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Shiner International, Inc. Announces First Quarter 2010 Financial Results
May 12, 2010 (04:05 PM EDT)


HAIKOU, China, May 12 /PRNewswire-Asia/ -- Shiner International, Inc. (Nasdaq: BEST), an emerging global supplier of anti-counterfeiting and advanced packaging products, today announced financial results for the quarter ended March 31, 2010.

    Financial Summary

    First Quarter Results
    -- Earnings per share of $0.04 for the quarter, unchanged from the prior
       quarter, and up from $(0.01) in the 2009 first quarter.
    -- Total revenue increased 63.9% in the first quarter from $7.1 million in
       2009 to $11.6 million for the first quarter of 2010.
    -- Net income of $0.92 million, compared to a net loss of $0.28 million in
       the first quarter of 2009.

    The following table sets forth the markets and the percentage of packaging
film revenue for each market for the quarter ended March 31, 2010 and 2009,
respectively:

                                                  Percent of Total Revenue
                                                   For the Quarter Ended
                                                          March 31,
                                                    2010               2009
    BOPP based film                                35.7%              47.4%
    Coated film                                    40.3%              27.7%
    Anti-counterfeiting film                       18.0%              17.1%
    Color printed packaging                         6.0%               7.8%

Revenues and Earnings

Shiner's revenue for the three months ended March 31, 2010 increased 7.5% on a sequential basis from the quarter ended December 31, 2009, and increased 63.9% when compared to the same period in 2009. The quarter to quarter increases in revenue related directly to increases in sales in two of Shiner's main business lines, including a 138% increase in coated film sales from $2.0 million for the first quarter 2009 compared to $4.7 million in the quarter ended March 31, 2010. Anti-counterfeit film sales increased 73% to $2.1 million from the comparable period a year ago of $1.2 million. Revenue from BOPP tobacco film sales was $4.1 million for the quarter ended March 31, 2010, an increase of 23% from the same period one year ago. Revenue from color printing increased 25% to $0.7 million in the first quarter in 2010 from $0.5 million from the comparable period in 2009.

The table below shows a product breakdown of 1st quarter 2010 consolidated net sales (in millions) based on product and percentage variances from 2009:


                                Net           %          %          %
    Product                    Sales        Change     Change     Change
                               Q1 FY        Q1 FY        in         in
                                2010         2009      Volume      Price

    BOPP Tobacco Film            4.1           23         14          2
    Coated Film                  4.7          138        166        (11)
    Anti-Counterfeit             2.1           73         50         47
    Color Printing               0.7           25         25         --


    The table below shows a product breakdown of the quarter ended March 31,
2010 domestic sales (in millions) based on product and percentage variances
from 2009:

                                   Net           %          %          %
    Product                       Sales       Change      Change     Change
                                  Q1 FY        Q1 FY        in         in
                                  2010         2009       Volume      Price
    BOPP Tobacco Film              4.1           23          14          2
    Coated Film                    3.8          254         291          9
    Anti-Counterfeit               0.7          818         523         44
    Color Printing                 0.6           13          13         --

International sales for the quarter ended March 31, 2010 totaled $2.4 million and accounted for 20% of Shiner's total revenues in comparison to $1.8 million, or 25%, for the comparable period in 2009. A 29.6% or, $0.5 million, increase in international sales was primarily due to a 49% increase in anti-counterfeit film sales.

    The table below shows a product breakdown of the first quarter 2010
international sales (in millions, based on product and percentage variances
from 2009:


                                 Net          %           %           %
    Product                     Sales       Change      Change      Change
                                Q1 FY       Q1 FY         in          in
                                 2010        2009       Volume       Price
    Coated Film                   0.9           2          (9)         12
    Anti-Counterfeit              1.4          49          40           7
    Color Printing                0.1          --          --          --

Cost of goods sold increased 4.7% on a sequential basis from the quarter ended December 31, 2009, and increased $ 3.1 million or 47%, from $6.6 million in the first quarter of 2009 to $9.7 million in the first quarter of 2010. Cost of goods sold represented 84% and 93% of our total revenue in the quarter ended March 31, 2010 and 2009, respectively.

Our gross profit for the quarter ended March 31, 2010 was about $ 1.9 million, which represented a gross margin of 16.3% and an increase of 143% from a gross margin of 6.7% for the quarter ended March 31, 2009. The increase in gross margin was a direct consequence of an increase in the selling prices of our products, a decrease in overhead unit rates as a result of increased production volume, and lower raw material prices.

Our selling, general and administrative expenses increased by about 5.4% to $845,142 for the quarter ended March 31, 2010 compared to $801,769 for the comparable period in 2009.

Income from operations was $1.0 million for the 2010 first quarter compared to a $0.3 million loss in the same period of the prior year.

For the first quarter of fiscal 2010, Shiner reported net income of $0.9 million which compared to a net loss of $0.3 million in the same period of the prior year. Earnings per share were $0.04 for the first quarter of fiscal 2010 compared to an adjusted net loss of $0.01 for the first quarter of fiscal 2009. The improvement reflects significantly higher sales volume, increased manufacturing capacity utilization, higher selling prices, and lower raw material costs. The company's productivity and cost-cutting actions are essentially tracking according to plan.

At March 31, 2010, we had $1.8 million in cash and cash equivalents on hand. On March 31, 2010, we had five short-term loans outstanding for a total of $3.2 million and we had working capital of $11.6 million, an increase of $225,573 from December 31, 2009.

Management Comments

Mr. Qingtao Xing, Shiner's C.E.O., commented, "We are encouraged by the continued positive trends in revenue in the first quarter; our gross profit was positively impacted by improved product mix toward our higher margin products, anti counterfeit and coated film. The improvement reflects significantly higher sales volume, increased manufacturing capacity utilization, higher realized sales prices, lower raw material costs, and partly offset by fixed cost increases for growth investments. The company's productivity and cost-cutting actions are essentially tracking according to plan. Since the implementation of the Food Safety Law (FSL) in June 2009, we are experiencing an increase of inquiries from food manufacturers. This interest affects our entire breadth of products and we are confident this will lead to an overall improvement in our business. Our Hainan manufacturing facility will be completed in June 2010 and is expected to be fully operational in October. We have purchased a new BOPP line at the cost of approximately $13,200,000. The equipment is expected to be delivered early in the first quarter of 2011, installed in the latter part of the first quarter of 2011 and operational in the second quarter of 2011. With the completion of this facility and the increase in our manufacturing capacity, Shiner will be well positioned to be the prime beneficiary of increased domestic consumption, a growing world economy, and increased market penetration through the recently enacted FSL. We believe that Shiner will continue to improve its revenue and net income and provide significant value to our shareholders."

About Shiner International, Inc.

Shiner International is engaged in the research and development, manufacture and sale of flexible packaging material. Products include coated packaging film, shrink-wrap film, common packaging film, anti-counterfeit laser holographic film and color-printed packaging materials. The Company's flexible packaging products are used by manufacturers in the food and consumer products industry to preserve texture, flavor, hygiene, and convenience and safety of their products. The Company was founded in 1990 and is headquartered in Haikou China.

Approximately 69% percent of Shiner's current customers are located in China with the remainder spanning Southeast Asia, Europe, the Middle East and North America. Shiner holds 15 patents on products and production equipment, and has an additional eight patent applications pending. The Company's flexible packaging meets the approval of U.S. FDA requirements, as well as those required for food packaging sold in the EU. Shiner's product manufacturing process is certified under ISO 9001:2000. Additional information on Shiner International is available at http://www.shinerinc.com .

Safe Harbor Statements

All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect Shiner International, Inc.'s current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in Shiner's filings with the Securities and Exchange Commission. The information contained in this press release is made as of the date of the press release, even if subsequently made available by Shiner on its website or otherwise.




                  SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                               March 31,       December 31,
                                                 2010              2009
                                              (unaudited)
                   ASSETS

    CURRENT ASSETS:
         Cash & cash equivalents               $1,824,128       $3,059,796
         Restricted cash                               --          733,455
         Accounts receivable, net of
          allowance for doubtful accounts
          of $353,574 and $252,008              7,206,442        6,405,741
         Advances to suppliers                  4,150,784        3,192,211
         Notes receivable                         293,400           88,311
         Inventory, net                        10,143,905        8,320,624
         Prepaid expenses & other current
          assets                                  515,617          299,694

             Total current assets              24,134,276       22,099,832

         Property and equipment, net           11,788,007       12,163,693
         Construction in progress               7,653,731        6,582,805
         Intangible assets, net                   347,752          349,491

         TOTAL ASSETS                         $43,923,766      $41,195,821

    LIABILITIES AND STOCKHOLDERS' EQUITY

     CURRENT LIABILITIES:
         Accounts payable                      $4,381,934       $2,667,835
         Other payables                         4,515,477        4,487,587
         Unearned revenue                         310,370          234,543
         Accrued payroll                          129,881          138,826
         Short term loan                        3,227,400        3,227,400

             Total current liabilities         12,565,062       10,756,191

         Commitments and contingencies

     STOCKHOLDERS' EQUITY:
         Common stock, par value $0.001;
          75,000,000 shares authorized,
          24,650,000 shares issued and
          24,588,155 shares outstanding
          at March 31, 2010 and December
          31, 2009, respectively                   24,650           24,650
         Additional paid-in capital            11,396,074       11,389,756
         Treasury stock (61,845 shares)           (58,036)         (58,036)
         Other comprehensive income             2,970,740        2,980,077
         Statutory reserve                      2,888,318        2,872,856
         Retained earnings                     14,136,958       13,230,327
             Total stockholders' equity        31,358,704       30,439,630

         TOTAL LIABILITIES AND
          STOCKHOLDERS' EQUITY                $43,923,766      $41,195,821



                   SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE
                INCOME (LOSS) FOR THE THREE MONTHS ENDED MARCH 31,

                                                   2010              2009
                                               (unaudited)       (unaudited)

    Net Revenue                                $11,586,719        $7,070,408

    Cost of Revenue                              9,699,466         6,598,923

    Gross profit                                 1,887,253           471,485

    Operating expenses
        Selling expenses                           403,770           277,851
        General and administrative expenses        441,372           523,918
             Total operating expenses              845,142           801,769

    Income (loss) from operations                1,042,111          (330,284)

    Non-operating income (expense):
        Other income (expense), net                 45,129            10,873
        Subsidy income                              41,062                --
        Interest income                              2,286             7,106
        Interest expense                           (42,829)          (46,049)
        Exchange gain (loss)                        (7,461)            1,458
             Total non-operating income
              (expense)                             38,187           (26,612)

    Income before income tax                     1,080,298          (356,896)

    Income tax (benefit) expense                   158,205           (81,883)

    Net income (loss)                              922,093          (275,013)

    Other comprehensive income
         Foreign currency translation gain          (9,337)          (41,649)

    Comprehensive Income (Loss)                   $912,756         $(316,662)

    Weighted average shares outstanding:
        Basic                                   24,588,155        24,650,000
        Diluted                                 24,598,358        24,650,000

    Earnings per share:
        Basic                                        $0.04            $(0.01)
        Diluted                                      $0.04            $(0.01)



                   SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 2010

                                                          Additional
                                         Common Stock      Paid in   Treasury
                                        Shares    Amount   Capital     Stock
     Balance, December 31, 2008       24,650,000  24,650  11,214,071       --

    Stock compensation expense for
     options issued to directors              --      --     175,685       --

    Purchase of 61,845 treasury
     shares                                   --      --          --  (58,036)

    Foreign currency translation gain         --      --          --       --

    Net loss                                  --      --          --       --

    Transfer to statutory reserve             --      --          --       --

     Balance, December 31, 2009       24,650,000  24,650  11,389,756  (58,036)

    Stock compensation expense for
     options issued to directors              --      --       6,318       --

    Foreign currency translation gain         --      --          --       --

    Net income                                --      --          --       --

    Transfer to statutory reserve             --      --          --       --

     Balance, March 31, 2010
      (unaudited)                     24,650,000  24,650  11,396,074  (58,036)




                   SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 2010

                                  Other                              Total
                              Comprehensive Statutory   Retained Stockholders'
                                  Income     Reserve    Earnings     Equity
     Balance, December 31, 2008  2,977,847  2,854,686  13,348,298  30,419,552

    Stock compensation expense
     for options issued to
     directors                          --         --          --     175,685

    Purchase of 61,845 treasury
     shares                             --         --          --     (58,036)

    Foreign currency translation
     gain                            2,230         --          --       2,230

    Net loss                            --         --     (99,801)    (99,801)

    Transfer to statutory
     reserve                            --     18,170     (18,170)         --

     Balance, December 31, 2009  2,980,077  2,872,856  13,230,327  30,439,630

    Stock compensation expense
     for options issued to
     directors                          --         --          --       6,318

    Foreign currency translation
     gain                           (9,337)        --          --      (9,337)

    Net income                          --         --     922,093     922,093

    Transfer to statutory
     reserve                            --     15,462     (15,462)         --

     Balance, March 31, 2010
      (unaudited)                2,970,740  2,888,318  14,136,958  31,358,704




                   SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      FOR THE THREE MONTHS ENDED MARCH 31,

                                                    2010              2009
                                                (unaudited)       (unaudited)

    CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                           $922,093         $(275,013)
      Adjustments to reconcile net income
       (loss) to net cash provided by
       (used in) operating activities:
         Depreciation                              395,917           412,045
         Amortization                               31,819             1,737
         Stock compensation expense for
          options issued to directors                6,318            39,892
         (Increase) / decrease in assets:
            Accounts receivable                   (829,991)        1,008,690
            Inventory                           (1,822,659)          383,870
            Advances to suppliers                 (958,247)          (68,470)
            Notes receivable                      (205,019)         (648,788)
            Other assets                          (186,285)         (487,507)
         Increase / (decrease) in current
          liabilities:
            Accounts payable                     1,713,513            88,203
            Unearned revenue                        75,803           180,826
            Other payables                          27,353            37,350
            Accrued payroll                         (8,941)            9,573

      Net cash provided by (used in)
       operating activities                       (838,326)          682,408

    CASH FLOWS FROM INVESTING ACTIVITIES
         Payments for property and
          equipment                                (50,441)         (147,208)
         Payments for construction in
          progress                              (1,079,695)         (401,973)
         Decrease in restricted cash               733,205           341,080

      Net cash used in investing
       activities                                 (396,931)         (208,101)

    CASH FLOWS FROM FINANCING ACTIVITIES:
         Repayment of short-term loans                  --          (399,976)

      Net cash used in financing
       activities                                       --          (399,976)

    Effect of exchange rate changes on
     cash and cash equivalents                        (411)           (4,944)

    NET INCREASE (DECREASE) IN CASH &
     CASH EQUIVALENTS                           (1,235,668)           69,387

    CASH & CASH EQUIVALENTS, BEGINNING
     BALANCE                                     3,059,796         3,816,454

    CASH & CASH EQUIVALENTS, ENDING
     BALANCE                                    $1,824,128        $3,885,841

    SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION:
      Interest paid                                $42,829           $44,978
      Income taxes paid                           $114,900           $14,807


    For more information, please contact:

    Shiner International, Inc.
     Jeffrey T. Roney
     Chief Financial Officer
     Email: jeffrey.roney@shinerinc.com
     Phone: +1-434-531-4146

SOURCE Shiner International, Inc.