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American Oriental Bioengineering Reports Third Quarter 2007 Financial Results

- Revenue Increased 61% Compared to 3Q06 to $43.5 Million in 3Q07 - - 3Q07 Net Income Increased 58% Compared to 3Q06 to $11.9 Million, or $0.16

per Diluted Share -

- Company Provides Financial Outlook for 2007 and 2008 -

NEW YORK, Nov. 5 /PRNewswire-FirstCall/ -- American Oriental Bioengineering, Inc. (NYSE: AOB), a leading manufacturer and distributor of plant-based pharmaceutical and nutraceutical products, today announced financial results for the third quarter of 2007.

Revenue for the third quarter of 2007 increased 60.7% to $43.5 million from $27.1 million in the third quarter of 2006. Revenue from PBP products increased 78.4% to $35.5 million from $19.9 million in the prior year's third quarter, driven primarily by the Jinji products series, including the Company's Yi Mu Cao product, and by strong revenue growth from prescription products, including Shuanghuanlian and the Cease Enuresis Gel. Within the PBP product category, prescription product revenue increased 43.7% to $15.6 million compared to $10.9 million in the prior year period. OTC product revenue increased 120.4% to $19.8 million from $9.0 million in the prior year period. Revenue from PBN products increased 11.7% to $8.0 million from $7.2 million in the third quarter of 2006, due to increased demand for the Company's soy peptide series of products.

Gross profit in the third quarter of 2007 increased 73.3% to $30.7 million from $17.7 million in the third quarter of 2006. Gross profit margin increased 510 basis points to 70.5% from 65.4% in the prior year's period. The increase in gross profit was a result of increased sales of OTC products, which carry higher margins, and improved operating efficiencies across all business segments.

Operating expenses in the third quarter increased 100% to $16.7 million compared to $8.3 million in the prior year period. This increase was a result of additional investment related to the Jinji product promotional efforts, as well as increased marketing and advertising expenses related to the Company's efforts to increase market awareness of its brands and products and higher selling expenses to support the Company's growth. Operating income for the third quarter increased 49.5% to $14.0 million from $9.4 million in the third quarter of 2006. Operating margin was down slightly to 32.1%, from 34.5% in the prior year's third quarter, due to additional investment in the business, including a larger salesforce and higher advertising budget.

Net Income for the third quarter of 2007 increased 58.2% to $11.9 million, or $0.16 per diluted share, compared to $7.6 million, or $0.12 per diluted share, in the prior year period.

Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering commented, "Our overall results for the third quarter demonstrate the achievement made through the execution of our two pronged strategy, which is to expand our business performance through organic growth and acquisitions. We expect this strategy will continue to bring us further opportunities down the road. We have completed two acquisitions recently that have improved our product line and broadened our distribution reach. During the third quarter, we closed on the Changchun Xinan Pharmaceutical Group (CCXA) acquisition, and after the close of the third quarter we completed the acquisition of Guangxi Boke Pharmaceutical Company (Boke). Similar to our other acquisitions, we see the potential to expand CCXA's and Boke's sales, improve margins and enhance the operating infrastructure of each company."

Financial Expectations

For the full year 2007, the Company anticipates revenue of approximately $160.0 million, a 45.2% increase compared to prior year revenue of $110.2 million. This guidance includes approximately $8.0 million in revenue from CCXA and Boke. For the full year, the Company anticipates diluted earnings per share of approximately $0.60, based on an estimated weighted average diluted share count of 72.0 million for the full year. This guidance does not account for any other potential acquisitions for the remainder of 2007.

For the full year 2008, the Company expects continued seasonal quarter-to- quarter fluctuations, as well as short-term integration costs. Nonetheless, the Company anticipates a sustainable organic revenue growth rate of at least 30%, which includes all product lines managed by AOB for at least four quarters.

"We have laid the foundation for future growth and we are pleased with the traction we are seeing with our latest acquisitions as well as in the organic growth driven by our existing products. Our growing and diversified product portfolio, far reaching distribution network and extensive, highly skilled marketing team serves as a competitive advantage for our business that will continue to establish AOBO as a leading cultivator and consolidator of plant- based medicine products well into the future," concluded Liu.

The Company will conduct a conference call to discuss the third quarter 2007 results today, Monday, November 5, 2007 after the market close at 4:30 pm ET. Listeners may access the call by dialing 1-913-312-0857. A webcast will also be available on Company's website at A replay of the call will be available through November 12, 2007. Listeners may access the replay by dialing 1-719-457-0820, password 4449446.

About American Oriental Bioengineering Inc.

American Oriental Bioengineering Inc. is a leading, fully integrated, plant based pharmaceutical and plant based nutraceutical company dedicated to improving health through the development, manufacture and commercialization of modernized plant based products in China. For more information, visit

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the Company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.





2007 2006



Cash and cash equivalents $170,624,005 $87,784,419

Accounts receivable, net of

reserve of $285,007 and $39,776

at September 30, 2007 and

December 31, 2006, respectively 15,333,892 11,141,057

Inventories, net of $615,050

and $615,552 provision for slow

moving inventories at September

30, 2007 and December 31, 2006,

respectively 15,349,597 10,684,316

Advances to suppliers 2,580,911 1,950,101

Notes receivable 2,223,683 3,238,161

Other receivables 89,630 37,545

Due from employees 190,849 585,050

Deposit for acquisition 4,420,770 -

Deferred consulting expenses 97,500 166,600

Total Current Assets 210,910,837 115,587,249


Plant and equipment, net 42,596,023 32,194,957

Land use rights, net 40,539,275 32,937,743

Construction in progress 173,073 326,121

Deferred tax assets 1,600,940 1,797,153

Other intangible assets, net 9,976,982 383,755

Goodwill 11,467,270 1,933,100

Long-term investment and advance 190,882 113,868

Total Long-Term Assets 106,544,445 69,686,697

TOTAL ASSETS $317,455,282 $185,273,946 See accompanying notes to the condensed consolidated financial statements





2007 2006



Accounts payable $ 4,781,481 $ 2,871,981

Other payables and accrued expenses 7,443,882 4,549,867

Taxes payable 2,243,868 2,211,542

Short-term bank loans 6,119,007 8,314,679

Current portion of long-term bank loans 977,739 1,450,905

Customer deposits 1,393,819 2,263,654

Notes payable 69,125 66,216

Payable for acquisition 11,681,890 -

Other liabilities 769,721 1,606,334

Total Current Liabilities 35,480,532 23,335,178


Long-term bank loans, net of current

portion 2,601,679 915,909

Long-term notes payable 274,424 255,836

Deferred tax liabilities 8,882,761 4,580,698

Other liabilities 1,597 9,083

Total Long-Term Liabilities 11,760,461 5,761,526

TOTAL LIABILITIES 47,240,993 29,096,704



Preferred stock, $0.001 par value;

2,000,000 shares authorized;

1,000,000 shares issued and

outstanding at September 30, 2007

and December 31, 2006, respectively 1,000 1,000

Common stock, $0.001 par value;

150,000,000 shares authorized;

74,909,301 and 64,230,369 shares

issued and outstanding, respectively 74,909 64,230

Stock to be issued 197,083 599,069

Additional paid-in capital 172,963,877 92,307,960

Retained earnings (the restricted

portion of retained earnings is

$8,498,766 at September 30, 2007

and December 31, 2006, respectively) 86,853,096 58,826,911

Accumulated other comprehensive income 10,124,324 4,378,072

Total Shareholders' Equity 270,214,289 156,177,242


EQUITY $317,455,282 $185,273,946 See accompanying notes to the condensed consolidated financial statements






2007 2006 2007 2006

REVENUES $ 43,514,049 $ 27,075,059 $103,062,573 $ 69,238,089

COST OF GOODS SOLD 12,833,252 9,373,245 31,048,916 24,292,034

GROSS PROFIT 30,680,797 17,701,814 72,013,657 44,946,055

Selling and

marketing 5,644,776 2,230,490 12,210,509 5,896,617

Advertising 6,934,160 3,607,212 16,150,754 8,844,564

General and

administrative 3,742,364 2,223,335 9,234,426 6,781,231

Depreciation and

amortization 377,856 288,070 1,054,128 654,890

Total operating

expenses 16,699,156 8,349,107 38,649,817 22,177,302


OPERATIONS 13,981,641 9,352,707 33,363,840 22,768,753

INTEREST INCOME, NET 360,365 106,804 375,604 550,057


(EXPENSE), NET (12,191) 6,379 133,284 15,540


INCOME TAXES 14,329,815 9,465,890 33,872,728 23,334,350

INCOME TAXES 2,386,189 1,915,266 5,846,543 4,922,419

NET INCOME 11,943,626 7,550,624 28,026,185 18,411,931


Foreign currency

translation gain 2,344,696 949,154 5,746,252 1,587,449

Income tax

expense related

to other

comprehensive income (351,704) (142,373) (861,938) (238,117)



NET OF TAX 1,992,992 806,781 4,884,314 1,349,332


INCOME $ 13,936,618 $ 8,357,405 $ 32,910,499 $ 19,761,263


BASIC $ 0.16 $ 0.12 $ 0.41 $ 0.30

DILUTED $ 0.16 $ 0.12 $ 0.40 $ 0.30




BASIC 74,379,650 62,704,918 68,012,018 62,200,836

DILUTED 75,331,015 62,849,767 69,234,193 62,328,290 See accompanying notes to the condensed consolidated financial statements

SOURCE American Oriental Bioengineering, Inc.
Copyright©2007 PR Newswire.
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