TAI'AN, China, Nov. 7, 2011 /PRNewswire-Asia-FirstCall/ --
China Biologic Products, Inc. (NASDAQ: CBPO) ("China
Biologic" or the "Company"), one of the leading plasma-based
biopharmaceutical companies in the
People's Republic of China ("PRC"), today reported its
financial results for the three and nine months ended September 30, 2011.
Financial highlights for the third quarter 2011
- Total sales increased $5.3
million or 14.7% to $41.3
million in the third quarter 2011 from $36.0 million in the third quarter 2010,
including the benefit of a 6.1% gain from foreign exchange
translation. Total sales in RMB increased 8.6% in the third quarter
2011 from the third quarter of last year.
- Gross profit increased $0.2
million or 0.8% to $27.5
million in the third quarter 2011 from $27.3 million in the third quarter 2010. The
gross profit margin was 66.7% in the third quarter 2011 compared
with 75.9% in the third quarter 2010.
- (Loss) income from operations decreased $28.2 million or 149.9% to a loss of $9.4 million in the third quarter 2011 from
$18.8 million in the third quarter
2010. The third quarter 2011 included a non-cash charge for
impairment loss of goodwill of $18.1
million and a non-cash loss on abandonment of long-lived
assets of $6.5 million.
- GAAP net (loss)/income attributable to China Biologic decreased
$23.1 million or 168.2% to a net loss
of $9.4 million in the third quarter
2011 from a net income of $13.7
million in the third quarter 2010.
- Diluted net loss per share was $0.37 in the third quarter 2011, down from
diluted net income per share of $0.39
in the third quarter 2010.
- Excluding non-cash employee stock compensation, non-cash gain
related to change in fair value of derivative liability, impairment
loss of goodwill and loss on abandonment of long-lived assets and
write-off of raw plasma materials due to the closure of the plasma
collection stations of Guizhou Taibang, the non-GAAP adjusted net
income attributable to China Biologic was $11.0 million or diluted net income per share of
$0.42 in the third quarter 2011, from
$10.5 million or $0.40 per diluted share in the third quarter
2010.
CEO Comments
Mr. Chao Ming Zhao, Chief
Executive Officer of China Biologic, said, "With the closure of our
plasma collection stations in August
2011 due to the unexpected policy changes by the
Guizhou provincial government, we
have taken several measures to mitigate the loss of about 34% of
our total raw plasma collection (based on our collection volume in
2010). Those measures are both short-term and longer-term.
"First, to ensure a minimal write-off on the collected plasma
from these closed stations, we will maintain adequate employees
from the closed stations to actively track donors who made
donations before the stations closed on August 1 but have not yet returned for a second
test for compliance with 90-day quarantine rules.
"Second, we are in the process of reallocating resources from
the closed stations to other facilities within the Company in order
to maximize their utilization.
"Third, we are working on strategies to explore new suitable
regions for new plasma stations, especially in other provinces.
That process, from gaining multiple levels of government approval
to selecting appropriate locations for building plasma stations can
be a relatively long process with some uncertainties, given the
need for station construction, equipment installation, inspections
and licensing, and donor promotion and education programs.
"Fourth, we are adjusting our production plan and sales strategy
both in the short-term and mid-term to leverage the available
resources to maximize profit as we respond to changing market
dynamics.
"Last, we further increased our direct sales efforts on the
hospitals and inoculation centers that are likely to be our best
and highest volume customers for the long-term. That effort has
also been accelerating the increase in the portion of our sales
that are sold directly to institutions instead of through
independent distributors and others. As you recall, we believe the
shift to direct sales is very important to our long-term
success."
Results for the three months ended
September 30, 2011
Total sales increased by $5.3
million or 14.7% to $41.3
million in the third quarter 2011 from $36.0 million in the third quarter 2010, mainly
due to higher sales volume and an increase in foreign exchange
translation that contributed a 6.1% increase in sales.
Sales,
average prices and volume for Q3 2011 / Q3 2010
|
|
|
|
U.S. dollars in millions
except percents
|
|
|
Percent
change Q3 2011 / Q3 2010
|
|
|
Q3 2011 %
|
|
Q3 2011
|
|
Sales
|
|
Average selling price
|
|
Sales
volume
|
|
Products
|
of total
sales
|
|
Sales
$
|
|
In
USD
|
|
In
RMB
|
|
In
USD
|
|
In
RMB
|
|
|
|
Human albumin
|
54.4%
|
|
$ 22.4
|
|
+28.4%
|
|
+21.6%
|
|
+4.3%
|
|
-1.2%
|
|
+23.1%
|
|
Human immunoglobulin for
intravenous injection
|
31.0%
|
|
12.8
|
|
-1.9%
|
|
-7.3%
|
|
+8.9%
|
|
+2.9%
|
|
-9.9%
|
|
Human hepatitis B
immunoglobulin
|
4.4%
|
|
1.8
|
|
-29.0%
|
|
-32.8%
|
|
+8.1%
|
|
+2.2%
|
|
-34.3%
|
|
Human rabies
immunoglobulin
|
1.9%
|
|
0.8
|
|
-26.7%
|
|
-29.6%
|
|
-5.8%
|
|
-9.4%
|
|
-22.2%
|
|
Human tetanus
immunoglobulin
|
7.5%
|
|
3.1
|
|
+108.7%
|
|
+98.5%
|
|
-5.9%
|
|
-10.5%
|
|
+121.7%
|
|
Other
|
0.9%
|
|
0.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Total
|
100.0%
|
|
$ 41.3
|
|
+14.7%
|
|
+8.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Human albumin sales increased in the third quarter 2011 at
higher average prices with higher volumes as compared to the third
quarter 2010. Human albumin products, which were 54.4% of total
sales in the third quarter 2011, had an average price increase of
4.3% from the third quarter 2010. Excluding the foreign exchange
translation effect, the average price in RMB decreased 1.2% from
the third quarter 2010. The average price decrease in human albumin
was due to the continued increase in volume of imported products
competing with our products. Sales volume of human albumin
increased 23.1% from the third quarter 2010.
Human immunoglobulin for intravenous injection ("IVIG") sales
increased in the third quarter 2011 at higher average prices with
lower volumes. IVIG products, which were 31.0% of total sales in
the third quarter 2011, had an average price increase of 8.9% from
the third quarter 2010. Excluding the foreign exchange translation
effect, the average price in RMB increased 2.9% from the third
quarter 2010. The average price increase in IVIG was primarily due
to the continuing shortage in supply of such products. Sales volume
of IVIG products decreased 9.9% from the third quarter 2010, mainly
due to lower occurrences of hand-foot-and-mouth disease in the
third quarter 2011 than in the third quarter 2010.
Human hepatitis B immunoglobulin sales decreased in the third
quarter 2011 at higher average prices with lower volumes. Human
hepatitis B immunoglobulin products, which were 4.4% of total sales
in the third quarter, had an average price increase of 8.1% from
the third quarter 2010. Excluding the foreign exchange translation
effect, the average price in RMB increased 2.2% from the third
quarter 2010. Sales volume of human hepatitis B immunoglobulin
products decreased 34.3% from the third quarter 2010, mainly due to
a lower demand as a result of a new government program emphasizing
inoculations for new-born infants instead of pre-natal mothers.
Human rabies immunoglobulin sales decreased in the third quarter
2011 at lower average prices with lower volumes. Human rabies
immunoglobulin products, which were 1.9% of total sales, had an
average price decrease of 5.8% from the third quarter 2010.
Excluding the foreign exchange translation effect, the average
price in RMB decreased 9.4% from the third quarter 2010. The price
decrease in human rabies immunoglobulin was mainly due to a higher
level of competition in the market. Sales volume of human rabies
immunoglobulin products decreased 22.2% from the third quarter 2010
mainly due to lower availability of raw materials needed for
production.
Human tetanus immunoglobulin sales increased in the third
quarter 2011 at lower average prices with higher volumes. Human
tetanus immunoglobulin products, which were 7.5% of total sales in
the third quarter, had an average price decrease of 5.9%. Excluding
the foreign exchange translation effect, the average price in RMB
decreased 10.5% from the third quarter 2010. The price decrease in
human tetanus immunoglobulin was mainly due to a higher level of
competition in the market. Sales volume of human tetanus
immunoglobulin products increased 121.7%, mainly due to the
increased availability of the product for sale during the
quarter.
Unlike our human albumin and IVIG products, the availability of
hyper-immune products depends on various factors, including the
availability of specific vaccinated plasma and production lines.
Consequently, our sales of hyper-immune products (to prevent or
treat rabies and tetanus) may vary significantly from quarter to
quarter.
Cost of sales increased $5.1
million or 58.6% to $13.8
million in the third quarter from $8.7 million in the third quarter 2010. Cost of
sales as a percent of total sales was 33.3% in the third quarter
compared with 24.1% in the third quarter 2010. The increases in
cost of sales and percentage of sales were in line with the higher
sales volume for certain products and higher costs for plasma paid
to donors, as well as a write-off of $0.7
million for raw material plasma that is expected not to
qualify for production due to the 90-day quarantine period rules
because the related sourcing plasma stations were closed by
Guizhou provincial government. The
cost of plasma, our main raw material, is the most significant
component of our cost of sales. In an effort to increase plasma
collection volume and expand our donor base, we increased nutrition
fees and spending on promotional programs for donors, which
contributed to the higher cost of sales in the third quarter 2011
from the third quarter 2010.
Gross profit increased $0.2
million or 0.8% to $27.5
million in the third quarter from $27.3 million in the third quarter 2010. Gross
profit margin declined to 66.7% in the third quarter 2011 from
75.9% in the third quarter 2010 mainly due to decreases in average
prices in some of our products and the increase in raw material
costs and the raw material write-off as discussed above.
Operating expenses increased $28.4
million or 334.7% to $36.9
million in the third quarter from $8.5 million in the third quarter 2010. The
increase was primarily due to a goodwill impairment loss of
$18.1 million, a non-cash loss on
abandonment of long-lived assets of $6.5
million, a 66.1% increase in selling expenses, and a 39.1%
increase in general and administrative expenses. Total operating
expenses as a percentage of sales increased to 89.4% in the third
quarter from 23.6% in the third quarter 2010. Excluding the
non-cash charge for impairment loss of goodwill and loss on
abandonment of long-lived assets, the operating expenses increased
$3.8 million or 45.1% to $12.3 million in the third quarter from
$8.5 million in the third quarter
2010.
Selling expenses increased $1.5
million or 66.1% to $3.7
million in the third quarter 2011 from $2.2 million in the third quarter 2010. As a
percent of sales, selling expenses in the third quarter 2011
increased to 9.0% from 6.2% in the third quarter 2010. The increase
was primarily due to the expansion of our sales force and the
increase in our promotional and conference activities, which are in
line with our continuing efforts to expand our customer base in
hospitals and inoculation centers throughout China to help counter the negative effects of
the price pressures on certain products caused by increased
competition.
General and administrative expenses increased $2.3 million or 39.1% to $8.1 million in the third quarter 2011 from
$5.8 million in the third quarter
2010. As a percentage of sales, general and administrative expenses
increased to 19.6% in the third quarter from 16.2% in the third
quarter 2010 mainly due to higher expenses for payroll and employee
benefits, as well as an increase of $1.2
million in non-cash employee stock compensation expenses.
The increase in payroll was mainly due to our efforts to enhance
corporate governance with the addition of corporate officers,
general payroll increase to keep up with the labor market and the
addition of new corporate offices in Beijing.
Research and development expenses increased $0.08 million or 17.8% to $0.5 million in the third quarter from
$0.4 million in the third quarter
2010. As a percentage of sales, research and development expenses
for both third quarters were 1.2%.
Following the closure of four plasma collection stations of
Guizhou Taibang, the Company revised its earnings guidance for the
year of 2011 and experienced incremental declines in its stock
price and market capitalization in the third quarter of 2011. The
closure of the plasma collection stations is considered to be a
triggering event that the fair value of the Company's reporting
unit would more likely than not be below its book value. Therefore
the Company performed a two-step goodwill impairment test and
concluded that for the three months ended September 30, 2011, a goodwill impairment loss of
$18.1 million was recognized in the
Company's single reporting unit since the carrying amount of the
reporting unit was greater than the fair value of the reporting
unit (as determined based on the quoted market price) and the
carrying amount of the reporting unit goodwill exceeded the implied
fair value of that goodwill.
As a result of the closure of four plasma collection stations of
Guizhou Taibang, certain equipment, office furniture, building
improvement and plasma collection permits were abandoned during the
three months ended September 30,
2011. Loss on these long-lived assets of $6.5 million was recognized in the three months
ended September 30, 2011.
(Loss)/income from operations decreased 149.9% to a loss of
$9.4 million in the third quarter
from an income of $18.8 million in
the third quarter 2010. The operating income margin declined to
(22.7)% in the third quarter from 52.3% in the third quarter
2010.
The embedded derivatives (including the conversion option) in
our senior secured convertible notes and warrants issued in
June 2009 are recorded at fair value.
The Company recognized a gain of $2.9
million from the change in fair value of derivative
liabilities in the third quarter 2011 compared with $3.8 million in the third quarter 2010. The
recognized gain from the change in the fair value of the derivative
liabilities in the third quarter 2011 was mainly due to a decrease
in the price of our common stock from $10.20 per share as of June 30, 2011 to $6.81 per share as of September 30, 2011. As of September 30, 2011, the embedded conversion
option in our convertible notes was no longer outstanding because
the convertible notes had been fully converted. Future changes in
the market price of our common stock could cause the fair value of
the warrants to change significantly in future periods.
Interest expense decreased $0.3
million or 45.0% to $0.4
million in the third quarter from $0.7 million in the third quarter 2010 primarily
because the convertible notes, which incurred interest charges of
$0.5 million in the third quarter
2010, became nil for the third quarter 2011 since the convertible
notes were fully converted on June 10,
2011. Interest income increased $0.2
million or 111.5% to $0.5
million in the third quarter from $0.2 million in the third quarter 2010.
The provision for income taxes decreased $2.4 million or 69.7% to $1.0 million in the third quarter from
$3.4 million in the third quarter
2010. The decrease of income tax provision was mainly attributable
to the decrease in the applicable income tax rate of Guizhou
Taibang from 25% for the six months ended June 30, 2011 to 15% for the nine months ended
September 30, 2011.
The net loss attributable to China Biologic was $9.4 million in the third quarter 2011 compared
with the net income attributable to China Biologic of $13.7 million in the third quarter 2010 for the
reasons discussed in detail above.
GAAP net loss attributable to China Biologic in the third
quarter 2011 was $9.4 million or a
loss of $0.37 per diluted share
compared with the net income attributable to China Biologic of
$13.7 million or $0.39 per diluted share in the third quarter
2010.
Non-GAAP adjusted net income was $11.0
million or $0.42 per diluted
share in the third quarter of 2011 compared with $10.5 million, or $0.40, per diluted share in the third quarter of
2010.
Non-GAAP adjusted net income and diluted earnings per share in
the third quarter 2011 excluded an aggregate $2.9 million of gains, which are related to the
change in the fair value of derivative liabilities, and added back
$1.2 million of non-cash employee
stock compensation expenses, $18.1
million of non-cash impairment loss of goodwill,
$3.5 million of controlling interest
portion of loss on abandonment of long-lived assets and
$0.4 million of controlling interest
portion of raw material write-off as a result of the closing of the
plasma stations of Guizhou Taibang. Please see the table at the end
of this release for the reconciliation of our non-GAAP measures to
the nearest comparable GAAP measures.
Results for the first nine months of 2011
Total sales increased by 12.9% or $13.4
million to $117.4 million for
the nine months ended September 30,
2011 from $104.0 million for
the nine months ended September 30,
2010 primarily due to increases in prices and/or sales
volume of certain of our plasma based products. In addition,
foreign exchange translation accounted for 5.2% of the sales
increase.
Gross profit increased by $4.0
million or 5.1% to $81.8
million for the nine months ended September 30, 2011 from $77.9 million for the same period in 2010. Gross
profit margin decreased to 69.7% for the nine months ended
September 30, 2011, from 74.9% for
the same period in 2010. The decrease in gross profit margin was
mainly due to the price decreases of certain products and higher
raw material costs as discussed above.
Income from operations decreased $32.5
million, or 59.2%, in the first nine months of 2011 to
$22.4 million from $54.8 million in the first nine months of 2010.
The decrease was mainly due to the lower gross profit margin
discussed above, an 82.8% increase in selling expenses, 39.2%
increase in general and administrative expenses, a non-cash charge
for impairment of goodwill of $18.1
million and a non-cash loss on abandonment of long-lived
assets of $6.5 million for the first
nine months of 2011 compared with the same period of 2010.
Net income attributable to China Biologic decreased $23.8 million or 63.7% to $13.5 million for the first nine months of 2011
from $37.3 million for the same
period in 2010. Net income attributable to China Biologic as a
percentage of total sales was 11.5% for the first nine months of
2011 and 35.9% for same period in 2010. The declines were a result
of the cumulative effect of the foregoing factors.
Diluted earnings per share were $0.08 for the first nine months of 2011 and
$1.07 in the same period in 2010.
Excluding non-cash employee stock compensation expenses, change
in the fair value of derivative liabilities and interest related to
the convertible notes, non-cash impairment loss of goodwill,
controlling interest portion of the loss on abandonment of assets
and controlling interest portion of the raw material write-off as a
result of the closure of the plasma collection stations of Guizhou
Taibang, non-GAAP adjusted net income for the first nine months of
2011 was $27.7 million or
$1.04 per diluted share from non-GAAP
net income of $29.1 million or
$1.10 per diluted share for the first
nine months of 2010.
Financial Condition
To date, we have financed our operations primarily through cash
flows from operations, augmented by short-term bank borrowings and
equity contributions by our stockholders.
Net cash provided by operating activities was $25.8 million for the nine months ended
September 30, 2011, derived primarily
from a net income of $23.7
million.
Net cash used in investing activities for the nine months ended
September 30, 2011 was $5.6 million, primarily used for equipment and
buildings purchase and for construction in progress for collection
and production operations.
Net cash used in financing activities for the nine months ended
September 30, 2011 totaled
$7.8 million mainly due to a
$10.9 million repayment of a
short-term bank loan, a $7.6 million
payment to acquire the remaining 10% interest in our 90%
majority-owned subsidiary, and a dividend payment of $7.7 million to noncontrolling interest
shareholders, partly offset by cash provided by a new short-term
loan totaling $18.4 million.
As a result, the Company's cash increased by $15.4 million in the first nine months of 2011,
including the effects of foreign currency exchange rate changes on
cash. As of September 30, 2011, China
Biologic had $80.3 million in cash,
primarily consisting of cash on hand and bank deposits. As of
September 30, 2011, working capital
was $111.7 million, and the current
ratio was 285.5%. Total shareholders' equity was $175.9 million as of September 30, 2011 compared with $145.0 million as of December 31, 2010.
The Company believes that it has sufficient cash on hand and
continuing positive cash inflow from the sale of our plasma-based
products in the PRC market.
Conference call
China Biologic will host a dial-in conference call at
8:00 a.m. EST (New York) on November
8, 2011 (which is 9:00 p.m. in
Beijing and Hong Kong on the same day), to discuss its
results for the third quarter 2011. To participate in the
conference call, please dial the appropriate number about 10
minutes prior to the scheduled conference call time:
The dial-in details for the live conference call are:
U.S. toll-free number
|
1 866 549 1292
|
|
U.K. toll-free
number
|
0 800 279 7818
|
|
Mainland China toll-free
number
|
800 876 8626
|
|
Hong Kong local
access
|
3005 2050
|
|
International toll
number
|
+852 3005 2050
|
|
Participant pass
code
|
674 477#
|
|
|
|
A telephone replay of the call will be available after the
conclusion of the conference all through 7:00 a.m. EST on December
7, 2011.
The dial-in details for the telephone replay are:
U.S.
toll-free number
|
1 866 753 0743
|
|
U.K. toll-free
number
|
0 808 234 7126
|
|
Mainland China toll free
number
|
800 876 8594
|
|
Hong Kong local
access
|
3005 2020
|
|
International dial-in toll
number
|
+852 3005 2020
|
|
Replay pass code
|
138 012#
|
|
|
|
Use of non-GAAP financial measures
This news release contains non-GAAP financial measures that
exclude non-cash compensation expenses related to options granted
to employees and directors under the Company's 2008 Equity
Incentive Plan, changes in the fair value of derivative
liabilities, including warrants and derivative instruments
(including the conversion option) embedded in the Company's Senior
Secured Convertible Notes (after adding back interest related to
the convertible notes under the if-converted method), the
impairment loss of goodwill, the loss on abandonment of long-lived
assets and the write-off of raw plasma materials due to the closure
of plasma collection stations of Guizhou Taibang. To supplement the
Company's condensed consolidated financial statements presented on
a GAAP basis, the Company has provided non-GAAP financial
information excluding the impact of this item in this release. The
Company's management believes that these non-GAAP measures provide
investors with a better understanding of how the results relate to
the Company's historical performance. A reconciliation of the
adjustments to GAAP results appears in the table accompanying this
news release. This additional non-GAAP information is not meant to
be considered in isolation or as a substitute for GAAP financials.
The non-GAAP financial information that the Company provides also
may differ from the non-GAAP information provided by other
companies.
About China Biologic Products, Inc.
China Biologic Products, Inc., through its indirect
majority-owned subsidiaries, Shandong Taibang Biological Products
Co., Ltd. and Guiyang Dalin Biologic Technologies Co., Ltd, and its
equity investment in Xi'an Huitian Blood Products Co., Ltd., is one
of the leading plasma-based biopharmaceutical companies in
China.
The Company is a fully integrated biologic products company with
plasma collection, production and manufacturing, research and
development, and commercial operations. The Company's plasma-based
biopharmaceutical products are irreplaceable during medical
emergencies and are used for the prevention and treatment of
various diseases. The Company sells its products to hospitals and
other healthcare facilities in China. Please see the Company's website at
www.chinabiologic.com for additional information.
Safe harbor statement
This release may contain certain "forward-looking statements"
relating to the business of China Biologic Products, Inc. and its
subsidiaries. All statements, other than statements of historical
fact included herein are "forward-looking statements," including,
among others, statements regarding: the Company's financial and
business outlook in 2011, the closure of the plasma collection
centers in Guizhou, its expected
effect on the Company's financial performance, business operations
and the industry, the Company's ability and plan to seek
alternative solutions and opportunities, the Company's production
plan, sales strategy and its ability to maximize profit and adapt
to changing market, the ability of the Company to achieve its
commercial objectives, the business strategy, plans, and objectives
of the Company and its subsidiaries, including its ability to
successfully implement its growth strategies, including its
strategy to expand direct sales to hospitals and inoculation
centers in order to boost future sales, and any other statements of
non-historical information. These forward-looking statements are
often identified by the use of forward-looking terminology such as
"believes," "expects" or similar expressions, and involve known and
unknown risks and uncertainties. Although the Company believes that
the expectations reflected in these forward-looking statements are
reasonable, they involve assumptions, risks, and uncertainties, and
these expectations may prove to be incorrect. Investors should not
place undue reliance on these forward-looking statements, which
speak only as of the date of this news release. The Company's
actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of
factors, including its potential inability to achieve the expected
financial performance in 2011 and growth, potential inability to
find alternative sources of plasma, potential inability to increase
production at permitted sites, potential inability to mitigate the
financial consequences through cost cutting or other efficiencies,
and potential additional regulatory restrictions on its operations
and those additional risks and uncertainties discussed in the
Company's periodic reports that are filed with the Securities and
Exchange Commission and available on the SEC website
(http://www.sec.gov). All forward-looking statements attributable
to the Company or persons acting on its behalf are expressly
qualified in their entirety by these factors. Other than as
required under the securities laws, the Company does not assume a
duty to update these forward-looking statements.
Company
Contact
|
|
|
|
Mr. Y. Tristan
Kuo
|
|
Chief Financial
Officer
|
|
China Biologic Products,
Inc.
|
|
Telephone: +86 53 8620
2206
|
|
Email: ir@chinabiologic.com
|
|
www.chinabiologic.com
|
|
|
Financial statements follow.
CHINA
BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATION
|
|
|
|
For the
three months ended
|
|
|
For the nine
months ended
|
|
|
|
|
September 30, 2011
|
|
|
September 30, 2010
|
|
|
September 30, 2011
|
|
|
September 30, 2010
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
customers
|
$
|
41,137,473
|
|
$
|
35,847,351
|
|
$
|
117,197,707
|
|
$
|
103,289,680
|
|
|
Related party
|
|
166,228
|
|
|
156,414
|
|
|
242,274
|
|
|
720,954
|
|
|
Total sales
|
|
41,303,701
|
|
|
36,003,765
|
|
|
117,439,981
|
|
|
104,010,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
customers
|
|
13,741,811
|
|
|
8,648,875
|
|
|
35,531,374
|
|
|
26,046,001
|
|
|
Related party
|
|
32,698
|
|
|
33,627
|
|
|
67,302
|
|
|
80,365
|
|
|
Cost of sales
|
|
13,774,509
|
|
|
8,682,502
|
|
|
35,598,676
|
|
|
26,126,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
27,529,192
|
|
|
27,321,263
|
|
|
81,841,305
|
|
|
77,884,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
3,703,683
|
|
|
2,229,685
|
|
|
9,191,739
|
|
|
5,029,474
|
|
|
General and administrative
expenses
|
|
8,110,693
|
|
|
5,832,118
|
|
|
23,240,140
|
|
|
16,700,320
|
|
|
Research and development
expenses
|
|
509,061
|
|
|
431,991
|
|
|
2,439,029
|
|
|
1,332,025
|
|
|
Impairment loss of
goodwill
|
|
18,064,183
|
|
|
-
|
|
|
18,064,183
|
|
|
-
|
|
|
Loss on abandonment of
long-lived assets
|
|
6,536,517
|
|
|
-
|
|
|
6,536,517
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) / income from
operations
|
|
(9,394,945)
|
|
|
18,827,469
|
|
|
22,369,697
|
|
|
54,822,449
|
|
|
Other income /
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income of an equity
method investee
|
|
712,320
|
|
|
323,015
|
|
|
1,446,402
|
|
|
668,670
|
|
|
Change in fair value of
derivative liabilities
|
|
2,863,870
|
|
|
3,792,793
|
|
|
15,061,119
|
|
|
9,897,199
|
|
|
Interest expense
|
|
(404,349)
|
|
|
(735,016)
|
|
|
(4,385,872)
|
|
|
(1,688,074)
|
|
|
Interest income
|
|
473,278
|
|
|
223,731
|
|
|
913,003
|
|
|
556,731
|
|
|
Other (expenses) / income,
net
|
|
(63,773)
|
|
|
(142,285)
|
|
|
(1,134,055)
|
|
|
575,219
|
|
|
Total other income,
net
|
|
3,581,346
|
|
|
3,462,238
|
|
|
11,900,597
|
|
|
10,009,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) / earnings before income
tax expense
|
|
(5,813,599)
|
|
|
22,289,707
|
|
|
34,270,294
|
|
|
64,832,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
1,022,310
|
|
|
3,373,557
|
|
|
10,602,775
|
|
|
11,406,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income
|
|
(6,835,909)
|
|
|
18,916,150
|
|
|
23,667,519
|
|
|
53,425,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to
the noncontrolling interest
|
|
2,525,768
|
|
|
5,182,647
|
|
|
10,120,516
|
|
|
16,092,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income attributable
to China Biologic Products, Inc.
|
$
|
(9,361,677)
|
|
$
|
13,733,503
|
|
$
|
13,547,003
|
|
$
|
37,332,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income per share of
common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.37)
|
|
$
|
0.58
|
|
$
|
0.55
|
|
$
|
1.59
|
|
|
Diluted
|
$
|
(0.37)
|
|
$
|
0.39
|
|
$
|
0.08
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in
computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
25,551,125
|
|
|
23,513,533
|
|
|
24,849,403
|
|
|
23,471,084
|
|
|
Diluted
|
|
25,551,125
|
|
|
26,578,471
|
|
|
26,707,840
|
|
|
26,575,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINA
BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
|
|
UNAUDITED CONSOLIDATED BALANCE
SHEETS
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
$
|
80,300,299
|
|
$
|
64,941,368
|
|
|
Accounts receivable, net
of allowance for doubtful accounts
|
|
19,124,281
|
|
|
9,922,111
|
|
|
Accounts receivable - a
related party
|
|
-
|
|
|
212,611
|
|
|
Inventories
|
|
65,818,643
|
|
|
52,300,447
|
|
|
Other
receivables
|
|
2,923,558
|
|
|
2,727,110
|
|
|
Prepayments and prepaid
expenses
|
|
1,433,821
|
|
|
855,338
|
|
|
Deferred tax
assets
|
|
2,367,782
|
|
|
1,860,753
|
|
|
Total Current
Assets
|
|
171,968,384
|
|
|
132,819,738
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
39,915,911
|
|
|
39,511,731
|
|
|
Intangible assets,
net
|
|
7,270,644
|
|
|
14,559,020
|
|
|
Land use rights,
net
|
|
4,976,918
|
|
|
4,701,450
|
|
|
Prepayments and deposits
for property, plant and equipment
|
|
5,780,682
|
|
|
4,254,423
|
|
|
Goodwill
|
|
-
|
|
|
17,778,231
|
|
|
Equity method
investment
|
|
8,448,892
|
|
|
7,297,201
|
|
|
Total Assets
|
$
|
238,361,431
|
|
$
|
220,921,794
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
Short-term bank
loans
|
$
|
10,955,000
|
|
$
|
3,034,000
|
|
|
Accounts
payable
|
|
4,765,086
|
|
|
4,392,772
|
|
|
Due to related
parties
|
|
3,300,957
|
|
|
3,192,140
|
|
|
Other payables and accrued
expenses
|
|
23,396,836
|
|
|
21,606,730
|
|
|
Advance from
customers
|
|
4,195,098
|
|
|
3,560,018
|
|
|
Income tax
payable
|
|
9,121,469
|
|
|
6,659,805
|
|
|
Other taxes
payable
|
|
2,172,825
|
|
|
2,146,868
|
|
|
Convertible
notes
|
|
-
|
|
|
1,196,233
|
|
|
Derivative liabilities -
embedded conversion option in convertible notes
|
|
-
|
|
|
14,561,661
|
|
|
Derivative liabilities -
warrants
|
|
2,324,134
|
|
|
11,095,592
|
|
|
Total Current
Liabilities
|
|
60,231,405
|
|
|
71,445,819
|
|
|
Other payable
|
|
342,032
|
|
|
333,008
|
|
|
Deferred tax
liabilities
|
|
1,844,463
|
|
|
4,098,834
|
|
|
Total
Liabilities
|
|
62,417,900
|
|
|
75,877,661
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
Common
stock: par value $.0001; 100,000,000 shares authorized; 25,551,125
and 24,351,125 shares issued and outstanding at September 30, 2011
and December 31, 2010, respectively
|
|
2,555
|
|
|
2,435
|
|
|
Additional paid-in
capital
|
|
47,390,339
|
|
|
35,435,139
|
|
|
Retained
earnings
|
|
69,286,104
|
|
|
55,739,101
|
|
|
Accumulated other
comprehensive income
|
|
12,063,349
|
|
|
8,023,121
|
|
|
Total
stockholders' equity
attributable to China Biologic Products, Inc.
|
|
128,742,347
|
|
|
99,199,796
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest
|
|
47,201,184
|
|
|
45,844,337
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
175,943,531
|
|
|
145,044,133
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Equity
|
$
|
238,361,431
|
|
$
|
220,921,794
|
|
|
|
|
|
|
|
|
|
|
|
CHINA
BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
For the nine
months ended
|
|
|
|
|
September 30, 2011
|
|
|
September 30, 2010
|
|
|
CASH FLOWS
FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net income
|
$
|
23,667,519
|
|
$
|
53,425,595
|
|
|
Adjustments to reconcile
net income to cash provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
3,264,962
|
|
|
2,379,794
|
|
|
Goodwill impairment
loss
|
|
18,064,183
|
|
|
-
|
|
|
Loss on abandonment of
long-lived assets
|
|
6,536,517
|
|
|
-
|
|
|
Amortization
|
|
2,575,176
|
|
|
2,614,637
|
|
|
Loss on sale of property,
plant and equipment
|
|
172,893
|
|
|
9,685
|
|
|
Provision for doubtful
accounts, net
|
|
81,311
|
|
|
427,411
|
|
|
Write-down of obsolete
inventories
|
|
712,492
|
|
|
121,244
|
|
|
Deferred tax
benefit
|
|
(2,789,505)
|
|
|
(582,664)
|
|
|
Stock
compensation
|
|
3,648,255
|
|
|
681,653
|
|
|
Change in fair value of
derivative liabilities
|
|
(15,061,119)
|
|
|
(9,897,199)
|
|
|
Amortization of deferred
note issuance cost
|
|
91,945
|
|
|
258,753
|
|
|
Amortization of discount
on convertible notes
|
|
3,503,767
|
|
|
784,822
|
|
|
Equity in income of an
equity method investee
|
|
(1,446,402)
|
|
|
(668,670)
|
|
|
Change in operating assets
and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable -
third parties
|
|
(8,834,281)
|
|
|
(4,450,082)
|
|
|
Accounts receivable - a
related party
|
|
216,030
|
|
|
(20,176)
|
|
|
Other
receivables
|
|
(214,826)
|
|
|
(439,357)
|
|
|
Inventories
|
|
(12,396,932)
|
|
|
(10,666,230)
|
|
|
Prepayments and prepaid
expenses
|
|
(688,391)
|
|
|
(746,863)
|
|
|
Accounts
payable
|
|
229,802
|
|
|
9,738
|
|
|
Other payables and accrued
expenses
|
|
1,769,221
|
|
|
1,456,220
|
|
|
Accrued interest -
noncontrolling interest shareholders
|
|
-
|
|
|
(2,068,526)
|
|
|
Advance from
customers
|
|
514,559
|
|
|
176,961
|
|
|
Income tax
payable
|
|
2,216,995
|
|
|
(1,561,895)
|
|
|
Other taxes
payable
|
|
(41,341)
|
|
|
51,216
|
|
|
Net cash provided by operating
activities
|
|
25,792,830
|
|
|
31,296,067
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Dividend
received
|
|
663,987
|
|
|
-
|
|
|
Acquisition of a
subsidiary, net of cash acquired
|
|
-
|
|
|
(4,026,415)
|
|
|
Payment for property,
plant and equipment
|
|
(5,878,973)
|
|
|
(6,225,041)
|
|
|
Payment for intangible
assets and land use right
|
|
(424,971)
|
|
|
(1,338,218)
|
|
|
Net cash
used in investing activities
|
|
(5,639,957)
|
|
|
(11,589,674)
|
|
|
|
|
|
|
|
|
|
|
|
CHINA
BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
|
|
UNAUDTIED
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
|
|
|
|
For the nine
months ended
|
|
|
|
|
September 30, 2011
|
|
|
September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds from warrants
exercised
|
|
-
|
|
|
689,160
|
|
|
Proceeds from stock option
exercised
|
|
100,000
|
|
|
-
|
|
|
Proceeds from short term
bank loans
|
|
18,373,200
|
|
|
5,884,000
|
|
|
Repayment of short term
bank loans
|
|
(10,871,200)
|
|
|
(4,461,731)
|
|
|
Acquisition of
noncontrolling interest
|
|
(7,635,000)
|
|
|
-
|
|
|
Repayment of
noncontrolling interest shareholder loan
|
|
-
|
|
|
(3,652,500)
|
|
|
Dividend paid by
subsidiaries to noncontrolling interest shareholders
|
|
(7,744,100)
|
|
|
(8,628,886)
|
|
|
Net cash
used in financing activities
|
|
(7,777,100)
|
|
|
(10,169,957)
|
|
|
|
|
|
|
|
|
|
|
EFFECTS OF EXCHANGE RATE
CHANGE IN CASH
|
|
2,983,158
|
|
|
1,198,711
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN
CASH
|
|
15,358,931
|
|
|
10,735,147
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning of
period
|
|
64,941,368
|
|
|
53,843,951
|
|
|
|
|
|
|
|
|
|
|
Cash, end of
period
|
$
|
80,300,299
|
|
$
|
64,579,098
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information
|
|
|
|
|
|
|
|
Cash paid for income
taxes
|
$
|
11,175,285
|
|
$
|
13,477,608
|
|
|
Cash paid for interest
expense
|
$
|
690,755
|
|
$
|
247,649
|
|
|
Noncash investing and
financing activities:
|
|
|
|
|
|
|
|
Convertible notes
conversion
|
$
|
12,972,000
|
|
$
|
2,498,957
|
|
|
Reclassification of warrant
liability to paid-in capital upon warrants conversion
|
$
|
-
|
|
$
|
1,747,765
|
|
|
Utilization of prepayments and
deposits to acquire intangible assets
|
$
|
128,861
|
|
$
|
441,300
|
|
|
Utilization of prepayments and
deposits to acquire property, plant and equipment
|
$
|
526,328
|
|
$
|
630,925
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
|
|
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
|
|
|
Three
months ended
|
|
Three
months ended
|
|
|
9/30/2011
|
|
9/30/2010
|
|
Net income / (loss)
Diluted EPS
|
|
Net
Income
|
|
EPS
|
|
|
Net
Income
|
|
EPS
|
|
Adjusted net income for
diluted net income per share - Non GAAP
|
$
|
11,034,533
|
|
$
|
0.42
|
|
$
|
10,548,336
|
|
$
|
0.40
|
|
|
$
|
(1,229,968)
|
|
|
|
|
$
|
(63,812)
|
|
|
|
|
Gain from change in fair
value of warrants
|
$
|
2,863,870
|
|
|
|
|
$
|
-
|
|
|
|
|
Impairment loss of
goodwill
|
$
|
(18,064,183)
|
|
|
|
|
$
|
-
|
|
|
|
|
Loss on abandonment of
long-lived assets attributable to controlling interest
|
$
|
(3,529,719)
|
|
|
|
|
$
|
-
|
|
|
|
|
Written-off of raw
material attributable to controlling interest due to closure of
plasma stations
|
$
|
(436,210)
|
|
|
|
|
$
|
-
|
|
|
|
|
Net income / (loss) for
diluted net income per share
|
$
|
(9,361,677)
|
|
$
|
(0.37)
|
|
$
|
10,484,524
|
|
$
|
0.39
|
|
Interest on the
Notes
|
$
|
-
|
|
|
|
|
$
|
(543,814)
|
|
|
|
|
Gain from change in fair
value of embedded conversion option in the Notes
|
$
|
-
|
|
|
|
|
$
|
2,267,027
|
|
|
|
|
Gain from change in fair
value of warrants
|
$
|
-
|
|
|
|
|
$
|
1,525,766
|
|
|
|
|
Net income attributable to
controlling interest
|
$
|
(9,361,677)
|
|
|
|
|
$
|
13,733,503
|
|
|
|
|
Weighted average number of
shares
|
|
25,551,125
|
|
|
|
|
|
26,578,471
|
|
|
|
|
Weighted average number of
shares used in computation of Non
GAAP diluted EPS
|
|
26,419,932
|
|
|
|
|
|
26,578,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
|
|
FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
|
|
|
|
|
|
|
|
Nine months
ended
|
|
Nine months
ended
|
|
|
9/30/2011
|
|
9/30/2010
|
|
Net income Diluted
EPS
|
|
Net
Income
|
|
EPS
|
|
|
Net
Income
|
|
EPS
|
|
Adjusted net income for
diluted net income per share - Non GAAP
|
$
|
27,744,418
|
|
$
|
1.04
|
|
$
|
29,117,513
|
|
$
|
1.10
|
|
|
$
|
(18,064,183)
|
|
|
|
|
$
|
-
|
|
|
|
|
Loss on abandonment of
long-lived assets attributable to controlling
interest
|
$
|
(3,529,719)
|
|
|
|
|
$
|
-
|
|
|
|
|
Written-off of raw
material attributable to controlling interest due to closure of
plasma stations
|
$
|
(436,210)
|
|
|
|
|
$
|
-
|
|
|
|
|
Non-cash employee stock
compensation
|
$
|
(3,648,255)
|
|
|
|
|
$
|
(681,653)
|
|
|
|
|
Net income for diluted net
income per share
|
$
|
2,066,051
|
|
$
|
0.08
|
|
$
|
28,435,860
|
|
$
|
1.07
|
|
Interest on the
Notes
|
$
|
(3,580,167)
|
|
|
|
|
$
|
(1,000,125)
|
|
|
|
|
Gain from change in fair
value of embedded conversion option in the Notes
|
$
|
6,289,661
|
|
|
|
|
$
|
6,076,772
|
|
|
|
|
Gain from change in fair
value of warrants
|
$
|
8,771,458
|
|
|
|
|
$
|
3,820,427
|
|
|
|
|
Net income attributable to
controlling interest
|
$
|
13,547,003
|
|
|
|
|
$
|
37,332,934
|
|
|
|
|
Weighted average number of
shares
|
|
26,707,840
|
|
|
|
|
|
26,575,801
|
|
|
|
|
Weighted average number of
shares used in computation of Non
GAAP diluted EPS
|
|
26,707,840
|
|
|
|
|
|
26,575,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE China Biologic Products, Inc.