American Lorain Q1 Results

Q1 results

AMERICAN LORAIN CORPORATION
CONSOLIDATED BALANCE SHEETS
AT MARCH 31, 2011 AND DECEMBER 31, 2010
(Stated in US Dollars)

							(Audited)
ASSETS		Note		At March 31, 2011			At December 31, 2010
Current assets
Cash and cash equivalents		2 (d)	$	18,603,272		$	12,730,626
Restricted cash		3		4,858,780			2,308,898
Short-term investment				7,794,153			9,447,585
Trade accounts receivable		4		21,835,538			33,226,612
Other receivables		5		1,976,234			1,492,850
Inventories		6		38,730,930			29,807,198
Advance to suppliers				7,467,094			7,744,976
Prepaid expenses and taxes				949,956			434,061
Deferred tax asset				104,689			103,713
Security deposits and other Assets				628,998			693,858
Total current assets			$	102,949,644		$	97,990,377
Non-current assets
Property, plant and equipment, net		7		72,782,827			72,095,007
Land use rights, net		8		4,884,453			4,877,438
Deposit				15,878			20,297
TOTAL ASSETS			$	180,632,802		$	174,983,119
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term bank loans		9	$	16,139,139		$	25,164,469
Long-term debt – current portion		13		220,998			218,935
Notes payable		10		6,106,777			4,249,977
Accounts payable				5,468,206			6,284,532
Taxes payables		11		1,248,383			3,266,502
Accrued liabilities and other payables		12		1,780,060			1,335,947
Customers deposits				1,180,590			89,370
Total current liabilities			$	32,144,153		$	40,609,732
Long-term liabilities
Long-term debt		13		15,126,807			5,030,930
TOTAL LIABILITIES			$	47,270,960		$	45,640,662

See Accompanying Notes to the Financial Statements and Accountant’s Report
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AMERICAN LORAIN CORPORATION
CONSOLIDATED BALANCE SHEETS
AT MARCH 31, 2011 AND DECEMBER 31, 2010
(Stated in US Dollars)

		Note		At March 31, 2011			(Audited) At December 31, 2010
STOCKHOLDERS’ EQUITY
Preferred Stock, $.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively				-			-
Common stock, $0.001 par value, 200,000,000 shares authorized; 34,419,709 and 34,419,709 shares issued and outstanding as of March 31, 2011 and December 31, 2010, respectively		14		34,420			34,420
Additional paid-in capital		14		52,545,183			52,371,481
Statutory reserves		2 (r)		12,060,229			11,340,739
Retained earnings				50,395,173			48,688,375
Accumulated other comprehensive income				10,753,537			9,475,745
Non-controlling interests		15		7,573,300			7,431,697
TOTAL STOCKHOLDER’S EQUITY			$	133,361,842		$	129,342,457
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY			$	180,632,802		$	174,983,119

See Accompanying Notes to the Financial Statements and Accountant’s Report
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AMERICAN LORAIN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(Stated in US Dollars)

		Note		March 31, 2011			March 31, 2010
Net revenues		2 (t),16	$	30,449,805		$	24,560,216
Cost of revenues				(23,674,895	)		(18,836,126	)
Gross profit			$	6,774,910		$	5,724,090
Operating expenses
Selling and marketing expenses				(1,362,686	)		(1,372,352	)
General and administrative expenses				(1,475,947	)		(1,016,452	)
				(2,838,633	)		(2,388,804	)
Operating income			$	3,936,277		$	3,335,286
Government subsidy income				293,093			181,421
Interest income				2,475			2,804
Other income				44,609			119,277
Other expenses				(159,572	)		(27,523	)
Interest expense				(653,123	)		(920,424	)
				(472,518	)		(644,445	)
Earnings before tax			$	3,463,759		$	2,690,841
Income tax		2 (q),17		(895,868	)		(671,992	)
Net income			$	2,567,891		$	2,018,849
Net income attributable to:
-Common stockholders			$	2,426,288		$	1,860,531
-Non-controlling interest				141,603			158,318
			$	2,567,891		$	2,018,849
Earnings per share		2 (u), 18
- Basic			$	0.07		$	0.07
- Diluted			$	0.07		$	0.07
Weighted average shares outstanding
- Basic				34,419,709			26,075,413
- Diluted				35,155,958			26,730,651

Q1 2011 Operational Highlights
•Each product segment increased by over 16% in sales year-over-year
•Convenience food segment continued to grow as a percent of total revenue
•Company's international sales continued to improve, increasing 49.2%

Q1 2011 Financial Highlights
•Total revenues of $30.4 million, an increase of 24.0% year over year
•Gross margins decreased slightly to 22.2%, compared to 23.3% year-over-year and 22.7% at 12/31/2010
•Net income attributable to common stockholders of $2.4 million, up 30.4% year-over-year
•Diluted earnings per share of $0.07
•Operating cash flow of $3.8 million for the period ended March 31, 2011

American Lorain's Chairman and CEO, Mr. Si Chen, stated, "We are extremely pleased with the performance of the Company in the first quarter. We believe the largest contributor to our growth in the coming months will be the continued expansion of our convenience foods segment, as was the case in the first quarter. We continue to focus on both diversifying our lines to include a wider variety of food products and leveraging our known brand name among different segments, as evidenced by our expansion in the instant rice market."

"Although the first quarter is seasonally one of our weakest due to the chestnut business, American Lorain's highly competitive cost structure, coordinated sales and marketing platform, and continued diverse food operations allowed us to deliver another solid quarter. Over the past two years, American Lorain has made significant improvements to the balance sheet and cash generation. We reported $3.8 million in operating cash flow during the period. We believe that the Company is appropriately capitalized to grow organically in the coming months."

Outlook for 2011
Mr. Chen concluded, "Chestnut sales (both domestically and internationally) have remained strong throughout the first four months of the year when compared to last. While it is always a challenge to precisely assess customer demand for our products, we are optimistic about fiscal 2011 based on what we are seeing thus far. The efforts of our management group in all three business segments are producing greater efficiencies in both the operating infrastructure and costs control which will help us as we continue to grow. We are in a very basic business, supplying easy, ready-to-eat food to individuals across the globe. In tough economic times, people tend to cook at home by shopping at their local grocer. This is our core business and, along with our international presence, we should be better positioned than many of our local competitors in this regard. We are optimistic about the outlook of our market growth in China and abroad because of growing demand, improving brand recognition, and balanced supply. We will continue to execute on the Company's core strategies of driving growth through each of our business segments."