omniture

Orient Paper, Inc. Reports Financial Results for Fourth Quarter and Full Year 2014

2015-03-26 04:05 2071

BAODING, China, March 26, 2015 /PRNewswire/ -- Orient Paper, Inc. (NYSE MKT: ONP) ("Orient Paper" or the "Company"), a leading manufacturer and distributor of diversified paper products in North China, today announced its audited financial results for the fourth quarter and full year ended December 31, 2014.

Financial Highlights:

US$ million

4Q 2014

YOY Change


FY 2014

YOY Change

Revenue

32.7

-7.1%


137.0

+9.0%

- Regular Corrugating
Medium Paper ("CMP") *

20.3

-12.9%


86.1

+6.4%

- Light-Weight CMP**

4.0

N/A


10.4

N/A

- Offset Printing Paper

8.3

-20.1%


37.5

-5.7%

- Digital Photo Paper

0.04

-97.5%


3.0

-40.0%

Gross profit

5.6

-22.1%


22.8

-2.3%

Gross margin

17.1%

-3.2pp


16.6%

-1.9pp

- Regular CMP

15.9%

-2.9pp


14.4%

-4.0pp

- Light-Weight CMP**

25.2%

N/A


27.2%

N/A

- Offset Printing Paper

16.5%

-6.5pp


18.6%

0.0pp

- Digital Photo Paper

-93.0%

N/A


17.7%

-5.5pp

Operating income

3.6

-32.6%


17.4

-7.6%

Net income

2.2

-36.7%


11.7

-10.0%

EBITDA

6.0

-15.5%


25.7

-4.7%

Note:

*Products from PM6

**Products from the newly renovated PM1

Pp represents percentage points.

Key Highlights for Fourth Quarter 2014:

  • Revenue down 7.1% YoY to US$32.7 million
  • Production impacted by government mandated production halt during the APEC Summit and absence of digital photo production during government mandated relocation of production facility
  • Volume and revenue of core CMP product line up over 4% each
  • Continued market acceptance of new Light-Weight CMP
  • Improved price environment for offset printing paper

Key Highlights for Full Year 2014:

  • Revenue up 9.0% YoY to US$137.0 million, driven by the launch of Light-Weight CMP and growth in Regular CMP sales
  • Improved operating efficiency partially offset the impact of soft CMP pricing; Annual utilization rate of Regular CMP production increased to 66% from 60% in 2013
  • Continued heavy investment in building efficient and environmentally friendly production facilities solidified the Company's position in the industry

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of Orient Paper, commented, "We are gratified report another year of volume and revenue growth despite very challenging industry conditions in our region. Due to solid execution in ramping up our Regular CMP production line and market acceptance of our new Light-Weight CMP product, we increased revenue by 9.0% from 2013. We achieved this growth despite production interruptions created by various government mandates related to zoning in Xushui and the APEC Summit in November. Our ability to manage a tough policy environment gives us great optimism for the year ahead."

Mr. Liu continued, "In 2015 we anticipate several positive influences on our business. We expect CMP pricing to stabilize or even improve, since more small-scale manufacturers will be forced to shut down obsolete production lines, reducing overall industry capacity. We expect sales of our new Light-Weight CMP to continue to increase. The production of household tissue paper and digital photo paper are scheduled to begin in the second half of 2015."

Financial Review:
Fourth Quarter 2014 Financial Results compared with Fourth Quarter 2013

The table below summarizes changes in revenues, sales volumes, and average selling prices ("ASPs") for 4Q 2014:


Sales Volum
(Tonnes)

YOY

Change

Revenue

(US$ millions)

YOY

Change

ASP

(US$)

YOY

Change

- Regular CMP

54,922

-12.2%

20.3

-12.9%

369

-1.1%

- Light-Weight CMP

10,670

N/A

4.0

N/A

373

N/A

- Offset Printing Paper

12,110

-21.7%

8.3

-20.1%

690

+2.1%

- Digital Photo Paper

12.81

-96.6%

0.04

-97.5%

3,069

-20.9%

Revenue

Total Revenue in the fourth quarter of 2014 was $32.7 million, a decrease of 7.1% from $35.2 million in the prior year period. The revenue decline was mostly due to the absence of sales of digital photo paper because those production facilities are being relocated, and the decline in the volume of offset printing paper sold. Total sales of CMP were up year over year. Volume was impacted by the mandatory production halt imposed by the central government during the APEC Summit in November. The Company lost two weeks of production of all product lines, but was able to run extra shifts to recover some lost production later in the quarter.

CMP

  • Revenue from CMP increased 4.1% year over year to $24.3 million, representing 74.3% of total revenue.
  • Of the total CMP sales, $4.0 million was generated by Light-Weight CMP and $20.3 million was generated by Regular CMP.
  • Total volume sold was up 4.8% year over year to 65,592 tonnes. Regular CMP volume sold was down 12.2% year over year to 54,922 tonnes, while volume sold for the new Light-Weight CMP totaled 10,670 tonnes.
  • Regular CMP ASP was mostly stable, slightly decreasing only 1.1% to $369/tonne.
  • Light-Weight CMP commands a slight premium to Regular CMP, with an ASP of $373/tonne.

Offset Printing Paper

  • Volume sold was down 21.7% year over year to 12,110 tonnes in part due to a mandated two week suspension of production during the APEC Summit in November.
  • Revenue from offset printing paper decreased 20.1% year over year to $8.3 million, representing 25.4% of total revenue, due to reduced volume.
  • ASP increased 2.1% year over year to $690/tonne.

Digital Photo Paper

  • Production of digital photo paper is suspended while production facilities are relocated in compliance with regulatory mandates by the Xushui county government.
  • Volumes sold dropped 96.6% to 13 tonnes, as the company sold off remaining inventory.
  • Revenue from digital photo paper decreased 97.5% to $0.04 million.
  • ASP decreased by 20.9% year over year to $3,069/tonne.

Cost of Sales and Gross Profit

Cost of Sales in the fourth quarter of 2014 was $27.1 million, down 3.4% year over year. Lower volumes resulted in higher fixed cost absorption on a per-unit basis. Raw material cost was slightly higher, due to reduced volumes of imported recycled paper across China, which creates a "floor" market price for domestic material. The cost of recycled white scrap paper, which is used in offset printing paper, was noticeably higher when compared with Q4 2013. Cost of energy was also higher when compared to the year-ago period. Cost per tonne for Regular CMP went up by 2.6% to $311, and cost per tonne for offset printing paper went up by 10.1% to $577.

Gross profit in the fourth quarter of 2014 was $5.6 million, down 22.1% from the fourth quarter of 2013. Gross margin was 17.1%, down from 20.3% for the fourth quarter of 2013. Gross profit margins for Regular CMP, Light-Weight CMP, and offset printing paper were 15.8%, 25.2% and 16.5%, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") were $2.0 million for the fourth quarter of 2014, up 7.0% from $1.8 million for the fourth quarter of 2013. The increase was related to $0.25 million of depreciation cost associated with the digital photo production lines that was charged to SG&A after the disassembly of those lines for relocation. Other increases in SG&A, such as the cost of personnel associated with the launch of the new tissue paper product line, were offset by reduced legal, consulting, and other fees.

Income from Operations

Income from operations was $3.6 million for the fourth quarter of 2014, down 32.6% from $5.3 million in the fourth quarter of 2013.

Net Income

Net income was $2.2 million, down 36.7% from $3.5 million in the fourth quarter of 2013. Basic and diluted earnings per share for the fourth quarter of 2014 were $0.11, compared to $0.19 for the corresponding period of 2013.

EBITDA

Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $6.0 million, down from $7.1 million in the fourth quarter of 2013. EBITDA is a non-GAAP financial measure. Please see Note 2 for the reconciliation of Net Income to EBITDA.

Full Year 2014 Financial Results compared with Full Year 2013

Changes in revenues, sales volumes, and ASPs for 2014 are presented as follows:


Sales Volumes
(Tonnes)

YOY

Change

Revenue
(US$ millions)

YOY

Change

ASP

(US$)

YOY

Change

- Regular CMP

236,906

+9.1%

86.1

+6.4%

363

-2.7%

- Light-Weight CMP

28,226

N/A

10.4

N/A

369

N/A

- Offset Printing Paper

54,774

-6.5%

37.5

-5.7%

686

+0.9%

- Digital Photo Paper

763

-40.6%

3.0

-40.0%

3907

+0.9%

Revenue

Total Revenue in 2014 was $137.0 million, an increase of 9.0% from $125.7 million in 2013.

CMP

  • Revenue from CMP increased 19.3% from 2013 to $96.5 million, representing 70.4% of total revenue.
  • Of the total CMP sales, $10.4 million was generated by the new Light-Weight CMP and $86.1 million was generated by Regular CMP.
  • Total volumes sold were up 22.1% from 2013 to 265,132 tonnes. Volume sold for Regular CMP was up 9.1% to 236,906 tonnes; Volume sold for the new Light-Weight CMP totaled 28,226 tonnes.
  • Regular CMP ASP decreased 2.7% year over year to $363/tonne.
  • Light-Weight CMP ASP was $369/tonne.

Offset Printing Paper

  • Volumes sold were down 6.5% from 2013 to 54,774 tonnes due to the mandated production suspension during the APEC summit.
  • Revenue from offset printing paper decreased 5.7% from 2013 to $37.5 million, representing 27.4% of total revenue. The decrease is mainly due to the decline in volume sold.
  • ASP increased 0.9% from 2013 to $686/tonne.

Digital Photo Paper

  • Revenue from digital photo paper decreased 40.0% to $3.0 million.
  • Volume sold dropped 40.6% to 763 tonnes. Production ceased from the third quarter due to the mandated relocation of our digital photo paper production facilities.
  • ASP increased slightly by 0.9% to $3,907/tonne.

Cost of Sales and Gross Profit

Cost of Sales in 2014 was $114.3 million, up 11.6% from 2013. The average cost of recycled paper board, which is used in CMP production, did not change significantly from 2013, but the average cost of recycled white scrap paper, which is used in offset printing paper, was up year over year. Energy costs were up when compared with 2013 as well. These increases were offset by low depreciation cost for Light-Weight CMP, because that product is manufactured on a rebuilt production line that was previously fully depreciated. The cost of sales per tonne for Regular CMP was up 2.3% year over year to $311; cost per tonne for Light-Weight CMP was $269; Cost per tonne for offset printing paper was up 0.8% year over year to $558.

Gross profit in 2014 was $22.8 million, down 2.4% from 2013. Gross margin in 2014 was 16.6%, down from 18.6% for 2013. Gross profit margins for Regular CMP, Light-Weight CMP, offset printing paper and digital photo paper for 2014 were 14.4%, 27.2%, 18.6% and 17.7%, respectively. The average utilization rate for Regular CMP production in 2014 was 65.8%, compared to 60.3% in the prior year, which contributed to gross margin via better fixed cost absorption.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $4.9 million in 2014, up 6.4% from $4.6 million in 2013. The increase was mainly a result of an increase in compensation expense for new hires in preparation for the launch of the tissue paper product line, an increase in depreciation of property at the Wei County Industrial Park and of the new facilities for digital photo paper production; and increased sales commissions.

Income from Operations & Operating Margin

Income from operations was $17.4 million, down 7.6% from $18.8 million in 2013, due to the decrease in gross profit and a $0.7 million loss from the disposal of certain equipment in connection with the relocation of our digital photo paper production lines.

Other Expense and Taxes

Other expense was $1.3 million for the year, which mostly consisted of net interest expense. Interest expense increased 45.0% from 2013, due to a larger amount of borrowings. Taxes were $4.4 million, with an effective tax rate of 27.5%.

Net Income

Net income was $11.7 million, down 10.1% from $13.0 million in 2013. Basic and diluted earnings per share were $0.61, compared to $0.71 in 2013.

EBITDA

EBITDA was $25.7 million, down from $26.9 million in 2013. EBITDA is a non-GAAP financial measure. Please see Note 2 for the reconciliation of Net Income to EBITDA.

Cash, Liquidity and Financial Position

As of December 31, 2014, cash and cash equivalents were $3.9 million, compared to $3.1 million at the end of 2013. The Company generated net cash flow from operating activities of $32.3 million in 2014, an increase of 8.0% from $29.9 million in 2013.

The net working capital deficit was $17.9 million at December 31, 2014, with $26.6 million of current assets and $44.5 million of current liabilities. The Company believes it can successfully secure financing to meet all working capital and capital expenditure needs for the next twelve months. However, there can be no guarantee that the Company will succeed in raising additional financing. Therefore, the working capital deficit raises a substantial doubt about the ability of the Company to continue as going concern.

As of December 31, 2014, short-term debt was $26.1 million, including notes payable of $16.1 million. Current capital lease obligations were $12.3 million. Long-term debt was $17.9 million, and non-current capital lease obligations $4.1 million. Debt (including capital leases) represents 25% of total capitalization, which, the Company believes, is within a normal range for the paper industry in China.

Operations and Business Updates

Light-Weight CMP Production

In the fourth quarter, production volume of the new Light-Weight CMP continued to increase. The Company launched this product in the second quarter, and was running near full capacity at the end of the fourth quarter. The Company produced and sold 10,670 tonnes in the fourth quarter and 28,226 tonnes in total since launch. The annual production capacity for Light-Weight CMP is approximately 60,000 tonnes.

Light-Weight CMP has a weight specification of 40 to 80 grams per square meter ("g/s/m"), and is used in a wide range of commercial applications, including: the encapsulation of certain insulating materials as a construction material for wall and floor insulation; the manufacturing of moisture-proof packaging materials for transportation of books and magazines; and as the corrugating medium in cardboard for light-weight packaging solutions. Light-Weight CMP is considered a niche product in the packaging paper market and enjoys a higher margin than conventional CMP. The Company anticipates steady demand from end-users since the supply of this specialty CMP is relatively limited. Currently, the Company's Light-Weight CMP is being used mainly for packaging paper. The Company anticipates future uses of its Light-Weight CMP in other applications, such as insulation liner.

Expansion into Tissue Paper Market

The Company is building production facilities in the Wei County Industrial Park in Hebei Province for tissue paper production. Construction of the factory and associated infrastructure is progressing, and the production of tissue paper is scheduled to begin in the second half of 2015.

Relocation of Digital Photo Paper Production

The Company is relocating its digital photo paper production lines and related equipments from its Headquarters Compound to a new location across the street from the Company's Xushui Paper Mill ("Xushui Mill Annex"). Currently, the two production lines have been disassembled, equipment moved to the Xushui Mill Annex, and approximately 60% of the equipment installed. Over the next several months, the Company anticipates completing installation of electrical and steam infrastructure, and the remaining 40% of production machinery. Paper production is expected to resume in the second half of 2015. The Company estimates the cost of relocation to be approximately $1.6 million. Building construction costs at the Xushui Mill Annex is estimated to be an additional $7.5 million for the next two years.

Commitment to Sustainability

Since its founding, the Company has pursued a business model that combines profitability with clean and sustainable operations. The Company continues to utilize only recycled paper waste for its feedstock, which gives it a cost advantage over regular pulp feedstock today as well as future opportunities for marketing "green" products.

The Company voluntarily initiated environmental upgrades years ago, and the Company believes that it now enjoys a competitive advantage against some large paper mills that are being closed by authorities due to lack of compliance with environmental and energy savings standards. Notably, in 2014 as part of continued efforts to modernize the paper industry, the relevant authorities shut down outdated facilities of a total capacity of 4.63 million tonnes of paper and pulp, including facilities producing 505,000 tonnes in Hebei Province. Mandatory closures included a number of large capacity paper machines (up to 226,000 tonnes per line) that fail to meet government-published environmental and energy savings standards. The Company believes that demand and pricing conditions for its products will improve in 2015 as the effect of these closures are felt across the industry.

Conference Call

The Company will host a conference call at 8:30 am US Eastern Time (5:30 am US Pacific Time/8:30 pm Beijing Time) on Thursday, March 26, 2015, to discuss its financial results and recent business, operational and corporate activities.

To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time:

Mainland China:

400-120-0654

Hong Kong:

800-906-606

United States:

1-855-500-8701

International:

+65-6723-9385

Passcode:

9998 4279

A replay of this conference call will be available by dialing:

Mainland China:

400-632-2162 / 800-870-0205

Hong Kong:

800-963-117

United States:

1-855-452-5696

International:

+61-2-9003-4211

Passcode:

9998 4279

The replay will be archived for fourteen days following the earnings announcement until April 8, 2015.

This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking http://www.orientpaperinc.com/. Please access the link at least fifteen minutes prior to the call to register, download, and install any necessary audio software. A replay will be available for one year shortly after the call by accessing the same link.

About Orient Paper, Inc.

Orient Paper, Inc. ("Orient Paper") is a leading paper manufacturer in North China. Using recycled paper as its primary raw material, Orient Paper produces and distributes three categories of paper products: corrugating medium paper, offset printing paper, and other paper products, including digital photo paper. The Company is currently building facilities to expand into the production of tissue paper.

With production operations based in Baoding in North China's Hebei Province, Orient Paper is located strategically close to the Beijing and Tianjin region, home to a growing base of industrial and manufacturing activities and one of the largest markets for paper products consumption in the country.

Orient Paper's production facilities are controlled and operated by its wholly owned subsidiary Shengde Holdings Inc, which in turn controls and operates Baoding Shengde Paper Co., Ltd., and Hebei Baoding Orient Paper Milling Co., Ltd for manufacturing digital photo, printing and packaging paper.

Founded in 1996, Orient Paper has been listed on the NYSE MKT with the ticker symbol "ONP" since December 2009. (Please visit http://www.orientpaperinc.com)

Note 1: Production Facilities of Orient Paper

Production Line#

Paper Product

Designed Capacity (tonnes/year)

Location

PM1

Corrugating medium paper

60,000

Xushui County, Baoding city, Hebei province

PM2

Offset printing paper

50,000

PM3

Offset printing paper

40,000

PM4*

Digital photo paper

**

Xushui County, Baoding city, Hebei province

PM5*

Digital photo paper

**

PM6

Corrugating medium paper

360,000

Xushui County, Baoding city, Hebei province

PM7*

Specialty paper

10,000

PM8*

Tissue paper

15,000

Economic Development Zone in Wei County, Hebei Province

PM9*

Tissue paper

15,000

*: Paper machines being relocated, under renovation or construction, or in the planning stage.

**: PM4 and PM5 have a total coating capacity of 2,500 tonnes per year.

Note 2: Non-GAAP Financial Measures

In addition to our U.S. GAAP results, this press release also includes a discussion of EBITDA, a non-GAAP financial measure as defined by the SEC. The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.

Reconciliation of Net Income to EBITDA

(Amounts expressed in US$)

(in millions)

For the Three Months Ended

December 31

For the Year Ended

December 31


2014

2013

2014

2013

Net income

$

2.2

$

3.5

$

11.7

$

13.0

Add: Income tax


0.9


1.5


4.4


5.1

Add: Net interest expense


0.5


0.3


1.3


1.0

Add: Depreciation and amortization


2.4


1.8


8.3


7.8

EBITDA

$

6.0

$

7.1

$

25.7

$

26.9

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the plan to resume digital photo paper production and sales; anticipated launch of the tissue paper production and sales, the actions and initiatives of current and potential competitors; the Company's ability to introduce new products; the Company's ability to implement the planned capacity expansion of corrugate medium paper; market acceptance of new products; general economic and business conditions; the ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

ORIENT PAPER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND YEARS ENDED

DECEMBER 31, 2014 AND 2013



Three Months Ended



Year Ended





December 31,



December 31,





2014



2013



2014



2013

















Revenues


$

32,697,113



$

35,246,348



$

137,041,447



$

125,717,630




















Cost of sales



(27,121,656)




(28,085,195)




(114,263,299)




(102,392,031)





















Gross Profit



5,575,457




7,161,153




22,778,148




23,325,599





















Selling, general and administrative expenses



(1,965,387)




(1,836,328)




(4,859,215)




(4,567,079)



Gain (Loss) from disposal of property, plant and equipment



(20,225)




235




(709,647)




84,972



Gain from disposal of assets held for sale



132








203,620







Income from Operations



3,589,977




5,325,060




17,412,906




18,843,492





















Other Income (Expense):


















Interest income



69,845




11,312




149,783




90,260



Subsidy income



22,614




474




22,614




171,125



Interest expense



(558,411)




(272,591)




(1,446,439)




(995,694)





















Income before Income Taxes



3,124,025




5,064,255




16,138,864




18,109,183





















Provision for Income Taxes



(896,011)




(1,543,642)




(4,432,504)




(5,094,535)





















Net Income



2,228,014




3,520,613




11,706,360




13,014,648





















Other Comprehensive Income:




































Foreign currency
translation adjustment



952,353




736,669




(125,143)




4,818,869





















Total Comprehensive Income


$

3,180,367



$

4,257,282



$

11,581,217



$

17,833,517





















Earnings Per Share:



-















Basic and Fully Diluted Earnings per Share


$

0.11



$

0.19



$

0.61



$

0.71





















Weighted Average Number of Shares



-















Outstanding - Basic and Fully Diluted



20,316,400




18,458,446




19,270,394




18,458,446



ORIENT PAPER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2014 and 2013



December 31,




2014



2013









ASSETS














Current Assets







Cash and cash equivalents


$

3,891,473



$

3,131,163


Restricted cash



8,873,999




2,454,108


Accounts receivable (net of allowance for doubtful accounts of $76,125 and $67,592 as of December 31, 2014 and 2013, respectively)



3,730,123




3,327,494


Inventories



7,139,599




11,428,405


Prepayments and other current assets



2,919,668




1,068,031


Assets held for sale



-




4,130,590


Deferred tax assets - current



-




413,537











Total current assets



26,554,862




25,953,328











Prepayment on property, plant and equipment



1,490,440




1,492,098


Property, plant, and equipment, net



208,213,198




178,535,259


Recoverable VAT



3,228,075




3,277,188


Deferred tax asset - non-current



281,010




268,329











Total Assets


$

239,767,585



$

209,526,202











LIABILITIES AND STOCKHOLDERS' EQUITY


















Current Liabilities









Short-term bank loans


$

9,805,524



$

6,544,288


Current portion of long-term loans from credit union



147,083




1,660,613


Current portion of long-term loan from a related party



2,386,978




-


Current obligations under capital lease



12,258,488




8,264,795


Accounts payable



-




926,571


Notes payable



16,113,744




4,908,216


Security deposit from a related party



-




1,636,072


Due to a related party



227,900




64,546


Accrued payroll and employee benefits



492,765




498,010


Other payables and accrued liabilities



2,400,523




2,651,472


Income taxes payable



637,143




1,218,140











Total current liabilities



44,470,148




28,372,723











Loans from credit union



5,760,745




4,253,788


Loan from a related party



9,805,524




2,389,633


Deferred gain on sale-leaseback



695,389




1,160,271


Long-term obligations under capital lease



4,090,413




12,296,639











Total liabilities



64,822,219




48,473,054











Commitments and Contingencies


















Stockholders' Equity









Common stock, 500,000,000 shares authorized, $0.001 par value per share, 20,316,400 and 18,753,900 shares issued and outstanding as of December 31, 2014 and 2013, respectively



20,316




18,754


Additional paid-in capital



49,218,982




46,909,543


Statutory earnings reserve



6,080,574




6,038,406


Accumulated other comprehensive income



17,021,165




17,146,308


Retained earnings



102,604,329




90,940,137











Total stockholders' equity



174,945,366




161,053,148











Total Liabilities and Stockholders' Equity


$

239,767,585



$

209,526,202












ORIENT PAPER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013



Year Ended

December 31,







2014



2013









Cash Flows from Operating Activities:







Net income


$

11,706,360



$

13,014,648


Adjustments to reconcile net income to net cash provided by operating activities:









Depreciation and amortization



8,289,320




7,794,743


Loss (Gain) from impairment and disposal of property, plant and equipment



709,647




(84,972)


Gain from disposal of assets held for sale



(203,620)




-


Allowance for (Recovery from) bad debts



8,571




7,990


Stock-based expense for service received



-




773,862


Deferred tax



398,385




409,665


Changes in operating assets and liabilities:









Accounts receivable



(413,159)




(402,709)


Prepayments and other current assets



(1,799,514)




1,211,679


Inventories



4,257,805




4,105,876


Accounts payable



(921,580)




(117,308)


Notes payable



11,163,003




1,614,387


Accrued payroll and employee benefits



(4,950)




194,795


Other payables and accrued liabilities



(299,932)




1,599,375


Income taxes payable



(577,163)




(200,090)


Net Cash Provided by Operating Activities



32,313,173




29,921,941











Cash Flows from Investing Activities:









Purchases of property, plant and equipment



(39,207,768)




(64,566,785)


Refund of prepayment for purchase of property, plant and equipment



-




-


Proceeds from sale of assets held for sale



2,684,703




1,614,387


Proceeds from disposal of property, plant and equipment



241,714




2,589,919


Net Cash Used in Investing Activities



(36,281,351)




(60,362,479)











Cash Flows from Financing Activities:









Proceeds from issuing of common stock



2,311,002




-


Proceeds from related party loans



10,557,060




1,390,802


Repayment of related party loans



(793,500)




(1,390,802)


Proceeds from bank loans



11,366,410




10,703,389


Proceeds from sale-leaseback financing



-




24,215,811


Repayments of bank loans



(8,111,890)




(8,281,807)


Payment of capital lease obligation



(4,199,689)




(5,406,481)


Restricted cash



(6,395,131)




(807,194)


Dividend Paid



-




(323,032)


Net Cash Provided by (Used in) Financing Activities



4,734,262




20,100,686











Effect of Exchange Rate Changes on Cash and Cash Equivalents



(5,774)




330,727











Net Increase (Decrease) in Cash and Cash Equivalents



760,310




(10,009,125)











Cash and Cash Equivalents - Beginning of Period



3,131,163




13,140,288











Cash and Cash Equivalents - End of Period


$

3,891,473



$

3,131,163











Supplemental Disclosure of Cash Flow Information:









Cash paid for interest, net of capitalized interest cost


$

1,826,460



$

708,089


Cash paid for income taxes


$

4,611,282



$

4,884,961


To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/orient-paper-inc-reports-financial-results-for-fourth-quarter-and-full-year-2014-300055850.html

Source: Orient Paper, Inc.
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