Net sales                  8,811,932  8,336,046  17,599,025 13,873,115 
    Costs of goods sold        6,098,647  5,810,884  12,172,329 10,212,720 
    Gross profit               2,713,285  2,525,162   5,426,696  3,660,395 
    Operating expenses                                                     
    Selling expenses              15,385     59,388     155,592    182,951 
    General and                                                          
     administrative                                                       
     expenses                    410,487     50,734     804,981    243,193 
    Total operating                                                      
     expenses                    425,872    110,122     960,573    426,144 
    Operating income           2,287,413  2,415,040   4,466,123  3,234,251 
    Other income (expense)                                                 
    Interest income               45,066     62,443      97,018    125,460 
    Interest expense             (77,388)   (73,000)   (158,662)  (171,885)
    Government subsidies         216,924   (366,603)    749,647    325,416 
    Other income (expense)        22,266    (86,282)     44,517    (90,359)
    Total other income           206,868   (463,442)    732,520    188,632 
    Income before tax          2,494,281  1,951,598   5,198,643  3,422,883 
    Income tax                   566,800    378,288   1,173,454    744,321 
    Net income                 1,927,481  1,573,310   4,025,189  2,678,562 
    Other comprehensive                                                  
     income                                                                
    Effects of foreign                                                   
     currency conversion         101,348     25,884     104,940     35,137 
    Comprehensive income       2,028,829  1,599,194   4,130,129  2,713,699 
                                                                           
    Basic and diluted                                                    
     earnings per share            0.095      0.078       0.199      0.133 



CHINA LINEN TEXTILE INDUSTRY, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 2010 and 2009
(Stated in US Dollars)

                                                      Six months ended           
                                                           June 30,               
                                                   2010               2009      
    Cash Flows from Operating Activities                                
    Net income                                 $4,025,189         $2,678,562 
    Adjustments to reconcile net income                                  
     to net cash provided by operating 
     activities:                                        
    Fair value of common stock expensed                                  
     for services                                  25,800                 --
    Impairment loss on property, plant                                   
     and equipment                                                           
    Depreciation                                  224,152            221,395 
    Amortization                                    4,402              4,397 
    Deferred income taxes                          90,379             49,198 
    Changes in:                                                              
    Bank checks and commercial paper            1,921,610             37,722 
    Accounts receivable                        (2,121,629)        (6,673,531) 
    Inventory                                  (1,931,971)         5,551,550 
    Prepaid expenses                             (508,622)        (2,200,327) 
    Other receivables                             (85,440)          (568,788) 
    Governmental subsidy, net                    (363,576)           171,526 
    Accounts payable                              846,436           (172,914) 
    Accrued expenses and other payables           474,674            480,486 
    Taxes payable                              (1,377,666)           121,281 
    Deferred revenue                              360,287            181,823 
    Due to/from related parties                   553,945          1,479,484 
    Net cash provided by operating                                       
     activities                                 2,137,970          1,361,864 
                                                                             
    Cash Flows from Investing Activities                                     
    Purchase of property, plant and                                      
     equipment                                    (21,297)           (23,053) 
    Net cash used in investing                                           
     activities                                   (21,297)           (23,053) 

Source: China Linen Textile Industry, Ltd.
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