Retractable Technologies, Inc. (“Retractable”) (NYSE AMEX: RVP), a leading maker of safety needle devices, announces net income of more than $2.4 million in 2010 compared to a net loss of more than $9.4 million in 2009. The results for the year ended December 31, 2010 as compared to the year ended December 31, 2009 are as follows.
Revenues decreased 7.1%, due principally to the effect of the Department of Health and Human Services contract in 2009. Domestic sales were 81.7% of revenues with international sales comprising the remainder. Domestic unit sales decreased 16.8% and domestic average sales prices increased 3.2%. International unit sales increased 31.2% and average international selling prices increased. Overall unit sales decreased 7.4%.
Cost of sales decreased due to lower volume of product sold. Royalty expenses increased due to higher gross sales.
Despite the 7.1% decrease in revenues, gross profit margins only decreased 0.5%, from 34.7% in 2009 to 34.2% in 2010.
Operating expenses decreased 28.4% from the prior year due to lower litigation costs, lower compensation costs ($800,000), lower stock option expense ($771,000), and lower travel and entertainment costs ($178,000). Our litigation costs for 2010 were approximately $5.1 million less than the prior year. Lower litigation costs are the result of an agreement between us and our counsel to cap certain litigation fees. Additional reductions in expenses in 2010 as compared to 2009 include reductions of $173,000 for consulting, $77,000 in 401(k) expense, and $48,000 for marketing expense.
In 2010, we recognized impairment charges of $365,295 for costs associated with research and development activities compared to impairment charges of $2.6 million in 2009 associated with catheter production equipment.
As a result of the reduction in operating expenses and impairment charges from 2009 to 2010, our operating loss was reduced to $6.8 million in 2010 compared to an operating loss in 2009 of $13.3 million.