-- Revenue Increased 62% to $70.6 Million in 3Q08 -- -- 3Q08 Net
Income Increased 38% to $16.5 Million -- -- 3Q08 Diluted EPS $0.21
versus 3Q07 Diluted EPS $0.16 -- NEW YORK, Nov. 10
/Xinhua-PRNewswire-FirstCall/ -- American Oriental Bioengineering,
Inc. (NYSE:AOB), 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 in China, today announced financial results for the
quarter ended September 30, 2008. Financial Results Revenue in the
third quarter of 2008 increased 62% year over year to $70.6 million
from $43.5 million, reflecting a continued increase in demand for
the Company's OTC and prescription pharmaceutical products. Revenue
from pharmaceutical products increased 75% to $62.1 million from
$35.5 million in the third quarter of 2007. Revenue from OTC
pharmaceutical products increased 91% to $37.8 million from $19.8
million in the prior year's third quarter, reflecting continued
recognition of the Company's new products supported by effective
marketing campaigns. Sales generated by CCXA and Boke, which were
not subsidiaries in the third quarter of 2007, were major
contributors to the increase in OTC sales and generated a combined
$17.1 million of revenue during the third quarter of 2008. Strong
sales of the Jinji series and Jinji Yimucao products also
contributed to the increase in OTC revenue during the third quarter
of 2008. Prescription pharmaceutical products generated $24.3
million in revenue during the third quarter of 2008, a 55% year
over year increase. Prescription pharmaceutical sales increasingly
reflect contributions from the Company's diversifying product
portfolio, including recently launched CCXA prescription products,
as well as from existing products. Expanding rural market coverage
also drove prescription pharmaceutical revenue performance during
the third quarter of 2008. Nutraceutical product revenue increased
approximately 6% to $8.5 million in the third quarter of 2008 from
$8.0 million in the prior year's period, and decreased as a
percentage of total revenue to approximately 12% versus 18% in the
comparable period. The increase in Nutraceutical revenue was mainly
attributed to the increase in sales of peptide tablets and peptide
powder. The Company continues to focus on selling and marketing
higher growth pharmaceutical products. Gross profit in the third
quarter of 2008 increased 54% to $47.2 million from $30.7 million
in the third quarter of 2007. Gross margin was approximately 66.9%,
compared to 70.5% in the prior year's period, reflecting the
integration of CCXA and a shift in product mix. For the third
quarter of 2008, operating expenses increased 52% to $25.3 million
from $16.7 million in the comparable period of 2007. The increase
in operating expenses was primarily due to increases in sales and
marketing expenses, as well as additional depreciation and
amortization costs due to the Boke and CCXA acquisitions. Income
from operations in the third quarter of 2008 increased 56% to $21.8
million from $14.0 million in the third quarter of 2007, while
operating margin was 31%, compared to 32% in the third quarter of
the prior year. Net income for the third quarter of 2008 increased
38% to $16.5 million, or $0.21 per diluted share, compared to $11.9
million, or $0.16 per diluted share, in the prior year's period.
Diluted share count in the third quarter of 2008 was 85.4 million,
compared to 75.3 million in the third quarter of 2007. Mr. Tony
Liu, Chairman and Chief Executive Officer of American Oriental
Bioengineering, commented, "We are very pleased with our financial
performance in the third quarter of 2008, which demonstrates
continued growth across all of our product categories. We are also
extremely well-capitalized versus competitors, with over $220
million of cash and operating cash flow up 80% year over year.
Lastly, our third quarter results support our confidence in our
brand strength, expansion into rural markets, and unique
positioning as a leading consolidator in China's healthcare space."
Mr. Liu concluded, "Today we are increasing our full year 2008
revenue expectation to at least $250 million, up from prior
guidance of $245 million. We are reiterating our full year 2008 net
income expectation of $62 million, which excludes convertible note
interest expense for the second half of 2008, and also excludes any
contributions from Nuo Hua and GHK acquisitions. These recently
closed acquisitions should create several exciting opportunities
for our Company including enhanced distribution reach in strategic
areas like hospital pharmacies, new product development and
expertise bringing new products to market in the future."
Conference Call The Company will hold a conference call at 8:00 am
ET on November 10, 2008 to discuss its fiscal third quarter 2008
results. Listeners may access the call by dialing 1-866-578-5801 or
1-617-213-8058 for international callers, access code: 73013671. A
webcast will also be available through AOBO's website at
http://www.bioaobo.com/ . A replay of the call will be available
through November 17, 2008. Listeners may access the replay by
dialing 1-888- 286-8010 or 1-617-801-6888 for international
callers, access code: 59642931. 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. 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-Q for the quarter ended September 30, 2008, 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 CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
SEPTEMBER 30, DECEMBER 31, 2008 2007 UNAUDITED CURRENT ASSETS Cash
and cash equivalents $219,727,043 $166,410,075 Accounts receivable,
net of reserve of $224,333 and $302,270 at September 30, 2008 and
December 31, 2007, respectively 24,556,175 16,494,619 Inventories,
net 17,251,005 12,264,536 Advances to suppliers 1,467,388 4,309,352
Notes receivable 589,725 2,259,616 Refundable deposit 6,386,418 --
Deferred tax assets 529,813 -- Other current assets 615,765
5,134,118 Total Current Assets 271,123,332 206,872,316 LONG-TERM
ASSETS Plant and equipment, net 70,082,061 48,496,760 Land use
rights, net 63,883,307 46,310,240 Deposit for long-term assets
23,565,407 -- Construction-in-progress 446,203 755,614 Other
intangible assets, net 24,968,293 26,972,166 Goodwill 22,566,768
22,566,768 Investments in and advances to equity investments
21,479,515 242,551 Deferred tax assets 1,344,484 1,498,481
Unamortized financing cost 4,448,056 -- Total Long-Term Assets
232,784,094 146,842,580 TOTAL ASSETS $503,907,426 $353,714,896
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY
SEPTEMBER 30, DECEMBER 31, 2008 2007 UNAUDITED CURRENT LIABILITIES
Accounts payable $4,788,336 $3,436,352 Other payables and accrued
expenses 12,679,625 7,786,157 Taxes payable 4,485,151 2,843,719
Short-term bank loans 6,710,332 6,289,222 Current portion of
long-term bank loans 2,966,016 2,374,565 Other liabilities
2,263,080 3,621,030 Deferred tax liabilities 680,544 109,733 Total
Current Liabilities 34,573,084 26,460,778 LONG-TERM LIABILITIES
Long-term bank loans, net of current portion 818,058 1,263,483
Long-term notes payable 297,390 286,365 Deferred tax liabilities
16,390,430 12,621,180 Convertible Note 115,000,000 -- Total
Long-Term Liabilities 132,505,878 14,171,028 TOTAL LIABILITIES
167,078,962 40,631,806 COMMITMENTS SHAREHOLDERS' EQUITY Preferred
stock, $0.001 par value; 2,000,000 shares authorized; 1,000,000
shares issued and outstanding at September 30, 2008 and December
31, 2007, respectively 1,000 1,000 Common stock, $0.001 par value;
150,000,000 shares authorized; 78,249,264 and 77,991,935 shares
issued and outstanding at September 30, 2008 and December 31, 2007,
respectively 78,249 77,992 Common stock to be issued 279,332
1,611,333 Prepaid forward repurchase contract (29,998,616) --
Additional paid-in capital 195,500,513 193,007,987 Retained
earnings (the restricted portion of retained earnings is
$15,910,685 at September 30, 2008 and December 31, 2007,
respectively) 141,882,532 102,117,792 Accumulated other
comprehensive income 29,085,454 16,266,986 Total Shareholders'
Equity 336,828,464 313,083,090 TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $503,907,426 $353,714,896 AMERICAN ORIENTAL BIOENGINEERING,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (UNAUDITED) THREE MONTHS ENDED NINE MONTHS
ENDED SEPTEMBER 30, SEPTEMBER 30, 2008 2007 2008 2007 REVENUES
$70,593,949 $43,514,049 $168,372,552 $103,062,573 COST OF GOODS
SOLD 23,402,407 12,833,252 54,808,490 31,048,916 GROSS PROFIT
47,191,542 30,680,797 113,564,062 72,013,657 Selling and marketing
9,938,877 5,644,776 22,656,477 12,210,509 Advertising 9,913,728
6,934,160 21,760,300 16,150,754 General and administrative
4,467,638 3,742,364 13,633,595 9,234,426 Depreciation and
amortization 1,024,436 377,856 3,012,107 1,054,128 Total operating
expenses 25,344,679 16,699,156 61,062,479 38,649,817 INCOME FROM
OPERATIONS 21,846,863 13,981,641 52,501,583 33,363,840 EQUITY IN
EARNINGS (LOSS) FROM UNCONSOLIDATED ENTITIES 49,417 3,953 (591,650)
14,848 INTEREST INCOME (EXPENSE), NET (1,143,013) 360,365
(1,156,782) 375,604 OTHER INCOME (EXPENSE), NET 91,986 (16,144)
(264,515) 118,436 INCOME BEFORE INCOME TAXES 20,845,253 14,329,815
50,488,636 33,872,728 INCOME TAXES 4,362,334 2,386,189 10,723,896
5,846,543 NET INCOME 16,482,919 11,943,626 39,764,740 28,026,185
OTHER COMPREHENSIVE INCOME Foreign currency translation gain, net
of tax 729,272 1,992,992 12,818,468 4,884,314 TOTAL OTHER
COMPREHENSIVE INCOME, NET OF TAX 729,272 1,992,992 12,818,468
4,884,314 COMPREHENSIVE INCOME $17,212,191 $13,936,618 52,583,208
$32,910,499 NET INCOME PER SHARE BASIC $0.22 $0.16 0.52 $0.41
DILUTED $0.21 $0.16 0.50 $0.40 WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING BASIC 75,101,869 74,379,650 77,164,602 68,012,018
DILUTED 85,417,621 75,331,015 80,553,647 69,234,193 DATASOURCE:
American Oriental Bioengineering Inc. CONTACT: Lily Li, Chief
Financial Officer, +86-10-5982-2038; In the United States: Ashley
M. Ammon of Integrated Corporate Relations, Inc., +1- 203-682-8208
Web Site: http://www.bioaobo.com/
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