American Oriental Bioengineering, Inc. Announces Record Revenue and Earnings for the Fourth Quarter and Full Year 2005; Revenue Increases 71% for 2005: Net Income Increases 73%.HONG KONG Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong 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 Oriental oriental having some connection with the Orient. oriental avian eye fluke see philophthalmusgralli. oriental blood fluke schistosomajaponicum. oriental cattle plague see rinderpest. Bioengineering bioengineering Application of engineering principles and equipment to biology and medicine. It includes the development and fabrication of life-support systems for underwater and space exploration, devices for medical treatment (see , Inc. (AMEX AMEX See: American Stock Exchange :AOB AOB (on the agenda for a meeting) any other business ): 2005 Highlights: --Company Announces Private Offering Raising $60 Million in Gross Proceeds --Operating Margins Improve over 2.1% from 2004 --Decreased Inventories Contributing to Improvements in Working Capital American Oriental Bioengineering, Inc. (AMEX:AOB), an emerging 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. company that produces and distributes a broad range of pharmaceutical and nutraceutical nu·tra·ceu·ti·cal n. A food or naturally occurring food supplement thought to have a beneficial effect on human health. nutraceutical products, today announced financial results for the fourth quarter and full-year period ended December December: see month. 31, 2005.
Key Financial Indicators
(All numbers in thousands, except per-share amount in USD)
Q4 2005 Q4 2004 Percentage Change
Revenues $ 19,770 $ 12,684 55.9%
Cost of goods sold $ 6,879 $ 5,169 33.1%
Gross profit $ 12,891 $ 7,515 71.5%
Total operating expenses $ 6,681 $ 3,561 87.6%
Income from operations $ 6,210 $ 3,953 57.1%
Net Income $ 4,178 $ 2,763 51.2%
EPS -- Fully diluted $ 0.08 $ 0.08
Diluted shares 51.6 M 34.0 M 51.8%
The US dollar amounts are calculated based on the average conversion
rate of US $1 to RMB 8.1734 for the year ended December 31, 2005, and
US $1 to RMB 8.3 as of December 30, 2004.
Financial Results Fourth Quarter 2005 For the fourth quarter, the Company reported revenues of $19.8 million, an increase of 55.9 percent compared to the $12.7 million reported for the fourth quarter last year and up 47.5 percent compared to the $13.4 million reported in the third quarter of 2005. The increase in revenue was attributable to growth in both the Company's Plant-based Pharmaceutical (PBP PBP picture by picture (TVs and monitors) PBP Penicillin Binding Protein PBP Play-By-Play PBP Paris-Brest-Paris (bicycle race) PBP Progressive Bulbar Palsy PBP Pay Back Period PBP Pay By Phone ) and Plant-based Nutraceutical (PBN PBN Paint By Number PBN Procurement Business Number PBN Pyrolytic Boron Nitride PBN Policy-Based Networking PBN Performance-Based Navigation PBN Progressive Bengali Network PBN Paintball Nation PBN Permanent Background Notices ) line of products. PBP products comprised $12.1 million, or 61.4 percent of total sales, while PBN products comprised $7.6 million, or 38.6 percent of total sales for the quarter. During the fourth quarter of 2005, the sales of PBP products increased approximately $4.0 million, or 49.1 percent compared to the same period in 2004. PBP revenues were driven by 143.8 percent increase in the Company's Cease Enuresis enuresis Repeated urination into bedding or clothing, usually at night, in a normal child old enough to have completed toilet training. Enuresis may be voluntary or involuntary. It may run in families. Soft Gel and Patch sales, the only first grade PBP approved by the Chinese Government Ever since Republic of China founded in January 1st, 1912, China has had several regional and national governments. List
Most children (85-90%) will consistently stay dry by age 6. By age 10, 95% of children are dry at night. and nighttime urination urination Process of excreting urine from the bladder (see urinary system). Nerve centres in the spinal cord, brain stem, and cerebral cortex control it through involuntary and voluntary muscles. The need to void is felt when the bladder holds 3. and a 86.1 percent increase in Company's Double Grain beverage product recommended by people experiencing insomnia insomnia, abnormal wakefulness or inability to sleep. The condition may result from illness or physical discomfort, or it may be caused by stimulants such as coffee or drugs. However, frequently some psychological factor, such as worry or tension, is the cause. . During the fourth quarter of 2005, the Company also increased sales of its Shanghuanglian Anti-Virus See antivirus program. Powder Injection by 7.4 percent, one of only two products approved by the Chinese Government for the treatment of respiratory infections Noun 1. respiratory infection - any infection of the respiratory tract respiratory tract infection infection - the pathological state resulting from the invasion of the body by pathogenic microorganisms , which was acquired with Heilongjiang Heilongjiang or Heilungkiang (both: hā`l  ng`jyäng`) [Chin.,=black dragon river (the Amur)], province (1994 est. pop. 35,570,000), c. Songhuajiang Pharmaceutical Co., Ltd ("HSPL HSPL High-Speed Perceptual Learning ") in September
2004. PBN sales increased by $3.4 million or 80.9 percent compared to
last year as the Company continued to improve its marketing efforts
geared towards educating consumers on the benefits of using soy-based
peptide peptide, organic compound composed of amino acids linked together chemically by peptide bonds. The peptide bond always involves a single covalent link between the α-carboxyl (oxygen-bearing carbon) of one amino acid and the amino nitrogen of a second amino acid. products and increased sales related to expanded distribution
channels.Cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold were $6.9 million, an increase of 33.1 percent compared to the $5.2 million reported during the fourth quarter of 2004, resulting in gross margins of 65.2 percent for the fourth quarter compared to gross margins of 59.3 percent for the fourth quarter last year and 63.4 percent for the third quarter of 2005. The increase in gross margins was related to improved efficiencies in regards to the integration of HSPL and a higher contribution as percent of revenues from PBN products which carry a higher overall gross margin. Selling and marketing expenses increased 36.6 percent to $1.2 million, advertising expenses increased 420.6 percent to $3.1 million and general and administrative expenses increased 17.7 percent to $2.1 million compared to the fourth quarter of 2004. Collectively, total 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. were $6.7 million, an increase of 87.6 percent compared to the $3.6 million reported for the same period last year as the Company increased expenses to support operational growth. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased to $6.2 million, up 57.1 percent from $4.0 million from the year ago quarter. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: were 31.4 percent compared to 31.2 percent during the fourth quarter of 2004 and 34.6 percent in the third quarter 2005 as increases in gross profit were partially offset by the previously mentioned increase in operating expenses. The Company had an effective tax rate during the quarter of 26.2 percent as compared to 28.9 percent last year. Net income increased 51.2 percent to $4.2 million or $0.08 per fully 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 versus net income of $2.8 million or $0.08 per fully diluted share for the fourth quarter last year. The Company utilized 51.6 million weighted diluted shares in this calculation, representing a 51.8 percent increase from the 34.0 million weighted diluted shares for the fourth quarter of 2004. After the close of the private placement in January, the Company has 62.4 million fully diluted shares. "We continue to grow our top line results by further expanding our distribution channels and product offering while increasing consumer awareness surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the benefits of traditional Chinese herbal herbal, early botanical book containing descriptions and illustrations of herbs and plants with their properties, chiefly those qualities that made them useful as medicines or condiments. Most of the herbals were written between c.1470 and c. remedies," commented Tony Liu, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of American Oriental Bioengineering. "Our first retail location, 'Life Peptide,' had a very successful opening in Hong Kong where we are exclusively carrying AOB products, helping to increase overall brand awareness with consumers and contributing to the significant growth in our PBN revenues. During the year we also completed several initiatives to further integrate the HSPL acquisition, resulting in improved sales and profitability within our PBP segment. Overall, demand continues to remain strong for both PBP and PBN products helping to support our growth as we look to profitably expand into new regions and markets in China." Year Ended December 31, 2005 For the full-year period ended December 31, 2005, the Company announced revenue of $54.7 million, an increase of 71.2 percent compared to the $32.0 million reported for fiscal 2004. The Company's PBP division reported $34.2 million in revenue, up 114.4 percent compared to last year. Growth in this segment was driven by sales increases of 226.7 percent in Shanghuanglian Anti-Virus Powder Injection, 79.8 percent increase in sales of the Cease Enuresis Soft Gel and Patch and a 50.8 percent increase in double grain beverage sales. Sales of PBN products were $20.5 million, an increase of 28.2 percent as compared to last year as the Company saw increases in all related products due to increased marketing and distribution. Excluding the acquisition of HSPL organic revenues grew 42.5 percent for 2005 as compared to 2004. Cost of goods sold were $19.6 million, an increase of 74.0 percent compared to the $11.3 million from the same period a year ago. The Company's gross margin was 64.2 percent for the year, essentially flat compared to gross margin of 64.8 percent for the same period last year despite the inclusion of HSPL products which initially carried a lower gross margin than the Company's existing businesses. Total operating expenses were $16.8 million, an increase of 57.5 percent compared to the $10.7 million reported for the same period last year. Operating income was $18.3 million, an increase of 82.6 percent compared to $10.0 million reported in the prior year. Operating margins were 33.5 percent compared to 31.4 percent as the Company benefited from a faster rate of growth in sales and gross profits compared to expenses. Net income was $13.4 million compared to net income of $7.8 million, representing a 72.8 percent increase. Earnings were $0.31 per weighted fully diluted share, based on 43.8 million shares, compared to $0.23 per fully diluted share for 2004 based on 34.0 million shares. Balance Sheet The Company completed the quarter with $57.5 million in cash and cash equivalents, inclusive of inclusive of prep. Taking into consideration or account; including. the $11.2 million received from calling its class "B" warrants in October, 2005, and the Company's $60 million private placement in December, 2005. The Company received the first traunche in connection with its private placement consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. in the fourth quarter resulting in gross proceeds of $33.5 million with the remaining $26.5 million of gross proceeds received by the Company in January 2006. Net total proceeds received from the private placement in December 2005 and January 2006 were $56.4 million. This compares to $11.4 million in cash as of December 31, 2004. Short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. decreased $1.3 million to $3.7 million at the end of 2005 as compared to 2004. During the fourth quarter inventory declined by 53.2 percent and 13.3 percent as compared to the third quarter 2005 and fourth quarter 2004 respectively as the Company improved overall efficiency yielding increased inventory turns and reduced inventory days versus both periods. During 2005, the Company generated $11.6 million in positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses . The Company's current ratio as of December 31, 2005, was 8.80 to 1 compared to a current ratio or 2.55 to 1 on December 31, 2004. "In 2005, we took steps to further strengthen our company's competitive positioning by completing a private placement which has allowed us to expand existing operations and grow organically while also providing the opportunity to seek complementary acquisitions," Mr. Liu continued. "We continue to explore multiple acquisition opportunities aimed at either increasing our distribution points or improving the breadth of our product offering in either the plant-based pharmaceutical or nutraceutical markets. We are confident that our efforts in this regard will be successful in 2006." Mr. Liu continued, "We are pleased with the clear progress we have made in integrating the HSPL acquisition, improving our internal processes and driving further growth in revenue and profits during the year. Based on our planned organic growth and potential acquisitions strategies, we feel we are appropriately positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the growth in the Chinese Economy and the increasing addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be consumer market." Teleconference Information Management will conduct a conference call at 10 a.m. ET on March 31, 2006, to discuss these results. Interested participants should call 877-502-9274 when calling within the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or 913-981-5584 when calling internationally. There will be a playback Playback could mean:
This call is being webcast by ViaVid Broadcasting and can be accessed at American Oriental Bioengineering's web site at http://www.bioaobo.com. The webcast may also be accessed at ViaVid's website at www.viavid.net. The webcast can be accessed until April 30, 2006, on either site. About American Oriental Bioengineering, Inc. American Oriental Bioengineering, Inc. (AOB) is engaged in the development and production of plant-based pharmaceutical products and plant-based nutraceutical products widely distributed Adj. 1. widely distributed - growing or occurring in many parts of the world; "a cosmopolitan herb"; "cosmopolitan in distribution" cosmopolitan bionomics, environmental science, ecology - the branch of biology concerned with the relations between organisms throughout China. For more information, visit http://www.bioaobo.com. This news release contains 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. as defined by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" .
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
December 31, December 31,
------------ ------------
2005 2004
---- ----
-------------- --------------
CURRENT ASSETS
Cash and cash equivalents $ 57,532,049 $ 11,404,149
Accounts receivable 8,168,420 4,736,901
Inventories 4,916,500 5,673,059
Advances to suppliers 3,494,320 518,589
Other receivables 102,611 156,062
Due from employees 409,159 182,099
Deferred consulting expenses 752,620 1,686,652
-------------- --------------
Total Current Assets 75,375,679 24,357,511
PLANT AND EQUIPMENT, NET 13,386,439 8,068,776
LAND USE RIGHTS, NET 7,925,763 7,871,497
CONSTRUCTION IN PROGRESS 1,655,349 1,836,714
DEFERRED TAX ASSETS 614,336 159,958
LICENSE, NET 464,673 542,168
-------------- --------------
TOTAL ASSETS $ 99,422,239 $ 42,836,624
------------ ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,230,767 $ 755,266
Other payable and accrued expenses 1,604,096 1,064,411
Tax payable 1,485,872 1,096,545
Short-term bank loans 3,717,380 5,060,241
Customer deposits 355,975 160,504
Due to shareholders - 1,404,522
Other liabilities 168,080 12,952
-------------- --------------
Total current liabilities 8,562,170 9,554,441
DEFERRED TAX LIABILITIES 232,505 107,201
LONG-TERM PORTION OF OBLIGATIONS UNDER
CAPITAL LEASES 23,018 34,548
-------------- --------------
TOTAL LIABILITIES 8,817,693 9,696,190
SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value;
2,000,000 shares authorized;
1,000,000 shares issued and
outstanding 1,000 1,000
Common stock, $0.001 par value;
150,000,000 shares authorized;
57,109,188 and 39,746,827 shares
issued and outstanding, respectively 57,109 39,747
Additional paid-in capital 59,491,393 16,900,303
Retained earnings (the restricted
portion of retained earnings is
$4,104,115 and $1,294,689 as of
December 31, 2005 and 2004,
respectively) 29,625,765 16,199,384
Accumulated other comprehensive income 1,429,279 -
-------------- --------------
Total Shareholders' Equity 90,604,546 33,140,434
-------------- --------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 99,422,239 42,836,624
-------------------------------------- ============== ==============
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
----------- ----------- ------------ ------------
REVENUES $19,779,068 $12,683,793 $ 54,732,557 $ 31,966,927
COST OF GOODS
SOLD -6,878,931 -5,168,904 -19,607,240 -11,267,647
----------- ----------- ------------ ------------
GROSS PROFIT 12,891,137 7,514,889 35,125,317 20,699,280
Selling and
marketing -1,160,557 -849,665 -3,216,545 -2,387,805
Advertising -3,077,562 -591,132 -5,238,186 -2,926,629
General and
administrative -2,107,433 -1,799,644 -7,076,139 -4,582,388
Depreciation and
amortization -335,303 -321,046 -1,254,498 -757,720
----------- ----------- ------------ ------------
INCOME FROM
OPERATIONS 6,210,282 3,953,402 18,339,949 10,044,738
INTEREST INCOME
(EXPENSE), NET -545,896 -29,280 -505,822 -100,765
OTHER INCOME,
NET -271 -21,179 -6,876 44,035
----------- ----------- ------------ ------------
INCOME BEFORE
INCOME TAXES 5,664,210 3,884,780 17,827,251 9,988,008
INCOME TAXES -1,486,499 -1,122,232 -4,400,870 -2,216,626
----------- ----------- ------------ ------------
NET INCOME 4,177,711 2,762,548 13,426,381 7,771,382
OTHER
COMPREHENSIVE
INCOME
Foreign currency
translation
gain 575,221 - 1,429,279 -
Other
comprehensive
income before
tax 575,221 - 1,429,279 -
Income tax
expenses
related to
other
comprehensive
income -189,823 - -471,662 -
TOTAL OTHER
COMPREHENSIVE
INCOME, NET OF
TAX 385,398 - 957,617 -
----------- ----------- ------------ ------------
COMPREHENSIVE
INCOME $ 4,563,109 $ $ 14,383,998 $ 7,771,382
=========== =========== ============ ============
NET INCOME PER
SHARE
BASIC $ 0.08 $ 0.08 $ 0.31 $ 0.23
DILUTED $ 0.08 $ 0.08 $ 0.31 $ 0.23
WEIGHTED AVERAGE
NUMBER OF
SHARES
OUTSTANDING
BASIC 51,508,973 35,150,892 43,827,725 33,595,685
DILUTED 51,552,797 35,639,796 43,840,463 33,953,507
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