NEW YORK, March 31 /PRNewswire-Asia/ -- Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSE AlternextUS: TBV), http://www.tiens-bio.com , today announced record financial results for the twelve months ended December 31, 2008.
For the twelve months ended December 31, 2008, revenue was $77.2 million, an increase of 40.7% compared to $54.9 million for the twelve months ended December 31, 2007.
Net income for the twelve months ended December 31, 2008 was $27.7 million, or $0.39 per share, compared to $17.9 million, or $0.25 per share for the twelve months ended December 31, 2007.
The increase in revenue for 2008, compared to 2007, reflects an increase in sales for both China and internationally. Tiens' strong sales growth in China was due to increased marketing efforts during 2008. In addition, during the third quarter of 2008, Tianshi Engineering, the affiliated company which markets and sells Tiens' products in China, announced plans to increase the prices of its products beginning in October 2008. Tiens believes this announcement prompted customers to stock up on certain products. The price increase of Tianshi Engineering products will not affect the price at which Tiens sells its products to Tianshi Engineering.
For the twelve months ended December 31, 2008, revenue in China was $33.7 million, a 50% increase compared to $22.5 million for the same period in 2007.
Tiens' increase in international sales reflects a sharp increase in sales to Russia and Indonesia during 2008. In addition, beginning in the second quarter of 2008, certain export restrictions imposed in 2007 by the Administration for Quality Supervision, Inspection and Quarantine (AQSIQ) of the Chinese government were reduced, and the campaign ended at the end of 2008.
Cost of sales were $24.9 million in 2008 compared to $16.5 million in 2007, an increase of 50.5%. This increase was primarily due to the corresponding increase in sales revenue. Cost of sales increased at a higher rate than revenue because of increases in the costs of raw materials and packing materials, and an increase in the portion of the products we sold in 2008 bearing a higher cost of production, relative to our other products, than in 2007.
Gross profit increased by 36.5% to $52.4 million in 2008, compared to $38.4 million in 2007. The gross profit margin for 2008 was 67.8% compared to 69.9% in 2007. This decrease reflects an increase in the costs of raw materials and packing materials, and an increase in the portion of the products Tiens sold in 2008 bearing a higher cost of production, relative to other products, than in 2007.
Selling, general and administrative expenses were $18.6 million in 2008, compared to $14.9 million in 2007, an increase of 24.5%. The increase was primarily due to increases in salaries and insurance costs, allowance for bad debt, research and development, advertising expenses and house reserve funds. Selling and administrative expenses as a percentage of sales decreased to 24.1% in 2008 from 27.2% in 2007 because of the increase in sales.
In China, Tiens sells its products to Tianshi Engineering. In order to qualify for a direct selling license in China, Tianshi Engineering is required to produce a part of the products that it sells in China. As a result, in 2006, Tiens began to sell semi-finished products to Tianshi Engineering, which jointly shares licenses with Tiens to produce, manufacture and sell the products. The semi-finished products, which Tiens is now exclusively selling in China, have lower sales prices than the finished products Tiens had previously sold to Tianshi Engineering. The application of Tianshi Engineering for a direct selling license in China is still pending.
Tiens continues to strive to expand its market share in China through the branches, chain stores, and Chinese affiliated companies of Tianshi Engineering. To enhance its position in this competitive market, Tianshi Engineering continues to increase its marketing activities in China, including opening additional branches across China, developing a nation-wide advertising campaign, encouraging media coverage and strengthening the Tiens brand.
As of December 31, 2008, Tiens had $106.3 million of retained earnings and total shareholders' equity of $148.9 million.
Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased to report record results for 2008 which reflect both a significant increase in our domestic and international revenue. We have generated sequential growth since the first quarter of 2008 and are optimistic that our international sales will further increase as additional export restrictions are lifted. We are committed to gaining greater market share in China, continuing to expand our growing international customer base, and further implementing our strategic plans for long term domestic and international growth."
About Tiens Biotech Group (USA), Inc. http://www.tiens-bio.com
Tiens Biotech Group (USA), Inc. (NYSE AlternextUS: TBV) conducts its business operations from Tianjin, People's Republic of China. Tiens primarily engages in the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary supplements.
Tiens derives its revenues principally from product sales to affiliated companies in China and internationally in 46 countries. Since its establishment, Tiens has developed and produced 37 nutrition supplements, which include wellness products and dietary supplements. Tiens develops its products at its own product research and development center, which employs highly qualified professionals in the fields of pharmacology, biology, chemistry and fine chemistry. Tiens has obtained all required certificates and approvals from government regulatory agencies to manufacture and sell its products in China.
In China, Tiens conducts the marketing and sales of its products through its affiliated company, Tianshi Engineering. Tianshi Engineering markets and sells Tiens' products in China through chain stores, domestic affiliated companies, and its 98 branches. Outside of China, Tiens sells its products to affiliated companies in 46 countries who in turn sell through an extensive direct sales force, or multi-level marketing sales force. The Company's direct sales marketing program is subject to governmental regulation in each of these countries.
Certain statements in this press release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such forward-looking statements are not necessarily indicative of future financial results, and may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to: (i) the Company's ability to obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) the Company's ability to build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; (iv) whether the Company continues to experience delays in the export clearance of its products; (v) whether Tianshi Engineering, the Company's affiliate which sells its products in China, obtains a direct selling license in China; and (vi) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission which are available for review at http://www.sec.gov under "Search for Company Filings."
-Tables Follow- TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 2007 As Adjusted 2008 (Note 1) REVENUE - RELATED PARTIES $77,247,898 $54,900,060 COST OF SALES - RELATED PARTIES 24,870,178 16,526,695 GROSS PROFIT 52,377,720 38,373,365 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 18,574,719 14,921,414 INCOME FROM OPERATIONS 33,803,001 23,451,951 (Interest expense) (266,273) (399,773) Interest income 881,070 3,038,755 Other (expense) income, net (2,099,913) (1,161,071) OTHER (EXPENSE) INCOME, NET (1,485,116) 1,477,911 INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST 32,317,885 24,929,862 PROVISION FOR INCOME TAXES 2,345,474 2,026,875 INCOME BEFORE MINORITY INTEREST 29,972,411 22,902,987 MINORITY INTEREST 2,315,215 4,966,397 NET INCOME 27,657,196 17,936,590 OTHER COMPREHENSIVE INCOME: Foreign currency translation adjustment 7,891,018 9,915,740 COMPREHENSIVE INCOME $35,548,214 $27,852,330 EARNINGS PER SHARE, BASIC AND DILUTED $0.39 $0.25 WEIGHTED AVERAGE NUMBER OF SHARES 71,333,586 71,333,586 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2008 AND DECEMBER 31, 2007 2007 As Adjusted 2008 (Note 1) ASSETS CURRENT ASSETS: Cash $20,992,573 $54,081,848 Cash related to assets held for sale 23,861,938 -- Total cash 44,854,511 54,081,848 Accounts receivable, trade - related parties, net of allowance for doubtful accounts of $1,108,789 and $71,700 as of December 31, 2008 and 2007, respectively 23,941,431 14,268,229 Accounts receivable, trade - third parties -- 104,398 Inventories 8,365,607 5,949,963 Other receivables 813,591 1,068,343 Other receivables - related parties 15,729,076 13,887,138 Employee advances 112,591 65,901 Prepaid expenses 301,898 623,638 Prepaid income taxes 1,531,207 -- Assets held for Sale 10,904,842 -- Total current assets 106,554,754 90,049,458 PROPERTY, PLANT AND EQUIPMENT, net 10,274,643 16,071,900 OTHER ASSETS: Construction in progress 72,300,104 39,792,774 Construction deposits 2,586,302 1,089,216 Intangible assets, net 13,137,195 9,246,879 Other assets 87,541 5,301,847 Total other assets 88,111,142 55,430,716 Total assets $204,940,539 $161,552,074 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 LIABILITIES AND SHARE HOLDERS' EQUITY 2007 As Adjusted 2008 (Note 1) CURRENT LIABILITIES: Accounts payable $6,283,849 $4,070,906 Advances from customers - related parties 3,239,650 1,700,838 Wages and benefits payable 1,449,146 1,250,685 Other taxes payable 117,818 536,819 Income taxes payable -- 665,726 Contractor deposits 163,248 595,128 Contractor payables 11,871,456 7,820,285 Other payables 1,933,743 1,133,539 Other payables - related parties 6,373,900 7,938,205 Dividend payable to minority interest -- 4,902,629 Current portion of long term debt, related party 2,130,000 2,130,000 Liabilities directly associated with assets classified as held for sale 122,047 -- Total current liabilities 33,684,857 32,744,760 NON-CURRENT LIABILITIES Long term debt, net of current portion, related party 2,137,742 4,267,742 Other payables-non current -- 538,130 Deferred income 11,208,844 4,895,049 Total non current liabilities 13,346,586 9,700,921 Total liabilities 47,031,443 42,445,681 MINORITY INTEREST 9,006,438 6,144,063 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock, $0.001 par value, 250,000,000 shares authorized, 71,333,586 issued and outstanding, respectively 71,334 71,334 Paid-in-capital 9,234,123 8,842,009 Statutory reserves 9,420,783 9,420,783 Retained earnings 106,325,356 78,668,160 Accumulated other comprehensive income 23,851,062 15,960,044 Total shareholders' equity 148,902,658 112,962,330 Total liabilities and shareholders' equity $204,940,539 $161,552,074 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 2007 As Adjusted 2008 (Note 1) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $27,657,196 $17,936,590 Adjustments to reconcile net income to cash provided by (used in) operating activities: Provision for doubtful accounts 1,037,089 (15,076) Minority interest 2,315,215 4,966,397 Depreciation 2,681,167 2,898,586 Amortization 323,276 384,464 Interest income 55,641 313,402 (Gain) loss on sale of assets 39,208 (145,475) (Gain) loss on assets written off 192,833 -- Inventory write off -- 84,521 (Increase) decrease in assets: Accounts receivable, trade - related parties (17,917,994) (25,662,367) Accounts receivable, trade - third parties 109,674 (81,673) Other receivables 314,367 1,824,205 Other receivables - related parties 2,538,775 1,439,387 Inventories (1,873,607) 1,211,822 Employee advances (42,928) 81,239 Prepaid expense 356,136 1,586,652 Increase (decrease) in liabilities: Accounts payable 2,007,985 (313,235) Accounts payable - related parties -- -- Advances from customers - related parties 1,402,445 25,320 Wages and benefits payable 195,555 185,502 Other taxes payable (2,654,720) 142,666 Other payables 459,357 576,205 Other payables - related parties (390,158) (107,546) Net cash provided by operating activities 18,806,512 7,331,586 CASH FLOWS FROM INVESTING ACTIVITIES: Payment of deposit on acquisition of Life Resource -- (19,096,525) Increase in loans receivable - related party -- 493,941 Increase in long-term prepaid expense -- (209,087) Collections from loans to local government 457,329 -- Increase in intangible assets (6,068,759) (132,027) Construction deposits (4,391,560) (1,045,877) Contractor deposits (464,499) 346,934 Addition to construction in progress (25,714,095) (25,196,562) Proceeds from sales of properties 426,288 14,111,723 Purchase of equipment and automobiles (1,531,589) (3,003,945) Net cash used in investing activities (37,286,885) (33,731,425) CASH FLOWS FROM FINANCING ACTIVITIES: Loan from related parties 6,080,385 27,900,609 Increase (payment) in other payables-non current (282,664) 516,718 Increased in additional paid in capital 482,516 -- Increase in deferred income 5,891,999 -- Payments on long term debt, related party (1,197,662) -- Payments to minority interest shareholder (5,150,414) (6,676,102) Net cash provided by financing activities 5,824,160 21,741,225 EFFECT OF EXCHANGE RATE CHANGES ON CASH 3,428,876 3,525,922 DECREASE IN CASH (9,227,337) (1,132,692) CASH, beginning of year 54,081,848 55,214,540 CASH, end of year $44,854,511 $54,081,848 Supplemental disclosures of cash flow information Cash paid during the year for: Interest $266,273 $399,773 Income taxes $3,877,420 $2,215,159 Note 1. On December 20, 2007, the Company's subsidiary, Tianshi International Holdings Group Ltd. ("Tianshi Holdings"), entered a Sale and Purchase Agreement with Tianshi International Investment Group Co., Ltd. ("Tianshi Investment"). Pursuant to the Sale and Purchase Agreement, Tianshi Holdings agreed to buy all of the registered share capital of Tianjin Tiens Life Resources Co., Ltd. ("Life Resources") for $64.2 million. The transaction closed on March 13, 2008. As Tianshi Holdings and Life Resources were under common control by Jinyuan Li before the combination, the combination was treated for accounting purposes as a pooling of interests. The balance sheet of the Company at December 31, 2007 and comparative interim financial statements for the corresponding periods of the preceding fiscal year were adjusted as if Life Resources had been combined on January 1, 2007. TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES REVENUE BY REGION Twelve months ended December 31, 2008 2007 Change China $33,711,474 $22,476,135 50.0 % International $43,536,424 $32,423,925 34.3 % Total $77,247,898 $54,900,060 40.7 % For more information, please contact: Investor Relations Tiens Biotech Group (USA), Inc. Tel: +86-22-8213-3491 Fax: +86-22-8213-7914 Email: firstname.lastname@example.org Web: http://www.tiens-bio.com Carl Hymans G. S. Schwartz & Co. Tel: +1-212-725-4500 Fax: +1-212-725-9188 Email: email@example.com
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