CHANGGE and BEIJING, China,
May 7 /PRNewswire-Asia-FirstCall/ --
Zhongpin Inc. ("Zhongpin", Nasdaq: HOGS), a leading meat and food
processing company in the People's
Republic of China, today reported higher revenues, net
income, and diluted earnings per share for the first quarter of
2010 compared with the first quarter of 2009.
First Quarter 2010 and recent highlights:
-- Net sales revenues increased 32.8 percent in the three months ended
March 31, 2010 to $204.3 million from $153.8 million in the first
quarter 2009.
-- Net income increased 37.1 percent to $13.3 million in the first quarter
2010 from $9.7 million in the first quarter 2009.
-- Basic and diluted earnings per share increased 15.2 percent to $0.38 in
the first quarter 2010 from $0.33 in the first quarter 2009.
-- Hog and pork prices in the first quarter 2010 decreased about 10
percent from the fourth quarter 2009 due mainly to the hog supply
temporarily exceeding market demand. Prices are expected to recover in
the near future.
-- In March 2010, Zhongpin started to expand its pork plant in Anyang to
add 35 percent more capacity for chilled pork; the expansion should be
completed in July.
-- The company opened its new premium pork oil plant in Changge on April
12, with a designed annual capacity of 20,000 metric tons of oil.
-- Prior guidance for the year 2010 has been maintained.
Mr. Xianfu Zhu, Chairman and
Chief Executive Officer of Zhongpin Inc., said, "Our first quarter
of 2010, I believe, proves the wisdom of our aggressive expansion,
since we were able to continue growing sales revenues, net income,
and earnings per share during a period of moderate but temporary
declines in the prices of hogs and pork."
"Our long-term strategy, established several years ago and only
slightly retuned, continues to be (1) increase production capacity,
(2) broaden awareness and recognition of our well-known brand,
which today is starting to emerge from a regional toward a national
market, (3) exploit our sales capabilities by accessing more retail
outlets and sales channels, and as a result, (4) increase sales
revenues and net income."
Capacity and market expansion
Mr. Zhu added, "In 2010, we will continue to execute our
strategic plan, which has proven to be successful so far in
sustaining our growth. The easiest actions to see are our plant
expansions."
In January 2010, we began
production in our new chilled and frozen pork plant in Tianjin. It has an annual capacity of 100,000
metric tons, of which 70 percent will be chilled pork and 30
percent frozen pork. We believe we will reach target capacity
utilization in this plant during the third quarter 2010.
In March 2010, we began to improve
our chilled pork plant in Anyang to expand capacity by 35 percent.
When the four-month project is completed in July, our annual
capacity there will be 85,000 metric tons, of which 70 percent will
be for chilled pork, up from 60 percent, and the remaining 30
percent will be for frozen pork, which remains unchanged in
capacity. Production will be maintained during the changes. The
improvements and capacity increase are expected to help meet the
rapidly growing demand for high quality chilled pork that we expect
in north China over the next
several years.
In April 2010, we started
constructing a new prepared pork products plant in Tianjin that will have an annual capacity of
about 36,000 metric tons. The new Tianjin facility will include a new warehouse
and distribution center and a research and development center,
which should improve our product portfolio, support our cold-chain
logistics, and help accommodate the higher production capacity by
facilitating efficient distribution. Production is expected to
start in the fourth quarter 2010 and should achieve target capacity
utilization in the second quarter 2011. The two state-of-the-art
Tianjin facilities that will be
added in 2010, which will be integrated within one industrial park,
are expected to cost about $61.0
million in total.
As expected, we opened our new premium pork oil production plant
in Changge on April 12. It has a
designed annual capacity of about 20,000 metric tons. This new
product is being sold through Zhongpin's existing sales channels to
institutional, wholesale, and retail customers. The first orders
filled have been under contracts with institutional and wholesale
customers that were signed before production began.
By the end of 2010, we believe that Zhongpin's annual capacity
will be at least 563,760 metric tons for chilled and frozen pork,
126,000 metric tons for prepared pork products, 20,000 metric tons
for premium pork oil, and 30,000 metric tons for vegetables and
fruits, for a total production capacity of 739,760 metric tons. Of
course, as we build additional plants, we also extend our
cold-chain logistics system for delivery into our new markets.
New cold storage and distribution centers
Zhongpin is also constructing three cold storage and
distribution centers for chilled and fresh pork and agricultural
products. The centers are located adjacent to Zhongpin's processing
facilities in Zhumadian, Anyang, and Luoyang, in China's Henan
province, and will begin operating in the second quarter 2010.
Total investment for the centers will be $13.6 million.
Each center will have more than 20,000 square meters for
processing, storage, and allocation workshops. Adjustable
multi-temperature multi-level cold storage rooms in each center
will provide outstanding conditions to maintain the highest quality
and flavor for a variety of products. Initially, about 40 percent
of the capacity will be devoted to Zhongpin's chilled and frozen
pork, with the remaining 60 percent used to provide storage,
processing, and allocation services for other food producers, most
of which are already under contract. As with Zhongpin's other new
facilities, the centers will have the most modern quality
assurance, processing, logistics, and information technology
systems.
Technology and training leverage
Our research and development is focused mainly on advancing
process technology for our production and on creating new products
to serve the country's growing need for tasteful, healthy, and
nutritious food that can be easily adopted in China's evolving modern way of life.
We also continue to invest in training and employee development
so that we can better sustain rapid and healthy growth while
maintaining a satisfactory profit margin.
Further emphasis on chilled pork and prepared pork products
Our most popular products are chilled pork and prepared pork
products. Chilled pork offers customers the most preferred taste,
while prepared pork products offer great and varied tastes,
combined with easy and quick preparation. We believe these two
product lines, in particular, should provide us with attractive
profit margins and high sustainable demand.
Hog and pork prices declined
Hog and pork prices decreased approximately 10 percent in the
first quarter of 2010 from the fourth quarter of 2009 primarily
because the supply of hogs was higher than the market demand. The
imbalance between supply and demand was due to a limited outbreak
of foot and mouth disease in south China that affected the hog breeding industry.
Zhongpin does not source hogs from south China. As of the end of the first quarter, we
are not aware of any reports of new infections, so we believe the
disease has been controlled and the outbreak is over. We expect hog
and pork prices to recover in the near future.
Outlook for pork demand in China
China's economy continues to
expand at a good rate, with pork at the top of the food buying list
as China's preferred protein. The
industry outlook for pork processing remains positive. Zhongpin's
brand position and higher market share in the pork category
continues to strengthen, and we are broadening into additional
geographic markets and new products based on our research and
development. The expansion of our processing plants and
distribution networks is giving us the ability to satisfy the
increasing market demand for our high quality products.
Mr. Zhu summarized, "With this good start for the year, we
believe our outlook for 2010 continues to be encouraging, and we
remain comfortable with our previous performance guidance."
Guidance maintained
Zhongpin is maintaining its prior guidance for the year
2010.
Mr. Warren Wang, Zhongpin's Chief
Financial Officer, said, "For the year 2010, we continue to believe
that Zhongpin's sales revenues should be within a range of
$900 million to $940 million, with
gross profit within the range of $106
million to $115 million and net income within the range of
$52 million to $57 million. The
resulting diluted earnings per share for the year 2010 is currently
expected to be within the range of $1.49 to
$1.64 per share."
This guidance is based on several assumptions and strategies that include:
-- Continuation of China's policies designed to stimulate domestic
consumption and economic growth;
-- Higher average pork prices in China's pork industry in 2010 than in
2009;
-- Higher sales volume of our pork products, led by chilled pork products,
followed by prepared pork products and frozen pork products;
-- A higher percentage of sales from our higher-margin chilled pork and
prepared pork products;
-- Average capacity utilization of about 75 percent for pork products;
-- Increasing distribution efficiencies from expansion of our cold-chain
logistics system and service areas;
-- Growing awareness of the Zhongpin brand in regional markets and
emerging brand awareness across China; and
-- Continuation of the Chinese government's support and subsidies for
producers of agricultural products, such as Zhongpin.
Zhongpin believes that China's
food processing industry will continue to consolidate, which may
result in higher market shares for our main competitors. However,
we believe Zhongpin is equipped to meet the challenge of increasing
competition and that our guidance for 2010 can be achieved.
Sales revenues
Total revenues increased $50.5
million or 32.8 percent to $204.3
million in the three months ended March 31, 2010 from $153.8
million in the three months ended March 31, 2009. The increase was primarily due to
higher sales volume of our pork and pork products, which was partly
offset by somewhat lower prices for our pork and pork products.
The following table shows our sales by product division for the
three months ended March 31, 2010 and
2009.
Sales by Division
(unaudited)
Three Months Ended Three Months Ended
March 31, 2010 March 31, 2009
Sales Average Sales Average
Revenues Price Revenues Price
Metric (in / Metric Metric (in / Metric
Tons millions) Ton Tons millions) Ton
Pork and
Pork
Products
Chilled
pork 64,418 $114.7 $1,781 43,499 $86.3 $1,984
Frozen
pork 32,845 50.4 $1,534 24,077 44.0 $1,827
Prepared
pork
products 16,047 36.3 $2,262 9,530 22.0 $2,308
Vegetables
and Fruits 3,952 2.9 $734 2,645 1.5 $567
Total 117,262 $204.3 $1,742 79,751 $153.8 $1,929
Chilled pork revenues increased on higher tonnage at lower
average prices. Revenues from chilled pork products increased 32.9
percent in the first quarter 2010 from the first quarter 2009.
Chilled pork tonnage increased 48.1 percent in the first quarter
2010 from the first quarter 2009. Our average price per metric ton
for chilled pork decreased 10.2 percent in the first quarter 2010
from the first quarter 2009.
Frozen pork revenues increased on higher tonnage at lower
average prices. Revenues from frozen pork products increased 14.5
percent in the first quarter 2010 from the first quarter 2009.
Frozen pork tonnage increased 36.4 percent in the first quarter
2010 from the first quarter 2009. Our average price per metric ton
for frozen pork decreased 16.0 percent in the first quarter 2010
from the first quarter 2009.
Prepared pork revenues increased on higher tonnage at slightly
lower average prices. Revenues from prepared pork products
increased 65.0 percent in the first quarter 2010 from the first
quarter 2009. Prepared pork tonnage increased 68.4 percent in the
first quarter 2010 from the first quarter 2009. Our average price
per metric ton for prepared pork products decreased 2.0 percent in
the first quarter 2010 from the first quarter 2009.
Pork and pork products totaled 98.6 percent of total revenues in
the first quarter 2010, compared with 99.0 percent of total
revenues in the first quarter 2009.
Vegetables and fruits revenues increased on higher tonnage at
higher average prices. Vegetables and fruits revenues increased
93.3 percent in the first quarter 2010 from the first quarter 2009.
Tonnage of vegetables and fruits increased 49.4 percent in the
first quarter 2010 from the first quarter 2009. Our average price
per metric ton for vegetables and fruits increased 29.5 percent in
the first quarter 2010 from the first quarter 2009. This product
division benefitted from strong export sales in the first quarter
2010 compared with the first quarter 2009.
Vegetables and fruits were 1.4 percent of total revenues in the
first quarter 2010 compared with 1.0 percent of total revenues in
2009.
The sales of meat and vegetable products are closely related to
the particular regional markets in which our distribution channels
are located. Therefore, the increase in metric tons sold for the
first quarter of 2010 was partly attributable to our success in
expanding our distribution channels. The following table shows our
distribution channels at the end of the first quarters of 2010 and
2009.
Numbers of Stores and Cities Generating Sales Volume
(unaudited)
March 31, Net Percentage
2010 2009 Increase Increase
STORES AND COUNTERS
Showcase stores 148 135 13 9.6%
Branded stores 1,017 970 47 4.8%
Supermarket counters 2,055 1,992 63 3.2%
Total 3,205 3,061 144 4.7%
CITIES
First-tier cities 29 29 0 0.0%
Second-tier cities 125 111 14 12.6%
Third-tier cities 393 337 56 16.6%
Total cities 547 477 70 14.7%
The expansion in our distribution channels and geographical coverage has
been a significant factor in the increase in our sales volume. The following
table shows our revenues by distribution channel for the first quarter of 2010
and 2009.
Sales by Distribution Channel
(Dollars in millions)
(unaudited)
First quarter
ended March 31, Net Percent
2010 2009 increase increase
Retail channels $84.6 $68.3 $16.3 23.9%
Wholesalers and
distributors 62.2 45.5 16.7 36.7%
Restaurants and food
service 56.2 39.5 16.7 42.3%
Export 1.3 0.5 0.8 160.0%
Total $204.3 $153.8 $50.5 32.8%
The increase in sales to different distribution channels was
mainly due to the following factors: (1) our production capacity
has increased since we put new facilities into operation in 2009
and increased our utilization rate for all facilities; (2) we have
built up our brand image and brand recognition through general
advertising display promotions and sales campaigns; (3) we have
increased the number of stores and other channels through which we
sell our products; and (4) we believe consumers are placing
increased importance on food safety and are willing to pay higher
prices for safe food products.
As presented in the table above, our most significant dollar
revenue increases came almost equally from our retail channels,
wholesalers and distributors, and restaurants and food service
organizations. Sales to restaurants and food service providers had
the highest percentage increase.
Revenues from export sales increased $0.8
million or 160.0 percent to $ 1.3
million in the first quarter 2010 from $ 0.5 million in the first quarter 2009. The
increase was mainly in vegetables and fruits.
Costs of sales and gross profit margin
Our cost of sales increased $44.7 million or 33.2 percent to $179.4
million in the first quarter 2010 from $134.7 million in the first quarter
2009. The increase in our cost of sales was consistent with our increase in
sales revenues.
Cost of Sales by Division
(unaudited)
Three Months Ended Three Months Ended
March 31, 2010 March 31, 2009
Cost of Average Cost of Average
Sales Price Sales Price
Metric (in / Metric Metric (in / Metric
Tons millions) Ton Tons millions) Ton
Pork and
Pork
Products
Chilled
pork 64,418 $102.1 $1,585 43,499 $76.7 $1,763
Frozen
pork 32,845 46.3 $1,410 24,077 39.9 $1,657
Prepared
pork
products 16,047 28.6 $1,782 9,530 16.9 $1,773
Vegetables
and
Fruits 3,952 2.4 $607 2,645 1.2 $454
Total 117,262 $179.4 $1,530 79,751 $134.7 $1,689
Our gross profit margin (gross profit divided by sales revenues)
decreased slightly to12.2 percent in the first quarter 2010 from
12.4 percent in the first quarter 2009 primarily due to (1) an
increase in labor costs, (2) an increase in depreciation expense
resulting from the newly-built production facilities that were put
into service in the past year, and (3) our strategic decision to
take actions to increase market share and our capacity utilization
rate.
As a result, our gross profit margin was lower than the level we
would expect to achieve when we fully integrate our new production
facilities and open new regional markets for our products. We
intend to adjust our production levels and product mix and the
percentages of our sales through our different sales channels in
the coming quarters to increase our gross profit margin.
General, administrative, and selling expenses
General and administrative expenses increased $1.5 million or 32.6 percent to $6.1 million in the first quarter 2010 from
$4.6 million in the first quarter
2009. As a percentage of revenues, general and administrative
expenses remained at 3.0% in first quarters of 2010 and 2009.
The increase in general and administrative expenses in the first
quarter 2010 was primarily the result of a $0.5 million increase in bad debt provision due
to the increase in accounts receivables, a $0.4 million increase in depreciation due to the
increase in fixed assets, and a $0.4
million increase in consulting fees.
Selling expenses increased $1.5
million or 53.6 percent to $4.3
million in the first quarter 2010 from $2.8 million in the first quarter 2009. The
increase in selling expenses was primarily the result of our higher
sales of pork and pork products and was primarily due to a
$0.9 million increase in advertising
and a $0.3 million increase in
transportation. As a percentage of revenues, selling expenses
increased to 2.1 percent in the first quarter 2010 from 1.8 percent
in the first quarter 2009.
Interest expense, net
Interest expense, net of interest income, decreased $0.1 million or 6.7 percent to $1.4 million in the first quarter 2010 from
$1.5 million in the first quarter
2009 due primarily to lower interest rates.
Other income and government subsidies
Other income and government subsidies increased $0.9 million or 300.0 percent to $1.2 million in the first quarter 2010 from
$0.3 million in the first quarter
2009 primarily due to a new budget received from the PRC Ministry
of Finance in the first quarter 2010 to a few selected enterprises
in the locality. The objective of which is to promote further
growth and development of enterprises in the key industries
Income taxes
The effective tax rate in the PRC on income generated from the
sale of prepared pork products is 25 percent and there is no income
tax on income generated from the sale of other products, including
chilled and frozen pork, and vegetables and fruits products. The
increase of $0.3 million in the
provision for income taxes in the first quarter of 2010 from the
first quarter of 2009 resulted from the increase in revenue from
prepared meat products.
Net income
Net income increased $3.5 million
or 36.0 percent to $13.3 million in
the first quarter 2010 from $9.7
million in the first quarter 2009, primarily due to higher
revenues and good control of profit margin and expenses in support
of the higher sales.
Earnings per share
Basic and diluted earnings per common share were $0.38 in the first quarter 2010, up 15.2 percent
from $0.33 in the first quarter
2009.
Basic weighted average shares outstanding increased 17.7 percent
in the first quarter 2010 from the first quarter 2009. Diluted
weighted average shares outstanding increased 19.1 percent.
Liquidity and capital resources
At March 31, 2010, we had cash and
cash equivalents of $56.4 million and
working capital of $42.4 million.
Working capital is defined as current assets minus current
liabilities.
In the first quarter 2010, net cash provided by operating
activities was $7.1 million, which
resulted mainly from $13.2 million in
net income, depreciation and amortization allowance of $3.0 million and a net use of cash in operating
assets and liabilities of $9.1
million.
Net cash used in investing activities was $17.5 million in the first quarter 2010, which
resulted primarily from $21.5 million
used for construction in progress, additions to property and
equipment, and land use rights, partly offset by an increase of
$4.0 million in restricted cash.
Net cash used by financing activities was $2.2 million in the first quarter 2010, primarily
due to a repayment of a capital lease obligation of $1.6 million and cash used to repay debt, net of
debt borrowings, of $0.8 million,
partly offset by cash proceeds of $0.2
million from the exercise of warrants. During the first
quarter 2010, Zhongpin strengthened its financial structure by
paying off short-term borrowings using the proceeds from new
long-term loans that generally have lower interest rates and better
terms than had the short-term borrowings.
We believe our existing cash and cash equivalents, together with
our available lines of credit of $234.6
million at March 31, 2010,
will be sufficient to finance our investment in new facilities,
operating requirements, and anticipated capital expenditures of
approximately $74.2 million over the
next 12 months. We intend to use such funds over the next 12 months
to pay for our capacity expansion and the construction of
supporting facilities and to supplement our working capital
requirements to enable us to strengthen our market position and
accelerate our growth.
Conference call and webcast
Zhongpin will host its quarterly conference call and live
webcast at 8:00 a.m. Eastern Daylight
Time (New York) on
Monday, May 10, 2010, which is
8:00 p.m. in Beijing on the same day. The live event on
May 10, 2010 will be available at
1:00 p.m. in London and at 2:00
p.m. in west European cities.
Speaking on the call will be Mr. Xianfu
Zhu, Chairman and CEO, Mr. Baoke Ben, Board Director and
EVP, Mr. Warren (Feng) Wang, VP and
CFO, and Mr. Sterling Song, Investor
Relations Manager.
To participate in the live conference call, please dial one of
the following numbers five to ten minutes prior to the scheduled
starting time. When prompted by the operator, please enter the
participant PIN code shown below to be connected to the call.
U.S. toll-free number 1-866-549-1292
International dial-in number +852-3005-2050
Mainland China toll-free number 400-681-6949
Participant PIN code 326957#
A simultaneous live webcast of the conference call will be
available on the Investor Relations section of Zhongpin's website
at http://www.zpfood.com . To listen to the call, please go to the
website at least 15 minutes before the call's start to register and
to download and install any necessary audio software. An archive of
the webcast will be available shortly after the conference call and
can be reached in the Investor Relations section of Zhongpin's
website.
A telephone replay of the call will be available after the
conclusion of the conference call through 9:00 a.m. Eastern Daylight Time on June 9, 2010. The number for the toll-free
telephone replay in the U.S. is 1-866-753-0743, with the conference
reference number of 145136#. The international telephone dial-in
replay number is +852-3005-2020, with the conference reference
number of 145136#.
About Zhongpin
Zhongpin Inc. is a meat and food processing company that
specializes in pork and pork products, vegetables, and fruits in
China. Its distribution network in
the China covers 20 provinces plus
Beijing, Shanghai, Tianjin, and Chongqing and includes more than 3,000 retail
outlets. Zhongpin's export markets include the European Union and
Southeast Asia. For more
information about Zhongpin, please visit Zhongpin's website at
http://www.zpfood.com.
Safe harbor statement
Certain statements in this news release are forward-looking
statements made under the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Zhongpin has based its
forward-looking statements largely on its current expectations and
projections about future events and trends that it believes may
affect its business strategy, results of operations, financial
condition, and financing needs.
These projections involve risks and uncertainties that could
cause actual results to differ materially from those in the
forward-looking statements, which may include but are not limited
to such factors as downturns in the Chinese economy, unanticipated
changes in product demand, any effect from the A(H1N1) virus on
Zhongpin's market or sales, interruptions in the supply of live
pigs and or raw pork, poor performance of the retail distribution
network, delivery delays, freezer facility malfunctions, Zhongpin's
ability to build and commence new production facilities according
to intended timelines, the ability to prepare Zhongpin for growth,
the ability to predict Zhongpin's future financial performance and
financing ability, changes in regulations, and other information
detailed in Zhongpin's filings with the United States Securities
and Exchange Commission. These filings are available from
www.sec.gov or from Zhongpin's website at http://www.zpfood.com
.
You are urged to consider these factors carefully in evaluating
Zhongpin's forward-looking statements and are cautioned not to
place undue reliance on those forward-looking statements, which are
qualified in their entirety by this cautionary statement. All
information provided in this news release is as of the date of this
release. Zhongpin does not undertake any obligation to update any
forward-looking statement as a result of new information, future
events or otherwise, except as required by law.
Financial statements follow.
ZHONGPIN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in U.S. dollars) (Unaudited)
Three Months Ended
March 31,
2010 2009
Revenues
Sales revenues $204,284,915 $153,849,448
Cost of sales (179,366,565) (134,705,646)
Gross profit 24,918,350 19,143,802
Operating expenses
General and administrative
expenses (6,058,141) (4,608,286)
Selling expenses (4,336,828) (2,793,278)
Research & development expenses (40,852) (30,578)
Amortization of loss from sale-
leaseback (16,657)
Total operating expenses (10,435,821) (7,448,799)
Income from operations 14,482,529 11,695,003
Other income (expense)
Interest expenses (1,435,461) (1,499,520)
Other income (expenses) 565,063 168,073
Exchange gain (loss) (304) 1,333
Government subsidies 625,156 94,955
Total other income (expense) (245,546) (1,235,159)
Net income before taxes 14,236,983 10,459,844
Provision for income taxes (986,520) (718,545)
Net income 13,250,463 9,741,299
Foreign currency translation
adjustment 86,265 (378,972)
Comprehensive income $13,336,728 $9,362,327
Basic earnings per common share $0.38 $0.33
Diluted earnings per common share $0.38 $0.33
Basic weighted average shares
outstanding 34,715,466 29,486,642
Diluted weighted average shares
outstanding 35,222,810 29,569,452
ZHONGPIN INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in U.S. dollars)
March 31, December 31,
2010 2009
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $56,363,756 $68,982,259
Restricted cash 10,539,784 14,490,575
Bank notes receivable 9,127,624 7,997,172
Accounts receivable, net of
allowance for doubtful
accounts of $1,628,947 and
$1,132,038 29,860,755 20,419,797
Other receivables, net of
allowance for doubtful
accounts of $168,041 and $290,436 508,705 652,523
Purchase deposits 4,081,140 5,653,192
Inventories 35,893,367 33,859,420
Prepaid expenses 296,477 186,030
VAT recoverable 16,261,364 14,064,185
Allowance receivables 4,413,770 --
Deferred tax assets 256,222 256,151
Other current assets 155,992 120,709
Total current assets 167,758,956 166,682,013
Property, plant and equipment (net) 211,294,506 189,588,904
Deposits for purchase of land usage
rights 8,721,167 8,718,740
Construction in progress 66,833,282 70,192,150
Land usage rights 61,295,934 61,128,431
Deferred charges 28,512 39,855
Other noncurrent assets 1,762,199 1,761,709
Total assets $517,694,556 $498,111,802
LIABILITIES AND EQUITY
Current liabilities
Short-term loans $68,015,962 $84,661,697
Bank notes payable 5,874,339 9,560,353
Long-term loans - current portion 1,317,609 4,539,215
Capital lease obligation-current
portion 6,760,143 7,480,098
Accounts payable 12,544,468 9,260,750
Other payables 13,420,394 12,882,316
Accrued liabilities 10,462,477 7,377,850
Deposits from customers 4,982,010 5,335,907
Tax payable 1,940,455 1,918,057
Total current liabilities 125,317,857 143,016,243
Deferred tax liabilities 248,014 247,945
Deposits from customers 2,192,942 1,987,579
Capital lease obligation 10,192,985 11,104,435
Long-term loans 68,876,352 44,912,744
Total liabilities 206,828,150 201,268,946
Equity
Common stock par value $0.001;
100,000,000 authorized; 34,725,104
and 34,662,314 shares issued and
outstanding 34,725 34,662
Additional paid-in capital 166,856,661 166,169,902
Retained earnings 124,949,838 111,699,375
Accumulated other comprehensive
income 19,025,182 18,938,917
Total equity 310,866,406 296,842,856
Total liabilities and equity $517,694,556 $498,111,802
ZHONGPIN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in U.S. dollars) (Unaudited)
Three Months Ended March 31,
2010 2009
Cash flows from operating
activities:
Net income $13,250,463 $9,741,299
Adjustments to reconcile net income
to net cash provided by (used in)
operations:
Depreciation 2,729,974 1,801,235
Amortization 327,390 187,858
Provision for allowance for bad
debt 374,030 (102,628)
Stock-based compensation expense 473,472 289,917
Changes in operating assets and
liabilities:
Accounts receivable (9,929,541) (7,783,530)
Other receivables 266,413 1,378,559
Purchase deposits 1,573,258 (16,221,596)
Prepaid expenses (110,379) 61,962
Inventories (2,024,048) (8,640,944)
Tax refunds recoverable (2,192,751) (2,154,544)
Other current assets (35,240) (31,519)
Deferred charges 11,351 11,632
Accounts payable 3,280,371 2,189,263
Other payables 534,534 1,131,977
Allowance receivables (4,412,736) --
Accrued liabilities 3,082,041 544,581
Taxes payable 21,859 (71,681)
Deposits from clients (355,299) (1,258,162)
Deposits from clients Long term
portion 204,761 11,277
Net cash provided by (used in) by
operating activities 7,069,923 (18,915,044)
Cash flows from investing
activities:
Construction in progress (19,057,251) (2,749,323)
Additions to property and equipment (1,942,869) (3,441,307)
Additions to land usage rights (477,844) --
Increase in restricted cash 3,953,897 2,096,882
Net cash used in investing
activities (17,524,067) (4,093,748)
Cash flows from financing
activities:
Proceeds from (repayment of) bank
notes, net (4,815,772) 2,054,947
Proceeds from(repayment of) short-
term bank loans, net (19,887,508) 27,502,670
Proceeds from long-term loans 23,945,495 --
Proceeds from capital lease
obligation (1,636,194) (359,875)
Proceeds from warrants exercise 213,350 --
Net cash provided by (used in)
financing activities (2,180,629) 29,197,742
Effects of rate changes on cash 16,269 (82,166)
Increase (decrease) in cash and
cash equivalents (12,618,504) 6,106,784
Cash and cash equivalents,
beginning of period 68,982,259 41,857,166
Cash and cash equivalents, end of
period $56,363,755 $47,963,950
Supplemental disclosures of cash
flow information:
Cash paid for interest $1,926,252 $1,527,258
Cash paid for income taxes $964,583 $753,430
For more information, please contact:
Zhongpin Inc.
Mr. Sterling Song (English and Chinese)
Investor Relations Manager
Tel: +86-10-8286-1788 extension 101 in Beijing
Email: ir@zhongpin.com
Mr. Warren (Feng) Wang (English and Chinese)
Chief Financial Officer
Tel: +86-10-8286-1788 extension 104 in Beijing
Email: warren.wang@zhongpin.com
Christensen
Mr. Yuanyuan Chen (English and Chinese)
Tel: +86-10-5971-2001 in Beijing
Mobile: +86-139-2337-7882 in Beijing
Email: ychen@christensenir.com
Mr. Tom Myers (English)
Mobile: +86-139-1141-3520 in Beijing
Email: tmyers@christensenir.com
Ms. Kathy Li (English and Chinese)
Tel: +1-212-618-1978
Email: kli@christensenir.com
SOURCE Zhongpin Inc.