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Revenue for the second quarter of 2010 was $8.2 million, compared to $20.6million for the second quarter of 2009. Revenue for the six months ended June30, 2010 was $19.6 million, compared to $38.8 million for the first six monthsof 2009.
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Net income for the second quarter of 2010 was $0.5 million, or $0.01 pershare, compared to net income of $10.3 million, or $0.14 per share, for the2009 second quarter. For the six months ended June 30, 2010, net income was$4.1 million, or $0.5 per share, compared to $19.3 million, or $0.26 per sharefor the first six months of 2009.
The decrease in revenue was mainly due to a decrease in internationalsales which reflects China's Administration of Quality Supervision, Inspectionand Quarantine carrying out a national campaign against unsafe food andsubstandard products in 2008, which brought on a general slow-down and backlogof export clearances for Chinese food products. Upon the lifting of theregulations, overseas affiliated companies began to purchase more products,thereby increasing sales in the first two quarters of 2009. Second quarter2010 sales to Indonesia, Russia, Vietnam and Peru further decreased due to thedistributors in these countries purchasing more products in the first half of2009, after the 2008 product scarcity. The decrease in sales in China wasmainly due to domestic distributors' reduced purchasing demand following theirstocking up of products during 2009. Management believes the decrease inrevenues is temporary, and that revenue growth will resume in the near future.
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Cost of sales for the second quarter of 2010 decreased to $3.0 million, or50.3%, compared to $6.1 million for the same period in 2009. For the sixmonths ended June 30, 2010, cost of sales was $6.5 million, a decrease of45.3% compared to $11.9 million for the same period in 2009. Cost of sales forthe period decreased at a slightly lower rate than revenue, primarily due tofixed costs, which do not increase or decrease in line with revenue changes.
Gross profit for the second quarter of 2010 was $5.1 million, a decreaseof 64.5% compared to $14.4 million for the same period in 2009. The grossprofit margin for the second quarter of 2010 was 62.8%, compared to 70.2% forthe same period in 2009. For the six months ended June 30, 2010, gross profitwas $13.1 million, a decrease of 51.4% compared to the same period in 2010,and the gross profit margin was 66.9% compared to 69.4% for the same period in2009. These decreases were mainly due to the decrease of revenue overall andfixed costs, which do not increase or decrease in line with revenue changes.
Selling, general and administrative expenses were $4.1 million for thesecond quarter of 2010, an increase of 1.4% compared to $4.0 million for thesame period in 2009. This increase was primarily due to the increase inresearch and development expenses. Selling, general and administrativeexpenses as a percentage of sales were 49.8% for the second quarter of 2010compared to 19.5% for the same period in 2009. For the six months ended June30, 2010, selling, general and administrative expenses were $7.6 million, anincrease of 5.9% compared to $7.1 million in the same period in 2009. Thisincrease was mainly due to the increase in research and development expense.For the six months ended June 30, 2010, selling, general and administrativeexpenses as a percentage of sales was 38.7%, compared to 18.4% for the sameperiod in 2009.
As of June 30, 2010, Tiens had $126.8 million of retained earnings andtotal shareholders' equity of $180.4 million.
Jinyuan Li, Chairman, President and CEO of Tiens, said, "We believe thatour international and domestic sales will return to and possibly exceedprevious levels as our domestic and overseas affiliated companies haveindicated that they are not seeing sizable declines of their revenue, and thatthey expect that the market fluctuation will be temporary. They believe thatrevenue growth will resume in the near future, consistent with what they haveachieved during the majority of the past 15 years. We remain committed tobuilding greater market share in China, expanding our international customerbase, and remaining focused on our efforts to generate long-term domestic andinternational growth."
About Tiens Biotech Group (USA), Inc. http://www.tiens-bio.com
Tiens Biotech Group (USA), Inc. (NYSE AMEX: TBV) conducts its businessoperations from Tianjin, People's Republic of China. Tiens primarily engagesin the research, development, manufacturing, and marketing of nutritionsupplement products, including wellness products and dietary supplements.
Tiens derives its revenues principally from product sales to affiliatedcompanies in China and internationally in 54 countries. Since itsestablishment, Tiens has developed and produced 37 nutrition supplements,which include wellness products and dietary supplements. Tiens develops itsproducts at its own product research and development center, which employshighly qualified professionals in the fields of pharmacology, biology,chemistry and fine chemistry. Tiens has obtained all required certificates andapprovals from government regulatory agencies to manufacture and sell itsproducts in China.
In China, Tiens conducts the marketing and sales of its products throughits affiliated company, Tianshi Engineering. Tianshi Engineering markets andsells Tiens' products in China through chain stores, domestic affiliatedcompanies, and its 92 branches. Outside of China, Tiens sells its products toaffiliated companies in 54 countries who in turn sell through an extensivedirect sales force, or multi-level marketing sales force. The Company's directsales marketing program is subject to governmental regulation in each of thesecountries.
Certain statements in this press release constitute "forward-lookingstatements" within the meaning of Section 27A of the Securities Act of 1933and Section 21E of the Securities and Exchange Act of 1934. Suchforward-looking statements are not necessarily indicative of future financialresults, and may involve known and unknown risks, uncertainties and otherfactors, which may cause the actual results, performance or achievements ofthe Company, to be materially different from any future results, performance,or achievements expressed or implied by such forward-looking statements. TheCompany's future operating results are dependent upon many factors, includingbut not limited to: (i) the Company's ability to obtain sufficient capital ora strategic business arrangement to fund its expansion plans; (ii) theCompany's ability to build the management and human resources andinfrastructure necessary to support the growth of its business; (iii)competitive factors and developments beyond the Company's control; whetherTianshi Engineering, the Company's affiliate which sells its products in China,obtains a direct selling license in China; and (v) other risk factorsdiscussed in the Company's periodic filings with the Securities and ExchangeCommission which are available for review at http://www.sec.gov under "Searchfor Company Filings."-Tables Follow- TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 and 2009 (UNAUDITED) Three months ended June 30, Six months ended June 30, 2010 2009 2010 2009 REVENUE - RELATED PARTIES $8,167,849 $20,551,036 $19,571,212 $38,788,581 COST OF SALES - RELATED PARTIES 3,037,847 6,117,409 6,478,728 11,852,468 GROSS PROFIT 5,130,002 14,433,627 13,092,484 26,936,113 SELLING, GENERAL AND ADMINI- STRATIVE EXPENSES 4,069,097 4,014,591 7,566,644 7,145,527 INCOME FROM OPERATIONS 1,060,905 10,419,036 5,525,840 19,790,586 (Interest expense) -- (53,201) -- (105,817) Interest income 3,846 100,779 5,718 186,547 Other expense (418,260) (28,144) (671,970) (73,432) OTHER (EXPENSE) INCOME, NET (414,414) 19,434 (666,252) 7,298 INCOME BEFORE INCOME TAXES 646,491 10,438,470 4,859,588 19,797,884 INCOME TAXES 138,621 123,101 748,123 482,716 NET INCOME $507,870 10,315,369 4,111,465 19,315,168 LESS: Net income attributable to the noncontrolling interest (122,083) (139,071) (464,140) (546,045) NET INCOME ATTRIBUTABLE TO THE COMPANY 385,787 10,176,298 3,647,325 18,769,123 OTHER COMPREHENSIVE INCOME: Foreign currency translation adjustment 766,901 151,289 1,125,269 770,887 COMPREHENSIVE INCOME 1,152,688 10,327,587 4,772,594 19,540,010 COMPREHENSIVE INCOME ATTRI- BUTABLE TO THE NONCONTROLLING INTEREST 163,465 140,300 506,863 559,895 COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY $989,223 $10,187,287 $4,265,731 $18,980,115 EARNINGS PER SHARE, BASIC AND DILUTED $0.01 $0.14 $0.05 $0.26 WEIGHTED AVERAGE NUMBER OF SHARES, BASIC AND DILUTED 71,333,586 71,333,586 71,333,586 71,333,586 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2010 (UNAUDITED) AND DECEMBER 31, 2009 June 30, December 31, 2010 2009 (Unaudited) ASSETS CURRENT ASSETS: Cash $5,660,772 $1,848,328 Accounts receivable, trade - related parties, net of allowance for doubtful accounts of $1,307,687 and $1,419,178 as of June 30, 2010 and December 31, 2009, respectively 8,809,737 15,379,312 Inventories 5,776,964 5,328,052 Other receivables 2,354,237 995,657 Other receivables - related parties 33,035,274 44,561,626 Employee advances 238,075 115,673 Prepaid expenses 351,905 658,193 Prepaid taxes 121,542 407,534 Total current assets 56,348,506 69,294,375 PROPERTY, PLANT AND EQUIPMENT, net 9,946,030 10,124,483 OTHER ASSETS: Construction in progress 146,343,059 125,572,621 Construction deposits 5,068,290 1,405,997 Intangible assets, net 12,764,848 12,864,295 Other assets 18,039,203 11,847,937 Total other assets 182,215,400 151,690,850 Total assets $248,509,936 $231,109,708 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $4,387,829 $5,012,157 Advances from customers - related parties 17,055,922 4,426,751 Wages and benefits payable 788,451 1,484,852 Income taxes payable 330,095 -- Contractor deposits 258,403 183,395 Contractor payables 20,942,557 18,513,216 Other payables 1,248,953 1,151,551 Other payables - related parties 1,502,767 3,326,110 Total current liabilities 46,514,977 34,098,032 NON-CURRENT LIABILITIES Deferred income 11,283,364 11,236,501 Total non current liabilities 11,283,364 11,236,501 Total liabilities 57,798,341 45,334,533 EQUITY: Shareholders' equity of the Company: 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 18,194,133 18,042,189 Statutory reserves 16,465,144 13,217,217 Retained earnings 126,769,661 126,370,263 Accumulated other comprehensive income 18,880,529 18,262,123 Total shareholders' equity of the Company 180,380,801 175,963,126 Noncontrolling interest 10,330,794 9,812,049 Total equity 190,711,595 185,775,175 Total liabilities and equity $248,509,936 $231,109,708 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (UNAUDITED) Six months ended June 30, 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $4,111,465 $19,315,168 Adjustments to reconcile net income to cash provided by (used in) operating activities: Bad debt expense (116,962) (196,863) Depreciation 814,376 1,112,849 Amortization 167,147 194,380 Interest expense -- 2,710 Gain on sale of assets (15,085) (15,717) Rental expense borne by a related party 163,532 163,331 (Increase) decrease in assets: Accounts receivable, trade - related parties 6,725,384 (5,532,449) Other receivables (1,349,264) 10,743 Other receivables - related parties 213,304 (992,241) Inventories (421,815) 3,355,993 Employee advances (121,454) (80,805) Prepaid expense 307,795 (435,576) Increase (decrease) in liabilities: Accounts payable (662,699) (1,579,065) Advances from customers - related parties 12,562,625 (219,470) Wages and benefits payable (699,884) (703,898) Other taxes payable 615,431 8,920 Other payables 94,272 (395,970) Other payables - related parties 191,991 (202,847) Net cash provided by operating activities 22,580,159 13,809,193 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in Life Resources 6,000,000 -- Collections from loans to local government -- 105,193 Proceeds from disposal of a subsidiary 700,000 -- Construction deposits (2,678,074) (3,846,961) Contractor deposits 73,959 158,551 Addition to construction in progress (18,790,772) (15,954,182) Equipment deposits (6,133,065) - Proceeds from sales of properties 2,621,558 17,039 Purchase of equipment and automobiles (578,794) (921,388) Net cash used in investing activities (18,785,188) (20,441,748) CASH FLOWS FROM FINANCING ACTIVITIES: Loan from (repayment to) related parties -- (3,945,510) Net cash used in financing activities -- (3,945,510) EFFECT OF EXCHANGE RATE CHANGES ON CASH 17,473 64,084 NET INCREASE (DECREASE) IN CASH 3,812,444 (10,513,981) CASH, beginning of period 1,848,328 44,854,511 CASH, end of period $5,660,772 $34,340,530 Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ -- $105,817 Income taxes $913,722 $667,347 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES REVENUE BY REGION Three months ended June 30, 2010 2009 Change China $4,415,082 $9,669,603 -54.3 % International $3,752,767 $10,881,433 -65.5 % Total $8,167,849 $20,551,036 -60.3 % Six months ended June 30, 2010 2009 Change China $11,198,355 $12,412,223 -9.8 % International $8,372,857 $26,376,358 -68.3 % Total $19,571,212 $38,788,581 -49.5 % For more information, please contact: Tiens Biotech Group (USA), Inc. Investor Relations Tel: +86-22-8213-7594 Fax: +86-22-8213-7594 Email: [email protected] Web: http://www.tiens-bio.com G. S. Schwartz & Co. Carl Hymans Tel: +1-212-725-4500 Fax: +1-212-725-9188 Email: [email protected]
SOURCE Tiens Biotech Group (USA), Inc.
