HARBIN, China, March 22, 2011 /PRNewswire-Asia-FirstCall/ -- Weikang Bio-Technology Group Co., Inc. (OTC QB: WKBT) ("Weikang" or the "Company"), a leading developer, manufacturer and marketer of Traditional Chinese Medicine (TCM), Western prescription and OTC pharmaceuticals and other health and nutritional products in the People's Republic of China, today announced its financial results for the fiscal year ended December 31, 2010.
Fiscal 2010 Financial Highlights
Fiscal 2010 Financial SummaryFiscal 2010 ResultsFY 2FY 2009ChangeNet Sales$74.6 million
$47.5 million57.0%Gross Profit$45.0 million
$25.8 million74.2%Adjusted* Net Income
81.3%**GAAP Net Income$24.4 million
$15.6 million56.5%Adjusted* Diluted EPS
53.2%**GAAP Diluted EPS
$0.87$0.6240.3%* 2010 net income adjusted for $3.88 million non-cash stock-based compensation expenses.
**Annual percentage changes calculated using 2010 non-GAAP net income and 2009 GAAP net income. No adjustment to net income was necessary in fiscal 2009."Our business strategy was very successful this year, as evidenced by strong double-digit annual growth in both our top and bottom lines and an especially strong fourth quarter," commented Mr. Yin Wang, Chairman and CEO of Weikang. "Our market share continues to improve with our successful new product launches and expanded sales channels. The five new products we launched during 2010 contributed roughly $11 million to our total sales, and we plan to launch four new products during 2011, three of which we expect to roll out during the first quarter."
Mr. Wang continued, "We are committed to implementing improved marketing and promotional strategies as well as aggressive R&D, both of which contributed to our strong performance this year. Furthermore, we have streamlined our cost structure in order to provide the highest quality product at the best value, and we look forward to continued growth of this nature as we continue to pursue additional US investor support and interaction in 2011."
Fiscal Year 2010 Results of OperationsRevenuesDuring the year ended December 31, 2010, the Company recorded record revenues of $74.6 million, compared to $47.5 million in 2009, an increase of 57.0%, or $27.1 million. The increase in sales was primarily attributable to sales of the Company's five new products launched in the second half of 2010, which accounted for approximately 15% of total revenues. An additional 8% of sales were attributable to new sales channels in Hunan and Guangxi provinces, with further growth due to increased client demand and market share. General price increases throughout China also contributed to higher product prices for the Company.
Gross ProfitCost of sales increased to $29.5 million in 2010 from $21.6 million in 2009. The increase of $7.9 million, or 36.5%, was mainly due to a decrease in cost of goods sold as a percentage of sales from 45.6% in 2009 to 39.6% in 2010. Gross profit was $45.0 million for the year ended December 31, 2010, compared to $25.8 million for 2009, representing gross margins of 60.4% and 54.4%, respectively. The increase in gross margin was attributable to strict cost control procedures and improved economies of scale.
Operating IncomeTotal operating expenses were $11.3 million in 2010, compared to $5.9 million in 2009. The increase of 93.6%, or $5.5 million, was mainly attributable to increased promotional, marketing, and advertising expenses for new products; non-cash stock-based compensation expenses of $3.88 million; and R&D expenses of $2.54 million related to licorice flavonoid extraction technology. Income from operations totaled $33.7 million in 2010, an increase of 68.5% or $13.7 million, as compared to $20.0 million in 2009.
Net IncomeNet income for fiscal 2010 was $24.4 million, compared to $15.6 million for 2009, an increase of 56.5% or $8.8 million. The increase was mainly attributable to the increase in revenues, improvement in gross margin due to cost control measures, and other reasons set forth above. The Company generated basic and diluted EPS of $0.87, an increase of 40.3% from basic and diluted EPS of $0.62 in 2009.
About Weikang Bio-Technology Group Co., Inc.Weikang Bio-Technology Group Co., Inc. is principally engaged in developing, manufacturing and distributing Traditional Chinese Medicine (TCM), and health and nutritional supplements in China, in compliance with requisite Chinese licenses and approvals. The Company is also expanding its business scope to develop, manufacture and distribute Chinese herbal extract products and GMP-certified western prescription and OTC pharmaceuticals through its acquisition of Tianfang Pharmaceutical Co., Ltd. For more information, please visit http://www.weikangbio.com.
Use of Non-GAAP Financial Measures To supplement Weikang's condensed consolidated financial statements presented on a GAAP basis, Weikang is providing certain income statement information that is not calculated according to GAAP. Weikang believes that its non-GAAP disclosures are useful in evaluating its operating results as this information supplies the user with another view of the matching of costs and expenses. A reconciliation of the adjustments to GAAP results for the fiscal year ended December 31, 2010 is included below. The non-GAAP information presented is supplemental and is not purported to be a substitute for information prepared in accordance with GAAP.
Non-GAAP financial results for the fiscal year ended December 31, 2010 discussed in this release reflect operating results excluding the impact of the non-cash, stock-based compensation recognized under general and administrative expenses for investor relations and consulting services rendered to the Company in fiscal 2010.
Safe Harbor StatementCertain statements in this press release constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Investor Relations Contact:Paul Kuntz, Senior SpecialistRedChip Companies, Inc.Tel: +1-800-733-2447 x0Email: firstname.lastname@example.orgWEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 20102009Net sales$
47,484,188Cost of goods sold29,538,35921,640,326Gross profit45,015,85525,843,862Operating expenses:Selling 3,347,9472,583,202General and administrative 5,452,0141,321,838Research and development2,537,8541,951,000Total operating expenses11,337,8155,856,040Income from operations33,678,04019,987,822Non-operating income (expenses)Interest income82,83813,206Other income481,490973,196Other expenses(2,666)(1,664)Total non-operating income, net 561,662984,738Income before income tax34,239,70220,972,560Income tax9,802,0185,355,758Net income 24,437,68415,616,802Other comprehensive income Foreign currency translation gain 1,680,04021,375Comprehensive Income$
5,638,177Basic weighted average shares outstanding28,091,28225,375,581Diluted weighted average shares outstanding28,092,743-Basic earnings per share$
.62Diluted earnings per share$
-WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDECEMBER 31 2010 AND 200920102009ASSETS:CURRENT ASSETS:Cash & equivalents $
,380,019Account receivable652,167-Advances to suppliers and other receivables241,34226,079Inventory388,535285,395Deferred compensation902,226-Total current assets52,548,08211,691,493NONCURRENT ASSETSDeferred compensation-noncurrent16,077-Property and equipment, net9,606,26910,162,946Construction in progress683,830-Intangible assets15,754,66615,558,731Total noncurrent assets26,060,84225,721,677TOTAL ASSETS$
37,413,170LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIESAccounts payable$
2,668Unearned revenue528,48511,716Taxes payable6,269,4222,247,410Accrued expenses1,376,154-Due to related party25,669-Total current liabilities8,213,9342,271,794ADVANCE FROM OFFICER-650,000OTHER LIABILITY-7,620,321CONTINGENCIES DEFERRED TAX LIABILITY3,464,8153,450,005STOCKHOLDERS' EQUITYCommon stock, $.00001 par value; authorized shares ,000,000; issued and outstanding shares 29,963,551 and 25,486,800 at December 31, 2010 and 2009, respectively
300255Additional paid in capital17,530,601139,245Statutory reserve2,431,9271,069,507Accumulated other comprehensive income2,524,566844,526Retained earnings 44,442,78121,367,517Total stockholders' equity 66,930,17523,421,050TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
37,413,170WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31,20102009CASH FLOWS FROM OPERATING ACTIVITIES:Net income $
5,616,802Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization1,193,0451,176,909Stock compensation 3,843,732139,500Stock option35,132-Changes in deferred tax(90,241)(104,306)(Increase) decrease in current assets:Accounts receivable(638,024)-Advances to suppliers and other receivables(214,767)(1,903)Inventory (92,239)(133,257)Increase (decrease) in current liabilities:Accounts payable1,118(340)Unearned revenue505,207(212,677)Accrued expenses1,346,5108,559Taxes payable3,866,569979,150Net cash provided by operating activities34,193,72617,468,437CASH FLOWS FROM INVESTING ACTIVITIES:Construction in progress(669,001)-Acquisition of property & equipment(59,301)(3,563,305)Net cash used in investing activities(728,302)(3,563,305)CASH FLOWS FROM FINANCING ACTIVITIES:Changes in due from management-1,261,882Net proceeds from shares issued 4,323,913-Payment for purchase of Tianfang-(3,812,596)Changes in due from related party25,113-Net cash provided by (used in) financing activities4,349,026(2,550,714)EFFECT OF EXCHANGE RATE CHANGE ON CASH & EQUIVALENTS
1,169,3438,674INCREASE IN CASH & EQUIVALENTS38,983,79311,363,092CASH & EQUIVALENTS, BEGINNING OF YEAR11,380,01916,927CASH & EQUIVALENTS, END OF YEAR$
,380,019Supplemental Cash flow data: Income tax paid$
4,163,362 Interest paid$
-WEIKANG BIO-TECHNOLOGY GROUP CO., INCRECONCILIATION OF NON-GAAP FINANCIAL MEASURESFOR THE FISCAL YEAR ENDED DECEMBER 31, 2010Adjusted Net IncomeFiscal Year Ended
December 31, 2010Net Income (Loss) and Diluted EPS
Net IncomeDiluted EPSAdjusted amount (non-GAAP)
$0.95Stock-based compensation adjustment (1)
0.08GAAP amount per consolidated statement of operations
0.87(1) Stock-based compensation expense for shares issued to financial and investor relations consultants.
|SOURCE Weikang Bio-Technology Group Co., Inc.|
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