NEW YORK, Aug. 9, 2011 /PRNewswire-Asia-FirstCall/ --
American Oriental Bioengineering, Inc. (NYSE: AOB), (the
"Company" or "AOB"), a pharmaceutical company dedicated to
improving health through the development, manufacture and
commercialization of a broad range of prescription and
over-the-counter ("OTC") products, today announced financial
results for the second quarter ended June
30, 2011.
Second Quarter 2011 Financial Performance
In the second quarter of 2011, revenue decreased to $54.1 million from $77.3
million in the same period of 2010.
- The Company generated revenue of $50.3
million from its manufacturing business in the second
quarter of 2011 compared with $73.7
million in the prior year period. Revenue from
pharmaceutical products decreased to $40.7
million from $63.8 million in
the prior year period. Nutraceutical products generated revenue of
approximately $9.5 million in the
second quarter of 2011, compared to $9.9
million in the prior year period. We decreased the
manufacturing of certain generic drugs strategically shifted the
products mix toward higher-margin products from lower margin
products in order to minimize the impact from the increased cost of
certain raw materials and the continuing government price cut on
certain products.
- The Company generated $3.8
million from its distribution business, Nuo Hua, in the second quarter of 2011, an
increase of 5.2% from $3.6 million in
the prior year period.
Gross profit in the second quarter of 2011 was $25.8 million compared to $39.8 million in the second quarter of 2010.
Gross margin was 47.8% compared to 51.5% in the prior year period.
The margin pressure was mainly caused by the increased costs of
certain raw materials and newly levied urban construction and
maintenance tax and educational surcharge to foreign invested
companies in China since December,
2010.
Operating income in the second quarter of 2011 decreased to
$6.3 million compared with
$9.1 million in the prior year
period. Total operating expenses decreased 36.4% to $19.6 million from $30.8
million in the prior year period. Selling, general and
administrative expenses decreased 32.4% to $11.3 million from $16.7
million in the prior year period. The decrease reflects
management's continuing efforts to stringently control the
spending. Advertising expense decreased 63.1% to $3.4 million in the second quarter of 2011 from
$9.2 million in the prior year
period, reflecting reduced advertising efforts on some of OTC drugs
to correspond to the Company's selective product sales strategy and
optimal product portfolio. Research and development expenses
decreased 3.9% to $3.1 million from
$3.3 million in the prior year period
while the company continues to invest in its innovation and
technology improvement.
The Company generated a gain of $1.4
million due to changes in ownership of unconsolidated
entities, including investments in Nuo Hua Affiliate and Aoxing
Pharmaceutical Company, Inc. ("AXN").
Net income attributable to controlling interest for the second
quarter of 2011 was $3.6 million, or
$0.05 per diluted share, compared to
$5.1 million, or $0.07 per diluted share, in the prior year
period.
First Half 2011 Financial Performance
Revenue for the first half of 2011 decreased to $106.1 million from $131.0
million in the prior year period. In the first half of 2011,
gross profit was $50.9 million,
compared to $68.1 million in the
prior year period. Operating income in the first half of 2011was
$11.8 million, compared to
$15.5 million in the prior year
period. Net income attributable to controlling interest in the
first half of 2011 was $4.5 million,
or $0.06 per diluted share, compared
to $8.2 million, or $0.11 per diluted share, in the prior year
period.
Balance Sheet
Our cash position at June 30, 2011
was $75 million, representing a
decrease of $19.5 million compared
with our cash position of $94.6
million at December 31, 2010.
The decrease was mainly attributable to the decrease of investing
activities of $35.7 million and
partially offset by the increase from the operating and financing
activities of $12.2 million and
$0.2 million in the first half of
2011, respectively.
The Company generated approximately $12.2
million of operating cash flow in the first half of 2011,
representing an increase of $4.4
million compared with cash flows from operations of
$7.7 million for the same period of
2010 mainly from the collection of accounts and notes receivable of
$19.2 million.
Our net cash used in investing activities amounted to
$35.7 million in the first half of
2011 including cash outflows for a deposit of $23.8 million for a long-lived asset to be
acquired, which will allow us to have the right to establish a TCM
raw material trading center in Northeast
China approved by SFDA. The investment is intended to be
integrated with our competitive infrastructure and whole supply
chain management, providing a platform for the Company to start a
TCM raw material trading business, offering a long term steadier
supply of quality raw materials with manageable costs covering
Northeast China and generating new
profit stream in addition to our existing product portfolio.
We also paid $8.5 million for
purchases of construction in progress in the first half of 2011 for
the expansion and upgrade of our manufacturing facilities to
complement capacity improvement and efficiency enhancement.
We maintain a significant level of working capital. Our working
capital decreased to $138.5 million
at June 30, 2011, as compared to
$162.2 million at December 31, 2010, primarily due to a decrease in
cash and cash equivalents by $19.5
million, a decrease in net accounts and notes receivable by
$19.0 million and partially offset by
an increase of net inventories of $11.9
million.
Mr. Tony Liu, Chairman and Chief
Executive Officer of AOB, commented, "Our second quarter 2011
financial results were in line with our expectations considering
the increased costs of certain raw materials and the government's
price reduction on certain drugs. The financial performance
reflects our continuing efforts on profitability and cost control,
which largely absorbed revenue pressure and mitigated margin
decline. We are also excited to benefit from our long-term
investments in R&D both domestically and internationally."
Conference Call
The Company will hold a conference call at 8:00 am ET on Wednesday,
August 10, 2011, to discuss its results. Listeners may
access the call by dialing 1-800-299-0148 or 1-617-801-9711 for
international callers, access code: 43793141. A webcast will also
be available through AOB's website at www.bioaobo.com. A replay of
the call will be available through August
17, 2011. Listeners may access the replay by dialing
1-888-286-8010 or 1-617-801-6888 for international callers, access
code: 22224178.
About American Oriental Bioengineering, Inc.
American Oriental Bioengineering, Inc. is a pharmaceutical
company dedicated to improving health through the development,
manufacture and commercialization of a broad range of prescription
and over the counter products.
Safe Harbor Statement
Statements made in this press release are forward-looking and
are made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. Such statements involve risks
and uncertainties that may cause actual results to differ
materially from those set forth in these statements. The
economic, competitive, governmental, technological and other
factors identified in the Company's filings with the Securities and
Exchange Commission may cause actual results or events to differ
materially from those described in the forward looking statements
in this press release. The Company undertakes no obligation
to publicly update or revise any forward-looking statements,
whether because of new information, future events, or
otherwise.
Contact:
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ICR, LLC
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Christine Duan or Ashley
Ammon
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203-682-8200
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AMERICAN
ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
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CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
|
(UNAUDITED)
|
|
|
|
|
|
THREE MONTHS
ENDED
JUNE 30
|
|
SIX MONTHS
ENDED
JUNE 30
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
54,051,796
|
$
|
77,296,212
|
$
|
106,053,906
|
$
|
131,045,980
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
28,206,945
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|
37,455,860
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55,133,145
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62,968,907
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
25,844,851
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39,840,352
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50,920,761
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68,077,073
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|
|
|
|
|
|
|
|
|
|
|
Selling, general &
administrative expenses
|
|
11,258,098
|
|
16,663,566
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|
22,497,345
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|
27,406,278
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|
Advertising costs
|
|
3,399,355
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|
9,217,247
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|
7,220,503
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|
15,965,717
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|
Research and development
costs
|
|
3,125,276
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|
3,250,882
|
|
5,826,488
|
|
6,029,691
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|
Depreciation and
amortization
|
|
1,784,380
|
|
1,622,989
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|
3,555,091
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|
3,219,947
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
19,567,109
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|
30,754,684
|
|
39,099,427
|
|
52,621,633
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
6,277,742
|
|
9,085,668
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|
11,821,334
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|
15,455,440
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings (losses) from
unconsolidated entities
|
|
551,461
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|
(296,301)
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|
141,575
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|
(41,086)
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|
Gain (loss) on changes in
ownership of unconsolidated entities
|
|
1,417,878
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|
125,502
|
|
1,417,878
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|
(12,240)
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|
Interest expense, net
|
|
(1,518,810)
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|
(1,371,246)
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(3,032,395)
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|
(2,937,031)
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Other income (expenses),
net
|
|
11,887
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|
(30,039)
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|
437,767
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(17,792)
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|
|
|
|
|
|
|
|
|
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INCOME BEFORE INCOME
TAXES
|
|
6,740,158
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|
7,513,584
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|
10,786,159
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|
12,447,291
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|
Income tax
|
|
3,169,813
|
|
2,395,850
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|
6,294,668
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|
4,211,780
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|
|
|
|
|
|
|
|
|
|
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NET INCOME
|
|
3,570,345
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|
5,117,734
|
|
4,491,491
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|
8,235,511
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|
|
|
|
|
|
|
|
|
|
|
Net loss attribute to
non-controlling interest
|
|
10,673
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|
6,476
|
|
13,679
|
|
11,876
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|
|
|
|
|
|
|
|
|
|
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NET INCOME ATTRIBUTABLE TO
CONTROLLING INTEREST
|
|
3,581,018
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|
5,124,210
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|
4,505,170
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|
8,247,387
|
|
|
|
|
|
|
|
|
|
|
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OTHER COMPREHENSIVE
INCOME
|
|
8,277,811
|
|
1,843,654
|
|
11,410,277
|
|
1,936,503
|
|
|
|
|
|
|
|
|
|
|
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COMPREHENSIVE
INCOME
|
$
|
11,858,829
|
$
|
6,967,864
|
$
|
15,915,447
|
$
|
10,183,890
|
|
|
|
|
|
|
|
|
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EARNINGS PER COMMON
SHARE
|
|
|
|
|
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Basic
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$
|
0.05
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$
|
0.07
|
$
|
0.06
|
$
|
0.11
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|
Diluted
|
$
|
0.05
|
$
|
0.07
|
$
|
0.06
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
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WEIGHTED AVERAGE SHARES
OUTSTANDING
|
|
|
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|
|
|
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Basic
|
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74,675,136
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|
74,743,986
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|
74,788,633
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|
74,680,327
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|
Diluted
|
|
76,621,881
|
|
75,857,073
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|
76,328,242
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75,502,489
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|
|
|
|
|
|
|
|
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AMERICAN
ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
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CONDENSED
CONSOLIDATED BALANCE SHEETS
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(UNAUDITED)
|
|
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|
|
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JUNE
30,
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DECEMBER
31,
|
|
|
|
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2011
|
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2010
|
|
|
|
|
|
|
|
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CURRENT
ASSETS
|
|
|
|
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Cash and cash
equivalents
|
$
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75,030,526
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$
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94,568,520
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Restricted Cash
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|
1,306,706
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|
537,297
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Accounts and notes receivable,
net
|
|
61,582,172
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80,598,919
|
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Inventories, net
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|
24,562,693
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12,665,586
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Advances to suppliers and
prepaid expenses
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|
18,038,742
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|
14,246,144
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Deferred tax
assets
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|
319,197
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649,503
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Other current
assets
|
|
2,867,258
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2,986,005
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Total
Current Assets
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183,707,294
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206,251,974
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|
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|
|
|
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LONG-TERM
ASSETS
|
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Property, plant and
equipment, net
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110,060,705
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109,547,616
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Land use rights,
net
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157,244,683
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|
155,433,311
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|
Other long term
assets
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|
38,112,044
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|
8,167,880
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Construction in
progress
|
|
31,479,655
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|
22,516,044
|
|
Other intangible assets,
net
|
|
13,539,694
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|
14,889,127
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|
Goodwill
|
|
33,164,121
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|
33,164,121
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|
Other long-term
investment
|
|
41,772,510
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|
-
|
|
Investments in and
advances to equity investments
|
|
19,759,725
|
|
59,068,491
|
|
Deferred tax
assets
|
|
90,519
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|
147,024
|
|
Unamortized financing
costs
|
|
1,895,259
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|
2,359,404
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|
Total
Long-Term Assets
|
|
447,118,915
|
|
405,293,018
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
630,826,209
|
$
|
611,544,992
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|
|
|
|
|
|
|
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LIABILITIES AND SHAREHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JUNE
30,
|
|
DECEMBER
31,
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Accounts
payable
|
$
|
14,663,333
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$
|
10,716,686
|
|
Notes payable
|
|
1,306,706
|
|
537,297
|
|
Other payables and accrued
expenses
|
|
14,175,197
|
|
18,039,557
|
|
Taxes payable
|
|
2,550,152
|
|
1,237,169
|
|
Short-term bank
loans
|
|
8,166,337
|
|
6,957,258
|
|
Current portion of
long-term bank loans
|
|
62,148
|
|
61,405
|
|
Other
liabilities
|
|
4,107,599
|
|
6,284,107
|
|
Deferred tax
liabilities
|
|
171,650
|
|
243,304
|
|
Total
Current Liabilities
|
|
45,203,122
|
|
44,076,783
|
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
|
Long-term bank loans, net
of current portion
|
|
648,560
|
|
679,866
|
|
Deferred tax
liabilities
|
|
15,671,928
|
|
15,837,479
|
|
Unrecognized tax
benefits
|
|
6,666,147
|
|
5,050,157
|
|
Convertible
Notes
|
|
115,000,000
|
|
115,000,000
|
|
Total
Long-Term Liabilities
|
|
137,986,635
|
|
136,567,502
|
|
TOTAL
LIABILITIES
|
|
183,189,757
|
|
180,644,285
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
SHAREHOLDERS’
EQUITY
|
|
|
|
|
|
Preferred stock, $0.001 par
value; 2,000,000 shares authorized;
|
|
|
|
|
|
|
1,000,000 shares issued and
outstanding at
June 30, 2011 and December 31,
2010, respectively
|
|
1,000
|
|
1,000
|
|
Common stock, $0.001 par value;
150,000,000 shares authorized;
|
|
|
|
|
|
|
78,915,514 shares and 78,598,604
shares issued as of June 30, 2011 and December 31, 2010,
respectively; 78,466,351 shares and 78,598,604 shares outstanding
as of June 30, 2011 and December 31, 2010, respectively
|
|
78,915
|
|
78,598
|
|
Common stock to be
issued
|
|
157,333
|
|
350,500
|
|
Additional paid-in
capital
|
|
205,149,497
|
|
203,322,671
|
|
Retained earnings (the
restricted portion of retained earnings is
|
|
|
|
|
|
|
$26,471,124 at both June 30,
2011
and December 31,
2010)
|
|
212,020,274
|
|
207,515,104
|
|
Less: Treasury stock, at cost
(449,163 shares and nil as of June 30, 2011 and December 31, 2010,
respectively)
|
|
(799,999)
|
|
-
|
|
Less: Prepaid forward repurchase
contract
|
|
(29,998,616)
|
|
(29,998,616)
|
|
Accumulated other comprehensive
income
|
|
60,536,528
|
|
49,126,251
|
|
Total
Shareholders’ Equity
|
|
447,144,932
|
|
430,395,508
|
|
Non-controlling
Interest
|
|
491,520
|
|
505,199
|
|
TOTAL
EQUITY
|
|
447,636,452
|
|
430,900,707
|
|
TOTAL
LIABILITIES AND EQUITY
|
$
|
630,826,209
|
$
|
611,544,992
|
|
|
|
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SOURCE American Oriental Bioengineering, Inc.