Tiens Biotech Group (USA) Reports 2010 Results

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Mar 31, 2011, 05:30 ET

TIANJIN, China March 31, 2011 /PRNewswire-Asia/ -- Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSEAMEX: TBV), a company dedicated to the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary supplements, today announced financial results for the year ended December 31, 2010.

For 2010, revenue was $41.3 million, compared to $62.0 million for 2009.

Net income for 2010 was $4.8 million, or $0.07 per share, compared to $23.8 million, or $0.33 per share for 2009.

Results for 2010 mainly reflect a decrease in international sales. For 2010, international revenue was $16.4 million, compared to $34.7 million for 2009. In 2008, China's Administration of Quality Supervision, Inspection and Quarantine carried out a national campaign against unsafe food and substandard products, which brought on a general slow-down and backlog of export clearances for Chinese food products. Upon the lifting of the regulations, overseas affiliated companies began to purchase more products, thereby increasing sales for 2009.

In addition, Tiens' Indonesia affiliated company has not purchased from the Company during the year of 2010, given they purchased more products in 2009 after the 2008 product scarcity for the reason noted above. In addition, local Original Equipment Manufacturers in Indonesia have been producing healthcare products with the Company's semi-finished goods, which have a profit margin that is much lower than the profit margin of finished goods.

Tiens' affiliated companies in many regions have made certain adjustments to their marketing programs and reorganizations at their branch and higher levels, which are expected to boost sales performance over the long-run, but negatively affect short-term sales.

Other Highlights

Cost of sales were $15.0 million in 2010 compared to $20.2 million in 2009, a decrease of 25.6%. This decrease was primarily due to the corresponding decrease in sales. Cost of sales decreased at a lower rate than revenue, primarily due to fixed costs, which do not increase or decrease in line with sales.

Gross profit decreased by 37.0% to $26.3 million in 2010, compared to $41.8 million in 2009. The gross profit margin for 2010 was 63.7% compared to 67.5% in 2009.

Selling, general and administrative expenses increased by 22.0% to $19.5 million in 2010, compared to $16.0 million in 2009. The increase was primarily due to increases in allowance for bad debt ($1.9 million), salaries expenses ($0.7 million) and research & development expenses ($0.6 million).

As of December 31, 2010, Tiens had $128.0 million of retained earnings and total shareholders' equity of $285.5 million.

In addition, Tiens reported that on March 11, 2011, Tianjin Tianshi Biological Engineering Co., Ltd. (Tianshi Engineering) was awarded a direct selling license in Tianjin.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We remain confident that domestic sales will return to, and potentially exceed, previous levels, as distributors begin to replenish their stock of our products. In addition, we maintain this same positive sentiment regarding international sales, which we expect will benefit from the removal of export restrictions and gradual economic improvement. We are steadfast in our commitment to building greater market share in China, expanding our international customer base, and further implementing our strategic plans for long-term domestic and international growth."

About Tiens Biotech Group (USA), Inc. www.tiens-bio.com

Tiens Biotech Group (USA), Inc. (NYSEAMEX: 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 45 countries. Since its establishment, Tiens has developed and produced 37 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 87 branches. Outside of China, Tiens sells its products to affiliated companies in 45 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; and (v) 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.

-Tables Follow-

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2010 and 2009

		2010		2009
REVENUE - RELATED PARTIES	$	41,021,135	$	60,032,968
REVENUE - THIRD PARTIES		323,585		1,943,101

COST OF SALES - RELATED PARTIES		14,850,739		18,754,680
COST OF SALES - THIRD PARTIES		158,638		1,412,812

GROSS PROFIT		26,335,343		41,808,577

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		19,530,501		16,009,382

INCOME FROM OPERATIONS		6,804,842		25,799,195

Interest expense		(230,905)		(186,543)
Interest income		18,362		301,709
Other expense		35,965		(176,757)
OTHER EXPENSE, NET		(176,578)		(61,591)

INCOME BEFORE INCOME TAXES		6,628,264		25,737,604

INCOME TAXES		1,469,548		930,703

NET INCOME		5,158,716		24,806,901

LESS: Net income attributable to the noncontrolling interest		(323,101)		(965,557)

NET INCOME ATTRIBUTABLE TO THE COMPANY		4,835,615		23,841,344

OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustment		5,131,503		441,140
Loss from the realization of foreign currency sale		-		(6,030,079)

COMPREHENSIVE INCOME ATTRIBUTABLE
TO THE COMPANY		9,967,118		18,252,405

COMPREHENSIVE INCOME ATTRIBUTABLE
TO THE NONCONTROLLING INTEREST		664,854		993,504

COMPREHENSIVE INCOME	$	10,631,972	$	19,245,909

EARNINGS PER SHARE,
BASIC AND DILUTED	$	0.07	$	0.33

WEIGHTED AVERAGE NUMBER OF SHARES,
BASIC AND DILUTED		71,333,586		71,333,586

The accompanying notes are an integral part of this statement.


TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2010 AND DECEMBER 31, 2009
					December 31,		December 31,
					2010		2009
			A S S E T S

CURRENT ASSETS:
	Cash			$	10,155,522	$	1,848,328
	Accounts receivable, trade - related parties, net of allowance for doubtful accounts of $3,869,617 and $1,419,178 as of December 31, 2010 and December 31, 2009 , respectively				10,012,861		15,379,312
	Inventories				5,703,349		5,328,052
	Other receivables				1,045,952		995,657
	Other receivables - related parties				17,376,522		44,561,626
	Employee advances				170,842		115,673
	Prepaid expenses, net				415,208		658,193
	Prepaid taxes				3,646,140		407,534
		Total current assets			48,526,396		69,294,375

PROPERTY, PLANT AND EQUIPMENT, net					72,037,542		10,124,483

OTHER ASSETS:
	Construction in progress				128,715,283		125,572,621
	Construction deposits				12,490,855		1,405,997
	Intangible assets, net				12,987,000		12,864,295
	Other assets				10,721,040		11,847,937
		Total other assets			164,914,178		151,690,850

			Total assets	$	285,478,116	$	231,109,708

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

CURRENT LIABILITIES:
	Accounts payable			$	14,120,791	$	5,012,157
	Advances from customers - related parties				8,688,877		4,426,751
	Wages and benefits payable				1,613,782		1,484,852
	Short-term debt				3,024,800		-
	Income taxes payable				490,782		-
	Contractor deposits				209,376		183,395
	Contractor payables				28,134,711		18,513,216
	Other payables				1,113,416		1,151,551
	Other payables - related parties				1,417,516		3,326,110
		Total current liabilities			58,814,051		34,098,032

NON-CURRENT LIABILITIES
	Long term debt				18,451,280		-
	Deferred income				11,473,853		11,236,501
		Total non current liabilities			29,925,133		11,236,501
		Total liabilities			88,739,184		45,334,533

Commitments and Contingencies

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			18,349,908		18,042,189
		Statutory reserves			16,465,144		13,217,217
		Retained earnings			127,957,951		126,370,263
		Accumulated other comprehensive income			23,393,626		18,262,123
			Total shareholders' equity of the Company		186,237,963		175,963,126
		Noncontrolling interest			10,500,969		9,812,049
		Total equity			196,738,932		185,775,175
			Total liabilities and equity	$	285,478,116	$	231,109,708

	The accompanying notes are an integral part of this statement.

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
						2010		2009
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	5,158,716	$	24,806,901
	Adjustments to reconcile net income to cash provided by (used in) operating activities:

			Deferred income			(142,070)		-
			Provision for doubtful accounts			2,349,703		406,795
			Increase (decrease) provision for obsolete inventory			(237,632)		309,343
			Depreciation			2,036,280		2,173,251
			Amortization			338,019		381,742
			Interest expense			167,586		4,761
			(Gain) loss on sale of assets			(63,773)		47,054
			Loss on assets written off			40,982		5,876
			Rental expense borne by a related party			330,708		326,774
		(Increase) decrease in assets:
			Accounts receivable, trade - related parties			3,411,877		8,308,993
			Other receivables			(16,036)		(184,540)
			Other receivables - related parties			9,936,038		1,668,812
			Inventories			93,315		2,761,335
			Employee advances			(50,112)		(38,359)
			Prepaid expense			258,945		(419,419)
		Increase (decrease) in liabilities:
			Accounts payable			8,742,972		(1,249,152)
			Advances from customers - related parties			21,603,664		1,178,463
			Wages and benefits payable			76,914		(43,279)
			Other taxes payable			(2,674,295)		968,294
			Other payables			(74,068)		(650,296)
			Other payables - related parties			9,069,853		3,107,699
				Net cash provided by operating activities		60,357,586		43,871,048

CASH FLOWS FROM INVESTING ACTIVITIES:
	Cash outflow arising from disposal of a subsidiary					-		(23,975,473)
	Collections from loans to local government					-		105,229
	Construction deposits					(11,248,302)		(2,664,741)
	Contractor deposits					19,306		19,734
	Addition to construction in progress					(54,487,459)		(42,734,161)
	Equipment deposits					(6,102,039)		(11,782,984)
	Proceeds from sales of properties					73,650		29,131
	Purchase of equipment and automobiles					(1,441,906)		(2,009,536)
				Net cash used in investing activities		(73,186,750)		(83,012,801)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Loan from (repayment to) related parties					-		(3,946,860)
	Proceed from short term debt					2,958,800		-
	Proceeds from long term debt					18,048,680		-
				Net cash provided by (used in) financing activities		21,007,480		(3,946,860)

EFFECT OF EXCHANGE RATE CHANGES ON CASH						128,878		82,430

INCREASE (DECREASE) IN CASH						8,307,194		(43,006,183)

CASH, beginning of period						1,848,328		44,854,511


CASH, end of period					$	10,155,522	$	1,848,328

Supplemental disclosures of cash flow information
	Cash paid during the period for:
		Interest			$	217,154	$	105,817
		Income taxes			$	1,489,417	$	3,287,531

		The accompanying notes are an integral part of this statement.

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES REVENUE BY REGION

	Twelve months ended
	December 31,

	2010	2009	Change

China	$24,894,472	$27,241,333	- 8.6%
International	$ 16,450,248	$ 34,734,736	-52.6%
Total	$41,344,720	$61,976,069	-33.3%

CONTACT:

Investor Relations	Debra Berliner
Tiens Biotech Group (USA), Inc.	G. S. Schwartz & Co.
Tel: +86-22-8213-7335	Tel: 212-725-4500
Fax: +86-22-8213-7914	Fax: 212-725-9188
Email: [email protected]	Email: [email protected]
http://www.tiens-bio.com