NEW YORK, Aug. 20 /PRNewswire-Asia/ -- Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSE AMEX: TBV), http://www.tiens-bio.com , today announced financial results for the second quarter and six months ended June 30, 2010.
Revenue for the second quarter of 2010 was $8.2 million, compared to $20.6 million for the second quarter of 2009. Revenue for the six months ended June 30, 2010 was $19.6 million, compared to $38.8 million for the first six months of 2009.
Net income for the second quarter of 2010 was $0.5 million, or $0.01 per share, compared to net income of $10.3 million, or $0.14 per share, for the 2009 second quarter. For the six months ended June 30, 2010, net income was $4.1 million, or $0.5 per share, compared to $19.3 million, or $0.26 per share for the first six months of 2009.
The decrease in revenue was mainly due to a decrease in international sales which reflects China's Administration of Quality Supervision, Inspection and Quarantine carrying out a national campaign against unsafe food and substandard products in 2008, which brought on a general slow-down and backlog of export clearances for Chinese food products. Upon the lifting of the regulations, overseas affiliated companies began to purchase more products, thereby increasing sales in the first two quarters of 2009. Second quarter 2010 sales to Indonesia, Russia, Vietnam and Peru further decreased due to the distributors in these countries purchasing more products in the first half of 2009, after the 2008 product scarcity. The decrease in sales in China was mainly due to domestic distributors' reduced purchasing demand following their stocking up of products during 2009. Management believes the decrease in revenues is temporary, and that revenue growth will resume in the near future.
Other Highlights
Cost of sales for the second quarter of 2010 decreased to $3.0 million, or 50.3%, compared to $6.1 million for the same period in 2009. For the six months ended June 30, 2010, cost of sales was $6.5 million, a decrease of 45.3% compared to $11.9 million for the same period in 2009. Cost of sales for the period decreased at a slightly lower rate than revenue, primarily due to fixed costs, which do not increase or decrease in line with revenue changes.
Gross profit for the second quarter of 2010 was $5.1 million, a decrease of 64.5% compared to $14.4 million for the same period in 2009. The gross profit margin for the second quarter of 2010 was 62.8%, compared to 70.2% for the same period in 2009. For the six months ended June 30, 2010, gross profit was $13.1 million, a decrease of 51.4% compared to the same period in 2010, and the gross profit margin was 66.9% compared to 69.4% for the same period in 2009. These decreases were mainly due to the decrease of revenue overall and fixed costs, which do not increase or decrease in line with revenue changes.
Selling, general and administrative expenses were $4.1 million for the second quarter of 2010, an increase of 1.4% compared to $4.0 million for the same period in 2009. This increase was primarily due to the increase in research and development expenses. Selling, general and administrative expenses as a percentage of sales were 49.8% for the second quarter of 2010 compared to 19.5% for the same period in 2009. For the six months ended June 30, 2010, selling, general and administrative expenses were $7.6 million, an increase of 5.9% compared to $7.1 million in the same period in 2009. This increase was mainly due to the increase in research and development expense. For the six months ended June 30, 2010, selling, general and administrative expenses as a percentage of sales was 38.7%, compared to 18.4% for the same period in 2009.
As of June 30, 2010, Tiens had $126.8 million of retained earnings and total shareholders' equity of $180.4 million.
Jinyuan Li, Chairman, President and CEO of Tiens, said, "We believe that our international and domestic sales will return to and possibly exceed previous levels as our domestic and overseas affiliated companies have indicated that they are not seeing sizable declines of their revenue, and that they expect that the market fluctuation will be temporary. They believe that revenue growth will resume in the near future, consistent with what they have achieved during the majority of the past 15 years. We remain committed to building greater market share in China, expanding our international customer base, and remaining focused on our efforts to generate long-term domestic and international growth."
About Tiens Biotech Group (USA), Inc. http://www.tiens-bio.com
Tiens Biotech Group (USA), Inc. (NYSE AMEX: TBV) conducts its business operations from Tianjin, People's Republic of China. Tiens primarily engages in the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary supplements.
Tiens derives its revenues principally from product sales to affiliated companies in China and internationally in 54 countries. Since its establishment, Tiens has developed and produced 37 nutrition supplements, which include wellness products and dietary supplements. Tiens develops its products at its own product research and development center, which employs highly qualified professionals in the fields of pharmacology, biology, chemistry and fine chemistry. Tiens has obtained all required certificates and approvals from government regulatory agencies to manufacture and sell its products in China.
In China, Tiens conducts the marketing and sales of its products through its affiliated company, Tianshi Engineering. Tianshi Engineering markets and sells Tiens' products in China through chain stores, domestic affiliated companies, and its 92 branches. Outside of China, Tiens sells its products to affiliated companies in 54 countries who in turn sell through an extensive direct sales force, or multi-level marketing sales force. The Company's direct sales marketing program is subject to governmental regulation in each of these countries.
Certain statements in this press release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such forward-looking statements are not necessarily indicative of future financial results, and may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to: (i) the Company's ability to obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) the Company's ability to build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; whether Tianshi Engineering, the Company's affiliate which sells its products in China, obtains a direct selling license in China; and (v) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission which are available for review at http://www.sec.gov under "Search for Company Filings."
-Tables Follow-
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 and 2009 (UNAUDITED)
Three months ended June 30, Six months ended June 30,
2010 2009 2010 2009
REVENUE - RELATED
PARTIES $8,167,849 $20,551,036 $19,571,212 $38,788,581
COST OF SALES -
RELATED PARTIES 3,037,847 6,117,409 6,478,728 11,852,468
GROSS PROFIT 5,130,002 14,433,627 13,092,484 26,936,113
SELLING, GENERAL
AND ADMINI-
STRATIVE EXPENSES 4,069,097 4,014,591 7,566,644 7,145,527
INCOME FROM OPERATIONS 1,060,905 10,419,036 5,525,840 19,790,586
(Interest expense) -- (53,201) -- (105,817)
Interest income 3,846 100,779 5,718 186,547
Other expense (418,260) (28,144) (671,970) (73,432)
OTHER (EXPENSE)
INCOME, NET (414,414) 19,434 (666,252) 7,298
INCOME BEFORE
INCOME TAXES 646,491 10,438,470 4,859,588 19,797,884
INCOME TAXES 138,621 123,101 748,123 482,716
NET INCOME $507,870 10,315,369 4,111,465 19,315,168
LESS: Net income
attributable to
the noncontrolling
interest (122,083) (139,071) (464,140) (546,045)
NET INCOME
ATTRIBUTABLE TO
THE COMPANY 385,787 10,176,298 3,647,325 18,769,123
OTHER COMPREHENSIVE
INCOME:
Foreign currency
translation
adjustment 766,901 151,289 1,125,269 770,887
COMPREHENSIVE
INCOME 1,152,688 10,327,587 4,772,594 19,540,010
COMPREHENSIVE
INCOME ATTRI-
BUTABLE TO THE
NONCONTROLLING
INTEREST 163,465 140,300 506,863 559,895
COMPREHENSIVE
INCOME ATTRIBUTABLE
TO THE COMPANY $989,223 $10,187,287 $4,265,731 $18,980,115
EARNINGS PER
SHARE, BASIC
AND DILUTED $0.01 $0.14 $0.05 $0.26
WEIGHTED AVERAGE
NUMBER OF SHARES,
BASIC AND DILUTED 71,333,586 71,333,586 71,333,586 71,333,586
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2010 (UNAUDITED) AND DECEMBER 31, 2009
June 30, December 31,
2010 2009
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $5,660,772 $1,848,328
Accounts receivable, trade - related
parties, net of allowance for
doubtful accounts of $1,307,687 and
$1,419,178 as of June 30, 2010 and
December 31, 2009, respectively 8,809,737 15,379,312
Inventories 5,776,964 5,328,052
Other receivables 2,354,237 995,657
Other receivables - related parties 33,035,274 44,561,626
Employee advances 238,075 115,673
Prepaid expenses 351,905 658,193
Prepaid taxes 121,542 407,534
Total current assets 56,348,506 69,294,375
PROPERTY, PLANT AND EQUIPMENT, net 9,946,030 10,124,483
OTHER ASSETS:
Construction in progress 146,343,059 125,572,621
Construction deposits 5,068,290 1,405,997
Intangible assets, net 12,764,848 12,864,295
Other assets 18,039,203 11,847,937
Total other assets 182,215,400 151,690,850
Total assets $248,509,936 $231,109,708
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $4,387,829 $5,012,157
Advances from customers - related
parties 17,055,922 4,426,751
Wages and benefits payable 788,451 1,484,852
Income taxes payable 330,095 --
Contractor deposits 258,403 183,395
Contractor payables 20,942,557 18,513,216
Other payables 1,248,953 1,151,551
Other payables - related parties 1,502,767 3,326,110
Total current liabilities 46,514,977 34,098,032
NON-CURRENT LIABILITIES
Deferred income 11,283,364 11,236,501
Total non current liabilities 11,283,364 11,236,501
Total liabilities 57,798,341 45,334,533
EQUITY:
Shareholders' equity of the Company:
Common stock, $0.001 par value,
250,000,000 shares authorized,
71,333,586 issued and
outstanding, respectively 71,334 71,334
Paid-in-capital 18,194,133 18,042,189
Statutory reserves 16,465,144 13,217,217
Retained earnings 126,769,661 126,370,263
Accumulated other comprehensive
income 18,880,529 18,262,123
Total shareholders' equity of
the Company 180,380,801 175,963,126
Noncontrolling interest 10,330,794 9,812,049
Total equity 190,711,595 185,775,175
Total liabilities and equity $248,509,936 $231,109,708
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (UNAUDITED)
Six months ended June 30,
2010 2009
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $4,111,465 $19,315,168
Adjustments to reconcile net
income to cash provided by
(used in) operating activities:
Bad debt expense (116,962) (196,863)
Depreciation 814,376 1,112,849
Amortization 167,147 194,380
Interest expense -- 2,710
Gain on sale of assets (15,085) (15,717)
Rental expense borne by a
related party 163,532 163,331
(Increase) decrease in assets:
Accounts receivable, trade -
related parties 6,725,384 (5,532,449)
Other receivables (1,349,264) 10,743
Other receivables - related
parties 213,304 (992,241)
Inventories (421,815) 3,355,993
Employee advances (121,454) (80,805)
Prepaid expense 307,795 (435,576)
Increase (decrease) in
liabilities:
Accounts payable (662,699) (1,579,065)
Advances from customers -
related parties 12,562,625 (219,470)
Wages and benefits payable (699,884) (703,898)
Other taxes payable 615,431 8,920
Other payables 94,272 (395,970)
Other payables - related parties 191,991 (202,847)
Net cash provided by operating
activities 22,580,159 13,809,193
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in Life Resources 6,000,000 --
Collections from loans to local
government -- 105,193
Proceeds from disposal of a
subsidiary 700,000 --
Construction deposits (2,678,074) (3,846,961)
Contractor deposits 73,959 158,551
Addition to construction in
progress (18,790,772) (15,954,182)
Equipment deposits (6,133,065) -
Proceeds from sales of properties 2,621,558 17,039
Purchase of equipment and
automobiles (578,794) (921,388)
Net cash used in investing
activities (18,785,188) (20,441,748)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Loan from (repayment to) related
parties -- (3,945,510)
Net cash used in financing
activities -- (3,945,510)
EFFECT OF EXCHANGE RATE CHANGES
ON CASH 17,473 64,084
NET INCREASE (DECREASE) IN CASH 3,812,444 (10,513,981)
CASH, beginning of period 1,848,328 44,854,511
CASH, end of period $5,660,772 $34,340,530
Supplemental disclosures of cash
flow information
Cash paid during the period for:
Interest $ -- $105,817
Income taxes $913,722 $667,347
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
REVENUE BY REGION
Three months ended
June 30,
2010 2009 Change
China $4,415,082 $9,669,603 -54.3 %
International $3,752,767 $10,881,433 -65.5 %
Total $8,167,849 $20,551,036 -60.3 %
Six months ended
June 30,
2010 2009 Change
China $11,198,355 $12,412,223 -9.8 %
International $8,372,857 $26,376,358 -68.3 %
Total $19,571,212 $38,788,581 -49.5 %
Source: Tiens Biotech Group (USA), Inc.
