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Sinovac Reports Unaudited Fourth Quarter and Full Year 2012 Financial Results

- Conference call scheduled for Thursday, April 18, 2013 at 8:00 AM EDT -

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BEIJING, April 18, 2013 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of vaccines in China, announced today its unaudited fourth quarter and full year financial results for the period ended December 31, 2012.

Financial Highlights

  • Total sales were $19.0 million for the fourth quarter of 2012, a decrease of 10.4% from $21.1 million in the same period of 2011. Excluding sales of Panflu and Panflu.1 under the government stockpiling program in the fourth quarter of 2011, total sales in the fourth quarter of 2012 increased by 166.9% from $7.1 million in the same period of 2011. 2012 full year sales were $48.6 million, a decrease of 14.5% from $56.8 million in 2011. Excluding sales of Panflu and Panflu.1 under the government stockpiling program in 2011, the regular sales, including Healive, Bilive and Anflu, mumps vaccine and RabEnd, increased by 38.6% to $48.6 million in 2012.
  • Net loss attributable to common stockholders in the fourth quarter of 2012 was $5.4 million, or $0.10 per basic and diluted share. Full year 2012 net loss attributable to common stockholders was $15.7 million, or $0.29 per basic and diluted share. The operating expense for the fourth quarter and full year included a $1.5 million impairment charge on long-lived assets related to the production of animal vaccine.
  • Cash and cash equivalents totaled $90.9 million as of December 31, 2012, compared to $104.3 million as of December 31, 2011.

Recent Business Highlights

  • In March 2013, Sinovac announced preliminary top-line data from its phase III clinical trial assessing the efficacy, immunogenicity and safety of the Company's proprietary enterovirus 71 ("EV71") vaccine against hand, foot and mouth disease ("HFMD"). The primary objective of the study was to evaluate the efficacy of the EV71 vaccine in the prevention of HFMD caused by EV71 in infants of between 6 to 35 months of age.  The preliminary phase III data showed that Sinovac's EV71 vaccine was 95% efficacious against HFMD caused by EV71.
  • In April 2013, Fengcai Zhu, Deputy Director of the Jiangsu Provincial Center for Disease Prevention and Control, and co-principal investigator of Sinovac's phase III trial on EV71 vaccine, presented data regarding the efficacy and safety of the Company's proprietary EV71 vaccine against HFMD at the 13th Annual World Vaccine Congress & Expo. 
  • Also in April, 2013, we were granted a license from COFEPRIS, the regulatory authority of Mexico's Ministry of Health, to sell Anflu in Mexico.

Dr. Weidong Yin, Chairman, President and CEO, commented, "2012 was a transformative year for Sinovac as we focused on continuing to advance our vaccine development pipeline. We invested significantly in research and development this year for our lead candidate, our proprietary EV71 vaccine against HFMD. We are well positioned for medium- to long-term growth as this vaccine progresses through the regulatory process and approaches launch."

Dr. Yin continued, "EV71 represents a significant unmet medical need in China with over 2.16 million cases reported in 2012, from which 560 fatalities were reported, Most of serve cases of EV71 infection were seen in children under 5 years old, which totaled approximately 80 million in China. Unfortunately, no EV71-specific treatment and prevention method currently exists. With knowledge of this unmet need, we commenced development of an EV71 vaccine in 2008, and recently concluded the phase III efficacy trial for this candidate. In March 2013, the unblinded top-line results from the phase III clinical trial for the vaccine demonstrated a 95% efficacy rate against HFMD caused by EV71. We expect our EV71 vaccine, once commercialized, will provide a solution to this unmet medical need in China."

Dr. Yin concluded, "I am also very pleased with the 38.6% increase in regular vaccine sales for 2012. Growth was achieved across all three of our market segments: private pay market, public market and international market. Sinovac's core products, inclusive of Healive, Bilive, and Anflu, contributed to our sales growth, with Bilive and Healive sales in the private market in China being the primary contributors to both the rate and magnitude of the sales increase. Our financial results benefited from a successful price increase for both of these products, as well as higher volume. Our well-trained, experienced sales team continues to drive growth in our commercialized vaccine products, but also has taken significant strides to increase efficacy in our sales and marketing infrastructure, positioning us well for future vaccine product launches, such as the EV71 vaccine."

Financial Review for Unaudited Fourth Quarter Ended December 31, 2012

An analysis of sales and gross profit is as follows: 

In USD

2012Q4

% of Sales

2011Q4

% of Sales

Fluctuation %

Healive-hepatitis A

10,037,198

53.0%

2,970,802

14.1%

237.9%

Bilive-hepatitis A&B

3,784,668

20.0%

605,624

2.9%

524.9%

Anflu- influenza

5,091,076

26.8%

3,523,452

16.7%

44.5%

Core sales

18,912,942

99.8%

7,099,878

33.7%

166.4%

Mumps 

23,925

0.1%




Rabend (Animal)

14,634

0.1%




Regular Sales

18,951,501


7,099,878


166.9%

Panflu.1 -H1N1



14,004,653

66.2%


Panflu-H5N1



38,873

0.1%


Total sales

18,951,501


21,143,404


-10.4%

Cost of Sales

8,698,009


8,031,758



Gross profit

10,253,492

54.1%

13,111,646

62.0%

-21.8%

Total revenue for the fourth quarter of 2012 was $19.0 million, a decrease of 10.4% from $21.1 million in the same period of 2011. Fourth quarter 2012 sales of our regular products, Healive, Bilive, Anflu, mumps vaccine and RabEnd, increased by 166.9% to $19.0 million from $7.1 million in the same period of 2011. The significant increase in sales of core products in the fourth quarter was driven by: 1) expansion of Healive to a new territory of Jiangsu Province in the fourth quarter; 2) the successful implementation of a new sales strategy to achieve both volume growth and average selling price increase for hepatitis vaccines; and 3) higher Anflu sales in the fourth quarter compared to other regular years due to a later start of the Anflu sales season in 2012. 2011 sales included recognition of approximately $14 million revenue from Panflu and Panflu.1 vaccines stockpiled by the Chinese government in 2010. These two products are not for regular sales, since they were produced upon government order and subject to the government decision of using the vaccines within its shelf life if there was any flu pandemic caused by H1N1 and/or H5N1. The Company's revenue recognition requirements were not met until the fourth quarter of 2011. And in 2012, there was no revenue recognized for either Panflu or Panflu.1.

Compared with the fourth quarter of 2011, the gross profit margin for the fourth quarter of 2012 decreased from 62.0% to 54.1%. The higher gross margin in the fourth quarter of 2011 was due to the recognition of $14 million revenue from H1N1 vaccine stockpiling, which has a higher gross profit margin than other vaccines.

Selling, general and administrative expenses for the fourth quarter of 2012 were $12.8 million, compared to $5.9 million in the same period of 2011. The increase in SG&A was largely due to an increase in G&A, although both selling expense and general and administration expense increased. The increase of G&A expense was resulted from the increased expenses incurred for validation, commissioning, and trial production for the dedicated production facility for our EV71 vaccine at the Changping site, Beijing, and the preparation for GMP inspection by the government authorities of our existing manufacturing facilities in both the Changping and Shangdi sites in Beijing for compliance with China's 2010 GMP guidelines.

The R&D expense for the fourth quarter of 2012 was $1.3 million, a $1 million decrease from $2.3 million for the same period in 2011, due to lower EV71 clinical trial expense as the trial approaching its end.

Depreciation of property, plant and equipment and amortization of licenses and permits for the fourth quarter of 2012 was $0.5 million, compared to $0.4 million for the same period in 2011.

For the fourth quarter of 2012, an impairment charge of $1.5 million on the long-lived assets including plant and building, machinery and equipments related to the animal vaccine production was made.

Net loss attributable to stockholders for the fourth quarter of 2012 was $5.4 million, or $0.10 per basic and diluted share, compared to a net income of $2.8 million, or $0.05 per basic and diluted share, for the same period in 2011.

Financial Review for Unaudited Full Year Results Ended December 31, 2012

An analysis of sales and gross profit of full year 2012 is as follows:      

In USD

2012

% of Sales

2011

%of Sales

Fluctuation %







Healive-hepatitis A

20,141,416

41.5%

14,217,393

25.0%

41.7%

Bilive-hepatitis A&B

19,417,940

40.0%

12,721,993

22.4%

52.6%

Anflu-influenza

8,943,937

18.4%

8,112,279

14.3%

10.3%

Core sales

48,503,293

99.9%

35,051,665

61.7%

38.4%

Mumps

23,925

0.0%




Rabend (Animal)

49,482

0.1%




Regular Sales

48,576,700

100.0%

35,051,665

61.7%

38.6%

Panflu.1 -H1N1



14,008,225

24.6%


Panflu-H5N1



7,782,002

13.7%


Total Sales

48,576,700


56,841,892

100.0%

-14.5%

Cost of goods sold

19,099,927


21,127,410



Gross profit

29,476,773

60.7%

35,714,482

62.8%

-17.5%

Total revenue for the fiscal year ended December 31, 2012 was $48.6 million, a decrease of 14.5% from $56.8 million reported in 2011. Excluding the revenue recognized on the government stockpiling of Panflu and Panflu.1 in 2010, sales of our regular products, Healive, Bilive and Anflu, mumps vaccine and RabEnd, increased by 38.6% to $48.6 million in 2012 from $35.1 million in 2011.

Gross profit margin was 60.7% in 2012, a decline from 62.8% in 2011. Excluding the impact to sales and cost of sales in both years by of Panflu and Panflu.1, the gross margin of regular vaccine products increased to 63.7% in 2012 from 57.7% in 2011.

Selling, general and administrative expenses in 2012 were $31.7 million, compared to $22.4 million in 2011. The increase in SG&A was largely due to an increase in G&A, although both selling expense and general and administration expense increased. The increase of G&A expense was due to the increased cost incurred on the validation of the new facilities in Changping site and preparation for new GMP compliance inspection of our existing manufacturing facilities in both Changping and Shangdi sites.

Research and development expenses in 2012 increased to $17.0 million from $9.0 million in 2011. The increase was mainly due to expense incurred in 2012 in connection with the EV71 phase III clinical trial.

Depreciation of property, plant and equipment and amortization of licenses and permits in 2012 was $1.6 million, compared to $1.4 million in 2011. The higher depreciation in 2012 was mainly due to the additional depreciation on property, plant and equipment of the Changping site.

The Company recorded loss on disposal and impairment of property, plant and equipment of $2.2 million as operating expense, in which $1.5 million was for animal vaccine production related assets and $0.5 million was for human vaccine production related assets.

Net loss attributable to stockholders in 2012 was $15.7 million, or $0.29 per basic and diluted share, compared to a net loss of $0.8 million, or $0.02 per basic and diluted share in 2011.

As of December 31, 2012, cash and cash equivalents totaled $90.9 million, compared to $104.3 million as of December 31, 2011. Net cash used in operating activities was $16.6 million in 2012, which primarily resulted from payment made for EV71 clinical trial and validation of the new facilities in Changping, Beijing and new GMP inspection preparation expenses. Net cash used in investing activities was $16.2 million, which primarily resulted from payment for the purchase of property, plant and equipment for the Changping site. Net cash provided by financing activities was $17.3 million in 2012. The Company maintained a strong cash balance despite significant expenditure on the phase III clinical trial of EV71 vaccine candidate and investment in its production facilities. In order to commercialize other pipeline products, the Company may continue to explore new sources of financing when appropriate.

Correction of Unaudited Financials in Prior Quarterly Release

In the second quarter of 2012, the Company assessed there was reasonable assurance that the conditions attached to several government grants were fulfilled and recognized $1.4 million and $1.5 million of government grants as income for the three and six months periods ended June, 30, 2012, respectively. In the fourth quarter of 2012, the Company determined that government grants of $0.98 million (RMB 6.2 million) related to the purchase of equipment that should have been recorded as deferred government grants with the balance applied to reduce depreciation expense of the related equipment over their remaining useful lives. As a result, the amount of government grants recognized as income should be reduced by $0.98 million for the three and six months periods ended June 30, 2012, and $0.98 million for the nine months periods ended September 30, 2012, respectively. The depreciation expense should also be reduced by $11,679 and $11,679 for the three and six months periods ended June 30, 2012, and $36,646 and $46,636 for the three and nine months periods ended September 30, 2012, respectively. Net cash used from operating activities remained unchanged, because the adjustments on net loss, depreciation of property, plant and equipment and amortization of licenses and permits, and the recognized government grant income in operating activities did not affect cash. Corresponding corrections were made for both the unaudited fourth quarter and full year 2012 financial statements. The corrections to earning releases that were issued in the affected quarters in 2012 are presented in the tables below. Investors should no longer rely upon the previously released unaudited financial statements for the periods and any earnings releases or other communications relating to these periods.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss):

Unaudited Three-month and six-month period ended June 30, 2012


























 Three months ended 'June 30 2012 


 Six months ended 'June 30 2012 


 Previously Reported 

 Adjustment 

 Corrected Report 


 Previously Reported 

 Adjustment 

 Corrected Report 









 Sales 

9,364,632

-

9,364,632


15,338,099

-

15,338,099

 Cost of sales 

1,375,917

-

1,375,917


3,631,206

-

3,631,206









 Gross profit 

7,988,715

-

7,988,715


11,706,893

-

11,706,893









 Selling, general and administrative expenses  

6,700,526

-

6,700,526


11,020,815

-

11,020,815

 Research and development expenses - net of  

4,676,703

-

4,676,703


12,018,875

-

12,018,875

 Depreciation of property, plant and equipment 
and amortization of  licenses and permits 

324,944

(11,679)

313,265


632,387

(11,679)

620,708

 Loss of disposal and impairment of property, plant and equipment  

0

-

0


0

-

0

 Provision for doubtful debts 

-

-

-


-

-

-

 Government grants recognized in income 

(1,386,126)

981,044

(405,082)


(1,457,330)

981,044

(476,286)









 Total operating expenses 

10,316,047

969,365

11,285,412


22,214,747

969,365

23,184,112









 Operating income (loss) 

(2,327,332)

(969,365)

(3,296,697)


(10,507,854)

(969,365)

(11,477,219)









 Interest income 

498,856

-

498,856


1,096,527

-

1,096,527

 Interest and financing expenses 

(232,078)

-

(232,078)


(446,398)

-

(446,398)

 Other income (Expenses) 

14,635

-

14,635


132,713

-

132,713









 Income (loss)  before income taxes and non-
controlling interests 

(2,045,919)

(969,365)

(3,015,284)


(9,725,012)

(969,365)

(10,694,377)









 Income tax recovery (expenses) 

797,462

-

797,462


800,364

-

800,364









 Consolidated net income (loss) 

(1,248,457)

(969,365)

(2,217,822)


(8,924,648)

(969,365)

(9,894,013)









 Less: income (loss) attributable to non-controlling interests 

(326,828)

(260,856)

(587,684)


(2,389,964)

(260,856)

(2,650,820)









 Net income (loss) attributable to stockholders 

(921,629)

(708,509)

(1,630,138)


(6,534,684)

(708,509)

(7,243,193)

 Net income (loss) 

(1,248,457)

(969,365)

(2,217,822)


(8,924,648)

(969,365)

(9,894,013)









 Other comprehensive income (loss) 








 Foreign currency translation adjustment 

(474,801)

5,067

(469,734)


171,982

5,067

177,049

 Total comprehensive income (loss) 

(1,723,258)

(964,298)

(2,687,556)


(8,752,666)

(964,298)

(9,716,964)

 Less: comprehensive income (loss) attributable to non-controlling interests 

(373,994)

(259,492)

(633,486)


(2,353,583)

(259,492)

(2,613,075)

 Comprehensive income(loss) attributable to stockholders 

(1,349,264)

(704,806)

(2,054,070)


(6,399,083)

(704,806)

(7,103,889)

 Basic and diluted earnings (loss) per share  

(0.02)

(0.01)

(0.03)


(0.12)

(0.01)

(0.13)

 Weighted average number of shares 








 of common stock outstanding  








 - Basic 

54,804,498

54,804,498

54,804,498


54,784,801

54,784,801

54,784,801

 - Diluted 

54,804,498

54,804,498

54,804,498


54,784,801

54,784,801

54,784,801









Unaudited Three-month and six-month period ended September 30, 2012


























Three months ended 'September 30 2012


Nine months ended 'September 30 2012


 Previously Reported 

 Adjustment 

 Corrected Report 


 Previously Reported 

 Adjustment 

 Corrected Report 









Sales

14,287,100

-

14,287,100


29,625,199

-

29,625,199

Cost of sales

6,770,712

-

6,770,712


10,401,918

-

10,401,918









Gross profit

7,516,388

-

7,516,388


19,223,281

-

19,223,281









Selling, general and administrative expenses 

7,844,861

-

7,844,861


18,865,676

-

18,865,676

Research and development expenses - net of 

3,773,625

-

3,773,625


15,792,500

-

15,792,500

Depreciation of property, plant and equipment 
and amortization of  licenses and permits

471,242

(36,646)

434,596


1,103,629

(46,636)

1,056,993

Loss of disposal and impairment of property, plant and equipment 

-

-

-


-

-

-

Provision for doubtful debts

97,067

-

97,067


97,067

-

97,067

Government grants recognized in income

(78,053)

-

(78,053)


(1,535,383)

979,355

(556,028)









Total operating expenses

12,108,742

(36,646)

12,072,096


34,323,489

932,719

35,256,208









Operating income (loss)

(4,592,354)

36,646

(4,555,708)


(15,100,208)

(932,719)

(16,032,927)









Interest income

464,512

-

464,512


1,561,039


1,561,039

Interest and financing expenses

302,846

-

302,846


(143,552)

-

(143,552)

Other income (Expenses)

(47,283)

-

(47,283)


85,430


85,430









Income (loss)  before income taxes and non-
controlling interests

(3,872,279)

36,646

(3,835,633)


(13,597,291)

(932,719)

(14,530,010)









Income tax recovery (expenses)

(5,958)

-

(5,958)


794,406

-

794,406









Consolidated net income (loss)

(3,878,237)

36,646

(3,841,591)


(12,802,885)

(932,719)

(13,735,604)









Less: income (loss) attributable to non-controlling interests

(849,619)

9,861

(839,758)


(3,239,583)

(250,995)

(3,490,578)









Net income (loss) attributable to stockholders

(3,028,618)

26,785

(3,001,833)


(9,563,302)

(681,724)

(10,245,026)

Net income (loss)

(3,878,237)

36,646

(3,841,591)


(12,802,885)

(932,719)

(13,735,604)









Other comprehensive income (loss)








Foreign currency translation adjustment

890,063

(11,880)

878,183


1,062,045

(6,813)

1,055,232

Total comprehensive income (loss)

(2,988,174)

24,766

(2,963,408)


(11,740,840)

(939,532)

(12,680,372)

Less: comprehensive income (loss) attributable
to non-controlling interests

(744,732)

6,664

(738,068)


(3,098,315)

(252,828)

(3,351,143)

Comprehensive income(loss) attributable to stockholders

(2,243,442)

18,102

(2,225,340)


(8,642,525)

(686,704)

(9,329,229)

 Basic and diluted earnings (loss) per share  

(0.06)

0.01

(0.05)


(0.17)

(0.02)

(0.19)

Weighted average number of shares








of common stock outstanding 








- Basic

55,023,070

55,023,070

55,023,070


54,881,874

54,881,874

54,881,874

- Diluted

55,023,070

55,023,070

55,023,070


54,881,874

54,881,874

54,881,874









 

Unaudited Consolidated Balance Sheet:






























 June 30 2012 


 September 30 2012 



 Previously Reported

 Adjustment 

 Corrected Report


 Previously Reported

 Adjustment

 Corrected Report 


ASSETS


















Current assets









  Cash and cash equivalents

89,440,373

-

89,440,373


81,962,420

-

81,962,420


  Accounts receivable – net 

18,533,886

-

18,533,886


25,316,304

-

25,316,304


  Inventories

14,226,557

-

14,226,557


14,099,902

-

14,099,902


  Prepaid expenses and deposits

1,408,762

-

1,408,762


905,437

-

905,437











Total current assets

123,609,578

-

123,609,578


122,284,063

-

122,284,063











Property, plant and equipment 

80,961,440

-

80,961,440


82,994,261

-

82,994,261


Long-term inventories

3,974,552

-

3,974,552


2,227,196

-

2,227,196


Long-term prepaid expenses 

343,374

-

343,374


311,079

-

311,079


Prepayments for acquisition of equipment

452,144

-

452,144


525,972

-

525,972


Deferred tax assets 

353,903

-

353,903


351,627

-

351,627


Licenses and permits

1,278,421

-

1,278,421


1,261,820

-

1,261,820


Total assets

210,973,412

-

210,973,412


209,956,018

-

209,956,018











LIABILITIES AND EQUITY


















Current liabilities









  Loans payable 

4,722,178

-

4,722,178


4,773,422

-

4,773,422


  Accounts payable and accrued liabilities 

28,698,963

-

28,698,963


27,529,207

-

27,529,207


  Income tax payable

234,156

-

234,156


236,697

-

236,697


  Deferred revenue

3,794,136

-

3,794,136


8,108,669

-

8,108,669


  Dividends payable

0

-

0


-

-

-


  Deferred government grants 

100,897

345,471

446,368


101,992

349,222

451,214


Total current liabilities

37,550,330

345,471

37,895,801


40,749,987

349,222

41,099,209











Deferred government grants

2,805,528

618,827

3,424,355


2,761,758

590,310

3,352,068


Loans payable 

23,330,072

-

23,330,072


24,670,318

-

24,670,318


Due to related party 

3,167,008

-

3,167,008


3,201,375

-

3,201,375


Deferred revenue

6,925,862

-

6,925,862


4,194,246

-

4,194,246


Total long term liabilities

36,228,470

618,827

36,847,297


34,827,697

590,310

35,418,007











Total liabilities

73,778,800

964,298

74,743,098


75,577,684

939,532

76,517,216











Commitments and contingencies 


















EQUITY









Preferred stock

-

-

-


-

-

-


  Authorized 50,000,000 shares at par value of


-




-



 $0.001 each  Issued and outstanding: nil


-




-



Common stock 

55,020


55,020


55,024

-

55,024


Additional paid-in capital

106,032,906


106,032,906


106,204,800

-

106,204,800


Accumulated other comprehensive income

10,113,926

5,067

10,118,993


10,899,102

(6,813)

10,892,289


Statutory surplus reserves

11,808,271


11,808,271


11,808,271

-

11,808,271


Retained earnings(accumulated deficit) 

(3,838,457)

(708,509)

(4,546,966)


(6,867,075)

(681,724)

(7,548,799)


Total stockholders' equity

124,171,666

(703,442)

123,468,224


122,100,122

(688,537)

121,411,585











Non-controlling interests 

13,022,946

(260,856)

12,762,090


12,278,212

(250,995)

12,027,217











Total equity

137,194,612

(964,298)

136,230,314


134,378,334

(939,532)

133,438,802











Total liabilities and equity

210,973,412

-

210,973,412


209,956,018

-

209,956,018



















Conference Call Details

The Company will host a conference call on Thursday, April 18, 2013, at 8:00 a.m. EDT (April 18, 2013, at 8:00 p.m. China Standard Time) to review the Company's financial results and provide an update on recent corporate developments.

To access the conference call, please dial 1-877-407-4018 (USA) or 1-201-689-8471 (International).  A replay of the call will be available from 11 a.m. EDT on April 18, 2013 to May 2, 2013 at midnight.  To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 411774.

A live audio webcast of the call will also be available from the investors section on the corporate web site at www.sinovac.com.  A webcast replay can be accessed on the corporate website beginning April 18, 2013, and the replay will remain available for 30 days.

Statement Regarding Unaudited Financial Information

The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on the Company's year-end financial statements, which could result in significant differences from this unaudited financial information. The Company expects to file final audited results with the SEC shortly.

About Sinovac

Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases including hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu) and mumps, as well as animal rabies vaccine for canines.  The Company recently concluded the phase III clinical trial for enterovirus 71 (against hand, foot and mouth disease).  In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, Panflu.1, and has manufactured it for the Chinese Central Government, pursuant to the government-stockpiling program.  The Company is also the only supplier of the H5N1 pandemic influenza vaccine to the government-stockpiling program.  Sinovac is developing a number of new pipeline vaccines including vaccines for pneumococcal polysaccharides, pneumococcal conjugate, varicella and rubella.  Sinovac sells its vaccines mainly in China and exports selected vaccines to Mongolia, Nepal, and the Philippines. Sinovac was also granted a license to commercialize seasonal flu vaccine in Mexico.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about Sinovac's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Sinovac does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Helen Yang
Sinovac Biotech Ltd.
Tel:  +86-10-8279-9871
Fax:  +86-10-6296-6910
Email: ir@sinovac.com

Investors:
Stephanie Carrington
The Ruth Group
Tel:  +1-646-536-7017
Email: scarrington@theruthgroup.com

Media:
Aaron Estrada
The Ruth Group
Tel:  +1-646-536-7028
Email: vaguiar@theruthgroup.com



















SINOVAC BIOTECH LTD.









Incorporated in Antigua and Barbuda









Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)









Years ended December 31, 2012 and 2011









(Unaudited)


Three months ended


Twelve months ended

(Expressed in U.S. Dollars)


31-Dec


31-Dec



2012


2011


2012


2011

Sales

$

18,951,501

$

21,143,404

$

48,576,700

$

56,841,892

Cost of sales-(exclusive of depreciation of land
use right and amortization of licenses and
permits of $126,998 (2011- $33,507) for three
months and $234,768  (2011 -$290,526) for
twelve months. 


8,698,009


8,031,758


19,099,927


21,127,410

Gross profit


10,253,492


13,111,646


29,476,773


35,714,482










Selling, general and administrative expenses


12,819,508


5,909,584


31,685,185


22,372,095

Provision for (recovery of) doubtful accounts


-971,287


-1,661,581


-874,220


-166,865

Research and development expenses - net of $Nil (2011-$470,827) in government research grants for three months and $125,222 (2010-$686,258) for twelve months. 


1,251,065


2,261,688


17,043,565


9,006,550

Depreciation of property, plant and equipment  and amortization of  licenses and permits


539,672


365,391


1,594,976


1,436,944

Loss of disposal and impairment of property, plant and equipment 


2,190,504


259,464


2,190,504


454,973

Government grant recognised as income


181,486


-556,169


-372,853


-763,677










Total operating expenses


16,010,948

-

6,578,377


51,267,157

-

32,340,020

Operating income (loss)


-5,757,456

-

6,533,269


-21,790,384

-

3,374,462










Interest and financing expenses –net of $485,317 (2010-$nil) in government grants for three months and $595,883 (2010-$147,520) for twelve months. 


-630,824


61,756


-774,376


-384,560

Interest income


449,745


555,375


2,010,784


1,397,141

Other income (expenses)


-162,627


122,452


-77,197


279,866










Loss on disposal and write down of equipment


















Income (loss)  before income taxes and non-controlling interests


-6,101,162

-

7,272,852


-20,631,173

-

4,666,909










Income tax recovery (expenses) 


89,491


-3,009,880


883,897


-5,066,603










Consolidated net income (loss)


-6,011,671

-

4,262,972


-19,747,276

-

-399,694










Less: income (loss) attributable to non-controlling interests


-577,578


1,494,118


-4,068,156


445,002










Net income (loss) attributable to stockholders

$

-5,434,093

$

2,768,854

$

-15,679,120

$

-844,696

Net income (loss)

$

-6,011,671

$

4,262,972

$

-19,747,276

$

-399,694

Other comprehensive income 









Foreign currency translation adjustment


960,352


789,653


2,015,584


3,639,992

Total comprehensive income (loss)


-5,051,319


5,052,625


-17,731,692


3,240,298

Less: comprehensive income (loss) attributable to non-controlling interests 


-488,125


1,595,969


-3,839,268


973,562

Comprehensive income (loss) attributable to stockholders

$

-4,563,194

$

3,456,656

$

-13,892,424

$

2,266,736










Earnings (loss) per share              – basic

$

-0.10

$

0.05

$

-0.29

$

-0.02

                                                             – diluted

$

-0.10

$

0.05

$

-0.29

$

-0.02










Weighted average number of shares of common stock outstanding









      – Basic 


55,037,264


54,766,428


54,926,440


54,608,919

– Diluted


55,037,264


54,946,194


54,926,440


54,608,919



































SINOVAC BIOTECH LTD.





Incorporated in Antigua and Barbuda





Consolidated Balance Sheets





December 31, 2012 and 2011





(Unaudited)








(Expressed in U.S. Dollars)







December 31,


December 31, 

2012

2011

ASSETS










Current assets





  Cash and cash equivalents

$

90,881,970

$

104,286,695

  Accounts receivable – net


23,440,135


17,834,407

  Inventories


10,529,476


8,113,428

  Prepaid expenses and deposits


1,072,076


1,804,555






Total current assets


125,923,657


132,039,085






Property, plant and equipment 


80,083,383


75,627,881

Long-term inventories


28,692


5,248,237

Long-term prepaid expenses 


289,766


408,656

Prepayments for acquisition of equipment


483,278


828,902

Deferred tax assets 


445,589


419,114

Licenses and permits


1,149,914


1,336,254

Total assets

$

208,404,279

$

215,908,129






LIABILITIES AND EQUITY










Current liabilities





  Loans payable

$

3,328,590

$

4,713,498

  Accounts payable and accrued liabilities 


25,425,498


29,522,495

Income tax payable 


238,775


3,351,127

Deferred revenue


11,972,155


429,416

  Dividends payable


-


795,106

  Deferred government grants 


431,097


719,081

Total current liabilities


41,396,115


39,530,723






Deferred government grants 


4,068,602


3,388,913

Loans payable 


31,181,235


17,321,327

Due to related party 


3,230,125


-

Deferred revenue


99,517


10,369,695

Total long term liabilities


38,579,479


31,079,935






Total liabilities


79,975,594


70,610,658






Commitments and contingencies 










EQUITY





Preferred stock


-


-

  Authorized 50,000,000 shares at par value of $0.001 each





  Issued and outstanding: nil





Common stock 


55,092


54,774

  Authorized: 100,000,000 shares at par value of $0.001 each





  Issued and outstanding:  55,091,561 (2011 – 54,773,961)





Additional paid-in capital


106,245,934


105,383,346

Accumulated other comprehensive income


11,765,021


9,978,325

Statutory surplus reserves


11,808,271


11,808,271

Retained earnings (accumulated deficit) 


-12,982,893


2,696,227

Total stockholders' equity


116,891,425


129,920,943






Non-controlling interests 


11,537,260


15,376,528






Total equity


128,428,685


145,297,471






Total liabilities and equity

$

208,404,279

$

215,908,129





























SINOVAC BIOTECH LTD.

Incorporated in Antigua and Barbuda

Consolidated Statements of Cash Flows

Years ended December 31, 2012 and 2011

(Unaudited)










(Expressed in U.S. Dollars)



Three months ended


Twelve months ended



31-Dec


31-Dec



2012


2011


2012


2011

Cash flows from (used in)
operating activities









  Net income (loss)

$

-6,011,671


4,262,972

$

-19,747,276

$

-399,694

  Adjustments to reconcile net income to net cash









  provided by operating activities:









 - deferred income taxes


-89,491


788,472


-17,204


2,845,195

 - stock-based compensation


-40,878


41,909


347,226


206,301

 - inventory provision


2,113,825


2,735,822


3,479,453


4,034,169

 - Provision for (recovery of)  doubtful accounts


-971,287


-1,661,581


-874,220


-166,865

 Loss of disposal and impairment of property,  plant  and equipment 


2,184,576


259,464


2,190,504


454,973










  - research and development expenditures qualified for government grant


-46,242


-470,827


-125,222


-686,258

 - depreciation of property, plant and equipment









   and amortization of licenses and permits


814,252


1,213,428


4,487,411


4,825,613

 - deferred government grant recognized in income 


109,340


-225,035


-358,230


-432,543

 accretion expenses


49,608


86,780


234,957


377,410

Changes in:









 - accounts receivable


3,016,814


6,014,109


-4,285,669


5,474,602

 - inventories


3,715,070


-108,988


-425,853


-1,915,078

 - income tax payable 


-4,841


1,863,729


-3,129,693


1,339,812

 - prepaid expenses and deposits


-135,558


-107,276


913,084


-530,715

 - deferred revenue 


-330,322.00


-1,190,534


1,026,283


-2,695,943

 - accounts payable and accrued liabilities


3,451,254


3,075,574


-328,062


1,204,647










Net cash (used in)
provided by operating
activities


7,824,449


16,578,018


-16,612,511


13,935,626










Cash flows from financing activities









- Loan proceeds


9,489,001


7,399,314


16,787,057


11,391,836

- Loan repayment


-4,755,262


-9,275,502


-4,755,262


-10,658,840

   net of share issuance costs


108,960


6,400


508,160


748,800

- Proceeds from shares subscribed 


-26,880.00


-


7,520


3,360

- Dividends paid to non-controlling shareholder 









of Sinovac Beijing


-2775


-


-802,151


-5,862,676

- Government grants received 


2,154,186.00


1,585,289


2,394,766


1,592,925

- Repayment from (loan to) non-controlling shareholder of  Sinovac  Beijing 


11666


-




3,397,522

Repayment from (loan to) non-controlling shareholder of  Sinovac  Dalian


-


-


3,189,830












Net cash provided by
financing activities


6,978,896


-284,499


17,329,920


612,927










Cash flows used in
investing activities









 - Restricted cash 


-


-


-


-

 - Proceeds from disposal of equipment


5,375


4,797


5,375


122,089

- Proceeds from redemption of short-term investments


-


-


0


1,544,759

- Purchase of short-term investments


-


-


-


-

  - Prepayments for acquisition of equipment


254,966


-467,183


254,966


-467,183

 - Acquisition of property, plant and equipment


-5,469,802


-6,346,012


-16,411,576


-14,989,876










Net cash provided
(used) in investing
activities


-5,209,461


-6,808,398


-16,151,235


-13,790,211










Exchange gain on cash
and cash equivalents


674,334


602,319


2,029,101


1,942,863










Increase in cash and
cash equivalents


8,919,550


10,087,440


-13,404,725


2,701,205










Cash and cash
equivalents, beginning
of period


81,962,420


94,199,255


104,286,695


101,585,490



















Cash and cash equivalents, end of
period

$

90,881,970

$

104,286,695

$

90,881,970

$

104,286,695










Supplemental
disclosure of cash flow
information:









Cash paid for interest,net of amounts capitalized

$

256,256

$

242,504

$

749,500

$

455,851

Cash paid for income taxes

$

0

$

167,883

$

2,264,593

$

881,596










Supplemental schedule of non-cash activities:


















 Acquisition of property,
plant and equipment
included in accounts
payable and accrued
liabilities

$

3,788,804

$

9,124,751

$

3,788,004

$

9,124,751































SOURCE Sinovac Biotech Ltd.



RELATED LINKS
http://www.sinovac.com

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