omniture

American Oriental Bioengineering Reports Fourth Quarter and Full Year 2010 Financial Results

NEW YORK, March 15, 2011 /PRNewswire-Asia/ -- American Oriental Bioengineering, Inc. (NYSE: AOB), (the "Company" or "AOBO"), 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 fourth quarter and fiscal year ended December 31, 2010.

Fourth Quarter 2010 Financial Performance

In the fourth quarter of 2010, revenue decreased to $83.4 million from $100.0 million in the same period of 2009, primarily caused by decreased sales from pharmaceutical products, partially offset by increased sales from distribution business.

  • The Company generated $79.4 million from its manufacturing business, in the fourth quarter of 2010, compared with $96.4 million in the prior year period.  Revenue from pharmaceutical products decreased 19.7% to $68.3 million from $85.0 million in the prior year period. Nutraceutical products generated revenue of approximately $11.1 million in the fourth quarter of 2010, down 2.8% from $11.4 million in the prior year period.  The revenue performance reflects the Company's strategic shift of revenue mix toward higher-margin products to minimize the impact from the increased cost of certain raw materials and the continuing government price cut on certain products.
  • The Company generated $3.9 million from its distribution business, Nuo Hua, in the fourth quarter of 2010, an increase of 10.2% from $3.6 million in the prior year period, primarily due to Nuo Hua's expanding market coverage.

Gross profit in the fourth quarter of 2010 was $42.4 million compared to $52.6 million in the fourth quarter of 2009. Gross margin was 50.9%, compared to 52.6% in the prior year period. The Company continued its efforts to manage the margin pressure, which was mainly caused as a result of the combined impact of the increased cost of certain raw materials, the government's pricing control on EDL drugs, and increased labor costs.

Operating income in the fourth quarter of 2010 decreased to $5.9 million compared with $14.9 million in the prior year period. Selling, general and administrative expenses were $18.1 million, or 21.7% of total revenue, compared to $21.2 million, or 21.2% of total revenue in the prior year period. This is primarily driven by management's continuing efforts at cost control. Advertising expense increased to $12.0 million in the fourth quarter of 2010, compared to $9.5 million in the prior year period, driven by increased efforts to increase brand awareness and market recognition. Research and development expenses were $4.6 million, or 5.5% of total revenue, compared with $5.4 million, or 5.4% of total revenue, in the prior year period. The company emphasizes the importance of science and technology and continues investment in R&D spending related to create new products, and improve existing product portfolio.

Net income attributable to controlling interest for the fourth quarter of 2010 was $2.8 million, or $0.04 per diluted share, compared to $11.7 million, or $0.14 per diluted share, in the prior year period.

2010 Financial Performance

Revenue for the fiscal year 2010 increased 3.3% to $305.9 million from $296.2 million in 2009, primarily resulted from continuing customer demand and increased sales coverage. Prescription pharmaceutical products generated revenue of $129.2 million, up 11.6% from $115.8 million in the year 2009, and OTC pharmaceutical products generated revenue of $120.9 million, down 5.8% from $128.4 million in 2009. Revenue from nutraceutical products increased 4.8% to $41.0 million from $39.1 million in the year before.  Revenue from Nuo Hua's distribution business was $14.8 million compared to $12.9 million in 2009, primarily resulted from expanded sales coverage and distribution network especially in the rural areas. During the same time period, gross profit decreased by 5.4% to $157.8 million from $166.8 million in the year 2009.

Operating income in the year 2010 was $30.4 million compared to $58.8 million in the year 2009. Net income attributable to controlling interest for the year 2010 was $16.3 million, or $0.22 per diluted share, compared to $41.4 million, or $0.53 per diluted share, in the prior year period.

Balance Sheet

As of December 31, 2010, the Company had $94.6 million in cash and cash equivalents, and generated approximately $8.0 million of operating cash flow during the year of 2010. Working capital was $162.2 million in 2010, reflecting an increase of 23.9% compared to $130.9 million in 2009.

Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented, "We are pleased with our fiscal year 2010 financial results in which we demonstrated steady growth despite the increasingly challenging economic environment worldwide and China's rapidly changing regulatory environment. Our growth in 2010 was consistent with our expectations and reflects our continued efforts on profitability focus and cost control. We dynamically adjust our product mix to minimize the negative impact from the increased cost of certain raw materials, as well as the government's price cut on certain drugs. In addition, our long-term investments in science and technology have achieved initial results, which were demonstrated by the strong sales from the new products supported by our R&D efforts. Overall, we remain enthusiastic about the tremendous opportunities in China's healthcare sector, and we are looking forward to more progress in the fiscal year ahead."

Conference Call

The Company will hold a conference call at 8:00 am ET on Tuesday, March 15, 2011, to discuss its results. Listeners may access the call by dialing 1-800-901-5231 or 1-617-786-2961 for international callers, access code: 57286885. A webcast will also be available through AOB's website at www.bioaobo.com. A replay of the call will be available through March 22, 2011. Listeners may access the replay by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 91403928.

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, including the Form 10-K for the year ended December 31, 2010, 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:

 

 

ICR, LLC

 

 

Christine Duan or Ashley Ammon

 

 

203-682-8200

 

 

 



AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THREE MONTHS ENDED
DECEMBER 31

 

 

TWELVE MONTHS ENDED
DECEMBER 31

 

 

 

 

2010

 

 

2009

 

 

2010

 

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

 

83,365,061

 

$

 

100,032,887

 

$

 

305,944,085

 

$

 

296,150,780

 

 

Cost of sales

 

 

40,966,778

 

 

47,425,009

 

 

148,186,531

 

 

129,367,775

 

 

GROSS PROFIT

 

 

42,398,283

 

 

52,607,878

 

 

157,757,554

 

 

166,783,005

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

18,112,902

 

 

21,163,863

 

 

66,439,702

 

 

62,164,936

 

 

Advertising costs

 

 

11,971,242

 

 

9,536,612

 

 

38,920,905

 

 

31,896,992

 

 

Research and development costs

 

 

4,610,737

 

 

5,417,834

 

 

15,365,131

 

 

7,922,357

 

 

Depreciation and amortization expenses

 

 

1,760,232

 

 

1,591,061

 

 

6,662,237

 

 

6,038,625

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

36,455,113

 

 

37,709,370

 

 

127,387,975

 

 

108,022,910

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

 

5,943,170

 

 

14,898,508

 

 

30,369,579

 

 

58,760,095

 

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings (losses) from unconsolidated entities

 

 

196,134

 

 

2,374,211

 

 

384,991

 

 

2,075,139

 

 

Interest expense, net

 

 

(1,506,962)

 

 

(1,440,239)

 

 

(5,900,055)

 

 

(5,746,382)

 

 

Other expenses, net

 

 

(119,396)

 

 

(405,558)

 

 

(204,736)

 

 

(569,661)

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

4,512,946

 

 

15,426,922

 

 

24,649,779

 

 

54,519,191

 

 

Income tax

 

 

1,758,188

 

 

3,753,893

 

 

8,336,366

 

 

13,216,986

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

2,754,758

 

 

11,673,029

 

 

16,313,413

 

 

41,302,205

 

 

 

 

 

 

 

 

 

 

 

 

Net loss (income) attributable to non-controlling interest

 

 

8,382

 

 

79

 

 

27,937

 

 

118,945

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

 

 

2,763,140

 

 

11,673,108

 

 

16,341,350

 

 

41,421,150

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain

 

 

6,350,139

 

 

706,638

 

 

16,076,027

 

 

1,362,038

 

 

OTHER COMPREHENSIVE INCOME

 

 

6,350,139

 

 

706,638

 

 

16,076,027

 

 

1,362,038

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

$

 

9,113,279

 

$

 

12,379,746

 

$

 

32,417,377

 

$

 

42,783,188

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

0.04

 

$

 

0.16

 

$

 

0.22

 

$

 

0.56

 

 

Diluted

 

$

 

0.04

 

$

 

0.14

 

$

 

0.22

 

$

 

0.53

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

 

74,956,648

 

 

74,673,067

 

 

74,810,016

 

 

74,612,602

 

 

Diluted

 

 

75,983,964

 

 

89,494,201

 

 

75,724,826

 

 

89,286,621

 

 

 

 

 

 

 

 

 

 

 



AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DECEMBER 31,

 

 

DECEMBER 31,

 

 

 

 

 

2010

 

 

2009

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

94,568,520

 

$

 

91,126,486

 

 

Restricted Cash

 

 

537,297

 

 

3,298,379

 

 

Accounts and notes receivable, net

 

 

80,598,919

 

 

57,504,454

 

 

Inventories, net

 

 

12,665,586

 

 

10,015,711

 

 

Advances to suppliers and prepaid expenses

 

 

14,246,144

 

 

13,901,180

 

 

Deferred tax assets

 

 

649,503

 

 

824,451

 

 

Other current assets

 

 

2,986,005

 

 

1,246,647

 

 

Total Current Assets

 

 

206,251,974

 

 

177,917,308

 

 

 

 

 

 

 

 

LONG-TERM ASSETS

 

 

 

 

 

 

Property, plant and equipment, net

 

 

109,547,616

 

 

95,468,265

 

 

Land use rights, net

 

 

155,433,311

 

 

153,604,196

 

 

Other long term assets

 

 

8,167,880

 

 

7,909,086

 

 

Construction in progress

 

 

22,516,044

 

 

28,975,386

 

 

Other intangible assets, net

 

 

14,889,127

 

 

18,695,554

 

 

Goodwill

 

 

33,164,121

 

 

33,164,121

 

 

Investments in and advances to equity investments

 

 

59,068,491

 

 

57,325,887

 

 

Deferred tax assets

 

 

147,024

 

 

134,268

 

 

Unamortized financing costs

 

 

2,359,404

 

 

3,287,694

 

 

Total Long-Term Assets

 

 

405,293,018

 

 

398,564,457

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

 

611,544,992

 

$

 

576,481,765

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DECEMBER 31,

 

 

DECEMBER 31,

 

 

 

 

 

2010

 

 

2009

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

 

10,716,686

 

$

 

7,497,143

 

 

Notes payable

 

 

537,297

 

 

3,392,575

 

 

Other payables and accrued expenses

 

 

18,039,557

 

 

22,320,757

 

 

Taxes payable

 

 

1,237,169

 

 

947,338

 

 

Short-term bank loans

 

 

6,957,258

 

 

10,384,368

 

 

Current portion of long-term bank loans

 

 

61,405

 

 

60,108

 

 

Other liabilities

 

 

6,284,107

 

 

2,199,280

 

 

Deferred tax liabilities

 

 

243,304

 

 

172,473

 

 

Total Current Liabilities

 

 

44,076,783

 

 

46,974,042

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES

 

 

 

 

 

 

Long-term bank loans, net of current portion

 

 

679,866

 

 

743,957

 

 

Deferred tax liabilities

 

 

15,837,479

 

 

15,961,465

 

 

Unrecognized tax benefits

 

 

5,050,157

 

 

2,746,561

 

 

Convertible Notes

 

 

115,000,000

 

 

115,000,000

 

 

Total Long-Term Liabilities

 

 

136,567,502

 

 

134,451,983

 

 

TOTAL LIABILITIES

 

 

180,644,285

 

 

181,426,025

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Preferred stock, $0.001 par value; 2,000,000 shares authorized;

 

 

 

 

 

 

 

1,000,000 shares issued and outstanding at December 31, 2010 and December 31, 2009, respectively

 

 

1,000

 

 

1,000

 

 

Common stock, $0.001 par value; 150,000,000 shares authorized;

 

 

 

 

 

 

 

78,598,604 and 78,321,439 shares issued and outstanding at December 31, 2010 and December 31, 2009, respectively.

 

 

78,598

 

 

78,321

 

 

Common stock to be issued

 

 

350,500

 

 

388,000

 

 

Prepaid forward repurchase contract

 

 

(29,998,616)

 

 

(29,998,616)

 

 

Additional paid-in capital

 

 

203,322,671

 

 

199,829,921

 

 

Retained earnings (the restricted portion of retained earnings is

 

 

 

 

 

 

 

$26,471,124 and $23,757,901 at December 31, 2010 and December 31, 2009, respectively)

 

 

207,515,104

 

 

191,173,754

 

 

Accumulated other comprehensive income

 

 

49,126,251

 

 

33,050,224

 

 

Total Shareholders’ Equity

 

 

430,395,508

 

 

394,522,604

 

 

Non-controlling Interest

 

 

505,199

 

 

533,136

 

 

TOTAL EQUITY

 

 

430,900,707

 

 

395,055,740

 

 

TOTAL LIABILITIES AND EQUITY

 

$

 

611,544,992

 

$

 

576,481,765

 

 

 

 
Source: American Oriental Bioengineering, Inc.
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