Tiens Biotech Group (USA), Inc. Reports Third Quarter and Nine-Month Results

NEW YORK, Nov. 13 /PRNewswire-Asia-FirstCall/ -- Tiens Biotech Group (USA), Inc. , http://www.tiens-bio.com , today announced financial results for the third quarter and nine months ended September 30, 2009.

Revenue for the third quarter of 2009 was $9.4 million, compared to $26.2 million for the third quarter of 2008.

Net income for the third quarter of 2009 was $2.9 million, or $0.03 per share, compared to net income of $14.6 million, or $0.20 per share, for the third quarter of 2008.

Results for the third quarter of 2009 reflect a decrease in revenue in China to $4.7 million, compared to $14.6 million for the same period in 2008. The revenue decrease is attributed to a decline in domestic distributors' demand in the third quarter of 2009 after stocking up on products in the second quarter of 2009 due to the Company's increased marketing efforts in the second quarter. In addition, revenue for the third quarter of 2008 was unusually high due to a future price increase announcement by Tianshi Engineering during that quarter.

For the third quarter of 2009, international revenue was $4.8 million, compared to $11.6 million for the same period in 2008. The decrease in international revenue was mainly due to a decrease in sales in the Asia-Pacific region by $6.1 million and the Europe-Asia region by $2.5 million in the third quarter of 2009, as compared to the third quarter of 2008. International revenue results for the third quarter of 2009 reflect a decline in customer demand for the period as customers stocked up on certain products during the first two quarters of 2009. Export restrictions were reduced in late 2008 as China's Administration of Quality Supervision, Inspection and Quarantine completed its national campaign against unsafe food and substandard products. As a result of reduced export restrictions, customers were able to purchase more products in the first two quarters of 2009.

Revenue for the nine months ended September 30, 2009 was $48.2 million, compared to $58.7 million for the nine months ended September 30, 2008, reflecting the aforementioned decrease in sales in China.

Net income for the nine months ended September 30, 2009 was $22.2 million, or $0.29 per share, compared to $24.8 million, or $0.32 per share for nine months ended September 30, 2008.

For the nine months ended September 30, 2009, revenue in China was $17.1 million, compared to $29.2 million for the nine months ended September 30, 2008 reflecting the aforementioned reduction in distributors' product demand in the third quarter.

For the nine months ended September 30, 2009, international revenue was $31.2 million, compared to $29.5 million for the same period in 2008. The increase in international revenue for the nine months of 2009 reflects a strong increase in international sales in the first quarter of 2009 after China's Administration of Quality Supervision, Inspection and Quarantine ceased its export restrictions. From August 2007 to the end of 2008, it implemented an ongoing national campaign in China against unsafe food and substandard products, which resulted in a general slow-down and backlog of export clearances for Chinese food products.

Other Highlights

Cost of sales for the third quarter of 2009 was $3.1 million, compared to $6.6 million for the same period in 2008. The decrease was mainly due to the decrease in revenue for the third quarter of 2009.

Gross profit for the third quarter of 2009 was $6.3 million, compared to $19.6 million for the same period in 2008. The gross profit margin for the third quarter of 2009 was 66.7%, compared to 74.8% for the same period in 2008.

Selling, general and administrative expenses for the third quarter of 2009 were $2.9 million, compared to $4.6 million for the same period in 2008. The selling, general and administrative expenses as a percentage of sales was 30.9% for the third quarter of 2009 compared to 17.4% for the same period in 2008. This increase was primarily due to the decrease in revenue for the third quarter of 2009 compared to the same period of 2008.

Cost of sales for the nine months ended September 30, 2009, was $15.0 million, compared to $16.9 million for the same period in 2008. Cost of sales for the period decreased at a slightly lower rate than revenue, primarily due to fixed costs, which do not increase or decrease in line with revenue changes.

Gross profit for the nine months ended September 30, 2009 was $33.2 million, compared to $41.8 million the same period in 2008, and the gross profit margin was 68.9% compared to 71.3% for the same period in 2008. These decreases were mainly due to the decrease of revenue and the increase of fixed cost as a percentage of revenue.

Selling, general and administrative expenses for the nine months ended September 30, 2009 were $10.1 million, compared to $12.9 million in the same period in 2008. For the nine months ended September 30, 2009, selling, general and administrative expenses as a percentage of sales was 20.9%, compared to 22.0% for the same period in 2008. This decrease was primarily due to the decrease in selling, general and administrative expenses for the third quarter of 2009.

As of September 30, 2009, Tiens had $123.5 million of retained earnings and total shareholders' equity of $170.5 million.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are confident that international and domestic sales will return to, and potentially exceed, previous levels as customers and distributors begin to replenish stored up products. We will continue to implement our strategic plans for long-term growth and remain committed to expanding our international customer base and gaining greater market share in China."

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

Tiens Biotech Group (USA), Inc. 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 46 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 98 branches. Outside of China, Tiens sells its products to affiliated companies that 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."

CONTACT: Investor Relations, Tiens Biotech Group (USA), Inc.,
+86-22-8213-7594 (Tel), or +86-22-8213-7594 (Fax), or
investor@tiens-bio.com; Carl Hymans, G. S. Schwartz & Co., +1-212-725-4500
(Tel), or +1-212-725-9188 (Fax), or carlh@schwartz.com

Web site: http://www.tiens-bio.com/

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