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News and Information Article
NEW YORK, May 19 /-FirstCall/ -- Tiens Biotech Group (USA),
Inc. ("the Company" or "Tiens USA"), (Amex: TBV), http://www.tiens-bio.com,
announced financial results for the first quarter ended March 31, 2006.
First quarter revenue increased 17.0% to $16,722,560 from $14,295,999
for the first quarter ended March 31, 2005.
The increase in revenue reflects a 6.5% increase in sales of the
Companys products in China and a 30.4% rise in international sales,
including an approximately $3.0 million increase in sales in Indonesia,
offset by a $1.2 million decrease in Russian sales, which the Company
believes is a normal fluctuation for a relatively mature market.
A breakdown of Chinese and international sales is as follows:
Revenue First Quarter Ended March 31,
------------- ----------------------------------
2006 2005 Increase in %
------------ --------------- --------------
China $8,566,617 $8,040,796 6.5%
------------- ------------ --------------- --------------
International $8,155,943 $6,255,203 30.4%
------------- ------------ --------------- --------------
Net income for the quarter increased 20.8% to $6,769,709 from
$5,605,280 for the comparable 2005 period. Earnings per share for the 2006
first quarter was $0.09, on weighted average shares outstanding of
71,333,586, compared to $0.08, on the same weighted average shares
outstanding, for the first quarter of 2005.
Cost of sales for the quarter ended March 31, 2006 was $4,806,296,
compared to $3,457,418 for the first quarter ended March 31, 2005. The
increase in the cost of sales reflects the Companys increase in Chinese
and international sales, stricter quality control testing measures and the
introduction of new manufacturing procedures.
Consolidated gross profit increased 9.9% to $11,916,264 for the first
quarter ended March 31, 2006, from $10,838,581 for the first quarter ended
March 31, 2005.
The gross profit margin for the first quarter ended March 31, 2006
decreased 4.5% to 71.3%, from 75.8% for the first quarter ended March 31,
2005.
Tiens USA sells all of its products for consumption in China to Tianjin
Tianshi Biological Engineering Co. Ltd. ("Tianshi Engineering"), a related
party of Tiens USA. To qualify for a direct selling license in China,
Tianshi Engineering is required to produce some of the products that it
sells in China. As a result, in 2006, Tiens USA began to sell semi-finished
products to Tianshi Engineering, which jointly shares with Tiens USA
licenses to produce, manufacture and sell the products. These semi-finished
products have a lower sales price and a lower margin than the finished
products previously sold to Tianshi Engineering. The decrease in margins
was primarily due to the lower margin on semi-finished products compared to
finished goods, as well as the added manufacturing costs on Tiens USAs
goods due to the new manufacturing procedures.
Management is exploring the extent to which the amount of finished
manufacturing by Tianshi Engineering might need to increase in the future
to comply with its qualification for, and maintenance of, a direct selling
license in China, and the potential effect this will have on Tiens USA.
Management will provide additional information upon completion of a review
and analysis of this matter.
Selling, general and administrative expenses decreased slightly to
$2,566,422 for the first quarter ended March 31, 2006 compared to
$2,633,875 for the first quarter ended March 31, 2005. The selling, general
and administrative expenses as a percentage of revenue decreased 3.1% to
15.3% for the three months ended March 31, 2006, compared to 18.4% for the
first quarter ended March 31, 2005.
As of March 31, 2006, Tiens USA had $75,848,769 of retained earnings
and total shareholders equity of $97,134,935.
As of March 31, 2006 Tiens USA had cash of $35,470,512, compared with
$77,545,991 as of December 31, 2005, a decrease of $42,075,479. This
decrease is primarily due to loans of approximately $24,960,000 made by
Tiens USA to Tianshi Engineering and $4,400,000 made to Tianyuan Capital
Development Corp. Ltd., a related party of Tiens USA, in addition to the
purchase of $13,638,900 of short-term, interest bearing financial
instruments from the Agricultural Bank of China.
The loan to Tianshi Engineering, Tiens USAs largest customer, is
strategically important to Tiens USA. For the first quarter of 2006, sales
to Tianshi Engineering in China represented 51.2% of Tiens USAs total
revenue. After direct selling regulations were adopted by the Chinese
government in 2005, Tiens USAs competitors increased their investments in
China in order to capitalize on the projected increased sales
opportunities. Similarly, Tianshi Engineering has been focusing on
increasing 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.
Management believes that the loan by Tiens USA to Tianshi Engineering
is an investment in the future of Tiens USA at this significant stage in
the development of direct selling in China. In 2006 Tiens USA has not
directly incurred marketing expenses in China, but has chosen to support
the necessary marketing efforts of Tianshi Engineering through the loan.
The loan to Tianshi Engineering is due on June 30, 2006. Management intends
to review the status of Tianshi Engineerings direct selling license
application and the direct selling market in China as the due date
approaches to determine whether to extend the loan.
Jinyuan Li, Chairman, President and CEO of Tiens USA, said, "The
increase in sales for the first quarter reflects the growing worldwide
demand for our unique, high quality nutrition supplement and personal care
products. Tiens USA continues to implement its strategic growth plans which
include further expanding its networking sales force in China, establishing
new branches in China and forging relationships with international
affiliated companies. We are committed to increasing our market share and
will continue to invest in the companys growth. We are confident in our
positive long-term outlook for the Company and its ability to enhance
shareholder value."
About Tiens Biotech Group (USA), Inc., http://www.tiens-bio.com
Tiens Biotech Group (USA), Inc. conducts its main business operations
through its 80% owned subsidiary Tianjin Tianshi Biological Development
Co., Ltd. ("Biological"), which is based in Tianjin, Peoples Republic of
China (PRC). Biological primarily engages in the research, development,
manufacturing, and marketing of nutrition supplement products, including
wellness products and dietary nutrition supplement products, and personal
care products.
Tiens USA derives its revenues principally from product sales to
affiliated companies in China and outside of China. Since its
establishment, Biological has developed and produced 39 nutrition
supplements, which include wellness products and dietary nutrition
supplements. Biological has also developed and produced 25 personal care
products, which include skin care products and personal washing products.
Biological 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. Biological
has obtained all required certificates and approvals from government
regulatory agencies to manufacture and sell its products in China.
In China, Biological conducts the marketing and sales of its products
through its affiliated company, Tianshi Engineering. Tianshi Engineering
markets and sells Biologicals products in China through chain stores,
domestic affiliated companies, and its 106 branches. Outside of China,
Biological sells its products through an extensive direct sales force, or
multi-level marketing sales force of overseas affiliates, located in
approximately 54 countries, and independent distributors who use the
products themselves and/or resell them to other distributors or consumers.
The Companys direct sales marketing program is subject to governmental
regulation in each of these countries.
Tiens Biotech Group (USA), Inc. (Amex: TBV) is a corporation organized
under the laws of the State of Delaware.
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, including the Companys financial results for the three
months ended March 31, 2006, 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 Tiens Biotech Group (USA), Inc. ("the Company"), or
industry results, to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. The Companys future operating results are dependent upon many
factors, including but not limited to the Companys ability to: (i) obtain
sufficient capital or a strategic business arrangement to fund its
expansion plans; (ii) build the management and human resources and
infrastructure necessary to support the growth of its business; (iii)
competitive factors and developments beyond the Companys control; and (iv)
other risk factors discussed in the Companys 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 ENDED MARCH 31, 2006 AND 2005
March 31, March 31,
2006 2005
(Unaudited) (Unaudited)
----------- ------------
REVENUE - RELATED PARTIES $ 16,722,560 $ 14,295,999
COST OF SALES 4,806,296 3,457,418
----------- ------------
GROSS PROFIT 11,916,264 10,838,581
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 2,566,422 2,633,875
----------- ------------
INCOME FROM OPERATIONS 9,349,842 8,204,706
OTHER (EXPENSE), net (37,721) (463,061)
----------- ------------
INCOME BEFORE PROVISION FOR INCOME
TAXES AND MINORITY INTEREST 9,312,121 7,741,645
PROVISION FOR INCOME TAXES 733,531 616,259
----------- ------------
INCOME BEFORE MINORITY INTEREST 8,578,590 7,125,386
MINORITY INTEREST 1,808,881 1,520,106
----------- ------------
NET INCOME 6,769,709 5,605,280
OTHER COMPREHENSIVE INCOME
Foreign currency translation
adjustment 717,827 999
----------- ------------
COMPREHENSIVE INCOME $ 7,487,536 $ 5,606,279
=========== ============
EARNINGS PER SHARE, BASIC AND
DILUTED $ 0.09 $ 0.08
=========== ============
WEIGHTED AVERAGE NUMBER OF SHARES 71,333,586 71,333,586
=========== ============
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2006 AND DECEMBER 31, 2005
March 31, December 31,
2006 2005
(Unaudited) (Audited)
----------- ------------
ASSETS
------
CURRENT ASSETS:
Cash $ 35,470,512 $ 77,545,991
Short-term investment 13,728,000 -
Accounts receivable, trade - related
parties, net of allowance for doubtful
accounts of $208,251 and $206,916 as
of March 31, 2006 and December 31,
2005, respectively 9,906,880 2,165,958
Other receivables 408,003 234,486
Other receivables - related parties 32,195,077 3,281,081
Inventories 5,790,819 7,516,352
----------- ------------
Total current assets 97,499,291 90,743,868
----------- ------------
PLANT AND EQUIPMENT, net 26,534,605 24,877,688
----------- ------------
OTHER ASSETS:
Intangible assets, net 484,680 476,637
Employee advances 267,101 145,071
Deposits 5,270,190 5,380,890
----------- ------------
Total other assets 6,021,971 6,002,598
----------- ------------
Total assets $ 130,055,867 $ 121,624,154
=========== ============
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2006 AND DECEMBER 31, 2005
March 31, December 31,
2006 2005
(Unaudited) (Audited)
----------- ------------
LIABILITIES AND SHAREHOLDERS EQUITY
----------------------------------
CURRENT LIABILITIES:
Accounts payable $ 2,326,621 $ 2,698,813
Advances from customers - related
parties 2,145,619 2,077,130
Wages and benefits payable 511,614 1,045,052
Other taxes payable 1,215,316 1,413,054
Other payables 458,788 339,390
Other payables - related parties 1,867,311 1,816,534
Current portion of long term debt 2,130,000 2,130,000
----------- ------------
Total current liabilities 10,655,269 11,519,973
LONG TERM DEBT, net of current portion 8,527,742 8,527,742
----------- ------------
Total liabilities 19,183,011 20,047,715
----------- ------------
MINORITY INTEREST 13,737,921 11,929,040
----------- ------------
SHAREHOLDERS EQUITY:
Common stock, $0.001 par value,
260,000,000 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 75,848,769 69,079,060
Accumulated other comprehensive income 2,952,040 2,234,213
----------- ------------
Total shareholders equity 97,134,935 89,647,399
----------- ------------
Total liabilities and
shareholders equity $ 130,055,867 $ 121,624,154
============= =============
CONTACT:
Investor Relations Carl Hymans
Tiens Biotech Group (USA), Inc. G. S. Schwartz & Co.
Tel: 0086-22-8213-7594 Tel: 212-725-4500
Fax: 0086-22-8213-7667 Fax: 212-725-9188
Email: investor@tiens-bio.com Email: carlh@schwartz.com
http://www.tiens-bio.com
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