China Biologic Products Announces Third Quarter 2009 Results

PRNewswire
Nov 16, 2009

TAI'AN, China, Nov. 16 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (OTC: CBPO) (BULLETIN BOARD: CBPO) ("China Biologic," or the "Company"), one of the leading plasma-based biopharmaceutical companies in the People's Republic of China ("PRC"), operating through its indirect majority- owned subsidiaries, Shandong Taibang Biological Products Co. Ltd. ("Taibang") and Guiyang Dalin Biologic Technologies Co., Ltd. ("Dalin") and its equity investment in Xi'an Huitian Blood Products Co., Ltd. ("Huitian"), today reported financial results for the third quarter ended September 30, 2009.

  Third Quarter 2009 Highlights
  -- Revenues increased 95.9% year-over-year to $27.0 million
  -- Revenues excluding the acquisition of Dalin increased 23.2%
     year-over-year to $17.0 million
  -- Gross profit increased 107.8% year-over-year to $20.1 million,
     representing a gross margin of 74.3%
  -- Operating income increased 99.1% year-over-year to $14.0 million,
     representing an operating margin of 51.9%
  -- Net loss attributable to controlling interest was $6.2 million, or
     ($0.29) per diluted share, including the impact of a $13.2 million
     non-cash expense
  -- Non-GAAP net income(*) was $7.1 million or $0.33 per diluted share, a
     56.8% increase over $4.5 million or $0.21 per diluted share in the
     third quarter of 2008


  (*) Excluding non-cash employee compensation expenses and changes in the
      fair value of derivative liabilities. See "About Non-GAAP Financial
      Measures" as well as the reconciliation table of non-GAAP net income
      to GAAP net income at the end of the press release.


"In the third quarter of 2009, we maintained our leadership position in the industry by continuing to provide high margin, plasma-based products to the market. Our operating income nearly doubled year-over-year, due to the contribution of our recently acquired Dalin subsidiary and healthy organic growth," said Mr. Chao Ming Zhao, Chief Executive Officer. "Furthermore, we made major steps forward in expanding our research and development capabilities by engaging an expert in plasma-based research to serve as our director of R&D, and we entered into a collaboration agreement with a well- known blood institute in Sichuan Province. We believe that these measures will allow us to make tangible progress toward our goal of becoming the leading plasma-based pharmaceutical company in China."

During the third quarter of 2009, the Company achieved the following milestones:

  -- China Biologic hosted a forum of industry experts at its headquarters
     in Tai'an City. The Company received counsel on how to create synergies
     among its subsidiaries, including the initiation of research and
     development of new drugs, efficient use of resources, quality control
     procedures during collection, production and distribution processes,
     and other areas to create long-term, sustainable growth.
  -- In order to reduce the cost of administrative operations, the Company
     relocated its Dalin subsidiary from Chongqing, Sichuan Province, to
     China Biologic's campus in Guiyang, Guizhou Province. Dalin was renamed
     "Guiyang Dalin Biologic Technologies Co., Ltd." to reflect the
     relocation.
  -- China Biologic appointed Dr. Vincent Yi-Wu Xie to serve as the
     Company's Director of Research and Development. Dr. Xie will oversee
     the development of new biologic products including processes,
     analytical methods and indications. Dr. Xie is a veteran in the
     biopharmaceutical industry and has published several papers and
     articles related to the field of plasma-based research.
  -- China Biologic's indirectly owned subsidiary, Qianfeng Biological
     Products Co., Ltd. ("Qianfeng"), was granted renewal of its PRC State
     Food and Drug Administration ("SFDA") certification of compliance with
     Good Manufacturing Practices for the Qianfeng production facility.
  -- China Biologic entered into a strategic research and development
     agreement with the Institute of Blood Transfusion (the "IBT"), based in
     Chengdu, Sichuan Province, to strengthen the Company's research and
     development capabilities and manufacturing processes. IBT is a division
     of the Chinese Academy of Medical Sciences and Peking Union Medical
     College.


  Third Quarter Results

Revenues for the third quarter of 2009 increased 95.9% to a record $27.0 million, compared to $13.8 million for the same period last year. The increase in revenues is primarily attributable to the consolidation of Dalin, a general increase in the price of plasma-based products, which was partially offset by a decline in sales volume by one of the Company's products, and a 0.3% increase due to foreign exchange translation. During the third quarter of 2009, Dalin accounted for $10.0 million in revenue, or 37.1% of total revenues, and Taibang accounted for $17.0 million in revenue, or 62.9% of total revenues. Revenues, excluding the acquisition of Dalin, increased 23.2% year-over-year, as prior to January 1, 2009, Taibang accounted for 100% of the Company's revenues.

Gross profit for the third quarter of 2009 was $20.1 million, up 107.8% from $9.7 million in the third quarter of 2008. Gross margin was 74.3%, up 430 basis points from 70.0% in the third quarter of 2008. The increase in gross profit margin was primarily due to general price increases and an increase in sales of higher margin products, which was partially offset by an increase in raw material costs.

Total operating expenses in the third quarter of 2009 increased 131.4% to $6.1 million versus $2.6 million in the prior year period. Selling expenses decreased 20.6% to $0.6 million, compared to $0.8 million in the third quarter of 2008. The decrease in selling expenses was primarily due to the reduction in marketing and promotion activities initiated in 2008, which was offset by the consolidation of Dalin's selling activities, as well as increased marketing efforts to increase direct sales to new hospitals. As a percentage of sales, selling expenses in the third quarter of 2009 were 2.3%, down from 5.7% in the third quarter last year. General and administrative ("G&A") expenses increased 216.3% to $5.2 million. As a percentage of sales, G&A expenses increased to 19.1% for the third quarter of 2009, from 11.8% for the same period in 2008. The increase in G&A expenses was mainly due to expenses related to the acquisition of Dalin, such as additional professional service charges and personnel-related costs and depreciation and amortization expenses. The Company also incurred $7,314 in non-cash employee compensation expenses as a result of grants to employees, consultants and directors made under the 2008 Equity Incentive Plan, compared to $20,613 for the same period in 2008.

Research and development expenses increased 30.6% to $0.3 million, or 1.0% of total revenues, compared to $0.2 million, or 1.5% of total revenue, in the third quarter of 2008. The dollar increase was due primarily to the consolidation of Dalin and increased costs from continuing clinical trials on new products.

Total other expenses in the third quarter of 2009 were $14.3 million. Between June 30, 2009 and September 30, 2009, the Company's stock price increased from $4.03 per share to $7.52 per share. As a result, the Company recognized a loss of $13.2 million from changes in the fair value of derivative liabilities, including warrants and derivative instruments (including the conversion option) embedded in the Company's Senior Secured Convertible Notes. No such charge occurred in the third quarter of 2008. In addition, the Company recorded a loss of $31,051 in equity income in connection with its 35% equity interest in Huitian, the Company's unconsolidated affiliate, compared to a net gain of $90,390 in the second quarter of 2009, due to the additional depreciation and amortization expenses arising from the write-up of assets as a result of the equity investment. Net interest expense was $0.7 million for the third quarter of 2009 compared to interest income of $21,713 for the same period in 2008. The increase in interest expense is primarily due to financing related to the acquisition of Dalin.

Provision for income taxes increased 61.2% to $2.5 million for the third quarter of 2009, compared to $1.6 million for the same period last year. The increase in provision for income taxes is mainly due to the consolidation of Dalin, which was offset by the decrease of Taibang's provision for income taxes. Taibang accrued its 2008 taxes at 25% before it was granted a 15% preferential tax rate for the 2008 tax year in early 2009. Net loss attributable to controlling interest for the third quarter of 2009 was $6.2 million, compared to net income attributable to controlling interest of $4.5 million in the third quarter of 2008. Fully diluted loss per share was $0.29 for the third quarter of 2009, compared to earnings per share of $0.21 in the third quarter of 2008.

Non-GAAP net income in the third quarter of 2009 was $7.1 million or $0.31 per fully diluted share, an increase of 56.8% from non-GAAP net income of $4.5 million, or $0.21 per fully diluted share in the third quarter of 2008.(*)

  (*) Excluding non-cash employee compensation expenses and changes in the
      fair value of derivative liabilities. See "About Non-GAAP Financial
      Measures" as well as the reconciliation table of non-GAAP net income
      to GAAP net income at the end of the press release.

  Nine Month Results

For the first nine months of 2009, total revenue was $81.4 million, up 142.4% from the first nine months of 2008. Revenues excluding the acquisition of Dalin increased 41.8% year-over-year to $47.6 million, compared to $33.6 million a year ago. Gross profit for the first nine months of 2009 was $59.0 million, up 147.5% from $23.8 million in the comparable period a year ago. Gross margin increased 200 basis points to 73.0% from 71.0% in the same period last year. Income from operations for the period was $40.6 million, up 159.7% from $15.6 million in the first nine months of 2008. Net income for the first nine months of 2009 was $5.0 million, down 42.7% from $8.8 million in the first nine months of 2008. Fully diluted earnings per share was $0.23 for the first nine months of 2009 compared to $0.40 in the first nine months of 2008. Adjusting for non-cash employee compensation expenses and changes in the fair value of derivative liabilities, including warrants and derivative instruments (including the conversion option) embedded in the Company's Senior Secured Convertible Notes, non-GAAP net income for the first nine months of 2009 was $20.0 million, or $0.92 per fully diluted share, an increase of 99.7% from non-GAAP net income of $10.1 million or $0.46 per fully diluted share for the first nine months of 2008.

Financial Condition

As of September 30, 2009, the Company had $50.3 million in cash and cash equivalents, approximately $26.8 million in working capital, and a current ratio of 1.4:1. Total shareholder's equity at the end of the third quarter of 2009 was $78.3 million, compared to $42.0 million at the end of 2008. The Company generated $35.5 million in net cash from operating activities for the first nine months of 2009 compared to $14.7 million in the same period of 2008.

Recent Developments

China Biologic was named to Forbes Magazine's fifth annual list of Asia's "200 Best Under a Billion" for the year 2009.

Business Outlook

Mr. Zhao added, "We believe that as a result of our recent equity investments in Dalin and Huitian, and as the only approved manufacturer of plasma-based biopharmaceuticals in Shandong Province, we are well-positioned to capitalize on the opportunities in our market. The acquisition of equity interests in Dalin and Huitian has accelerated our geographic expansion, diversified our customer base, and enhanced our technological capabilities, and has provided us with ownership interests in three of the 32 approved plasma-based biopharmaceutical manufacturers in China.

"During the fourth quarter of 2009 and into 2010, we expect to continue to experience strong demand for our products and services, as the tight supply and demand situation for plasma-based products in China is expected to persist. In the interim, we continue to invest in our research and development efforts aimed at expanding our product line to include higher-margin, technologically more advanced plasma-based biopharmaceutical products."

Conference Call

China Biologic will host a conference call at 8:00 a.m. ET on Monday, November 16, 2009, to discuss the 2009 third quarter financial results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 866-356-3093. International callers should dial +1-617-597-5381. The pass code for the call is 91606809. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Monday, November 16, 2009 at 10:00 a.m. ET. To access the replay, dial 888-286-8010. International callers should dial +1-617-801-6888. The conference pass code is 78299906.

Use of Non-GAAP Financial Measures

GAAP results for the three months and nine months ended September 30, 2009, and September 30, 2008, include non-cash compensation expenses related to options granted to employees and directors under the Company's 2008 Equity Incentive Plan and changes in the fair value of derivative liabilities, including warrants and derivative instruments (including the conversion option) embedded in the Company's Senior Secured Convertible Notes. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information excluding the impact of this item in this release. The Company's management believes that this non-GAAP measure provides investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

About China Biologic Products, Inc.

China Biologic Products, Inc. (the "Company"), through its indirect majority-owned subsidiaries, Shandong Taibang Biological Products Co. Ltd. and Guiyang Dalin Biologic Technologies Co., Ltd, and its equity investment in Xi'an Huitian Blood Products Co., Ltd., is currently the largest non-state- owned plasma-based biopharmaceutical company in China. The Company is a fully integrated biologic products company with plasma collection, production and manufacturing, research and development, and commercial operations. The Company's plasma-based biopharmaceutical products are irreplaceable during medical emergencies, and are used for the prevention and treatment of various diseases. The Company sells its products to hospitals and other healthcare facilities in China.

Safe Harbor Statement

This release may contain certain "forward-looking statements" relating to the business of China Biologic Products, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the significance of the Company's acquisitions and acquisition strategy and the benefits of such acquisitions, including the expected impact on the Company's 2009 revenues and net income; the ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries, including its goal of becoming the leading plasma-based biopharmaceutical company in China; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov/ ). All forward- looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

  For further information, please contact:

  Company Contact:
  China Biologic Products, Inc.
   Mr. Y. Tristan Kuo
   Chief Financial Officer
   Tel:   +86-538-6202206
   Email: IR@chinabiologic.com
   Web:   http://www.chinabiologic.com/

  Investor Relations Contact:
  CCG Investor Relations
   Mr. Athan Dounis, Account Manager
   Tel:   +1-646-213-1916
   Email: athan.dounis@ccgir.com

   Mr. Crocker Coulson, President
   Tel:   +1-646-213-1915
   Email: crocker.coulson@ccgir.com
   Web:   http://www.ccgirasia.com/


  CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
    OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)FOR THE THREE AND NINE
             MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (Unaudited)

                            Three months ended        Nine months ended
                              September 30,             September 30,
                            2009         2008         2009         2008
  REVENUES
  Revenues               $26,871,259  $13,799,915  $80,861,353  $33,574,764
  Revenues - related
   party                     168,480           --      508,529           --
  Total revenues          27,039,739   13,799,915   81,369,882   33,574,764
  COST OF REVENUES
  Cost of revenues         6,942,948    4,138,077   22,283,881    9,725,103
  Cost of revenues -
   related party              17,953           --       53,715           --
  Total cost of revenues   6,960,901    4,138,077   22,337,596    9,725,103
  GROSS PROFIT            20,078,838    9,661,838   59,032,286   23,849,661
  OPERATING EXPENSES:
   Selling expenses          619,467      780,246    2,313,577    1,785,340
   General and
    administrative
    expenses               5,169,137    1,634,233   14,996,846    5,756,087
   Research and
    development expenses     262,500      201,037    1,098,083      664,652
  Total operating
   expenses                6,051,104    2,615,516   18,408,506    8,206,079
  INCOME FROM OPERATIONS  14,027,734    7,046,322   40,623,780   15,643,582
  OTHER EXPENSES
   (INCOME):
   Equity in loss
    (income) of
    unconsolidated
    affiliate                (31,051)          --       19,092           --
   Change in fair value
    of derivative
    liabilities           13,242,333           --   14,931,088           --
   Interest expense
    (income), net            724,771      (21,713)   1,979,538       (7,531)
   Other expense
    (income), net            337,645       57,815      372,955      110,267
  Total other expenses,
   net                    14,273,698       36,102   17,302,673      102,736
  INCOME (LOSS) BEFORE
   PROVISION FOR INCOME
   TAXES AND
   NONCONTROLLING
   INTEREST                 (245,964)   7,010,220   23,321,107   15,540,846
  PROVISION FOR INCOME
   TAXES                   2,535,023    1,572,816    7,547,318    4,437,141
  NET INCOME (LOSS)
   BEFORE NONCONTROLLING
   INTEREST               (2,780,987)   5,437,404   15,773,789   11,103,705
  Less: Net income
   attributable to
   noncontrolling
   interest                3,412,582      958,858   10,738,295    2,323,205
  NET INCOME (LOSS)
   ATTRIBUTABLE TO
   CONTROLLING INTEREST   (6,193,569)   4,478,546    5,035,494    8,780,500
  OTHER COMPREHENSIVE
   INCOME (LOSS):
   Foreign currency
    translation
    adjustments              (62,767)     121,814      349,602    1,992,939
  COMPREHENSIVE INCOME
   (LOSS)                $(6,256,336)  $4,600,360   $5,385,096  $10,773,439
  BASIC EARNINGS PER
   SHARE:
   Weighted average
    number of shares      21,632,793   21,434,942   21,504,002   21,434,942
   Earnings (loss) per
    share                     $(0.29)       $0.21        $0.23        $0.41
  DILUTED EARNINGS PER
   SHARE:
   Weighted average
    number of shares      21,632,793   21,504,629   21,767,086   21,713,170
   Earnings (loss) per
    share                     $(0.29)       $0.21        $0.23        $0.40



  CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
                AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
                                ASSETS
                                             September 30,      December 31,
                                                 2009               2008
                                              (Unaudited)
  CURRENT ASSETS:
  Cash and cash equivalents                   $50,348,133        $8,814,616
  Accounts receivable, net of allowance
   for doubtful accounts of $1,393,567
   and $1,268,052 as of September 30,
   2009 and December 31, 2008,
   respectively                                 1,473,942           313,087
  Accounts receivable - related party              41,430                --
  Dividend receivable                                  --           147,256
  Other receivables                               926,581           356,957
  Inventories                                  33,218,618        14,949,196
  Prepayments and deferred expense              1,582,566           614,704
  Total current assets                         87,591,270        25,195,816
  PLANT AND EQUIPMENT, net                     27,849,832        19,299,364
  OTHER ASSETS:
  Investment in unconsolidated
   affiliate                                    6,277,894         6,533,977
  Refundable deposit for potential
   acquisition                                         --        14,181,800
  Prepayments - non-current                     4,870,735           955,874
  Intangible assets, net                       21,152,417         1,002,561
  Goodwill                                     12,425,589                --
  Total other assets                           44,726,635        22,674,212
  Total assets                               $160,167,737       $67,169,392
  LIABILITIES AND EQUITY
  CURRENT LIABILITIES:
  Accounts payable                             $3,610,470        $2,481,889
  Notes payable                                        --            29,340
  Short term loans - bank                      10,782,450                --
  Short term loans - holder of
   noncontrolling interest                      4,425,777           773,277
  Other payables and accrued
   liabilities                                 17,118,218         3,962,931
  Other payable - related parties               3,086,940                --
  Accrued interest - holder of
   noncontrolling interest                      1,319,556                --
  Distribution payable to holder of
   noncontrolling interest                        759,319         3,252,354
  Customer deposits                             7,751,013         1,091,792
  Taxes payable                                 5,913,231         4,060,010
  Long term loan - bank, current
   maturities                                   3,374,100                --
  Investment payable                            2,625,405         3,275,501
  Total current liabilities                    60,766,479        18,927,094
  OTHER LIABILITIES:
  Non-current other payable - land use
   right                                          324,121           325,390
  Notes payable, net of discount of
   $9,508,965 as of September 30, 2009             45,175                --
  Long term loan - bank, net of current
   maturities                                          --         5,868,000
  Derivative liability - conversion
   option                                      12,784,873                --
  Fair value of derivative instruments          7,943,174                --
  Total other liabilities                      21,097,343         6,193,390
  Total liabilities                            81,863,822        25,120,484
  COMMITMENTS AND CONTINGENCIES                        --                --
  EQUITY:
  Common stock, $0.0001 par value,
   100,000,000 shares authorized,
   22,650,442 and 21,434,942 shares
   issued and outstanding at September
   30, 2009 and December 31, 2008,
   respectively                                     2,265             2,143
  Paid-in-capital                              19,191,623        10,700,032
  Statutory reserves                           13,413,353         6,989,801
  Retained earnings                            13,074,618        15,392,253
  Accumulated other comprehensive
   income                                       5,102,487         4,752,885
  Total shareholders' equity                   50,784,346        37,837,114
  NONCONTROLLING INTEREST                      27,519,569         4,211,794
  Total equity                                 78,303,915        42,048,908
  Total liabilities and equity               $160,167,737       $67,169,392




  CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
      CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
                                 (Unaudited)

                                                2009              2008
    CASH FLOWS FROM OPERATING
     ACTIVITIES:
    Net income attributable to
     controlling interest                     $5,035,494        $8,780,500
    Net income attributable to
     noncontrolling interest                  10,738,295         2,323,205
    Consolidated net income                   15,773,789        11,103,705
    Adjustments to reconcile net income
     to cash provided by operating
     activities:
    Depreciation                               2,158,206           914,575
    Amortization                               2,654,269            80,753
    Loss on disposal of equipment                114,246            73,310
    Recovery of bad debt previously
     reserved                                     (9,621)               --
    Allowance for bad debt - accounts
     receivables                                  90,442                --
    Allowance for bad debt - other
     receivables and prepayments                 659,788                --
    Stock based compensation                      62,281         1,283,801
    Change in fair value of warrant
     liabilities                              14,931,088                --
    Amortization of deferred note
     issuance cost                               110,938                --
    Amortization of discount on
     convertible notes                            45,175                --
    Equity in loss of unconsolidated
     affiliate                                    19,092                --
    Change in operating assets and
     liabilities:
    Notes receivable                                  --            43,011
    Accounts receivable                       (1,306,293)         (353,412)
    Accounts receivable - related party          378,308                --
    Other receivables                           (485,641)           15,251
    Inventories                               (9,729,616)       (3,206,654)
    Prepayments and deferred expenses           (511,819)         (355,012)
    Accounts payable                            (149,764)           72,681
    Other payables and accrued
     liabilities                               4,236,622         1,267,099
    Accrued interest - holder of
     noncontrolling interest                   1,319,555                --
    Customer deposits                          4,154,255           383,703
    Taxes payable                                942,929         3,477,543
    Contingent liability                              --          (108,430)
    Net cash provided by operating
     activities                               35,458,229        14,691,924
    CASH FLOWS FROM INVESTING
     ACTIVITIES:
    Cash acquired through acquisition         11,945,303                --
    Proceeds from dividend receivable            147,256                --
    Payments made for acquisition            (10,373,854)               --
    Payments made for unconsolidated
     affiliate                                (3,224,980)               --
    Purchase of plant and equipment           (2,323,903)       (3,154,996)
    Additions to intangible assets            (1,374,146)           (9,620)
    Proceeds from sale of equipment                  513            53,078
    Advances for potential acquisition                --        (1,463,000)
    Advances on non-current assets              (855,298)         (160,256)
   Net cash used in investing
    activities                                (6,059,109)       (4,734,794)
    CASH FLOWS FROM FINANCING
     ACTIVITIES:
    Change in restricted cash                         --          (338,353)
    Payments on notes payable                    (29,318)               --
    Proceeds from warrants conversion          3,455,059                --
    Proceeds from issuance of
     convertible notes                         8,967,516                --
    Repayments of former shareholders
     loan in acquiring company                (2,782,278)               --
    Proceeds from short term loans -
     bank                                     13,515,598                --
    Payments on short term loans - bank       (2,814,528)         (716,850)
    Payments on long term loan - bank         (5,863,600)               --
    Dividends paid to noncontrolling
     interest shareholders                    (2,293,888)         (286,740)
    Net cash provided by (used in)
     financing activities                     12,095,925        (1,341,943)
    EFFECTS OF EXCHANGE RATE CHANGE IN
     CASH                                         38,472           598,736
    INCREASE IN CASH                          41,533,517         9,213,923
    CASH and CASH EQUIVALENTS,
     beginning of period                       8,814,616         5,010,033
    CASH and CASH EQUIVALENTS, end of
     period                                  $50,348,133       $14,223,956
  SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
    Income taxes paid                         $7,525,262        $1,830,589
    Interest paid (net of capitalized
     interest)                                  $911,846           $47,197
    Non-cash investing and financing
     activities:
   Reclassification of warrant
    liability to paid-in capital upon
    warrants conversion                       $5,712,822               $--
   Dividend paid by offsetting accounts
    receivable-related party                    $943,907               $--
   Dividend paid in exchange of holder
    of noncontrolling interest loan           $3,737,283               $--
   Dividend paid by offsetting loan due
    from holder of noncontrolling
    interest                                  $4,470,995               $--
   Net assets acquired with prepayments
    made in prior periods                    $14,248,548               $--
   Net assets acquired with unpaid
    investment                                $2,849,710               $--
   Land use right acquired with
    prepayments made in prior periods           $131,931               $--



                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
   FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

                                     Three Months Ended   Three Months Ended
                                     September 30, 2009   September 30, 2008

                                         Net      Diluted     Net    Diluted
                                        Income      EPS      Income     EPS
  Adjusted Amount - Non GAAP          $7,056,078   $0.33   $4,499,159  $0.21
  Non-cash employee compensation (1)      $7,314   $0.00      $20,613  $0.00
  Change in fair value of derivative
   liabilities (2)                   $13,242,333   $0.61           --     --
  Amount per consolidated statement
   of operations                     ($6,193,569) ($0.29)  $4,478,546  $0.21
  Weighted average number of shares
   - diluted                          21,632,793           21,504,629


                                     Nine Months Ended     Nine Months Ended
                                     September 30, 2009   September 30, 2008

                                          Net    Diluted      Net    Diluted
                                         Income     EPS       Income     EPS
  Adjusted Amount - Non GAAP         $20,028,863  $0.92   $10,064,301  $0.46
  Non-cash employee compensation (1)     $62,281  $0.00    $1,283,801  $0.06
  Change in fair value of derivative
   liabilities (2)                   $14,931,088  $0.69            --     --
  Amount per consolidated statement
   of operations                      $5,035,494  $0.23    $8,780,500  $0.40
  Weighted average number of shares
   -  diluted                         21,767,086           21,713,170


  (1) Non-cash compensation expenses related to options granted to employees
      and directors under the Company's 2008 Equity Incentive Plan;
  (2) Change in the fair value of derivative liabilities, including warrants
      and derivative instruments (including the conversion option) embedded
      in the Company's Senior Secured Convertible Notes, to be recognized in
      earnings each quarter.

First Call Analyst:

SOURCE: China Biologic Products, Inc.

CONTACT: China Biologic Products, Inc., +86-538-6202206, Email:
IR@chinabiologic.com; Investor Relations Contact: CCG Investor Relations, Mr.
Athan Dounis, Account Manager, +1-646-213-1916, Email: athan.dounis@ccgir.com,
or Mr. Crocker Coulson, President, +1-646-213-1915, Email:
crocker.coulson@ccgir.com

Web site: http://www.chinabiologic.com/


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