Ossen Innovation Announces First Quarter 2014 Financial Results

       Ossen Innovation Announces First Quarter 2014 Financial Results

To Host Conference call at 8:30 am ET on June 30, 2014

PR Newswire

SHANGHAI, June 27, 2014



SHANGHAI, June 27, 2014 /PRNewswire-FirstCall/ --Ossen Innovation Co., Ltd.
("Ossen" or the "Company") (Nasdaq: OSN), a China-based manufacturer of an
array of plain surface, rare earth and zinc coated pre-stressed steel
materials, today announced its financial results for the three months ended
March 31, 2014.

"I am pleased with Ossen's significant increase in revenue during this
quarter," said Dr. Liang Tang, Chairman of Ossen Innovation. "We experienced
year over year demand growth for our higher quality and more durable rare
earth coated products. Although our margin was impacted by price competition,
I am pleased to announce the addition of several new customers who placed
large orders in the first quarter of 2014. We are striving to add more
customers throughout the year, who continue to be drawn to our products'
superior performance, durability and cost effectiveness, compared to our
competitors," concluded Dr. Tang.

Financial Summary

(in millions ex- EPS)    Q1 2014    Q1 2013    Chg.
Revenue                  $28.0      $14.6      +92%
Gross Profit             $2.6       $1.7       +56%
Net Income*              $0.5       $0.1       +550%
EPS                      $0.02      $0.004     +400%
Shares Outstanding       19.9       19.9       0%
*Net income attributable to Ossen Innovation Co., Ltd.

First Quarter Ended March 31, 2014 Financial Results

Revenue for the three months ended March 31, 2014 was $28.0 million, up 92%
from the same period a year ago. Sales of coated pre-stressed steel materials,
including rare earth and zinc coated products, were approximately $26.5
million, up 105.4% compared to approximately $12.9 million in the first
quarter of 2013. Sales of plain surface PC strands were $1.5 million for the
three months ended March 31, 2014, a decrease of $0.2 million compared to the
prior year. The overall increase in revenue was primarily due to increased
demand because of our ability to use lower grade raw material for rare earth
coated steel products, enabling us to compete on price, as well as the
addition of several new customers. The decrease in sales of plain surface
products was due to the Company's strategy to focus more on the sales of rare
earth coated products.

Gross profit was $2.6 million, a 56% increase from $1.7 million in the year
ago period. Gross margin was 9.4% in the first quarter of 2014, down from
11.6% in the first quarter of 2013. Gross margin was lower primarily due to
increased price competition and lower unit pricing of its coated products in
the first quarter of 2014, in order to attract new customers.

Selling expenses increased by 146% to $0.1 million due to an increase in
sales. General and administrative expenses increased 122% to $1.3 million,
primarily due to increased R&D expenses. Operating income was approximately
$1.2 million, an increase of 14.4% from the same period a year ago.

Net income attributable to Ossen Innovation Co., Ltd. was $0.5 million in the
first quarter of 2014 compared to $0.1 million in the year-ago period.
Earnings per share were $0.02 versus $0.00 a year ago. The weighted average
diluted shares outstanding were 19.9 million, unchanged from the year-ago
period.

Balance Sheet and Cash Flows

Ossen had approximately $26.4 millionof cash and restricted cash as ofMarch
31, 2014compared to$32.9 millionatDecember 31, 2013. Total accounts
receivable on March 31, 2014 decreased to $44.2 million from $48.2 million on
December 31, 2013. The average accounts receivable days sales outstanding were
142 days for the first quarter of 2014 compared to 152 days for 2013. This
decrease was primarily due to improved accounts receivable collection times
and increased revenue in the first quarter.The balance of prepayments to
suppliers of raw materials was $54.4 million as of March 31, 2014, an increase
of $3.8 million compared with December 31, 2013. The increase was mainly due
to prepayment for raw materials due to an anticipated increase in future
sales. Inventories increased from $18.8 million at December 31, 2013 to $33.9
million at March 31, 2014, primarily due to an increase in raw materials for
coated products. Total working capital was $87.1 million at March 31, 2014.

The Company experienced cash outflows from operations of $1.1 million for the
three months ended March 31, 2014 as compared to positive cash flows from
operations of $9.1 for the same period of 2013. The primary reasons for the
cash outflows from operations were an increase in inventories and advances to
suppliers, partially offset by an increase in net income and a decrease in
accounts receivable.

Cash flow used in financing activities was $0.1 million for the three months
ended March 31, 2014 as compared to cash flow used in financing activities of
$7.8 million for the same period of 2013. The primary reasons for the decrease
in cash used in financing activities was a decrease in the repayment of
short-term bank loans and an increase in proceeds from short-term bank loans.

Business Updates and Outlook

On June 16, China's central bank made a targeted cut in the portion of
deposits that banks need to keep on reserve. It trimmed the rate by half a
percentage point for banks that lend to the rural sector and smaller
companies. It is consistent with the Chinese central bank's objective of
avoiding big stimulus that had been used in the past. We believe it is a
positive signal in support of the economy and we expect that infrastructure
spending will be selectively targeted at developing regions in Central and
Western China.

The CPC Committee Political Bureau held a meeting on April 25 and discussed
the current Chinese economic situation and development. The meeting announced
that the government will accelerate the development of railroad in Central and
Western China. In addition, currently a number of Development and Reform
Commission departments in Western provinces are studying a number of new high
speed rail projects, including high speed rail projects from ​​Guiyang to
Zhengzhou, from Guiyang to Nanning, from Lanzhou to Yinchuan, from Lanzhou to
Xi'an, and from Lanzhou to Taiyuan. We expect these projects should create
additional bidding opportunities for us if they are successfully launched by
the government.

We note several positive developments in the first part of 2014. Specifically:

  oIn February 2014, Ossen was awarded the national title of 'outstanding
    foreign-invested enterprise.' This prestigious recognition is awarded by
    the China Association of Enterprises with Foreign Investment, a division
    of the Ministry of Commerce of the PRC. Separately, Ossen's two new
    products, 15.24 mm 1860 MPa coated steel strand and 7.0 mm 1670 MPa high
    performance zinc coated steel wire, received key new products
    identification from the Jiangxi Provincial Department of Science and
    Technology.
  oIn March 2014, we announced that the Company's Jiujiang subsidiary, Ossen
    (Jiujiang) Steel Wire & Cable Co., Ltd., was recently honored as an
    'Innovative Enterprise' in Jiangxi province. This recognition is awarded
    by the Jiangxi provincial government. In addition, Ossen (Jiujiang) Steel
    Wire & Cable Co., Ltd. was recognized as a 'First Class Export Enterprise'
    in Jiangxi province by the Jiangxi government agency.
  oIn June 2014, we received new sales contracts to supply our coated steel
    wire for cables used for the construction of five bridges in South Korea,
    including the Saecheonnyeon bridge, Jangja bridge, Bubal bridge, Daedeok
    2nd bridge and Gujeuk bridge. Product delivery is expected in June 2014.
  oIn June 2014, Ossen (Jiujiang) Steel Wire & Cable Co., Ltd. applied for
    Major Scientific and Technological Innovation Title in Jiujiang City for
    the year 2014. It is to develop 5mm series zinc-aluminum rare earth coated
    bridge cables. Currently Science and Technology Bureau of Jiujiang City
    has recommended this project to Science and Technology Department of
    Jiangxi province. If this project is recognized as Major Scientific and
    Technological Innovation by the Science and Technology Department of
    Jiangxi province, Ossen (Jiujiang) will receive tax incentives and subsidy
    from the government.

Conference Call

To attend the call, please use the information below for either dial-in access
or webcast access. When prompted on dial-in, ask for "Ossen Innovation First
Quarter 2014 Conference Call" or be prepared to utilize the conference ID.

Conference Call                 Ossen Innovation First Quarter 2014 Conference
                                Call
Date:                           Monday, June 30, 2014
Time:                           8:30 am Eastern Time, US
Conference Line Dial-In (U.S.): +1-845-675-0437
                                United States: +1-866-519-4004
International Toll Free:        China, Domestic Mobile: 4006208038
                                China, Domestic: 8008190121
Conference ID:                  64623766

Please dial in at least 10 minutes before the call to ensure timely
participation. A playback will be available through July 8, 2014. To listen,
please call +1-855-452-5696 within the United States or +1-646-254-3697 if
calling internationally. Utilize the pass code 64623766 for the replay.

This call is being webcast and can be accessed by clicking on this
link:http://www.media-server.com/m/p/rxairs2g

About Ossen Innovation Co., Ltd.

Ossen Innovation Co., Ltd. manufactures and sells a wide variety of plain
surface pre-stressed steel materials and rare earth coated and zinc coated
pre-stressed steel materials. The Company's products are mainly used in the
construction of bridges, as well as in highways and other infrastructure
projects. Ossen has two manufacturing facilities located in Maanshan, Anhui
Province, and Jiujiang, Jiangxi Province.

Safe Harbor Statements

This press release may contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, and as defined in the U.S.
Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve inherent risks and uncertainties that could cause actual
results to differ materially from those projected or anticipated, including
risks outlined in the Company's public filings with the Securities and
Exchange Commission, including the Company's annual report on Form 20-F, as
amended. All information provided in this press release is as of the date
hereof. Except as required by law, the Company undertakes no obligation to
update or revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise, after the date on which the
statements are made or to reflect the occurrence of unanticipated events.

For more information, please contact:

Ossen Innovation Co., Ltd.
Feng Peng, Chief Financial Officer
Email: feng.peng@ossencorp.com
Phone: +86 (21) 6888-8886
Web: www.osseninnovation.com

Investor Relations
FCC Group LLC
Phone: +1-347-850-7098
Email: ir@ossencorp.com



OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                   March 31,      December 31,
                                                   2014           2013
                                                   (Unaudited)
ASSETS
Current Assets
Cash and cash equivalents                        $ 762,242      $ 1,139,450
Restricted cash                                    25,683,669     31,783,670
Notes receivable – bank acceptance notes           4,867,601      2,421,581
Accounts receivable, net of allowance for
doubtful accounts of
$1,251,115 and $1,336,177 at March 31, 2014 and    44,208,748     48,200,076
December
31,2013, respectively
Inventories                                        33,863,234     18,750,770
Advance to suppliers                               54,426,353     50,614,815
Other current assets                               2,633,153      3,447,886
Notes receivable from related party – bank         -              12,915,099
acceptance notes
 Total Current Assets                             166,445,000    169,273,347
Property, plant and equipment, net                 8,141,594      8,458,121
Land use rights, net                               4,294,538      4,297,849
TOTAL ASSETS                                     $ 178,881,132  $ 182,029,317



OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                   March 31,      December 31,
                                                   2014           2013
                                                   (Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable – bank acceptance notes            $ 43,459,566   $ 50,990,427
Short-term bank loans                              29,043,354     27,283,147
Accounts payable                                   347,889        503,944
Customer deposits                                  4,970,260      2,908,271
Income tax payable                                 409,198        232,541
Other payables and accrued expenses                937,303        1,549,748
Due to related party                               95,633         16,911
Due to shareholder                                 100,000        50,000
 Total Current Liabilities                        79,363,203     83,534,989
TOTAL LIABILITIES                                  79,363,203     83,534,989
EQUITY
Shareholders' Equity
Ordinary shares, $0.01 par value: 100,000,000
shares authorized,
20,000,000 shares issued; 19,901,959 shares        200,000        200,000
outstanding as of
March 31, 2014 and December 31, 2013,
respectively
Additional paid-in capital                         33,971,455     33,971,455
Statutory reserve                                  4,680,101      4,615,699
Retained earnings                                  41,936,309     41,518,259
Treasury stock, at cost: 98,041 shares as of       
March 31, 2014 and                                                (96,608)
December 31, 2013, respectively                    (96,608)
Accumulated other comprehensive income             8,141,882      7,646,562
TOTAL SHAREHOLDERS' EQUITY                         88,833,139     87,855,367
Non-controlling interest                           10,684,790     10,638,961
TOTAL EQUITY                                       99,517,929     98,494,328
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 178,881,132  $ 182,029,317



OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
                                                  Three Months Ended March 31,
                                                     2014           2013
REVEUNUES                                         $  28,036,908   $ 14,592,753
COST OF GOODS SOLD                                   25,392,916     12,900,737
GROSS PROFIT                                         2,643,992      1,692,016
Selling expenses                                     108,438        44,075
General and administrative expenses                  1,339,531      602,707
 Total Operating Expenses                           1,447,969      646,782
INCOME FROM OPERATIONS                               1,196,023      1,045,234
Financial expenses, net                              (700,735)      (904,173)
Other income, net                                    168,265        44,391
INCOME BEFORE INCOME TAX                             663,553        185,452
INCOME TAX                                           (135,272)      (85,270)
NET INCOME                                           528,281        100,182
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING     45,829         26,143
INTEREST
NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST      482,452        74,039
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain                    495,320        510,447
TOTAL OTHER COMPREHENSIVE INCOME                     495,320        510,447
COMPREHENSIVE INCOME                              $  977,772      $ 584,486
EARNINGS PER ORDINARY SHARE
Basic and diluted                                 $  0.02         $ 0.004
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING
Basic and diluted                                    19,901,959     19,901,959



OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(Unaudited)
                                                                          Total Ossen Innovation Co., Ltd. Shareholders' Equity
                              Ordinary Shares                               Additional   AccumulatedOther                               Non
                                                     Treasury Stock         Paid-in      Comprehensive        Statutory    Retained      Controlling    Total
                              $0.01 Par Value                               Capital      Income               Reserve      Earnings      Interest
                              Shares     Amount      Shares   Amount
Balance at December 31, 2013  20,000,000   200,000   (98,041) (96,608)   33,971,455    7,646,562            4,615,699      41,518,259    10,638,961     98,494,328
Netincome                    -            -         -        -             -            -                    -            482,452       45,829         528,281
Transfertostatutoryreserve -            -         -        -             -            -                    64,402       (64,402)      -              -
Foreign currency translation                                                                                
adjustment                    -            -                                -            495,320                           -             -              495,320
                                                     -        -                                               -
Balance atMarch 31, 2014     20,000,000 $ 200,000   (98,041) $ (96,608) $  33,971,455 $ 8,141,882          $ 4,680,101  $ 41,936,309  $ 10,684,790   $ 99,517,929



OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                 Three Months Ended March 31,
                                                   2014            2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                      $ 528,281       $ 100,182
Adjustments to reconcile net income to net
cash provided by /
(used in) operating activities:
Depreciation and amortization                     388,213         384,490
Share-based compensation expense                                  -
Changes in operating assets and liabilities:
(Increase) Decrease In:
Accounts receivable                               3,991,328       7,598,791
Inventories                                       (15,112,464)    (6,346,785)
Advance to suppliers                              (3,811,538)     5,061,431
Other current assets                              814,733         39,668
Notes receivable - bank acceptance notes          (2,446,020)     394,079
Notes receivable from related party - bank        12,915,099      1,830,208
acceptance notes
Accounts receivable from related party            -               (2,625,082)
Increase (Decrease) In:
Accounts payable                                  (156,056)       25,822
Customer deposits                                 2,061,988       3,259,299
Income tax payable                                176,656         (337,907)
Other payables and accrued expenses               (612,444)       (297,020)
Due to related party                              78,722          -
Due to shareholder                                50,000          -
Net cash provided by/(used in) operating           (1,133,502)     9,087,176
activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment                  (1,150)         (12,671)
Net cash used in investing activities              (1,150)         (12,671)



OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                Three Months Ended March 31,
                                                  2014            2013
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in restricted cash                      6,100,001       6,561,343
Proceeds from short-term bank loans              8,336,466       6,049,607
Repayments of short-term bank loans              (6,701,865)     (12,177,826)
Proceeds from notes payable-bank acceptance      15,365,252      14,487,216
notes
Repayment of notes payable-bank acceptance       (23,211,338)    (22,765,625)
notes
Net cash used in financing activities             (111,484)       (7,845,285)
INCREASE/(DECREASE) IN CASH AND CASH              (1,246,136)     1,229,220
EQUIVALENTS
Effect of exchange rate changes on cash          868,927         879,543
Cash and cash equivalents at beginning of        1,139,451       1,996,764
period
CASH AND CASH EQUIVALENTS AT END OF PERIOD      $ 762,242       $ 4,105,527
SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid during the periods:
Income taxes paid                              $ 241,679       $ 389,179
Interest paid                                  $ 572,627       $ 899,973
Non-cash transactions:
Appropriation to statutory reserve              $ 64,402        $ 45,706

SOURCE Ossen Innovation Co., Ltd.

Website: http://www.media-server.com/m/p/rxairs2g
Website: http://www.osseninnovation.com
 
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