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U.S.-CHINA INDUSTRIAL EXCHANGE (CHINDEX) REPORTS
YEAR END RESULTS; RESTRUCTURING OF OPERATIONS

BETHESDA, MARYLAND - March 31, 1998 - U.S. - CHINA INDUSTRIAL EXCHANGE, INC. (NASDAQ:CHDX), today announced that due to its increased focus on, and its investment in, its most promising business segments in healthcare, and also to a substantial restructuring of operations, which includes a one-time charge in the fourth quarter of $1.5 million, the Company reported a loss for the year ended December 31, 1997. The net loss for the 1997 year was $4.6 million, or a loss of $0.74 per share, compared to the prior year’s net income of $576,000, or $0.15 per share. Revenues for the 1997 year rose slightly to $24.4 million, compared to revenues of $22.9 for the full year ended 1996.

Chindex Chairperson, President and CEO Roberta Lipson, commented, "We have instituted a program that will focus our future efforts by eliminating unprofitable operations and concentrating exclusively on continuing our growth solely as an American healthcare company in China. This will include the elimination of all non-healthcare related lines of business, as well as several of our less profitable medical equipment lines.

"We intend to further reduce costs throughout the Company in order to bring operating expenses in line with near term anticipated revenues as rapidly as possible," she said. "We believe our program, which includes reducing overall non-hospital staff levels by 18 percent and the restructuring charge involving additional reserves for closing non-essential operations and severance pay, will achieve this goal without sacrificing either our established core medical business or the new initiatives we have been developing in healthcare services and products distribution." Lipson continued, "As part of our cost reductions, the executive management team has agreed to take a 10 percent reduction in salary and to forego any bonuses."

"While we are certainly disappointed by these results," she said, "we continue to be encouraged by our medical business and prospects and have decided that it is in the Company’s best interest to focus our efforts solely in the healthcare field."

The Company noted that SG&A expense for the 1997 year was $12.6 million including the one-time restructuring charge of $1.5 million, up from $7.9 million for the same period last year. In addition to the restructuring charge, the increase was due to costs associated with increased personnel, startup expenses related to the opening in September of the Company’s Beijing United Family Hospital, and other costs related to expanded selling efforts.

The Company’s balance sheet as of December 31, 1997 showed cash and equivalents of $6.2 million, total assets of $26.6 million, a current ratio of 1.8:1 and shareholders’ equity of $14.2 million.

 

 

U.S.-CHINA INDUSTRIAL EXCHANGE, INC. (CHINDEX)

Consolidated Statements of Operations

         
   

Twelve Months Ended

   

December 31,

   

1997

 

1996

         
Net sales  

$ 23,849,000

 

$ 22,060,000

Cost of goods sold  

17,487,000

 

15,078,000

         
Gross profit on sales  

6,362,000

 

6,982,000

Net commission income  

532,000

 

841,000

         
Total gross profit on sales        
and net commission income  

6,894,000

 

7,823,000

         
Selling, general and administrative        
Salaries and payroll taxes  

4,726,000

 

3,536,000

Travel and entertainment  

2,214,000

 

1,796,000

Other  

4,180,000

 

2,564,000

Restructuring  

1,472,000

 

-

Net operating loss  

(5,698,000)

 

(73,000)

         
Other income and expenses        
Interest expense  

(31,000)

 

(119,000)

Interest income  

452,000

 

408,000

Miscellaneous income - net  

554,000

 

501,000

         
(Loss) income before benefit from/        
(provision for) income taxes  

(4,723,000)

 

717,000

Benefit from/(provision for) income taxes  

75,000

 

(141,000)

         
Net (loss)/income  

$ (4,648,000)

 

$ 576,000

         
Net (loss)/income per common share  

$ (0.74)

 

$ 0.15

         
Weighted average shares outstanding  

6,322,500

 

3,809,078

         
 
 

 

* * * * *

Chindex is a leading American company in healthcare in the Greater Chinese marketplace including Hong Kong and Macau. It provides representative and distribution services to a number of Fortune 500 companies including Acuson, Johnson & Johnson, Kendall Healthcare Products, and Schering AG. It also operates a private hospital corporation in China. With over sixteen years experience, 200 employees, and operations in the United States, China and Hong Kong, the Chindex strategy is to expand its cross-cultural reach by providing leading edge technologies, quality products and services to Greater China’s professional communities. Chindex is listed on NASDAQ under the ticker symbol CHDX.

 

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