NEW YORK, April 4 /PRNewswire-FirstCall/ -- Tiens Biotech Group (USA), Inc. ("the Company" or "Tiens USA"), , http://www.tiens-bio.com, announced financial results for the fourth quarter and twelve months ended December 31, 2005.
Revenue for the fourth quarter ended December 31, 2005 increased approximately 40% to $17,958,202 from $12,835,756 for the fourth quarter ended December 31, 2004.
The rise in revenue mainly reflects a 760% increase in the demand for Tiens' products in China, resulting from an increase in Tiens' networking domestic sales force and the establishment of 40 new branches in China by Tianshi Engineering. The addition of the 40 new branches increases the total number of branches in China to 106.
Net income for the fourth quarter ended December 31, 2005 was $5,473,176, compared to net income of $3,002,406 for the fourth quarter ended December 31, 2004. Earnings per share for the fourth quarter ended December 31, 2005 were $0.08, on weighted average shares outstanding of 71,333,586, compared to $0.04, on weighted average shares outstanding of 71,333,586, for the fourth quarter ended December 31, 2004.
Revenue for the twelve months ended December 31, 2005 increased approximately 16.6% to $68,688,669 from $58,910,532 for the twelve months ended December 31, 2004.
Net income for the twelve months ended December 31, 2005 was $26,878,120, compared to net income of $27,438,296 for the twelve months ended December 31, 2004. Earnings per share for the twelve months ended December 31, 2005 were $0.41 on weighted average shares outstanding of 71,333,586, compared to $0.38 on weighted average shares outstanding of 71,801,819 for the twelve months ended December 31, 2004.
Reasons for the revenue increases are detailed below and discussed in terms of domestic and international revenues.
Revenue Fourth Quarter Ended December 31, ------------- ---------------------------------- 2005 2004 Increase in % ----------- ---------- ------------- Domestic $14,759,431 $1,715,434 760% ------------- ----------- ---------- ------ International $7,854,463 $6,464,631 21.5% ------------- ----------- ---------- ------ Revenue Twelve Months Ended December 31, ------------- ----------------------------------- 2005 2004 Increase in % ------------- ----------- ---------- ------------- Domestic $38,181,090 $29,210,167 30.7% ------------- ----------- ----------- ------------- International $30,507,579 $29,700,365 2.7% ------------- ----------- ----------- -------------
For the twelve months ended December 31, 2005, domestic sales increased 30.7% compared to the corresponding period in 2004. The increase reflects a significant increase in the demand for our products in China during 2005, resulting from the increase in our networking sales forces in China and the establishment of 40 new branches in China by Engineering. International sales for the twelve months ended December 31, 2005 increased 2.7%, reflecting an increase in demand from two newly established affiliate companies located in Rwanda and Venezuela and a consistent level of sales in the international market.
Tien's strategy continues to develop a strong direct sales force through its international affiliated companies. Its products are sold to an extensive direct sales force of overseas affiliates and independent distributors who use the products themselves and/or resell them to other distributors or consumers. In 2005, as part Tien's focus on controlling costs, the number of countries sold to directly was reduced from 90 to 54. A material reduction in sales is not expected as a consequence, as some of the affiliated companies in those 54 countries resell Tien's products to its affiliates in the other countries.
The decrease in net income was due primarily to the provision of $2,984,302 for income taxes and $639,137 of other expense. The increase in provision for income taxes was the result of Tianjin Tianshi Biological Development Co., Ltd. ("Biological"), Tiens' USA's 80% owned subsidiary, becoming subject to an annual income tax rate of 7.5%. According to Chinese tax regulation, Biological was fully exempted from People's Republic of China (PRC) income taxes in 2003 and 2004, and became subject to income tax at a reduced rate of 7.5% in 2005 through 2007. From 2008 onwards, Biological will be subject to a 15% income tax.
One of the two main items contained in other expense was a one-time charge of $339,299 of additional taxes and penalties paid by Biological to the PRC government during the first quarter in 2005 as the result of a VAT examination by the local government. Another item was the $532,887 of interest expense incurred by Tianshi International Holdings Group Ltd., Tiens' wholly-owned subsidiary, according to the terms of its long-term loan agreement with Tian Yuan Investment Ltd.
Consolidated gross profit increased by $6,841,902 for the fourth quarter ended December 31,2005 and $9,810,271 for the twelve months ended December 31,2005 respectively, compared to the corresponding periods in 2004. Tiens USA's gross profit margin was 73% and 75% respectively for the fourth quarter and twelve months ended December 31, 2005, compared to 49% and 70% for the comparable periods of 2004. Tiens USA's ability to generate significant gross profit margins reflects management's ability to control costs while continuing to increase sales.
Cost of Goods Sold as a percentage of sales for the fourth quarter and twelve months ended December 31, 2005 were 27% and 25%, respectively, compared to 51% and 30% for the fourth quarter and twelve months ended December 31, 2004. The improvement in cost of goods sold as a percentage of sales reflects Tiens' focus on controlling such costs and improving economies of scale relating to the expansion of its production, as well as a decrease in raw material costs per unit based on larger raw material purchase orders.
Selling, general and administrative expenses increased by $6,050,627, for the twelve months ended December 31, 2005 from the corresponding period in 2004. The selling, general and administrative expenses as a percentage of sales increased to 19.5% for the twelve months ended December 31, 2005. This increase primarily reflects increases in salary expense due to new hires and a corresponding increase in low cost supplies.
As of December 31, 2005, Tiens had $69,079,060 of retained earnings, cash of $77,545,991 and total shareholders' equity of $89,647,399.
Jinyuan Li, Chairman, President and CEO of Tiens Biotech Group (USA), Inc., said, "The increase in sales for 2005 lends further credence to Tiens' ability to continue to capitalize on the growing worldwide demand for our unique nutrition supplement and personal care products. We are committed to increasing our market share, and we will continue to invest in the company's growth. We remain steadfast in our dedication to providing the highest level of quality products and are optimistic in our long-term outlook for the Company and its ability to enhance future 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, People's 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, Tianjin Tianshi Biological Engineering Co., Ltd. ("Tianshi Engineering"), a company incorporated in China. Tianshi Engineering markets and sells Biological's 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. Our direct sales marketing program is subject to governmental regulation in each of these countries.
Tiens Biotech Group (USA), Inc. 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 Company's financial results for the twelve months ended December 31, 2005, 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 Company's future operating results are dependent upon many factors, including but not limited to the Company's 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 Company's control; and (iv) 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."
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS AND THE YEARS ENDED DECEMBER 31, 2005, 2004 3 months ended 12 months ended December 31 December 31 2005 2004 2005 2004 (Unaudited) (Audited) (Unaudited) (Audited) REVENUE - RELATED PARTIES $17,958,202 $12,835,756 $68,688,669 $58,910,532 COST OF SALES 4,842,177 6,561,633 17,451,605 17,483,739 GROSS PROFIT 13,116,025 6,274,123 51,237,064 41,426,793 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 5,518,910 2,307,281 13,413,875 7,363,248 INCOME FROM OPERATIONS 7,597,115 3,966,842 37,823,189 34,063,545 OTHER (EXPENSE) INCOME, net 174,996 (134,794) (639,137) 388,266 INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST 7,772,111 3,832,048 37,184,052 34,451,811 PROVISION FOR INCOME TAXES 669,089 - 2,984,302 - INCOME BEFORE MINORITY INTEREST 7,103,022 3,832,048 34,199,750 34,451,811 MINORITY INTEREST 1,629,846 829,642 7,321,630 7,013,515 NET INCOME 5,473,176 3,002,406 26,878,120 27,438,296 OTHER COMPREHENSIVE INCOME (LOSS): 196,535 (8,239) 2,246,380 (8,239) Foreign currency translation adjustment COMPREHENSIVE INCOME $5,669,711 $2,994,167 $29,124,500 $27,430,057 EARNINGS PER SHARE, BASIC AND DILUTED $0.08 $0.04 $0.41 $0.38 WEIGHTED AVERAGE NUMBER OF SHARES 71,333,586 71,333,586 71,333,586 71,801,819 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2005 AND 2004 A S S E T S 2005 2004 CURRENT ASSETS: Cash $77,545,991 $39,243,872 Accounts receivable, trade - related parties, net of allowance for doubtful accounts of $206,916 and $30,442 as of December 31, 2005 and 2004, respectively 2,165,958 6,058,021 Other receivables 234,486 529,036 Other receivables - related parties 3,281,081 8,144,740 Inventories 7,516,352 4,567,418 Total current assets 90,743,868 58,543,087 PLANT AND EQUIPMENT, net 24,877,688 20,200,806 OTHER ASSETS: Intangible assets, net 476,637 469,765 Employee advances 145,071 75,212 Deposits 5,380,890 4,230,063 Total other assets 6,002,598 4,775,040 Total assets $121,624,154 $83,518,933 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 $2,698,813 $1,791,019 Accounts payable - related parties - 209,199 Advances from customers - related parties 2,077,130 673,349 Wages and benefits payable 1,045,052 165,370 Other taxes payable 1,413,054 623,113 Other payables 339,390 263,469 Other payables - related parties 1,816,534 945,274 Current portion of long term debt 2,130,000 155,442 Total current liabilities 11,519,973 4,826,235 LONG TERM DEBT, net of current portion 8,527,742 10,657,742 Total liabilities 20,047,715 15,483,977 MINORITY INTEREST 11,929,040 7,512,057 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 69,079,060 42,200,940 Accumulated other comprehensive income (loss) 2,234,213 (12,167) Total shareholders' equity 89,647,399 60,522,899 Total liabilities and shareholders' equity $121,624,154 $83,518,933 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.comhttp://www.tiens-bio.com
Tiens Biotech GroupCONTACT: Investor Relations - Tiens Biotech Group (USA), Inc.,+86-22-8213-7594, Fax: +86-22-8213-7667, investor@tiens-bio.com; CarlHymans, G. S. Schwartz & Co., +1-212-725-4500, Fax: +1-212-725-9188,carlh@schwartz.com
Web site: http://www.tiens-bio.com/
