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American Oriental Bioengineering Reports Fourth Quarter and Full Year 2007 Financial Results
Date:3/6/2008

- Revenue Increased 39.0% to $57.3 Million in 4Q07 and 45.7% to $160.5

Million in FY07 - 4Q07 Net Income Increased 39.7% to $15.2 Million, or $0.20 per Diluted

Share - FY07 Net Income Increased 48.3% to $43.3 Million, or $0.61 per Diluted

Share

- Company Provides Financial Outlook for 1Q08

NEW YORK, March 6 /PRNewswire-FirstCall/ -- American Oriental Bioengineering, Inc. (NYSE: AOB), a leading manufacturer and distributor of pharmaceutical and nutraceutical products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2007.

Revenue in the fourth quarter of 2007 increased 39.0% to $57.3 million from $41.3 million in the fourth quarter of 2006, reflecting continued demand for the Company's core prescription and OTC pharmaceutical products, as well as $4.2 million and $3.2 million from the CCXA and Boke acquisitions, respectively. Revenue from pharmaceutical products increased 51.9% to $47.8 million from $31.5 million in the prior year's fourth quarter, driven by increased demand for Shuanghuanglian Injection Powder, Jinji Series of products, Cease Enuresis Soft Gel and Patch. Prescription pharmaceutical products generated $22.2 million in revenue during the fourth quarter, up 48.9% year over year, and OTC pharmaceutical products generated $25.6 million in revenue during the fourth quarter, up 54.6% year over year. Nutraceutical products generated $9.6 million of revenue in the fourth quarter of 2007 compared to $9.8 million in the fourth quarter of 2006. Nutraceutical products generated 17% of revenue in the fourth quarter of 2007 compared to 24% in the same period of last year, as the Company placed more focus on pharmaceutical product sales.

Gross profit in the fourth quarter of 2007 increased 43.5% to $39.0 million from $27.2 million in the fourth quarter of 2006. Gross margin increased 220 basis points to 68.1% from 65.9% in the prior year's period. The increase in gross profit was a result of higher sales, continued operating cost management, and sourcing and operating efficiencies.

Operating income in the fourth quarter increased 38.1% to $18.8 million, an operating margin of 32.8%, from $13.6 million, an operating margin of 33.1%, in the fourth quarter of 2006, reflecting previously anticipated expenses associated with Boke and CCXA acquisitions. Operating expenses in the fourth quarter increased 48.9% to $20.2 million compared to $13.6 million in the prior year period. This increase was primarily due to increased marketing materials, payroll and shipping expenses commensurate with sales growth. Additionally, the Company increased advertising costs as it continued to invest in its brand.

Net income for the fourth quarter of 2007 increased 39.7% to $15.2 million, or $0.20 per diluted share, compared to $10.9 million, or $0.17 per diluted share, in the prior year's period.

Fiscal 2007 Financial Results

Revenue for the fiscal year 2007 increased 45.7% to $160.5 million from $110.2 million in 2006. Prescription pharmaceutical products generated revenue of $59.0 million, up 30.0% from $45.4 million in the year 2006, and OTC pharmaceutical products generated revenue of $68.8 million, up 102.5% from $34.0 million in 2006. The recently acquired CCXA and Boke businesses contributed revenue of $5.4 million and $3.2 million during the fiscal year 2007, respectively. Revenue from nutraceutical products increased 6.0% to $32.7 million from $30.8 million the year before. Net income for 2007 increased 48.3% to $43.3 million, or $0.61 per diluted share, compared to $29.2 million, or $0.46 per diluted share, in the prior year.

Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented, "We are pleased with our fourth quarter and full year 2007 results, and we are particularly encouraged by the synergies we are starting to realize from our recent acquisitions, Boke and CCXA. These transactions round out our product portfolio nicely, and we believe this strengthens our positioning to achieve our goal of building a leading pharmaceutical business in China. We will continue to seek acquisitions that allow us to drive growth through product diversification, brand strength and distribution reach."

Financial Expectations

For the first quarter of fiscal 2008, which is traditionally the seasonally slowest quarter of the year, the Company anticipates revenue of at least $38.0 million and anticipates diluted earnings per share of approximately $0.12. This is based on a diluted share count of approximately 78 million shares outstanding.

Mr. Liu concluded, "We continue to focus on generating organic growth of at least 30 percent in 2008, while also optimizing our recently acquired businesses. With the expertise we have accumulated from past acquisitions, and a cohesive strategic team, we believe that we are well-positioned to be the leading consolidator in this fragmented industry. We are excited by the opportunities in the marketplace and we will continue to work responsibly and aggressively on behalf of our shareholders."

The company will hold a conference call on March 6, 2008 at 8:00 am ET to discuss fiscal fourth quarter and full year 2007 results. Listeners may access the call by dialing 1-866-454-4207 or 1-913-981-5575 for international callers. A webcast will also be available through AOB's website at http://www.bioaobo.com. A replay of the call will be available through March 13, 2008. Listeners may access the replay by dialing 1-888-203-1112 or 1-719-457- 0820 for international callers, access code: 4824427.

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 in China. For more information, visit http://www.bioaobo.com.

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, 2007, 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.

AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31,

2007 2006

CURRENT ASSETS

Cash and cash equivalents $166,410,075 $87,784,419

Accounts receivable, net 16,494,619 11,141,057

Inventories, net 12,264,536 10,684,316

Advances to suppliers and prepaid

expenses 4,309,352 1,950,101

Notes receivable 2,259,616 3,238,161

Other current assets 5,134,118 789,195

Total Current Assets 206,872,316 115,587,249

LONG-TERM ASSETS

Plant and equipment, net 48,496,760 32,194,957

Land use rights, net 46,310,240 32,937,743

Construction in progress 755,614 326,121

Deferred tax assets 1,498,481 1,797,153

Other intangible assets, net 26,972,166 383,755

Goodwill 22,566,768 1,933,100

Long-term investment and advance 242,551 113,868

Total Long-Term Assets 146,842,580 69,686,697

TOTAL ASSETS $353, 714,896 $185,273,946

CURRENT LIABILITIES

Accounts payable $3,436,352 $2,871,981

Other payables and accrued expenses 7,786,157 4,549,867

Taxes payable 2,843,719 2,211,542

Short-term bank loans 6,289,222 8,314,679

Current portion of long-term bank

loans 2,374,565 1,450,905

Customer deposits 2,253,528 2,263,654

Notes payable 72,254 66,216

Other liabilities 1,295,248 1,606,334

Deferred tax liabilities 109,733 -

Total Current Liabilities 26,460,778 23,335,178

LONG-TERM LIABILITIES

Long-term bank loans, net of current

portion 1,263,483 915,909

Long-term notes payable 286,365 255,836

Deferred tax liabilities 12,621,180 4,580,698

Other liabilities - 9,083

Total Long-Term Liabilities 14,171,028 5,761,526

TOTAL LIABILITIES 40,631,806 29,096,704

COMMITMENTS

SHAREHOLDERS' EQUITY

Preferred stock, $0.001 par value;

2,000,000 shares authorized;

1,000,000 shares issued and

outstanding at December 31, 2007 and

2006 1,000 1,000

Common stock, $0.001 par value;

150,000,000 shares authorized;

77,991,935 and 64,230,369 shares

issued and outstanding, at December

31, 2007 and 2006, respectively 77,992 64,230

Stock to be issued 1,611,333 599,069

Additional paid-in capital 193,007,987 92,307,960

Retained earnings (the restricted

portion is $15,910,685 and

$8,498,766 at December 31, 2007 and

2006, respectively) 102,117,792 58,826,911

Accumulated other comprehensive

income 16,266,986 4,378,072

Total Shareholders' Equity 313,083,090 156,177,242

TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY $353,714,896 $185,273,946

AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Quarter Ended December 31, Year Ended December 31,

2007 2006 2007 2006

REVENUES $57,332,523 $41,258,250 $160,482,383 $110,182,092

COST OF GOODS SOLD 18,302,489 14,054,600 49,364,486 38,318,223

GROSS PROFIT 39,030,034 27,203,650 111,117,897 71,863,869

Selling and

marketing 8,435,612 2,988,430 20,669,303 8,876,829

Advertising 6,696,321 6,339,752 22,865,903 15,174,125

General and

administrative 4,131,922 3,904,795 13,365,156 10,446,740

Depreciation and

amortization 936,546 334,646 1,989,425 988,488

Total operating

expenses 20,200,401 13,567,623 58,889,787 35,486,182

INCOME FROM

OPERATIONS 18,829,633 13,636,027 52,228,110 36,377,687

INTEREST INCOME

(EXPENSE), NET 196,352 23,756 617,524 574,172

OTHER INCOME

(EXPENSE), NET (589,087) (349,425) (501,354) (333,798)

INCOME BEFORE INCOME

TAXES 18,436,898 13,310,358 52,344,280 36,618,061

INCOME TAXES 3,204,281 2,403,690 9,053,399 7,416,915

NET INCOME 15,232,617 10,906,668 43,290,881 29,201,146

OTHER COMPREHENSIVE

INCOME

Foreign currency

translation gain 6,142,663 1,360,255 11,888,914 2,948,793

Income tax expense

related to other

comprehensive

income (309,119) (795,688) (1,783,337) (442,319)

OTHER COMPREHENSIVE

INCOME, NET OF TAX 5,833,544 564,567 10,105,577 2,506,474

COMPREHENSIVE INCOME $21,066,161 $11,471,235 $53,396,458 $31,707,620

NET INCOME PER SHARE

BASIC $0.21 $0.17 $0.62 $0.47

DILUTED $0.20 $0.17 $0.61 $0.46

WEIGHTED AVERAGE

NUMBER OF SHARES

OUTSTANDING

BASIC 75,386,436 62,704,918 69,870,775 62,679,996

DILUTED 75,663,385 62,849,767 71,364,244 62,913,961


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SOURCE American Oriental Bioengineering, Inc.
Copyright©2008 PR Newswire.
All rights reserved

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