General and administrative expenses were $4.9 million, or 24.7% of sales, compared to $3.9 million, or 19.6% of sales, in 2006, primarily because of professional fees associated with the Company's listing on the American Stock Exchange and compliance with the U.S. securities regulations.
Research and development expense was $0.3 million, compared to $28,000 in 2006, as a result of the Company's efforts to enhance product development and improve its manufacturing processes to further reduce production costs.
Overall, total operating expenses in 2007 increased 31.2% from the prior year to $12.0 million. Operating income was $2.9 million, down from $4.4 million in 2006.
The Company received a benefit from income taxes of $2.0 million, compared to a provision for income tax of $0.4 million in 2006. One of the Company's subsidiaries, Shenghuo Medicine Co., Ltd., received income tax relief of approximately $1.0 million from the PRC government for the 2005 and 2006 fiscal years. The remaining $1.0 million consists of deferred tax benefits from net operating losses and adjustments to bad debt allowances.
Net income for the 2007 fiscal year was $4.0 million, or $0.21 per diluted share, compared with net income of $3.0 million, or $0.17 per diluted share, the prior year, an increase of 33.8%.
As of December 31, 2007, the Company had cash and cash equivalents of
$2.8 million and working capital of $10.9 million. The Company also had
$6.8 million in long-term debt, excluding the current portion, and had
stockholders' equity of $13.7 million, up from $7.5 million a year ago. In
2007, the Company used $5.0 million in net cash for operating activit
|SOURCE China Shenghuo Pharmaceutical Holdings, Inc.|
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