American Dairy Reports First Quarter 2006 Financial Results.BEIJING Beijing (bā-jĭng) or Peking (pē-kĭng, pā–), city (1994 est. urban pop. 6,093,300; 1994 est. total pop. 7,240,700), capital of the People's Republic of China. It is in central Hebei prov. -- American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Dairy dairy 1. a retail outlet for milk products. 2. the feeding and milking sheds on a dairy farm. 3. pertaining to or emanating from an animals or other thing concerned in the production of milk, e.g. dairy goat, dairy cleanser. , Inc. (NYSE Arca For other uses of "ARCA", see ARCA. NYSE Arca, previously known as ArcaEx, an abbreviation of Archipelago Exchange, is an entirely online securities exchange on which both stocks and options are traded. : ADY ADY is a three-letter acronym that may refer to:
See 10-Q. today. E[acute accent acute accent n. A mark (´) indicating: a. that a vowel is close or tense, as é in French été. b. that a vowel or syllable has a high or rising pitch, as in Chinese or Ancient Greek. c. ]Financial highlights from the first quarter of 2006 versus the first quarter of 2005, include: E[acute accent]--Net income increased 81% to $4.8 million, or $0.29 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in 1Q06, from $2.6 million, or $0.17 per diluted share in 1Q05 E[acute accent]--Revenue increased 91% to $25.9 million in 1Q06 from $13.6 million in 1Q05 E[acute accent]--Gross profit grew 116% to $13.5 million in 1Q06 from $6.3 million in 1Q05 E[acute accent]--Gross margin increased to 52% in 1Q06 from 46% in 1Q05 E[acute accent]Leng You Bin, Chief Executive Officer and President of American Dairy stated, "Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. consumers increasingly demand our premium milk products and the first quarter of 2006 was no exception. Our overall sales quantity increased 71%, to 6.3 million kilograms, driven by our leading products such as milk powder with nucleotides. We also invested heavily in our Feihe brand by significantly enhancing our advertising efforts, and our top-line growth speaks to this as well." E[acute accent]Quarter Ended March 31, 2006 E[acute accent]Net income increased 81%, to $4.8 million in the first quarter of 2006 from $2.6 million in the first quarter of 2005. Earnings per diluted share were $0.29, up 65% from $0.17 in the first quarter of the previous year. During this period, diluted shares outstanding increased to 17.1 million from 15.1 million in the first quarter of 2005. Net income performance reflects continued revenue growth, as well as a 600 basis point improvement in gross margin. E[acute accent]Revenue for the first quarter was $25.9 million, an increase of $12.3 million or 91% compared to $13.6 million in the first quarter of 2005. The increased popularity of the Feihe brand in mainland Mainland. 1 Island (1991 pop. 14,150), 178 sq mi (461 sq km), N Scotland. The largest of the Orkney Islands, it is also called Pomona. Kirkwall, the seat of the Orkney Islands council area, is on the island. China, reflecting American Dairy's successful advertising campaigns and extensive network of direct sales personnel through the PRC, continued to drive revenue growth in the first quarter. E[acute accent]Gross profit increased $7.3 million, or 116%, to $13.5 million from $6.3 million in the first quarter of 2005. Gross margin of 52% compared to 46% in the prior year's period reflects the successful ramp-up of a new processing facility, which allows the Company to process all whey whey liquid residue from milk after the removal of cheese curds in the manufacture of cheese. An excellent protein supplement but difficult to handle in the liquid form, except to pigs maintained close to the cheese factory. Dried whey is easy to handle but processing costs are high. products in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. . Previously, the Company had to purchase processed whey from other providers in China, which was significantly more expensive. E[acute accent]Income from operations increased $2.2 million, or 85% to $4.9 million from $2.6 million in the first quarter of 2005, and was offset by a 138% increase in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , the majority of which reflects increased advertising expenditure and salary costs. E[acute accent]Leng You Bin continued, "Aside from continued revenue growth, the first quarter also benefited from our focus on profitability. We realized the initial contribution of our new Feihe Dairy production facility at the gross margin level, and we grew net income 81% year over year despite continued reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. in our brand and our distribution capacity." E[acute accent]Balance Sheet E[acute accent]As of March 31, 2006, the Company had $11.6 million of cash, down from $13.0 million at December December: see month. 31, 2005. The Company had long term debt of $5.5 million as of March 31, 2006. E[acute accent]Guidance E[acute accent]American Dairy is reiterating its previously announced financial expectations for 2006. E[acute accent]The Company continues to expect revenue of $120.0 million, up 76% from $68.0 million in 2005, as well as net income of $20.0 million, up 72% from $11.6 million in 2005. Based on an updated diluted sharecount of 17.1 million shares, which assumes conversion of convertible debt in 2006, the Company expects net income per diluted share of $1.17 in 2006. E[acute accent]About American Dairy, Inc. E[acute accent]American Dairy, Inc. conducts operations in The People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China ("China") through its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Feihe Dairy. Founded in 1962, Feihe Dairy is one of the leading producers and distributors of milk powder and soybean products in China. Feihe Dairy is located in Kedong County Kedong ( Simplified Chinese: 克东; Traditional Chinese: 克東; Pinyin: Kèdōng , China, and has been in operation since 2001. American Dairy also has a milk powder processing plant, BaiQuan Feihe Dairy in Kedong County, and also has a milk powder processing plant in the city of QiQiHaEr, Heilongjiang Heilongjiang or Heilungkiang (both: hā`l  ng`jyäng`) [Chin.,=black dragon river (the Amur)], province (1994 est. pop. 35,570,000), c. Province. http://www.feihe.com/
E[acute accent]Certain of the statements made herein constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. In such instances, actual results could differ materially as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on collaborative col·lab·o·rate intr.v. col·lab·o·rat·ed, col·lab·o·rat·ing, col·lab·o·rates 1. To work together, especially in a joint intellectual effort. 2. retail partners and on new product development, variations in new product and service development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products and services, and other risk factors detailed in forms filed with the Securities and Exchange Commission from time to time.
AMERICAN DAIRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2006 AND DECEMBER 31, 2005
ASSETS
March 31, December 31,
2006 2005
(unaudited) (audited)
------------ ------------
Current assets:
Cash $11,606,000 $12,958,000
Accounts receivable
Trade-net of allowance for bad
debts of $315,000 and $309,000,
respectively 4,666,000 4,133,000
Employees 1,113,000 488,000
Other 396,000 1,517,000
Inventories 9,684,000 9,622,000
Prepaid expenses 713,000 875,000
Advances to suppliers 1,658,000 1,216,000
Other tax refundable - 501,000
------------ ------------
Total current assets 29,836,000 31,310,000
------------ ------------
Property and equipment:
Fixed assets, net of accumulated
depreciation 37,953,000 34,686,000
Construction in progress 236,000 3,374,000
------------ ------------
38,189,000 38,060,000
------------ ------------
Other assets:
Deposit on land 666,000 -
------------ ------------
666,000 -
------------ ------------
Total assets $68,691,000 $69,370,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2006 2005
(unaudited) (audited)
------------ ------------
Current liabilities:
Accounts payable and accrued
expenses $12,366,000 $11,855,000
Current portion of long term debt 102,000 102,000
Advances from related parties 769,000 933,000
Advances from employees 705,000 948,000
Deferred income 5,549,000 12,074,000
Short-term notes and loans payable 7,381,000 7,324,000
------------ ------------
Total current liabilities 26,872,000 33,236,000
------------ ------------
Long term debt, net of current portion
shown above 5,505,000 5,543,000
------------ ------------
Minority interest 465,000 494,000
------------ ------------
Stockholders' equity:
Common stock, $.001 par value;
50,000,000 shares authorized;
14,196,824 and
14,132,824 issued and outstanding at
March 31, 2006 and December 31, 2005,
respectively 14,000 14,000
Additional paid-in capital 9,669,000 9,209,000
Retained earnings 25,033,000 20,269,000
Accumulated other comprehensive
income 1,133,000 605,000
------------ ------------
Total stockholders' equity 35,849,000 30,097,000
------------ ------------
Total liabilities and stockholders'
equity $68,691,000 $69,370,000
============ ============
See accompanying notes to financial statements.
AMERICAN DAIRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
--------------------------
2006 2005
------------ ------------
SALES $25,893,000 $13,561,000
COST OF GOODS SOLD 12,365,000 7,297,000
------------ ------------
Gross Profit 13,528,000 6,264,000
------------ ------------
OPERATING AND ADMINISTRATIVE
EXPENSES:
Distribution expenses 7,555,000 3,332,000
General and administrative expenses 1,068,000 270,000
Depreciation 51,000 37,000
------------ ------------
8,674,000 3,639,000
------------ ------------
Income from operations 4,854,000 2,625,000
------------ ------------
OTHER INCOME (EXPENSE):
Other income (expenses) 131,000 10,000
Other expenses - -
Interest and finance costs (224,000) (2,000)
------------ ------------
(93,000) 8,000
------------ ------------
MINORITY INTEREST 3,000 -
------------ ------------
INCOME BEFORE INCOME TAXES 4,764,000 2,633,000
(PROVISION FOR) BENEFIT FROM
INCOME TAXES - -
------------ ------------
NET INCOME 4,764,000 2,633,000
OTHER COMPREHENSIVE INCOME:
FOREIGN CURRENCY TRANSLATION
ADJUSTMENT 535,000 -
------------ ------------
TOTAL COMPREHENSIVE INCOME $ 5,299,000 $ 2,633,000
============ ============
BASIC NET INCOME PER COMMON SHARE $ 0.34 $ 0.19
============ ============
WEIGHTED AVERAGE BASIC SHARES OUTSTANDING 14,164,280 13,556,354
============ ============
DILUTED NET INCOME PER COMMON SHARE $ 0.29 $ 0.17
============ ============
WEIGHTED AVERAGE DILUTED SHARES
OUTSTANDING 17,068,052 15,133,369
============ ============
See accompanying notes to financial statements.
AMERICAN DAIRY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
2006 2005
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 4,764,000 $2,633,000
Adjustments to reconcile net income to
operating activities - - -
Depreciation 340,000 118,000
Compensation expense for stock issued 434,000 -
Changes in assets and liabilities:
(Increase) decrease in -
Accounts and notes receivable (533,000) (3,065,000)
Other receivables 1,120,000 274,000
Employees receivables (625,000) -
Inventories (62,000) 891,000
Prepaid expenses 163,000 68,000
Advances to suppliers (442,000) (41,000)
Other tax refundable 501,000 (66,000)
Increase (decrease) in -
Accounts payable and accrued expenses 511,000 1,994,000
Advances from related parties (164,000) (50,000)
Advances from employees (243,000) 52,000
Deferred income (6,525,000) (5,710,000)
------------ -----------
Net cash used by operating activities (761,000) (2,902,000)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (469,000) (41,000)
Payments received on note receivable - 218,000
Deposit on land, building and
equipment (666,000) -
Minority interest (29,000) 305,000
Construction in progress - (2,026,000)
------------ -----------
Net cash used in investing activities (1,164,000) (1,544,000)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loan 57,000 943,000
Repayment of long-term loans (38,000) (31,000)
Issuance of common stock 26,000 -
------------ -----------
Net cash provided by financing activities 45,000 912,000
------------ -----------
Effect of exchange rate change on cash and
cash equivalents 528,000 -
------------ -----------
NET DECREASE IN CASH AND EQUIVALENTS (1,352,000) (3,534,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 12,958,000 6,645,000
------------ -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $11,606,000 $3,111,000
============ ===========
AMERICAN DAIRY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid, net of capitalized
amounts $ 62,000 $ 2,000
============ ===========
Income taxes paid $ - $ -
============ ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
See accompanying notes to financial statements.
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