American Oriental Bioengineering Reports First Quarter 2010 Financial Results

NEW YORK, May 10 /PRNewswire-Asia-FirstCall/ -- American Oriental Bioengineering, Inc. (NYSE: AOB), ("the Company" or "AOBO"), a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter ("OTC") products, today announced financial results for the first quarter ended March 31, 2010.

First Quarter 2010 Financial Performance

Revenue in the first quarter of 2010 increased 16.7% year over year to $53.7 million from $46.1 million, reflecting continued demand for the Company's core prescription and OTC pharmaceutical products.

    -- Revenue from pharmaceutical products increased 17.8% to $40.9 million
       from $34.7 million in the first quarter of 2009, driven by increased
       demand for the Shuanghuanglian ("SHL") Injection Powder, BOKE and CCXA
       pharmaceutical products, as well as the newly-launched products such as
       YuYeQingHuo Capsules. Revenue from prescription pharmaceutical products
       increased 29.3% to $20.9 million from $16.2 million in the prior year
       period, reflecting a year over year increase in sales from the
       prescription Jinji capsule, SHL powder, Boke and CCXA prescription
       products. The overall increase in sales was also supported by
       continuous marketing efforts, an increase in new product offerings, and
       expansion of coverage to previously unaddressed rural markets.  OTC
       pharmaceutical products generated $19.9 million in revenue during the
       first quarter of 2010, in comparison to $18.5 million in the prior year
       period, reflecting increased sales of our Boke and CCXA products as a
       result of improved recognition of those products.
    -- Nutraceutical products generated revenue of approximately $9.7 million
       in the first quarter of 2010, up 8.5% from $8.9 million in the prior
       year period, reflecting increased sales of new beverage products
       launched in the second quarter of 2009.
    -- The Company generated $3.2 million from its distribution business, Nuo
       Hua, in the first quarter of 2010. An increase of 29.5% was mainly
       attributed to the Nuo Hua's expanding market coverage.

Gross profit in the first quarter of 2010 was $28.2 million, compared to $28.4 million in the first quarter of 2009. Gross margin was 52.5%, compared to 61.7% in the prior year period, reflecting continued revenue mix shift to CCXA's generic product sales as well as increasing raw material prices.

Operating income in the first quarter of 2010 was $6.4 million, compared to $10.9 million in the prior year period. Selling and marketing expenses increased 14.7% to $6.0 million from $5.2 million in the prior year period, and advertising expense increased 21.2% to $6.7 million in the first quarter of 2010 from $5.6 million in the prior year period. General and administrative expenses increased 8.6% to $4.8 million from $4.4 million in the prior year period. Research and development expenses increased to $2.8 million from $0.7 million in the prior year period. This reflects the Company's continuing efforts to invest in the centralized R&D centre in Beijing.

Net income attributable to controlling interest for the first quarter of 2010 was $3.1 million, compared to $7.2 million in the prior year period. The Company's net income attributable to controlling interest was $0.04 per diluted share, compared to $0.10 per diluted share in the same period of 2009.

Balance Sheet

As of March 31, 2010, the Company had $99.0 million in cash and cash equivalents, including restricted portions, and generated approximately $5.8 million of operating cash flow during the first quarter of 2010. Working capital was $136.9 million as of March 31, 2010, reflecting an increase of 4.6% from $130.9 million as of December 31, 2009.

Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented, "We are very satisfied with our performance in the first quarter, despite the challenging global economic environment and the changing Chinese regulatory environment. During the past quarter, we continued to invest heavily in R&D, which consumed 5% of total revenue, in order to upgrade our existing products and develop new proprietary products to lay a solid foundation for AOBO's near term and long term growth. Meanwhile, we continued to fortify our market position, strengthen our presence in rural areas, and diversify our business operations through cost control, advertising campaigns, and sales network expansion. We are confident that we will achieve initial success from the above combined efforts in the latter part of this year."

Conference Call

The Company will hold a conference call at 8:00 am ET on Monday, May 10, to discuss its results. Listeners may access the call by dialing 1-866-804-6927 or 1-857-350-1673 for international callers, access code: 92995812. A webcast will also be available through AOB's website at http://www.bioaobo.com . A replay of the call will be available through May 17, 2010. Listeners may access the replay by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 50942560.

About American Oriental Bioengineering, Inc.

American Oriental Bioengineering, Inc. is a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter products.

Statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. The economic, competitive, governmental, technological and other factors identified in the Company's filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2010, may cause actual results or events to differ materially from those described in the forward looking statements in this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.

    For more information, please contact:

     Integrated Corporate Relations, Inc.
     Ashley M. Ammon
     Tel:   +1-646-277-1200



           AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (UNAUDITED)

                                                   MARCH 31,    DECEMBER 31,
                                                      2010          2009
    CURRENT ASSETS
    Cash and cash equivalents                     $95,787,301   $91,126,486
    Restricted Cash                                 3,209,381     3,298,379
    Accounts and notes receivable, net             53,503,601    57,504,454
    Inventories, net                               19,838,535    10,015,711
    Advances to suppliers and prepaid
     expenses                                       5,525,812    13,901,180
    Deferred tax assets                               590,330       824,451
    Other current assets                            1,494,931     1,246,647
            Total Current Assets                  179,949,891   177,917,308

    LONG-TERM ASSETS
    Property, plant and equipment, net             94,614,699    95,468,265
    Land use rights, net                          152,805,027   153,604,196
    Other long term assets                          7,930,112     7,909,086
    Construction in progress                       30,111,567    28,975,386
    Other intangible assets, net                   17,480,990    18,695,554
    Goodwill                                       33,164,121    33,164,121
    Investments in and advances to
     equity investments                            57,461,382    57,325,887
    Deferred tax assets                               138,746       134,268
    Unamortized financing costs                     3,055,621     3,287,694
           Total Long-Term Assets                 396,762,265   398,564,457

                TOTAL ASSETS                     $576,712,156  $576,481,765

    LIABILITIES AND SHAREHOLDERS' EQUITY

                                                   MARCH 31,    DECEMBER 31,
                                                      2010          2009

    CURRENT LIABILITIES
    Accounts payable                              $10,660,316    $7,497,143
    Notes payable                                   3,297,568     3,392,575
    Other payables and accrued expenses            14,935,485    22,320,757
    Taxes payable                                     352,439       947,338
    Short-term bank loans                          10,386,039    10,384,368
    Current portion of long-term bank
     loans                                             60,404        60,108
    Other liabilities                               3,140,176     2,199,280
    Deferred tax liabilities                          172,017       172,473
         Total Current Liabilities                 43,004,444    46,974,042

    LONG-TERM LIABILITIES
    Long-term bank loans                              727,731       743,957
    Deferred tax liabilities                       15,737,755    15,961,465
    Unrecognized tax benefits                       3,300,625     2,746,561
    Convertible Notes                             115,000,000   115,000,000
        Total Long-Term Liabilities               134,766,111   134,451,983
             TOTAL LIABILITIES                    177,770,555   181,426,025

    EQUITY
    SHAREHOLDERS' EQUITY
    Preferred stock, $0.001 par value;
     2,000,000 shares authorized;
      1,000,000 shares issued and
       outstanding at March 31, 2010
       and December 31, 2009, respectively              1,000         1,000
    Common stock, $0.001 par value;
     150,000,000 shares authorized;
       78,321,439 shares issued and
        outstanding at March 31, 2010
        and December 31, 2009                          78,321        78,321
    Common stock to be issued                         485,000       388,000
    Prepaid forward repurchase contract           (29,998,616)  (29,998,616)
    Additional paid-in capital                    200,408,156   199,829,921
    Retained earnings (the restricted
     portion of retained earnings is
       $23,757,901 at both March 31 and
        December 31, 2009)                        194,296,931   191,173,754
    Accumulated other comprehensive
     income                                        33,143,073    33,050,224
         Total Shareholders' Equity               398,413,865   394,522,604
    Non-controlling Interest                          527,736       533,136
                TOTAL EQUITY                      398,941,601   395,055,740
        TOTAL LIABILITIES AND EQUITY             $576,712,156  $576,481,765



           AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                 (UNAUDITED)

                                                     THREE MONTHS ENDED
                                                         MARCH 31,
                                                   2010              2009

    Revenues                                   $53,749,768       $46,077,190
    Cost of sales                               25,513,047        17,660,338

    GROSS PROFIT                                28,236,721        28,416,852

    Selling and marketing expenses               5,976,226         5,211,502
    Advertising costs                            6,748,470         5,567,357
    Research and development costs               2,778,809           749,798
    General and administrative expenses          4,766,486         4,390,701
    Depreciation and amortization
     expenses                                    1,596,958         1,632,586

    Total operating expenses                    21,866,949        17,551,944

    INCOME FROM OPERATIONS                       6,369,772        10,864,908

    Equity in earnings from
     unconsolidated entities                       117,473           437,794
    Interest expense, net                       (1,565,785)       (1,579,269)
    Other income (expenses)                         12,247           (98,609)

    INCOME BEFORE INCOME TAXES                   4,933,707         9,624,824
    Income tax                                   1,815,930         2,469,764

    NET INCOME                                   3,117,777         7,155,060

    Net loss (income) attributable to
     non-controlling interest                        5,400            (3,551)

    NET INCOME ATTRIBUTABLE TO
     CONTROLLING INTEREST                        3,123,177         7,151,509

    OTHER COMPREHENSIVE INCOME                      92,849           491,337

    COMPREHENSIVE INCOME                        $3,216,026        $7,642,846

    EARNINGS PER COMMON SHARE
       Basic                                         $0.04             $0.10
       Diluted                                       $0.04             $0.10

    WEIGHTED AVERAGE SHARES OUTSTANDING
       Basic                                    74,697,044        74,538,593
       Diluted                                  89,460,953        86,917,603

SOURCE American Oriental Bioengineering, Inc.