NEW YORK, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- Tiens Biotech
Group (USA), Inc. (the "Company" or "Tiens", (NYSE Alternext US:
TBV), http://www.tiens-bio.com/ , announced financial results for
the third quarter and nine months ended September 30, 2008. For the
third quarter ended September 30, 2008, revenue was $26.2 million,
an increase of 137.6% compared to $11.0 million for the third
quarter ended September 30, 2007. Net income for the third quarter
of 2008 was $14.5 million, an increase of 377.0% compared to $3.0
million for the same period in 2007. The increase in revenue for
the third quarter of 2008 reflects an increase in revenue for both
China and internationally. For the third quarter of 2008, revenue
in China was $14.6 million, an increase of 330.1% compared to $3.4
million for the same period in 2007. During the third quarter,
Tianshi Engineering, the affiliated company which markets and sells
Tiens' products in China, announced plans to increase the prices of
its products in October 2008. Tiens believes that the increase in
revenue in the third quarter was due in part to customers stocking
up on certain products as a result of the price increase
announcement by Tianshi Engineering. Therefore, the increase in
sales may not continue through the fourth quarter of 2008. At the
present time, however, the price increase of Tianshi Engineering
products will not affect the price at which Biological sells to
Tianshi Engineering. For the third quarter of 2008, international
revenue was $11.6 million, an increase of 52.1% compared to $7.6
million for the same period in 2007. The increase in international
sales reflects further reductions in export restrictions by China
for countries in Africa and Asia through the third quarter of 2008.
In August 2007, China's Administration of Quality Supervision,
Inspection and Quarantine ("AQSIQ") announced an ongoing national
campaign in China against unsafe food and substandard products. The
special campaign against poor product quality was launched in
response to a series of safety scares involving Chinese products
worldwide. The campaign set 20 detailed goals, including twelve
"100 percents". For example, 100 percent of food producers should
be licensed; 100 percent of agricultural wholesale markets in
cities must be monitored; 100 percent of suppliers of raw materials
for exported products should be inspected; and 100 percent of
agricultural products must be free of five types of strong
pesticides. The campaign, which was originally scheduled to finish
at the end of 2007, is currently scheduled to continue throughout
2008. As a result of this campaign by the AQSIQ, there has been a
general slow- down and backlog of export clearances for Chinese
food products, and, from August 2007 through the first quarter of
2008, Tiens experienced significant delays in obtaining export
clearance for all of the products which we sell to our
international affiliates. Beginning in the second quarter of 2008,
these export restrictions were reduced for exports to countries in
Africa and Asia, but remained in place for exports to countries in
Europe and the Americas. During the third quarter of 2008, these
export restrictions were further reduced. For the nine months ended
September 30, 2008, revenue was $58.7 million, an increase of 41.1%
compared to $41.6 million for the nine months ended September 30,
2007. For the nine months ended September 30, 2008, net income was
$22.8 million, an increase of 56.5% compared to $14.6 million for
the same period in 2007. For the nine months ended September 30,
2008, revenue in China was $29.2 million, an 85.5% increase
compared to $15.7 million for the same period in 2007. The growth
in revenue during the third quarter was offset by a 15% decrease in
revenue in China during the first quarter of 2008. During the first
quarter of 2008, Tiens believes that sales in China were negatively
impacted by continued uncertainty in China regarding the impact of
recently enacted direct selling regulations and uncertainty
regarding the timing of the direct selling license application
process and approval. For the nine months ended September 30, 2008,
international revenue was $29.5 million, an increase of 14.0%
compared to $25.8 million for the same period in 2007. This
increase in international revenue was mainly due to an increase in
sales in Russia and Indonesia. Other Highlights Cost of sales for
the third quarter of 2008 increased $113.8% to $6.6 million,
compared to $3.1 million for the same period in 2007. This increase
was mainly due to the increase in revenue for the period. Cost of
sales for the period increased at a lower rate than revenue
primarily due to the increase in sales of products sold to Tianshi
Engineering which have a lower cost compared to products sold to
overseas companies. For the nine months ended September 30, 2008,
cost of sales increased 40.7% to $16.9 million, compared to $12.0
million for the same period in 2007. This increase was in line with
the increase in revenue for the period and was due to both the
increase in sales and the increase in the value of the renminbi
against the dollar. Gross profit for the third quarter of 2008
increased 146.8% to $19.6 million, compared to $7.9 million for the
same period in 2007. For the nine months ended September 30, 2008,
gross profit increased 41.3% to $41.8 million, compared to $29.4
million for the same period in 2007. The gross profit margin for
the third quarter of 2008 was 74.8%, compared to 72.0% for the same
period in 2007. This increase reflects the increase in proportion
of sales with higher gross profit margins. For the nine months
ended September 30, 2008, the gross profit margin was 71.3%
compared to 71.2% for the same period in 2007. The increase in
gross profit margin during the third quarter was offset by a 4.2%
decrease during the first quarter of 2008. Selling, general and
administrative expenses were $4.6 million for the third quarter of
2008, an increase of 18.5% compared to $3.9 million for the same
period in 2007. The increase was primarily due to increases in
salary expense and research and development. Selling, general and
administrative expenses as a percentage of sales was 17.4% for the
third quarter of 2008 compared to 34.9% for the same period in
2007. For the nine months ended September 30, 2008, selling,
general and administrative expenses were $12.9 million, an increase
of 22.8% compared to $10.5 million in the same period in 2007. For
the nine months ended September 30, 2008, selling, general and
administrative expenses as a percentage of sales was 22.0%,
compared to 25.3% for the same period in 2007. This decrease
reflects the increase in sales. In China, Tiens sells its products
to Tianshi Engineering, an affiliated Chinese company. 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 September 30, 2008, Tiens had $101.5 million of
retained earnings and total shareholders' equity of $143.6 million.
Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are
extremely pleased with the significant increase in both our
domestic and international revenue and continued sequential growth
since the first quarter of 2008. We continue to benefit from
reduced international export restrictions and are optimistic that
our international sales will further increase as additional export
restrictions are lifted. We are well positioned to capitalize on
our growing international customer base and remain committed to
gaining greater market share in China for our high quality products
as well." About Tiens Biotech Group (USA), Inc.
http://www.tiens-bio.com/ . Tiens Biotech Group (USA), Inc. (NYSE
Alternext US: 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 52
countries. Since its establishment, Tiens has developed and
produced 33 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 100 branches. Outside of
China, Tiens sells its products to affiliated companies in 52
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." TIENS
BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS AND
NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (Unaudited) Three
months ended Nine months ended September 30, September 30, 2008
2007 2008 2007 As Adjusted As Adjusted (Note 1) (Note 1) REVENUE -
RELATED PARTIES $26,195,853 $11,027,478 $58,671,121 $41,584,749
COST OF SALES - RELATED PARTIES 6,606,502 3,089,791 16,850,267
11,979,984 GROSS PROFIT 19,589,351 7,937,687 41,820,854 29,604,765
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 4,562,946 3,851,249
12,898,742 10,504,831 INCOME FROM OPERATIONS 15,026,405 4,086,438
28,922,112 19,099,934 OTHER (EXPENSE) INCOME, NET (252,501) 152,014
(866,178) 1,040,161 INCOME BEFORE PROVISION FOR INCOME TAXES AND
MINORITY INTEREST 14,773,904 4,238,451 28,055,934 20,140,095
PROVISION FOR INCOME TAXES 152,990 344,248 3,297,438 1,610,653
INCOME BEFORE MINORITY INTEREST 14,620,914 3,894,203 24,758,496
18,529,442 MINORITY INTEREST 92,326 848,212 1,979,405 3,970,791 NET
INCOME 14,528,588 3,045,991 22,779,091 14,558,651 OTHER
COMPREHENSIVE INCOME Foreign currency translation adjustment
807,035 1,927,502 7,906,663 5,700,759 COMPREHENSIVE INCOME
$15,335,623 $4,973,493 $30,685,754 $20,259,410 EARNINGS PER SHARE,
BASIC AND DILUTED $0.20 $0.04 $0.32 $0.20 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 SEPTEMBER 30, 2008 AND DECEMBER
31, 2007 A S S E T S September 30, December 31, 2008 2007 As
Adjusted (Unaudited) (Note 1) CURRENT ASSETS: Cash $41,667,163
$54,081,848 Accounts receivable, trade - related parties, net of
allowance for doubtful accounts of $168,305 and $71,700, as of
September 30, 2008 and December 31, 2007, respectively 33,492,698
14,268,229 Accounts receivable, trade - third parties -- 104,398
Inventories 7,565,126 5,949,963 Other receivables 465,221 1,068,343
Other receivables - related parties 10,852,795 13,887,138 Employee
advances 423,239 65,901 Prepaid expense 308,614 623,638 Prepaid
income taxes 728,993 -- Total current assets 95,503,849 90,049,458
PLANT AND EQUIPMENT, net 15,617,886 16,071,900 OTHER ASSETS:
Construction in progress 61,421,955 39,792,774 Construction
deposits 3,950,031 1,089,216 Intangible assets, net 15,820,797
9,246,879 Other assets 5,332,266 5,301,847 Total other assets
86,525,049 55,430,716 Total assets $197,646,784 $161,552,074 L I A
B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
September 30, December 31, 2008 2007 As Adjusted (Unaudited) (Note
1) CURRENT LIABILITIES: Accounts payable $7,507,216 $4,070,906
Advances from customers - related parties 3,074,501 1,700,838 Wages
and benefits payable 938,879 1,250,685 Other taxes payable --
536,819 Income taxes payable 138,841 665,726 Contractor deposits
236,165 595,128 Contactor payables 7,606,111 7,820,285 Other
payables 1,223,681 1,133,539 Other payables - related parties
7,582,403 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 Total current liabilities 30,437,797 32,744,760
NON-CURRENT LIABILITIES Long term debt, net of current portion,
related party 3,202,742 4,267,742 Other payables-non current
574,184 538,130 Deferred income 11,207,307 4,895,049 Total non
current liabilities 14,984,233 9,700,921 Total liabilities
45,422,030 42,445,681 MINORITY INTEREST 8,576,670 6,144,063
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 8,842,009 8,842,009 Statutory
reserves 9,420,783 9,420,783 Retained earnings 101,447,251
78,668,160 Accumulated other comprehensive income 23,866,707
15,960,044 Total shareholders' equity 143,648,084 112,962,330 Total
liabilities and shareholders' equity $197,646,784 $161,552,074
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2008 AND 2007 (UNAUDITED) Nine months ended September 30, 2008 2007
As Adjusted (Note 1) CASH FLOWS FROM OPERATING ACTIVITIES: Net
Income $22,779,091 $14,558,651 Adjustments to reconcile net income
to cash provided by (used in) operating activities: Provision for
doubtful accounts 89,913 (11,320) Minority interest 1,979,405
3,970,791 Depreciation 2,063,597 2,218,230 Amortization 226,559
218,677 Interest expense (income) (138,328) 62,182 (Gain) on sale
of assets (8,644) (3,341) (Increase) decrease in assets: Accounts
receivable, trade - related parties (25,058,774) (1,558,640)
Accounts receivable, trade - third parties 109,101 -- Other
receivables 639,999 2,050,878 Other receivables - related parties
452,044 (10,924,763) Inventories (1,090,429) 1,436,897 Employee
advances (345,666) 51,326 Prepaid expense 347,689 909,621 Increase
(decrease) in liabilities: Accounts payable 3,098,509 (1,278,408)
Advances from customers - related parties 1,233,804 (62,960) Wages
and benefits payable (381,633) (233,645) Other taxes payable
(1,834,741) (346,126) Other payables (86,004) 109,016 Other
payables - related parties 282,945 (278,926) Net cash provided by
operating activities 4,358,437 10,888,140 CASH FLOWS FROM INVESTING
ACTIVITIES: Repayment from (loans to) related parties 2,155,702
(2,865,778) Collections from (loans to) local government 454,941
(9,778) Acquisition of intangible assets (6,037,069) (317,238)
Construction deposits (3,363,647) -- Contractor deposits (390,634)
64,189 Addition to construction in progress (18,573,180)
(17,431,705) Proceeds from sale of equipment 61,797 196 Purchase of
equipment and automobiles (574,822) (4,742,096) Net cash used in
investing activities (26,266,912) (25,302,210) CASH FLOW FROM
FINANCING ACTIVITIES: Loan from (repayment to) related parties
6,578,584 (846,820) Payments on long term debt, related party
(1,065,000) -- Increase in legal capital -- 20,999,900 Increase in
deferred income 5,861,232 -- Payment to minority interest
shareholder (5,123,520) (6,676,102) Net cash provided by (used in)
financing activities 6,251,296 13,476,978 EFFECT OF EXCHANGE RATE
CHANGES ON CASH 3,242,494 1,822,813 INCREASE (DECREASE) IN CASH
(12,414,685) 885,721 CASH, beginning of period 54,081,848
55,214,540 CASH, end of period $41,667,163 $56,100,261 Supplemental
disclosures of cash flow information Cash paid during the year for:
Interest (net of amount capitalized) $132,662 $211,441 Income taxes
$3,857,173 $1,885,052 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 before January 1,
2007. TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES REVENUE BY
REGION (Unaudited) Three months ended September 30, 2008 2007
Change China $14,576,060 $3,388,880 330.1% International
$11,619,793 $7,638,598 52.1% Total $26,195,853 $11,027,478 137.6%
Nine months ended September 30, 2008 2007 Change China $29,191,771
$15,736,494 85.5% International $29,479,350 $25,848,255 14.0% Total
$58,671,121 $41,584,749 41.1% For more information, please contact:
Investor Relations Tiens Biotech Group (USA), Inc. Tel:
+86-22-8213-7915 Fax: +86-22-8213-7667 Email: Web:
http://www.tiens-bio.com/ Carl Hymans G. S. Schwartz & Co. Tel:
+1-212-725-4500 Fax: +1-212-725-9188 Email: DATASOURCE: Tiens
Biotech Group (USA), Inc. CONTACT: Investor Relations, Tiens
Biotech Group (USA), Inc., +86-22- 8213-7915, fax +86-22-8213-7667,
or Carl Hymans, G. S. Schwartz & Co., +1-212-725-4500, fax
+1-212-725-9188, for Tiens Biotech Group (USA), Inc. Web site:
http://www.tiens-bio.com/
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