American Dairy Inc. (ADY, Financial) filed Quarterly Report for the period ended 2008-03-31.
American Dairy Inc. conducts operations in the People's Republic of China through its wholly owned subsidiary Feihe Dairy. Feihe Dairy is one of the leading producers and distributors of milk powder and soybean products in China. Feihe Dairy is located in Kedong County China and has been in operation since 2001. American Dairy also has a milk powder processing plant Sanhao Dairy in Kedong County. American Dairy Inc. has a market cap of $314.3 million; its shares were traded at around $18.29 with and P/S ratio of 1.8.
Our costs of goods sold consist primarily of direct and indirect manufacturing costs, including production overhead costs shipping and handling costs for the products sold. Cost of goods sold increased approximately $9.4 million, or 55.5%, from approximately $16.9 million for the three month period ended March 31, 2007 to approximately $26.3 million for the three month period ended March 31, 2008. This increase was primarily attributable to an increase of approximately $6.5 million, or 66.6%, in cost of purchase of raw milk powder purchased from third parties for processing and distribution, as well as a general increase in costs resulting from economic conditions.
Our total operating expenses consist primarily of sales and marketing expenses and general and administrative expenses. Our total operating expenses decreased by approximately $2.4 million, or 19.1%, from approximately $12.4 million in the three month period ended March 31, 2007 to approximately $10.0 million in the three month period ended March 31, 2008. This decrease was primarily attributable to a decrease of approximately $1.5 million, or 15.5%, in sales and marketing expenses from approximately $9.7 million for the three month period ended March 31, 2007 to approximately $8.2 million for the three month period ended March 31, 2008, and a decrease of approximately $872,000, or 32.0%, in general and administrative expenses from approximately $2.7 million for the three month period ended March 31, 2007 to approximately $1.9 million for the three month period ended March 31, 2008. Despite this year-over-year decrease in operating and administrative expenses, we expect our operating and administrative expenses to increase as we continue expanding our distribution network throughout China and seek to increase our market share and awareness of our premium quality products throughout China.
As a result of the foregoing, our income from operations decreased by approximately $2.0 million, or 27.6%, from approximately $7.1 million in the three month period ended March 31, 2007 to approximately $5.1 million in the three month period ended March 31, 2008.
Our other income (expenses) consists primarily of interest income, interest and finance costs, amortization of deferred charges, registration rights penalty, unrealized loss on investment in mutual funds gain (loss) on derivatives, government subsidized tax refunds, and other income and expense accounts. Other income (expenses) increased approximately $3.0 million, or 342.1%, from approximately $889,000 for the three month period ended March 31, 2007 to approximately $3.9 million for the three month period ended March 31, 2008. The increase was primarily attributable to an increase in gain on derivatives of approximately $9.0 million (compared to $0 in the three month period ended March 31, 2007), as well as increases in other income accounts. This increase was offset in part by a decrease in interest and finance costs of approximately $4.7 million, or 824.9%, from approximately $571,000 for the three month period ended March 31, 2007 to approximately $5.3 million for the three month period ended March 31, 2008, as well as decreases in other income accounts.
We had retained earnings of approximately $45.2 million at March 31, 2008 and $37.9 million at December 31, 2007. As of March 31, 2008, we had cash and cash equivalents of approximately $11.2 million and total current assets of approximately $104.5 million, and working capital of approximately $50.6 million. We have financed our activities to date principally from cash generated from operations and the sale of debt securities.
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American Dairy Inc. conducts operations in the People's Republic of China through its wholly owned subsidiary Feihe Dairy. Feihe Dairy is one of the leading producers and distributors of milk powder and soybean products in China. Feihe Dairy is located in Kedong County China and has been in operation since 2001. American Dairy also has a milk powder processing plant Sanhao Dairy in Kedong County. American Dairy Inc. has a market cap of $314.3 million; its shares were traded at around $18.29 with and P/S ratio of 1.8.
Highlight of Business Operations:
Total comprehensive income increased by approximately $7.7 million, or 104.6%, from approximately $7.3 million for the three month period ended March 31, 2007 to approximately $15.0 million for the three month period ended March 31, 2008. This increase was primarily attributable to an increase of approximately $5.1 million, or 13.9%, in sales, an increase of approximately $6.9 million, or 843.5%, in cumulative currency translation adjustments, a decrease of approximately $2.4 million, or 19.1%, of total operating expenses and an increase of approximately $3.0 million, or 342.1%, in other income, offset in part by an increase of approximately $9.4 million, or 55.5%, in cost of goods sold. Our gross profit margin decreased from 53.5% for the three month period ended March 31, 2007 to 36.6% for the three month period ended March 31, 2008.Our costs of goods sold consist primarily of direct and indirect manufacturing costs, including production overhead costs shipping and handling costs for the products sold. Cost of goods sold increased approximately $9.4 million, or 55.5%, from approximately $16.9 million for the three month period ended March 31, 2007 to approximately $26.3 million for the three month period ended March 31, 2008. This increase was primarily attributable to an increase of approximately $6.5 million, or 66.6%, in cost of purchase of raw milk powder purchased from third parties for processing and distribution, as well as a general increase in costs resulting from economic conditions.
Our total operating expenses consist primarily of sales and marketing expenses and general and administrative expenses. Our total operating expenses decreased by approximately $2.4 million, or 19.1%, from approximately $12.4 million in the three month period ended March 31, 2007 to approximately $10.0 million in the three month period ended March 31, 2008. This decrease was primarily attributable to a decrease of approximately $1.5 million, or 15.5%, in sales and marketing expenses from approximately $9.7 million for the three month period ended March 31, 2007 to approximately $8.2 million for the three month period ended March 31, 2008, and a decrease of approximately $872,000, or 32.0%, in general and administrative expenses from approximately $2.7 million for the three month period ended March 31, 2007 to approximately $1.9 million for the three month period ended March 31, 2008. Despite this year-over-year decrease in operating and administrative expenses, we expect our operating and administrative expenses to increase as we continue expanding our distribution network throughout China and seek to increase our market share and awareness of our premium quality products throughout China.
As a result of the foregoing, our income from operations decreased by approximately $2.0 million, or 27.6%, from approximately $7.1 million in the three month period ended March 31, 2007 to approximately $5.1 million in the three month period ended March 31, 2008.
Our other income (expenses) consists primarily of interest income, interest and finance costs, amortization of deferred charges, registration rights penalty, unrealized loss on investment in mutual funds gain (loss) on derivatives, government subsidized tax refunds, and other income and expense accounts. Other income (expenses) increased approximately $3.0 million, or 342.1%, from approximately $889,000 for the three month period ended March 31, 2007 to approximately $3.9 million for the three month period ended March 31, 2008. The increase was primarily attributable to an increase in gain on derivatives of approximately $9.0 million (compared to $0 in the three month period ended March 31, 2007), as well as increases in other income accounts. This increase was offset in part by a decrease in interest and finance costs of approximately $4.7 million, or 824.9%, from approximately $571,000 for the three month period ended March 31, 2007 to approximately $5.3 million for the three month period ended March 31, 2008, as well as decreases in other income accounts.
We had retained earnings of approximately $45.2 million at March 31, 2008 and $37.9 million at December 31, 2007. As of March 31, 2008, we had cash and cash equivalents of approximately $11.2 million and total current assets of approximately $104.5 million, and working capital of approximately $50.6 million. We have financed our activities to date principally from cash generated from operations and the sale of debt securities.
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