NEW YORK, March 14, 2011 /PRNewswire-Asia-FirstCall/ -- American Oriental Bioengineering, Inc. , (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 2010 2009 ---- ---- Revenues $83,365,061 $100,032,887 Cost of sales 40,966,778 47,425,009 GROSS PROFIT 42,398,283 52,607,878 ---------- ---------- Selling, general and administrative expenses 18,112,902 21,163,863 Advertising costs 11,971,242 9,536,612 Research and development costs 4,610,737 5,417,834 Depreciation and amortization expenses 1,760,232 1,591,061 Total operating expenses 36,455,113 37,709,370 ---------- ---------- INCOME FROM OPERATIONS 5,943,170 14,898,508 --------- ---------- Equity in earnings (losses) from unconsolidated entities 196,134 2,374,211 Interest expense, net (1,506,962) (1,440,239) Other expenses, net (119,396) (405,558) INCOME BEFORE INCOME TAXES 4,512,946 15,426,922 Income tax 1,758,188 3,753,893 --------- --------- NET INCOME 2,754,758 11,673,029 --------- ---------- Net loss (income) attributable to non-controlling interest 8,382 79 ----- --- NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST 2,763,140 11,673,108 --------- ---------- OTHER COMPREHENSIVE INCOME Foreign currency translation gain 6,350,139 706,638 --------- ------- OTHER COMPREHENSIVE INCOME 6,350,139 706,638 --------- ------- COMPREHENSIVE INCOME $9,113,279 $12,379,746 ========== =========== EARNINGS PER COMMON SHARE Basic $0.04 $0.16 ----- ----- Diluted $0.04 $0.14 ----- ----- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 74,956,648 74,673,067 ---------- ---------- Diluted 75,983,964 89,494,201 ---------- ----------
TWELVE MONTHS ENDED DECEMBER 31 2010 2009 ---- ---- Revenues $305,944,085 $296,150,780 Cost of sales 148,186,531 129,367,775 GROSS PROFIT 157,757,554 166,783,005 ----------- ----------- Selling, general and administrative expenses 66,439,702 62,164,936 Advertising costs 38,920,905 31,896,992 Research and development costs 15,365,131 7,922,357 Depreciation and amortization expenses 6,662,237 6,038,625 Total operating expenses 127,387,975 108,022,910 ----------- ----------- INCOME FROM OPERATIONS 30,369,579 58,760,095 ---------- ---------- Equity in earnings (losses) from unconsolidated entities 384,991 2,075,139 Interest expense, net (5,900,055) (5,746,382) Other expenses, net (204,736) (569,661) INCOME BEFORE INCOME TAXES 24,649,779 54,519,191 Income tax 8,336,366 13,216,986 --------- ---------- NET INCOME 16,313,413 41,302,205 ---------- ---------- Net loss (income) attributable to non-controlling interest 27,937 118,945 ------ ------- NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST 16,341,350 41,421,150 ---------- ---------- OTHER COMPREHENSIVE INCOME Foreign currency translation gain 16,076,027 1,362,038 ---------- --------- OTHER COMPREHENSIVE INCOME 16,076,027 1,362,038 ---------- --------- COMPREHENSIVE INCOME $32,417,377 $42,783,188 =========== =========== EARNINGS PER COMMON SHARE Basic $0.22 $0.56 ----- ----- Diluted $0.22 $0.53 ----- ----- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 74,810,016 74,612,602 ---------- ---------- Diluted 75,724,826 89,286,621 ---------- ----------
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER DECEMBER 31, 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 DECEMBER 31, 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 ============ ============ - -
American Oriental Bioengineering, Inc.
CONTACT: ICR, LLC, Christine Duan or Ashley Ammon, +1-203-682-8200
Web site: http://www.bioaobo.com/
