Gross profit in the third quarter of 2009 was $5.8 million, an increase of 78.9% over the third quarter of 2008. Gross margin was 30.5% of total revenues for the third quarter, slightly lower compared to 31.0% in the third quarter of 2008 due to changes in product mix.
Operating expenses in the third quarter of 2009 were $1.3 million, up 39.2% from $0.9 million in the third quarter of 2008. The increase was due to higher selling, general and administrative expenses related to travel and allowances, the interest of the bank loan, meals and entertainment, rent, labor unions and salaries. Operating expenses represented 6.8% of total revenues in the third quarter of 2009 compared to 8.9% in the third quarter of 2008.
Operating income was $4.5 million in the third quarter of 2009, up 94.7% from $2.3 million in third quarter of 2008. Operating margin was 23.7%, as compared to 22.2% during the same period a year ago.
The Company's provision for income taxes was $1.2 million for the three months ended September 30, 2009 compared to $411,890 for the comparable period of 2008. The increase was due to the increase in operating income and the change of income tax rate. A favorable tax rate of 16.5% in 2008 expired and the Company adopted a new tax rate of 25% in 2009.
Net income for the third of 2009 was $3.2 million, or $0.21 per diluted
share, which included a $0.14 million non-cash expense related to a change in
the fair value of warrants, compared to $2.0 million or $0.13 per diluted
share, in the third quarter of 2008. This is due to the adoption of a new
accounting policy that became effective January 1, 2009, which requires
changes in the fair value of warrants to be recognized in earnings each
quarter. Excluding this expense, adjusted net income for the third quarter of
2009 was $3.4 million, or $0.22 per fully diluted share, which t
|SOURCE China Medicine Corporation|
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