kl11044ex99-1.htm

SHANGHAI, November 29, 2012 -- 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 and nine months ended September 30, 2012.

“We had positive revenue growth for a second consecutive quarter,” said Dr. Liang Tang, Chairman of Ossen Innovation. “More importantly, we generated positive net income. These developments indicate a rebound in the industry and strong execution from our team. As the market demand improves further, we anticipate our margins to gradually return to historical levels.”

Revenue for the three months ended September 30, 2012 was $41.1 million, an increase of $10 million, or 32%, from the same period a year ago. Sales of coated pre-stressed steel materials, including rare earth coated products, were $29.7 million, up 178% compared to $10.7 million in the third quarter of 2011 due to overall higher demand of coated pre-stressed steel materials in the market.

Selling expenses increased 19% to $0.3 million due to higher sales. General and administrative expenses increased 58% to $0.5 million mainly due to the increase in R&D expenses. Operating income fell 42% to $2.1 million in the third quarter of 2012 with operating margin of 5.1% compared to $3.6 million and 11.7%, respectively, in the third quarter of 2011.

Net income attributable to controlling interest decreased 63% to $0.7 million in the third quarter of 2012 from $2 million in the year-ago period. Earnings per share were $0.04 versus $0.10 a year ago. The weighted average diluted shares outstanding was 19.9 million compared to 20.0 million a year ago as a result of 88,616 shares repurchased by Ossen as of September 30, 2012.

Operating expenses were $3.5 million, up 53% from $2.3 million in the first nine months of 2011, led by a $1.4 million year-over-year increase in general and administrative expenses. Operating income and operating margin for the year to date of 2012 was $4.2 million and 4.4% compared to $17.8 million and 19.3%, respectively, for the nine months ended September 30, 2011.

Ossen had approximately $24.7 million of cash and restricted cash as of September 30, 2012 compared to $21.3 million at December 31, 2011. Total accounts receivable on September 30, 2012 decreased to $40.5 million from $48.0 million on December 31, 2011. The average accounts receivable days sales outstanding were 101 days in the third quarter of 2012 compared to 118 days in the third quarter of 2011. Advances to suppliers increased to $75.5 million on September 30, 2012 as compared to $62.8 million a quarter ago, as the Company anticipated recovery of the market and purchased larger quantity of raw materials for better pricing. Inventories were down from $17.2 million at December 31, 2011 to 12.4 million at September 30, 2012. Total working capital was $73.5 million at September 30, 2012 compared to $70.8 million at December 31, 2011.

For the nine months ended September 30, 2012, the Company had approximately $13 million of cash outflows from operations as compared to $13.7 million of outflows in the same period of 2011. The primary reason for the reduction in cash used in operations was improvement in accounts receivable collection during the first nine months of 2012, which was partially offset by increased advances to suppliers.

In November 2011, the Company’s Board of Directors approved a share repurchase program for up to 500,000 shares of the Company's American Depositary Receipts ("ADSs") through May 2012. On May 31, 2012 the program was further extended for another 12 months to May 31, 2013. As of September 30, 2012, the Company had repurchased 88,616 shares of ADSs from the secondary market at an average price of $0.98 per share.

Accounts receivable collection improved during the first three quarters of 2012. The average accounts receivable days sales outstanding in Q1, Q2 and Q3 of 2012 were 201 days, 145 days and 101 days respectively. The Company expects accounts receiveable collection will further improve and return to the historical levels in the near future.

According to recent government announcements, total investments in railway construction in China will reach RMB530 billion (approx. USD84 billion) in 2013. Funding sources to support these constructions include central government support, bond issuance and bank loans. These funding sources have been secured by the Ministry of Railways in China.

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.

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. 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.
Alan Jin, Chief Financial Officer
Email: alanjin@osseninnovation.com
Phone: +86 (21) 5888-3163
Web: www.osseninnovation.com

Investor Relations
MZ North America
Ted Haberfield, President
Phone: +1-760-755-2716
Email: thaberfield@mzgroup.us
Web: www.mz-ir.com

	September 30,		December 31,
	2012		2011
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	2,100,709	$	1,568,261
Restricted cash		22,613,666		19,764,900
Notes receivable – bank acceptance notes		7,903,264		10,851,616
Accounts receivable, net of allowance for doubtful accounts of $386,255 and $384,311 at September 30, 2012 and December 31,2011, respectively		40,548,065		48,049,722
Inventories		12,448,654		17,222,664
Advance to suppliers		75,535,212		41,391,174
Other current assets		3,185,031		6,495,241
Account receivable from related party		534,616		20,799
Total Current Assets		164,869,217		145,364,377
Property, plant and equipment, net		10,031,284		11,022,916
Land use rights, net		4,329,806		4,380,708
Prepayment for plant and equipment		7,910,914		7,869,529
TOTAL ASSETS	$	187,141,221	$	168,637,530

	September 30,			December 31,
	2012			2011
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable – bank acceptance notes	$	43,626,018		$	24,848,628
Short-term bank loans		45,521,731			47,966,209
Accounts payable		1,199,579			948,475
Customer deposits		608,850			459,915
Income tax payable		42,999			4,792
Other payables and accrued expenses		421,304			324,423
Total Current Liabilities		91,420,481			74,552,442
Long-term bank loans		4,583,893			4,718,094
TOTAL LIABILITIES		96,004,374			79,270,536

EQUITY
Shareholders' Equity
Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 shares issued and 19,911,384 outstanding as of September 30, 2012 ; 20,000,000 shares issued and 20,000,000 shares outstanding as of December 31, 2011, respectively		200,000			200,000
Additional paid-in capital		33,963,932			33,884,656
Statutory reserve		4,040,105			3,884,808
Retained earnings		37,149,055			36,224,467
Treasury stock, at cost: 88,616 and 0 shares as of as of September 30, 2012 and December 31, 2011, respectively		(87,733	)		-
Accumulated other comprehensive income		5,742,139			5,295,641
TOTAL SHAREHOLDERS’ EQUITY		81,007,498			79,489,572
Non-controlling interest		10,129,349			9,877,422
TOTAL EQUITY		91,136,847			89,366,994
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	187,141,221		$	168,637,530

	FOR THE THREE MONTHS ENDED SEPTEMBER 30,						FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2012			2011			2012			2011

REVENUES	$	41,066,144		$	31,084,373		$	94,956,669		$	91,866,308
COST OF GOODS SOLD		38,141,575			26,867,212			87,224,774			71,793,245
GROSS PROFIT		2,924,569			4,217,261			7,731,895			20,073,063
Operating Expenses:
Selling and distribution expenses		298,231			251,721			633,325			809,683
General and administrative expenses		521,602			329,795			2,916,249			1,507,432
Total Operating Expenses		819,833			581,516			3,549,574			2,317,115
INCOME FROM OPERATIONS		2,104,736			3,635,645			4,182,321			17,755,948
Other Income (Expenses):
Financial expenses, net		(1,143,588	)		(1,003,853	)		(2,915,253	)		(2,611,774	)
Other income, net		49,374			15,006			383,255			85,692
INCOME BEFORE INCOME TAXES		1,010,522			2,646,798			1,650,323			15,229,866
INCOME TAXES		(156,041	)		(374,377	)		(318,511	)		(2,151,107	)
NET INCOME		854,481			2,272,421			1,331,812			13,078,759
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		113,215			272,679			251,927			1,594,126
NET INCOME ATTRIBUTABLE TO OSSEN INNOVATION CO., LTD AND SUBSIDIARIES		741,266			1,999,742			1,079,885			11,484,633
OTHER COMPREHENSIVE INCOME (EXPENSES)
Foreign currency translation gain, net of tax		(174,728	)		791,458			446,498			2,589,219
TOTAL OTHER COMPREHENSIVE INCOME (EXPENSES)		(174,728	)		791,458			446,498			2,589,219
COMPREHENSIVE INCOME		566,538			2,791,200			1,526,383			14,073,852
EARNINGS PER ORDINARY SHARE Basic and diluted	$	0.04		$	0.10		$	0.05		$	0.57
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING Basic and diluted	$	19,919,613		$	20,000,000		$	19,954,867		$	20,000,000

	Nine Months Ended September 30,
		2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,331,812		$	13,078,759
Adjustments to reconcile net income to net cash provided by/ (used in) operating activities:
Depreciation and amortization		1,190,589			1,566,548
Share-based compensation expense		79,276			78,987
Changes in operating assets and liabilities:
(Increase) Decrease In:
Accounts receivable		7,501,657			(35,660,081	)
Inventories		4,774,010			3,820,667
Advance to suppliers		(34,144,039	)		(23,514,812	)
Other current assets		3,310,212			2,895,266
Notes receivable - bank acceptance notes		2,948,352			17,636,928
Notes receivable from related party - bank acceptance notes		-			3,024,895
Account receivable from related party		(513,817	)		(1,374,570	)
Increase (Decrease) In:
Accounts payable		251,104			2,134,674
Customer deposits		148,935			50,453
Income tax payable		38,206			(255,258	)
Other payables and accrued expenses		96,882			18,089
Due to related party		-			2,811,709
Net cash used in operating activities		(12,986,821	)		(13,687,746	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment		(28,882	)		(154,820	)
Prepayment for plant and equipment		(1,583	)		-
Net cash used in investing activities		(30,465	)		(154,820	)

	Nine Months Ended September 30,
	2012			2011
CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase) in restricted cash		(2,848,766	)		(1,328,323	)
Proceeds from short-term bank loans		41,784,077			57,482,746
Repayments of short-term bank loans		(44,474,787	)		(51,602,914	)
Repayments of long-term bank loans		(158,278	)		-
Proceeds from notes payable-bank acceptance notes		59,354,226			34,833,953
Repayment of notes payable-bank acceptance notes		(40,677,430	)		(32,730,957	)
Repurchase of common shares		(87,733	)		-
IPO compensation		-			440,955
Net cash provided by financing activities		12,891,309			7,095,460

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(125,977	)		(6,747,106	)
Effect of exchange rate changes on cash		658,425			1,584,415
Cash and cash equivalents at beginning of period		1,568,261			12,322,982
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,100,709		$	7,160,291

SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid during the periods:
Income taxes paid	$	280,278		$	2,424,113
Interest paid	$	2,778,438		$	2,177,824
Non-cash transactions:
Appropriation to statutory reserve	$	155,297		$	1,173,410

	Three Months Ended September 30,
		2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	854,481		$	2,272,421
Adjustments to reconcile net income to net cash provided by/ (used in) operating activities:
Depreciation and amortization		361,743			678,860
Share-based compensation expense		26,618			26,618
Changes in operating assets and liabilities:
(Increase) Decrease In:
Accounts receivable		9,404,698			(17,262,055	)
Inventories		2,555,970			(3,870,017	)
Advance to suppliers		(12,743,803	)		23,912,632
Other current assets		2,766,985			(307,780	)
Notes receivable - bank acceptance notes		15,270			-
Account receivable from related party		(513,817	)		(1,025,603	)
Increase (Decrease) In:
Accounts payable		54,347			4,103,291
Customer deposits		257,450			(5,365,525	)
Income tax payable		(3,057	)		(331,398	)
Other payables and accrued expenses		86,437			(161,436	)
Due to related party		(316,741	)		2,811,709
Net cash provided by operating activities		2,806,581			5,481,717

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment		(486	)		(27,360	)
Net cash used in investing activities		(486	)		(27,360	)

	Three Months Ended September 30,
	2012			2011
CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase) in restricted cash		(5,500,566	)		(1,526,634	)
Proceeds from short-term bank loans		9,317,286			18,497,612
Repayments of short-term bank loans		(15,017,994	)		(23,642,600	)
Proceeds from notes payable-bank acceptance notes		19,443,550			8,843,854
Repayment of notes payable-bank acceptance notes		(10,744,423	)		(6,716,861	)
Repurchase of common shares		(18,702	)		-
Net cash used in financing activities		(2,520,849	)		(4,544,629	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		285,246			909,728
Effect of exchange rate changes on cash		(281,630	)		485,796
Cash and cash equivalents at beginning of period		2,097,093			5,764,767
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,100,709		$	7,160,291

SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid during the periods:
Income taxes paid	$	159,038		$	707,589
Interest paid	$	928,937		$	841,232
Non-cash transactions:
Appropriation to statutory reserve	$	77,102		$	230,030

(in millions ex- EPS)	Q3 2012	Q3 2011	Chg.			YTD 2012		YTD 2011		Chg.
Revenue	$41.1	$31.1		+32	%		$95.0		$91.9		3	%
Gross Profit	$ 2.9	$4.2		-31	%		$7.7		$20.1		-62	%
Net Income*	$ 0.7	$2.0		-63	%		$1.1		$11.5		-91	%
EPS	$0.04	$0.10		-63	%		$0.05		$0.57		-91	%
Shares Outstanding	19.9	20.0		-0.3	%		19.9		20.0		-0.1	%

Conference Call
Date:	Friday, November 30, 2012
Time:	9:00 am Eastern Time, US
Conference Line Dial-In (U.S.):	+ 1 718 354 1231
International Toll Free:	United States: +1-866-519-4004 China, Domestic Mobile: 4006208038 China, Domestic: 8008190121
Conference ID:	74841114