In the news release, "Orient Paper Inc. Announces Third Quarter 2009
Results," issued at 07:00 ET today by Orient Paper, Inc. (OTC Bulletin Board:
ORPN) over PR Newswire Asia, we are advised by the company that in the "Third
Quarter 2009 Highlights," the last sentence should read "Net income increased
107.1% year-over-year to approximately $4.8 million, or $0.41 (post reverse
split) per diluted share," rather than "Net income increased 107.1%
year-over-year to approximately $4.8 million, or $0.20 (post reverse split)
per diluted share," as originally stated inadvertently. Complete, corrected
text follows:
Orient Paper Inc. Announces Third Quarter 2009 Results
-- Revenue increases 67% year-over-year to $30.5 million
-- Net income rose 107% to $4.8 million
BAODING, Hebei, China, Nov. 16 /PRNewswire-Asia-FirstCall/ -- Orient
Paper,
Inc. (OTC Bulletin Board: ORPN) ("Orient Paper" or the "Company"), which
controls and operates Hebei Baoding Orient Paper Milling Co., Ltd. ("HBOP"), a
leading manufacturer and distributor of diversified paper products in Hebei,
China, today announced financial results for the third quarter ended September
30, 2009.
Third Quarter 2009 Highlights
-- Revenue for the third quarter of 2009 increased 67.3% year-over-year to
approximately $30.5 million
-- Gross profit increased 107.4% year-over-year to approximately $7.1
million
-- Gross margin was 23.3%, up 4.5 percentage points year-over-year
-- Operating income rose 107.0% year-over-year to approximately $6.6
million
-- Net income increased 107.1% year-over-year to approximately $4.8
million, or $0.41 (post reverse split) per diluted share
"In the third quarter, we continued to see growing demand for our
products,
especially our high-margin, medium-grade offset printing paper, which
increased fourfold year-over-year and accounted for almost half of our
revenue.
We also took advantage of short-term declines in the purchase cost of recycled
paperboard, thereby reducing our average unit cost of this key raw material by
27% quarter-over-quarter and significantly enhancing our profitability during
the quarter," commented Mr. Liu Zhenyong, chairman and chief executive officer
of Orient Paper. "We added 12 new customers during the quarter, including a
large paper distributor in Shanghai, further expanding our market reach in
China's rapidly growing paper industry," added Mr. Liu.
Third Quarter 2009 Financial Results
Revenue for the third quarter of 2009 was approximately $30.5 million
compared to $18.3 million for the same period in 2008, an increase of 67.3%.
The increase in revenue was primarily attributable to increased sales of the
Company's medium-grade offset printing paper and corrugating medium paper
products as a result of the relatively healthy (as opposed to the same period
last year) level of manufacturing activities around Northern China. Revenue
from medium-grade offset printing paper was approximately $14.1 million, up
447.7% from approximately $2.6 million for the same period in 2008, as we
converted a significant portion of the production capacities of writing paper
and high-grade offset printing paper to the production of medium-grade offset
printing paper to meet the strong market demand for medium-grade. The Company
also added twelve new customers during the quarter, which accounted for 6.3%
of the total sales revenue. Revenue from corrugating medium paper was
approximately $10.3 million compared to approximately $8.2 million for the
same period in 2008, an increase of 25.4%. Revenue from high-grade offset
printing paper declined 20.1% to approximately $2.3 million from approximately
$2.8 million for the same period in 2008. Revenue from writing paper
decreased 56.6% to $2.0 million from approximately $4.6 million during the
same period in 2008. The Company also produced 2,269 tons of white card paper
for $1.8 million in July 2009 to fill a special order.
Gross profit for the third quarter of 2009 increased 107.4% to
approximately $7.1 million from approximately $3.4 million for the third
quarter of 2008. The Company reported gross margin of 23.3%, an increase of
4.5 percentage points, from 18.8% in the third quarter of 2008. The
significant improvement in gross margin was a mainly attributable to a
temporary decline in recycled paperboard prices, which lowered the Company's
average cost of this raw material and, to a lesser extent, a higher portion of
the gross profit mix contributed by our white paper products, which usually
command a higher gross profit margin.
Selling, general and administrative expenses for three months ended
September 30, 2009 were approximately $0.5 million, up 112.7% from
approximately $0.2 million in the same period last year. The increase in
selling, general and administrative expenses was primarily attributable to
increase in professional fees and expenses related to the Company's status as
a public company.
Operating income for third quarter of 2009 was approximately $6.6 million,
up 107.0% from approximately $3.2 million in the third quarter of 2008. The
increase was primarily attributable to revenue and gross profit growth in the
quarter ended September 30, 2009.
Net income in the third quarter of 2009 was approximately $4.8 million, up
107.1% from approximately $2.3 million in the same period last year. Basic
and diluted earnings per share for the third quarter of 2009 were $0.41.
Weighted average shares used in the calculation of diluted earnings per share
were 11,716,579 in the quarter ended September 30, 2009 compared to 11,275,497
a year ago.
Nine Months Results
Total revenue for the first nine months of 2009 was approximately $70.8
million, up 43.5% from the first nine months of 2008. Gross profit for the
first nine months of 2009 was approximately $14.4 million, up 58.8% from gross
profit of approximately $9.1 million in the comparable period a year ago.
Gross margin was 20.4% for the first nine months of 2009, an increase of
approximately 2.0 percentage points from 18.4% for the same period a year ago.
Operating income was approximately $13.5 million, up 59.6% from approximately
$8.4 million in the first nine months of 2008. Net income for the first nine
months of 2009 was approximately $9.6 million, up 57.8% from approximately
$6.1 million in the first nine months of 2008. Basic and diluted earnings per
share were $0.84 for the first nine months of 2009 compared to $0.57 in the
first nine months of 2008. Weighted average shares used in the calculation of
diluted earnings per share were 11,424,749 in the nine months ended September
30, 2009 compared to 10,600,132 a year ago.
Financial Condition
As of September 30, 2009, Orient Paper had approximately $11.5 million in
unrestricted cash and approximately $11.2 million in working capital. Short
term debt stood at approximately $5.2 million and the company had
approximately $6.1 million in long term debt, of which approximately $4.1
million is from a group of related parties. Inventory totaled approximately
$7.1 million, up from approximately $0.9 million at year end. Approximately
90% of the inventory was raw materials inventory, as the Company increased its
stock of recycled paper board in anticipation of the continued rising raw
material prices. As of September 30, 2009, shareholders' equity was
approximately $47.7 million, up 39.7% from shareholder's equity of
approximately $34.1 million as of December 31, 2008. For the first nine
months of 2009, the Company generated net cash flow from operating activities
of approximately $10.2 million.
Recent Events
On October 7, 2009, Orient Paper closed a private placement financing to
support its future growth. It issued approximately 2.1 million post-reverse
split shares of the Company's common stock for an approximate aggregate
purchase price of $5.0 million.
On October 14, 2009, Orient Paper announced that it has engaged BDO
Limited, the Hong Kong member firm of the BDO International network, as its
new independent auditor.
On October 29, 2009, the Company announced the appointment of Mr. Drew
Bernstein, Mr. Wenbing Christopher Wang, and Ms. Zhaofang Wang to its Board of
Directors as independent directors effective October 28, 2009. The Company
also announced that effective October 28, 2009, Mr. Xiaodong Liu and Mr. Chen
Li resigned as directors of the Company. The Company also established Audit,
Nominating, and Compensation Committees.
On November 5, 2009, the Company has effected a one-for-four reverse split
of the Company's common stock and traded on the Over the Counter Bulletin
Board under the new ticker symbol "ORPN.OB" effective at the open of the
market on November 5, 2009. As a result of the reverse split, the Company now
has approximately 14,579,420 shares of common stock issued and outstanding.
Business Outlook
Orient Paper is using the proceeds of its recent financing to acquire a
digital photo paper plant to enter into the high-margin digital photo paper
business. The Company expects to close the acquisition by the middle of
December 2009.
"We expect to continue our strong revenue and net income growth trend for
the rest of the year and into 2010. We believe our entry into the high-end
digital photo paper market will expand our product portfolio, accelerate our
revenue growth, improve our profitability and further strengthen our position
in the industry," commented Mr. Liu Zhenyong, Chief Executive Officer of
Orient Paper. "In addition to our commitment to business expansion, we
enhanced our corporate governance and oversight with the addition of three new
and highly experienced independent directors to our Board."
The Company has already achieved its fiscal year 2009 make good target
($10.0 million minus a 10% margin of error as defined in the financing
documents) in the first nine months of 2009. Orient Paper expects to achieve
its make good guidance of $18.0 million for fiscal year 2010, provided the
digital photo paper project proceeds as planned.
About Orient Paper, Inc.
Orient Paper, Inc., through its wholly owned subsidiaries, Shengde
Holdings, Inc. and Baoding Shengde Paper Co., Ltd., controls and operates
Hebei Baoding Orient Paper Milling Co., Ltd ("HBOP"). Founded in 1996, HBOP
is engaged in the production and distribution of products such as corrugating
medium paper, offset printing paper, writing paper, and other paper and
packaging-related products in China. The Company uses recycled paper as its
primary raw material. As one of the largest paper producers in Hebei
Province,
China, the Company is strategically located in Baoding, a city in close
proximity to Beijing where the majority of publishing houses are based.
Orient Paper is led by an experienced management team committed to
diversifying the Company's product offering and delivering tailored services
to its customers. For more information, please visit
http://www.orientalpapercorporation.com .
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning
of the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical fact in this
announcement are forward-looking statements, including but not limited to, the
availability of funds and working capital to finance its activities; the
actions and initiatives of current and potential competitors; the Company's
ability to introduce new products; market acceptance of new products; general
economic and business conditions; the ability to attract or retain qualified
senior management personnel and research and development staff; and other
risks detailed in the Company's filings with the Securities and Exchange
Commission. These forward-looking statements involve known and unknown risks
and uncertainties and are based on current expectations, assumptions,
estimates and projections about the companies and the industry. The Company
undertakes no obligation to update forward-looking statements to reflect
subsequent occurring events or circumstances, or to changes in its
expectations, except as may be required by law. Although the Company believes
that the expectations expressed in these forward looking statements are
reasonable, it cannot assure you that its expectations will turn out to be
correct, and investors are cautioned that actual results may differ materially
from the anticipated results.
-- Financial tables follow --
ORIENT PAPER, INC.
BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(Unaudited)
ASSETS
As of As of
September 30, December 31,
2009 2008
Current Assets:
Cash and cash equivalents $11,542,958 $3,234,419
Restricted cash 260,158 --
Accounts receivable -
Trade (net of allowance for doubtful
accounts of $56,764 and $0 as of
September 30, 2009 and December 31,
2008, respectively) 2,781,415 1,425,899
Other 150 --
Inventories 7,069,798 2,821,063
Prepaid consulting fees and other 59,018 --
Total current assets 21,713,497 7,481,381
Property, Plant, and Equipment:
Building and improvements 9,846,424 9,876,637
Machinery and equipment 47,202,267 47,347,109
Vehicles 543,004 544,670
57,591,695 57,768,416
Less - Accumulated depreciation
and amortization (15,023,408) (12,427,735)
Net property, plant, and
equipment 42,568,287 45,340,681
Total Assets $64,281,784 $52,822,062
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term loans $5,195,229 $6,858,652
Accounts payable - Trade and
accrued liabilities 3,810,761 740,846
Income taxes payable 1,547,007 1,047,678
Total current liabilities 10,552,997 8,647,176
Long-Term Debt, less current
portion:
Loan from credit union 1,942,202 1,948,176
Related party notes 4,110,494 8,137,554
Total long-term debt 6,052,696 10,085,730
Total liabilities 16,605,693 18,732,906
Commitments and Contingencies
Stockholders' Equity:
Common stock, 500,000,000 shares
authorized, $0.001 par value per
share, 12,496,088 and 11,275,497
shares issued and outstanding as
of September 30, 2009 and December
31, 2008, respectively 12,496 11,275
Additional paid-in capital 13,695,913 9,598,944
Statutory earnings reserve 3,079,063 3,079,063
Accumulated other comprehensive
income 3,494,728 3,592,839
Retained earnings 27,393,891 17,807,035
Total stockholders' equity 47,676,091 34,089,156
Total Liabilities and Stockholders'
Equity $64,281,784 $52,822,062
ORIENT PAPER, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
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:
Sales, net $30,548,611 $18,256,309 70,786,472 $49,337,596
Cost of Sales:
Cost of sales 23,369,005 14,731,043 56,223,156 40,044,007
Business tax and
surcharges 53,915 89,673 132,204 204,322
Total cost of sales 23,422,920 14,820,716 56,355,360 40,248,329
Gross Profit 7,125,691 3,435,593 14,431,112 9,089,267
Selling, General and
Administrative
Expenses 491,676 231,116 966,238 654,889
Income from Operations 6,634,015 3,204,477 13,464,874 8,434,378
Other Income (Expense):
Interest income 35,522 34,621 67,464 37,920
Interest (expense) (208,471) (139,799) (624,551) (373,232)
Total other (expense) (172,949) (105,178) (557,087) (335,312)
Income before Income
Taxes 6,461,067 3,099,299 12,907,788 8,099,066
Provision for Income
Taxes (1,647,468) (774,825) (3,320,931) (2,024,767)
Net Income 4,813,598 2,324,474 9,586,856 6,074,299
Comprehensive Income:
Foreign currency
translation
adjustment 48,155 223,619 (98,111) 1,963,066
Total Comprehensive
Income $4,861,753 $2,548,093 9,488,745 $8,037,365
Earnings Per Share:
Basic Earning per Share $0.41 $0.21 $0.84 $0.57
Fully Diluted Earning
per Share $0.41 $0.21 $0.84 $0.57
Weighted Average Number
of Shares
Outstanding - Basic 11,697,557 11,275,497 11,418,338 10,600,132
Outstanding - Fully
Diluted 11,716,579 11,275,497 11,424,749 10,600,132
ORIENT PAPER, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2009 AND 2008
(Unaudited)
Nine Months Ended
September 30,
2009 2008
Cash Flows from Operating
Activities:
Net income $9,586,856 $6,074,299
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 2,595,673 2,956,454
Non-cash warrants compensation 17,723 --
Non-cash issuance of stock for
services 27,300 500,000
Changes in net assets and
liabilities:
Accounts receivable - Trade (1,355,665) (750,313)
Inventories (4,248,735) (499,031)
Prepaid expenses (5,851) (130,000)
Accounts payable - Trade and
accrued liabilities 3,069,915 2,065,846
Income taxes payable 499,328 499,918
Net Cash Provided by Operating
Activities 10,186,544 10,717,173
Cash Flows from Investing
Activities:
Purchases of property, plant, and
equipment 176,721 (12,554,348)
Net Cash (Used in) Investing
Activities 176,721 (12,554,348)
Cash Flows from Financing
Activities:
Proceeds from related party loans -- 4,304,045
Payments on related party loans (27,060) --
Payments on short term loans (1,663,423) --
Payments on loan from credit union (5,974) --
Proceeds from borrowing on credit
facility -- 1,124,413
Net Cash Provided by (Used in)
Financing Activities (1,696,457) 5,428,458
Effect of Exchange Rate Changes on
Cash and Cash Equivalents (98,111) 1,963,066
Net Increase in Cash and Cash
Equivalents 8,568,697 5,554,349
Cash and Cash Equivalents -
Beginning of Period 3,234,419 622,661
Less: Restricted Cash (260,158) --
Cash and Cash Equivalents - End of
Period $11,542,958 $6,177,010
Supplemental Disclosure of Cash Flow
Information:
Cash paid for interest $503,093 $373,232
Cash paid for income taxes $275,497 $1,729,172
ORIENT PAPER, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2009 AND 2008
Supplemental Disclosure of Cash Flow Information:
On October 29, 2007, the Company entered into an Agreement and Plan of
Merger between
Orient Paper; CARZ Merger Sub, Inc., a Nevada corporation, and wholly
owned subsidiary of the Company; DZH Limited; and the stockholders of DZH
Limited. Under the terms of the Agreement and Plan of Merger, the Company
issued to the stockholders of DZH Limited 7,450,497 (post reverse split)
shares of the Company's common stock, par value $.001, in exchange for all of
the issued and outstanding shares of stock of DZH Limited (50,000 shares).
In May 2008, the Company issued 1,250,000 (post reverse split) shares of
common stock to three consultants for services rendered during the year ending
December 31, 2008, valued at $500,000.
On May 10, 2009 the Company issued 1,250 (post reverse split) shares of
common stock to its CFO as compensation with a fair value of $900. No cash is
received as a result of the issuance of stock.
On June 24, 2009 the Company issued 15,000 (post reverse split) shares of
common stock for legal fees with a fair value of $26,400. No cash is received
for the issuance of stock.
On July 23, 2009, the Company issued a two-year warrant to purchase 25,000
(post reverse split) shares of the Company's common stock at $4.00 (post
reverse split) per share as an incentive for certain consulting services. The
value of the warrant was determined to be $70,890, and has an amortization
period of 12 months. No cash was received from the issuance of the warrant.
On August 31, 2009 Mr. Zhenyong Liu, Chairman and CEO of the Company,
converted $4,000,000 of his loan to the Company into 1,204,341 (post reverse
split) shares of common stock. No cash is paid for the retirement of the
$4,000,000 loan.
For more information, please contact:
Orient Paper, Inc.
Winston C. Yen, Chief Financial Officer
Tel: +1-562-818-3817 (Los Angeles)
Email: info@orientalpapercorporation.com
CCG Investor Relations Inc.
Mr. Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
------
Orient Paper Inc. Announces Third Quarter 2009 Results
Revenue increases 67% year-over-year to $30.5 million
Net income rose 107% to $4.8 million
BAODING, Hebei, China, Nov. 16 /PRNewswire-Asia-FirstCall/ -- Orient
Paper,
Inc. (OTC Bulletin Board: ORPN) ("Orient Paper" or the "Company"), which
controls and operates Hebei Baoding Orient Paper Milling Co., Ltd. ("HBOP"), a
leading manufacturer and distributor of diversified paper products in Hebei,
China, today announced financial results for the third quarter ended September
30, 2009.
Third Quarter 2009 Highlights
-- Revenue for the third quarter of 2009 increased 67.3% year-over-year to
approximately $30.5 million
-- Gross profit increased 107.4% year-over-year to approximately $7.1
million
-- Gross margin was 23.3%, up 4.5 percentage points year-over-year
-- Operating income rose 107.0% year-over-year to approximately $6.6
million
-- Net income increased 107.1% year-over-year to approximately $4.8
million, or $0.20 (post reverse split) per diluted share
"In the third quarter, we continued to see growing demand for our
products,
especially our high-margin, medium-grade offset printing paper, which
increased fourfold year-over-year and accounted for almost half of our
revenue.
We also took advantage of short-term declines in the purchase cost of recycled
paperboard, thereby reducing our average unit cost of this key raw material by
27% quarter-over-quarter and significantly enhancing our profitability during
the quarter," commented Mr. Liu Zhenyong, chairman and chief executive officer
of Orient Paper. "We added 12 new customers during the quarter, including a
large paper distributor in Shanghai, further expanding our market reach in
China's rapidly growing paper industry," added Mr. Liu.
Third Quarter 2009 Financial Results
Revenue for the third quarter of 2009 was approximately $30.5 million
compared to $18.3 million for the same period in 2008, an increase of 67.3%.
The increase in revenue was primarily attributable to increased sales of the
Company's medium-grade offset printing paper and corrugating medium paper
products as a result of the relatively healthy (as opposed to the same period
last year) level of manufacturing activities around Northern China. Revenue
from medium-grade offset printing paper was approximately $14.1 million, up
447.7% from approximately $2.6 million for the same period in 2008, as we
converted a significant portion of the production capacities of writing paper
and high-grade offset printing paper to the production of medium-grade offset
printing paper to meet the strong market demand for medium-grade. The Company
also added twelve new customers during the quarter, which accounted for 6.3%
of the total sales revenue. Revenue from corrugating medium paper was
approximately $10.3 million compared to approximately $8.2 million for the
same period in 2008, an increase of 25.4%. Revenue from high-grade offset
printing paper declined 20.1% to approximately $2.3 million from approximately
$2.8 million for the same period in 2008. Revenue from writing paper
decreased 56.6% to $2.0 million from approximately $4.6 million during the
same period in 2008. The Company also produced 2,269 tons of white card paper
for $1.8 million in July 2009 to fill a special order.
Gross profit for the third quarter of 2009 increased 107.4% to
approximately $7.1 million from approximately $3.4 million for the third
quarter of 2008. The Company reported gross margin of 23.3%, an increase of
4.5 percentage points, from 18.8% in the third quarter of 2008. The
significant improvement in gross margin was a mainly attributable to a
temporary decline in recycled paperboard prices, which lowered the Company's
average cost of this raw material and, to a lesser extent, a higher portion of
the gross profit mix contributed by our white paper products, which usually
command a higher gross profit margin.
Selling, general and administrative expenses for three months ended
September 30, 2009 were approximately $0.5 million, up 112.7% from
approximately $0.2 million in the same period last year. The increase in
selling, general and administrative expenses was primarily attributable to
increase in professional fees and expenses related to the Company's status as
a public company.
Operating income for third quarter of 2009 was approximately $6.6 million,
up 107.0% from approximately $3.2 million in the third quarter of 2008. The
increase was primarily attributable to revenue and gross profit growth in the
quarter ended September 30, 2009.
Net income in the third quarter of 2009 was approximately $4.8 million, up
107.1% from approximately $2.3 million in the same period last year. Basic
and diluted earnings per share for the third quarter of 2009 were $0.41.
Weighted average shares used in the calculation of diluted earnings per share
were 11,716,579 in the quarter ended September 30, 2009 compared to 11,275,497
a year ago.
Nine Months Results
Total revenue for the first nine months of 2009 was approximately $70.8
million, up 43.5% from the first nine months of 2008. Gross profit for the
first nine months of 2009 was approximately $14.4 million, up 58.8% from gross
profit of approximately $9.1 million in the comparable period a year ago.
Gross margin was 20.4% for the first nine months of 2009, an increase of
approximately 2.0 percentage points from 18.4% for the same period a year ago.
Operating income was approximately $13.5 million, up 59.6% from approximately
$8.4 million in the first nine months of 2008. Net income for the first nine
months of 2009 was approximately $9.6 million, up 57.8% from approximately
$6.1 million in the first nine months of 2008. Basic and diluted earnings per
share were $0.84 for the first nine months of 2009 compared to $0.57 in the
first nine months of 2008. Weighted average shares used in the calculation of
diluted earnings per share were 11,424,749 in the nine months ended September
30, 2009 compared to 10,600,132 a year ago.
Financial Condition
As of September 30, 2009, Orient Paper had approximately $11.5 million in
unrestricted cash and approximately $11.2 million in working capital. Short
term debt stood at approximately $5.2 million and the company had
approximately $6.1 million in long term debt, of which approximately $4.1
million is from a group of related parties. Inventory totaled approximately
$7.1 million, up from approximately $0.9 million at year end. Approximately
90% of the inventory was raw materials inventory, as the Company increased its
stock of recycled paper board in anticipation of the continued rising raw
material prices. As of September 30, 2009, shareholders' equity was
approximately $47.7 million, up 39.7% from shareholder's equity of
approximately $34.1 million as of December 31, 2008. For the first nine
months of 2009, the Company generated net cash flow from operating activities
of approximately $10.2 million.
Recent Events
On October 7, 2009, Orient Paper closed a private placement financing to
support its future growth. It issued approximately 2.1 million post-reverse
split shares of the Company's common stock for an approximate aggregate
purchase price of $5.0 million.
On October 14, 2009, Orient Paper announced that it has engaged BDO
Limited, the Hong Kong member firm of the BDO International network, as its
new independent auditor.
On October 29, 2009, the Company announced the appointment of Mr. Drew
Bernstein, Mr. Wenbing Christopher Wang, and Ms. Zhaofang Wang to its Board of
Directors as independent directors effective October 28, 2009. The Company
also announced that effective October 28, 2009, Mr. Xiaodong Liu and Mr. Chen
Li resigned as directors of the Company. The Company also established Audit,
Nominating, and Compensation Committees.
On November 5, 2009, the Company has effected a one-for-four reverse split
of the Company's common stock and traded on the Over the Counter Bulletin
Board under the new ticker symbol "ORPN.OB" effective at the open of the
market on November 5, 2009. As a result of the reverse split, the Company now
has approximately 14,579,420 shares of common stock issued and outstanding.
Business Outlook
Orient Paper is using the proceeds of its recent financing to acquire a
digital photo paper plant to enter into the high-margin digital photo paper
business. The Company expects to close the acquisition by the middle of
December 2009.
"We expect to continue our strong revenue and net income growth trend for
the rest of the year and into 2010. We believe our entry into the high-end
digital photo paper market will expand our product portfolio, accelerate our
revenue growth, improve our profitability and further strengthen our position
in the industry," commented Mr. Liu Zhenyong, Chief Executive Officer of
Orient Paper. "In addition to our commitment to business expansion, we
enhanced our corporate governance and oversight with the addition of three new
and highly experienced independent directors to our Board."
The Company has already achieved its fiscal year 2009 make good target
($10.0 million minus a 10% margin of error as defined in the financing
documents) in the first nine months of 2009. Orient Paper expects to achieve
its make good guidance of $18.0 million for fiscal year 2010, provided the
digital photo paper project proceeds as planned.
About Orient Paper, Inc.
Orient Paper, Inc., through its wholly owned subsidiaries, Shengde
Holdings, Inc. and Baoding Shengde Paper Co., Ltd., controls and operates
Hebei Baoding Orient Paper Milling Co., Ltd ("HBOP"). Founded in 1996, HBOP
is engaged in the production and distribution of products such as corrugating
medium paper, offset printing paper, writing paper, and other paper and
packaging-related products in China. The Company uses recycled paper as its
primary raw material. As one of the largest paper producers in Hebei
Province,
China, the Company is strategically located in Baoding, a city in close
proximity to Beijing where the majority of publishing houses are based.
Orient Paper is led by an experienced management team committed to
diversifying the Company's product offering and delivering tailored services
to its customers. For more information, please visit
http://www.orientalpapercorporation.com .
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning
of the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical fact in this
announcement are forward-looking statements, including but not limited to, the
availability of funds and working capital to finance its activities; the
actions and initiatives of current and potential competitors; the Company's
ability to introduce new products; market acceptance of new products; general
economic and business conditions; the ability to attract or retain qualified
senior management personnel and research and development staff; and other
risks detailed in the Company's filings with the Securities and Exchange
Commission. These forward-looking statements involve known and unknown risks
and uncertainties and are based on current expectations, assumptions,
estimates and projections about the companies and the industry. The Company
undertakes no obligation to update forward-looking statements to reflect
subsequent occurring events or circumstances, or to changes in its
expectations, except as may be required by law. Although the Company believes
that the expectations expressed in these forward looking statements are
reasonable, it cannot assure you that its expectations will turn out to be
correct, and investors are cautioned that actual results may differ materially
from the anticipated results.
-- Financial tables follow --
ORIENT PAPER, INC.
BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(Unaudited)
ASSETS
As of As of
September 30, December 31,
2009 2008
Current Assets:
Cash and cash equivalents $11,542,958 $3,234,419
Restricted cash 260,158 --
Accounts receivable -
Trade (net of allowance for doubtful
accounts of $56,764 and $0 as of
September 30, 2009 and December 31,
2008, respectively) 2,781,415 1,425,899
Other 150 --
Inventories 7,069,798 2,821,063
Prepaid consulting fees and other 59,018 --
Total current assets 21,713,497 7,481,381
Property, Plant, and Equipment:
Building and improvements 9,846,424 9,876,637
Machinery and equipment 47,202,267 47,347,109
Vehicles 543,004 544,670
57,591,695 57,768,416
Less - Accumulated depreciation
and amortization (15,023,408) (12,427,735)
Net property, plant, and
equipment 42,568,287 45,340,681
Total Assets $64,281,784 $52,822,062
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term loans $5,195,229 $6,858,652
Accounts payable - Trade and
accrued liabilities 3,810,761 740,846
Income taxes payable 1,547,007 1,047,678
Total current liabilities 10,552,997 8,647,176
Long-Term Debt, less current
portion:
Loan from credit union 1,942,202 1,948,176
Related party notes 4,110,494 8,137,554
Total long-term debt 6,052,696 10,085,730
Total liabilities 16,605,693 18,732,906
Commitments and Contingencies
Stockholders' Equity:
Common stock, 500,000,000 shares
authorized, $0.001 par value per
share, 12,496,088 and 11,275,497
shares issued and outstanding as
of September 30, 2009 and December
31, 2008, respectively 12,496 11,275
Additional paid-in capital 13,695,913 9,598,944
Statutory earnings reserve 3,079,063 3,079,063
Accumulated other comprehensive
income 3,494,728 3,592,839
Retained earnings 27,393,891 17,807,035
Total stockholders' equity 47,676,091 34,089,156
Total Liabilities and Stockholders'
Equity $64,281,784 $52,822,062
ORIENT PAPER, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
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:
Sales, net $30,548,611 $18,256,309 70,786,472 $49,337,596
Cost of Sales:
Cost of sales 23,369,005 14,731,043 56,223,156 40,044,007
Business tax and
surcharges 53,915 89,673 132,204 204,322
Total cost of sales 23,422,920 14,820,716 56,355,360 40,248,329
Gross Profit 7,125,691 3,435,593 14,431,112 9,089,267
Selling, General and
Administrative
Expenses 491,676 231,116 966,238 654,889
Income from Operations 6,634,015 3,204,477 13,464,874 8,434,378
Other Income (Expense):
Interest income 35,522 34,621 67,464 37,920
Interest (expense) (208,471) (139,799) (624,551) (373,232)
Total other (expense) (172,949) (105,178) (557,087) (335,312)
Income before Income
Taxes 6,461,067 3,099,299 12,907,788 8,099,066
Provision for Income
Taxes (1,647,468) (774,825) (3,320,931) (2,024,767)
Net Income 4,813,598 2,324,474 9,586,856 6,074,299
Comprehensive Income:
Foreign currency
translation
adjustment 48,155 223,619 (98,111) 1,963,066
Total Comprehensive
Income $4,861,753 $2,548,093 9,488,745 $8,037,365
Earnings Per Share:
Basic Earning per Share $0.41 $0.21 $0.84 $0.57
Fully Diluted Earning
per Share $0.41 $0.21 $0.84 $0.57
Weighted Average Number
of Shares
Outstanding - Basic 11,697,557 11,275,497 11,418,338 10,600,132
Outstanding - Fully
Diluted 11,716,579 11,275,497 11,424,749 10,600,132
ORIENT PAPER, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2009 AND 2008
(Unaudited)
Nine Months Ended
September 30,
2009 2008
Cash Flows from Operating
Activities:
Net income $9,586,856 $6,074,299
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 2,595,673 2,956,454
Non-cash warrants compensation 17,723 --
Non-cash issuance of stock for
services 27,300 500,000
Changes in net assets and
liabilities:
Accounts receivable - Trade (1,355,665) (750,313)
Inventories (4,248,735) (499,031)
Prepaid expenses (5,851) (130,000)
Accounts payable - Trade and
accrued liabilities 3,069,915 2,065,846
Income taxes payable 499,328 499,918
Net Cash Provided by Operating
Activities 10,186,544 10,717,173
Cash Flows from Investing
Activities:
Purchases of property, plant, and
equipment 176,721 (12,554,348)
Net Cash (Used in) Investing
Activities 176,721 (12,554,348)
Cash Flows from Financing
Activities:
Proceeds from related party loans -- 4,304,045
Payments on related party loans (27,060) --
Payments on short term loans (1,663,423) --
Payments on loan from credit union (5,974) --
Proceeds from borrowing on credit
facility -- 1,124,413
Net Cash Provided by (Used in)
Financing Activities (1,696,457) 5,428,458
Effect of Exchange Rate Changes on
Cash and Cash Equivalents (98,111) 1,963,066
Net Increase in Cash and Cash
Equivalents 8,568,697 5,554,349
Cash and Cash Equivalents -
Beginning of Period 3,234,419 622,661
Less: Restricted Cash (260,158) --
Cash and Cash Equivalents - End of
Period $11,542,958 $6,177,010
Supplemental Disclosure of Cash Flow
Information:
Cash paid for interest $503,093 $373,232
Cash paid for income taxes $275,497 $1,729,172
ORIENT PAPER, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2009 AND 2008
Supplemental Disclosure of Cash Flow Information:
On October 29, 2007, the Company entered into an Agreement and Plan of
Merger between
Orient Paper; CARZ Merger Sub, Inc., a Nevada corporation, and wholly
owned subsidiary of the Company; DZH Limited; and the stockholders of DZH
Limited. Under the terms of the Agreement and Plan of Merger, the Company
issued to the stockholders of DZH Limited 7,450,497 (post reverse split)
shares of the Company's common stock, par value $.001, in exchange for all of
the issued and outstanding shares of stock of DZH Limited (50,000 shares).
In May 2008, the Company issued 1,250,000 (post reverse split) shares of
common stock to three consultants for services rendered during the year ending
December 31, 2008, valued at $500,000.
On May 10, 2009 the Company issued 1,250 (post reverse split) shares of
common stock to its CFO as compensation with a fair value of $900. No cash is
received as a result of the issuance of stock.
On June 24, 2009 the Company issued 15,000 (post reverse split) shares of
common stock for legal fees with a fair value of $26,400. No cash is received
for the issuance of stock.
On July 23, 2009, the Company issued a two-year warrant to purchase 25,000
(post reverse split) shares of the Company's common stock at $4.00 (post
reverse split) per share as an incentive for certain consulting services. The
value of the warrant was determined to be $70,890, and has an amortization
period of 12 months. No cash was received from the issuance of the warrant.
On August 31, 2009 Mr. Zhenyong Liu, Chairman and CEO of the Company,
converted $4,000,000 of his loan to the Company into 1,204,341 (post reverse
split) shares of common stock. No cash is paid for the retirement of the
$4,000,000 loan.
For more information, please contact:
Orient Paper, Inc.
Winston C. Yen, Chief Financial Officer
Tel: +1-562-818-3817 (Los Angeles)
Email: info@orientalpapercorporation.com
CCG Investor Relations Inc.
Mr. Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
SOURCE Orient Paper, Inc.
Winston C. Yen, Chief Financial Officer of Orient Paper, Inc., +1-562-818-3817
(Los Angeles), info@orientalpapercorporation.com; Crocker Coulson, President
of CCG Investor Relations Inc., +1-646-213-1915 (New York),
crocker.coulson@ccgir.com
