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CTI Industries Corporation Reports Results for Full Year and Fourth Quarter 2013

Record Sales and Increased Profits

LAKE BARRINGTON, IL -- (Marketwired) -- 03/25/14 -- CTI Industries Corporation (NASDAQ: CTIB), a manufacturer and marketer of novelty balloons, flexible packaging and storage products and printed and laminated films, today announced its full-year results of operations for 2013, as well as for the three months ended December 31, 2013.

Year-End Results

For the year ended December 31, 2013, consolidated net sales totaled $56,059,000, compared to consolidated net sales of $49,543,000 for the year ended December 31, 2012, an increase of 13.2%. Sales for 2013 were at an all-time record high for CTI. For the year, CTI achieved net income of $376,000 or $0.12 per share (basic) and $0.11 (diluted), compared to $102,000 or $0.03 per share (basic and diluted) in 2012, a more than 269% improvement.

Fourth Quarter Results

Consolidated net sales for the fourth quarter of 2013 were $15,200,000 compared to consolidated net sales of $12,133,000 for the fourth quarter of 2012, an increase of more than 25.3%. For the fourth quarter of 2013, CTI had net income of $67,000 or $0.02 per share (basic and diluted), compared to a loss of $215,000 for the fourth quarter of 2012 or $0.07 per share (basic and diluted).

Key Factors and Trends

In 2013, net sales rose to the highest level in CTI's 38 year history, to $56 million as sales in the pouch and container line expanded 32.4% while sales in the novelty line of foil and latex balloons continued to expand as well. Overall, sales increased by 13.2% over 2012 sales of $49.5 million. Sales of our branded line of vacuum sealing machines and associated rolls and pouches, which were introduced in 2012 grew to $12.5 million in the year, and we anticipate continued significant revenue growth in that line during 2013.

Our income from operations increased by 97.4%, from $1,059,000 in 2012 to $2,090,000 in 2013. In the fourth quarter, income from operations increased from a loss of $65,000 to income of $603,000.

However, our bottom line results were affected by significant interest expense we incurred during the year, particularly related to our mezzanine loan of $5 million and the warrants associated with that loan, and also to relatively high tax expense. For the year, we incurred net interest expense of $1,440,000 and in the fourth quarter, we incurred net interest expense of $468,000.

Operating expenses increased modestly from $9,848,000 in 2012 to $10,523,000 in 2013, but as a percentage of sales operating expenses decreased from 19.9% of sales in 2012 to 18.8% of sales in 2013.

Gross margin levels increased from 22% in 2012 to 22.5% in 2013. This increase resulted from a change in the mix of products sold and also to gross margins achieved by our Mexico subsidiary, Flexo Universal.

Our liquidity improved with the result that our working capital increased from just over $10.1 million as of December 31, 2012 to more than $11.7 million on December 31, 2013.

CTI Industries Corporation, based in suburban Chicago, designs, develops, produces and markets a line of novelty balloon products, laminated and printed films for packaging applications and flexible packaging and storage products.

Statements made in this release that are not historical facts are "forward-looking" statements (within the meaning of Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties and are subject to change at any time. These "forward-looking" statements may include, but are not limited to, statements containing words such as "may," "should," "could," "would," "expect," "plan," "goal," "anticipate," "believe," "estimate," "predict," "potential," "continue," or similar expressions. We have based these forward-looking statements on our current expectations and projections about future results. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from statements made herein. More information on factors that could affect CTI's business and financial results are included in its public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.


CTI Industries Corporation and Subsidiaries
Condensed Consolidated Balance Sheets

                                                  December 31, December 31,
                                                      2013         2012
                                                  ------------ ------------
Current assets:
  Cash and cash equivalents (VIE $54,000 and
   $22,000, respectively)                         $    666,616 $    351,064
  Accounts receivable, (less allowance for
   doubtful accounts of $217,000 and $99,000
   respectively)                                     8,883,106    7,773,332
  Inventories, net                                  15,428,413   15,813,276
  Net deferred income tax asset                        931,245      846,371
  Prepaid expenses and other current assets (VIE
   $79,000 and $108,000, respectively)               2,261,298    2,345,711
                                                  ------------ ------------
    Total current assets                            28,170,678   27,129,754

    Total property, plant and equipment, net         8,681,771    8,699,070

    Total other assets                               2,219,051    1,918,319
                                                  ------------ ------------

TOTAL ASSETS                                      $ 39,071,500 $ 37,747,143
                                                  ============ ============


  Total current liabilities (VIE $493,000 and
   $198,000, respectively)                        $ 16,432,989 $ 16,963,447
  Total long-term liabilities, less current
   maturities (VIE $441,000 and $533,000,
   respectively)                                     9,874,386    8,701,650
                                                  ------------ ------------
    Total Liabilities                               26,307,375   25,665,097

  Total CTI Industries Corporation stockholders'
   equity                                           12,655,890   12,242,738

  Noncontrolling Interest                              108,235     (160,692)
                                                  ------------ ------------

    Total Equity                                    12,764,125   12,082,046
                                                  ------------ ------------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY          $ 39,071,500 $ 37,747,143
                                                  ============ ============

CTI Industries Corporation and Subsidiaries
Condensed Consolidated Statements of Operations

                                                     Three months ended
                       Year ended December 31,          December 31,
                         2013          2012          2013          2012

                     ------------  ------------  ------------  ------------
Net sales            $ 56,059,477  $ 49,542,762  $ 15,200,470  $ 12,132,945
Cost of sales          43,446,618    38,636,245    11,341,234     9,346,057
                     ------------  ------------  ------------  ------------
    Gross profit       12,612,859    10,906,517     3,859,236     2,786,888

Operating expenses:
  General and
   administrative       6,564,355     6,357,249     2,002,032     1,915,791
  Selling               2,224,551     1,720,878       775,654       416,095
  Advertising and
   marketing            1,733,609     1,769,477       478,271       520,399
                     ------------  ------------  ------------  ------------

    Total operating
     expenses          10,522,515     9,847,604     3,255,957     2,852,285
                     ------------  ------------  ------------  ------------

Income (loss) from
 operations             2,090,344     1,058,913       603,279       (65,397)

Other (expense)
  Interest expense,
   net                 (1,439,712)     (991,152)     (467,662)     (377,906)
  Other                    27,232        24,841        12,889        11,636
                     ------------  ------------  ------------  ------------

    Total other
     expense           (1,412,480)     (966,311)     (454,773)     (366,270)
                     ------------  ------------  ------------  ------------

Income (loss) before
 income taxes and
 interest                 677,864        92,602       148,506      (431,666)

Income tax expense
 (benefit)                269,836        46,272        46,074      (157,454)
                     ------------  ------------  ------------  ------------

Net income (loss)         408,028        46,330       102,432      (274,213)

Less: Net loss
 attributable to
 interest                  32,519       (55,419)       35,601       (58,844)
                     ------------  ------------  ------------  ------------

    Net income
     attributable to
     CTI Industries
     Corporation     $    375,509  $    101,749  $     66,831  $   (215,369)
                     ============  ============  ============  ============

Income (loss)
 applicable to
 common shares       $    375,509  $    101,749  $     66,831  $   (215,369)
                     ============  ============  ============  ============

Other Comprehensive
  Foreign currency
   adjustment             (81,919)      114,097      (201,813)       26,015
                     ------------  ------------  ------------  ------------
     income (loss)
     attributable to
     CTI Industries
     Corporation     $    293,590  $    215,846  $   (134,982) $   (189,354)
                     ============  ============  ============  ============

Basic income (loss)
 per common share    $       0.12  $       0.03  $       0.02  $      (0.07)
                     ============  ============  ============  ============

Diluted income
 (loss) per common
 share               $       0.11  $       0.03  $       0.02  $      (0.07)
                     ============  ============  ============  ============

Weighted average
 number of shares
 shares of common
 stock outstanding:
  Basic                 3,248,646     3,216,756     3,248,646     3,240,266
                     ============  ============  ============  ============

  Diluted               3,404,804     3,293,106     3,407,288     3,252,528
                     ============  ============  ============  ============

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