BEIJING and CHANGGE, China, May 10, 2013 /PRNewswire/ -- Zhongpin Inc. ("Zhongpin" or the "Company," Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China, today reported higher sales revenues and lower net income for the first quarter ended March 31, 2013 compared with the first quarter 2012.
First quarter 2013 highlights
Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin, said, "Our results for the first quarter of 2013 clearly illustrate the intense competitive pressure in the meat industry in China.
"While the demand for all our pork products, measured by our tonnage sold, was up 10.6% in the first quarter 2013 from last year's first quarter, the average price per ton for those products dropped 7.5%. Sequentially, the first quarter 2013 average price for all our pork products was only 1.0% higher than in the fourth quarter 2012.
"Both comparisons are substantially different from the normal seasonal pattern, when the first quarter prices often peak for the year due to the high demand for pork during the Chinese New Year. Those prices reflect strong competition to gain market share that is pressuring prices and financial performance.
"Our gross profit margin increased 0.6 percentage points to 10.1% in the first quarter from 9.5% in the first quarter 2012 primarily due to higher gross profit margins on our prepared pork products and from an increase in the spread between pork prices and hog prices, due to lower hog prices.
"Our operating expenses continued to increase to support higher sales. We added more employees to support expansion and had higher promotional activities and higher interest expense, all mainly due to the higher volume of business and expansion, plus the intense competitive pressure in the pork industry.
"For the year 2013, we expect that the demand for pork in China should remain strong and that Zhongpin's revenues from pork and pork products are likely to increase modestly based on higher tonnage sold at lower average prices compared with 2012. We anticipate that our net profit margin in 2013 will decrease due to increased competition in the industry, the expected increase in labor cost and overheads, and the expected increase in quality assurance and control costs in response to increased importance on food safety placed by the government and customers."
Capacity and market expansions update
Zhongpin is investing approximately $58.5 million to build a new production, research and development, and training complex in Changge, Henan province, excluding the cost of land use rights that it has already obtained. When completed, this new facility is expected to have an annual production capacity of about 100,000 metric tons for prepared pork products. Adjacent to this new production facility, Zhongpin plans to develop a center for research and development, training, and quality assurance and control. Construction for the first phase with a production capacity of approximately 50,000 metric tons for prepared pork products started in the second quarter of 2011 and was completed in the second quarter of 2012. Trial production started in July 2012, and the plant has been in regular production since the end of the third quarter of 2012.
Zhongpin established a joint venture company in June 2011, of which the Company owns 65%, with Henan Xinda Animal Husbandry Company Limited. The joint venture company is financed by capital contributions and bank loans. All capital contributions to the joint venture company have been made. The joint venture company is expected to provide 20,000 sire boars annually. Upon the completion of the building of infrastructures for sire boar breeding in the third quarter of 2012, the joint venture company leased the facility to a third party for an annual rental in the amount of RMB 5.0 million.
Zhongpin is investing approximately $18.0 million in a cold-chain logistics distribution center in Anyang, Henan province. This distribution center will have a temperature-adjustable warehouse with a floor area of approximately 27,000 square meters, processing capacity, a distribution center, and a quality control center. The distribution center will be used for third-party cold-chain logistics service. Zhongpin expects to put this distribution center into operation in the second quarter of 2013.
Zhongpin is investing approximately $87.5 million in a chilled and frozen food processing and distribution center in Kunshan, Jiangsu province, which is near Shanghai. The center will be built in three phases. The first phase will include a processing center, cold-chain logistics center, and business complex. Zhongpin invested about $35.0 million on the first phase that was put into operation in February 2013.
Zhongpin will be investing approximately $47.6 million to build a cold-chain logistics distribution center in Tangshan, Hebei province. This distribution center will have a 27,000 square meter temperature-adjustable warehouse, processing capacity, distribution center, and quality control center. This distribution center will be used for third-party cold-chain logistics service and is expected to be in operation in the fourth quarter of 2013.
As of March 31, 2013, Zhongpin had an annual capacity of 683,760 metric tons for chilled and frozen pork, 176,000 tons for prepared pork products, 20,000 tons for pork oil, and 30,000 tons for vegetables and fruits, for a combined total of 909,760 metric tons. In addition, its annual capacity for sausage casings was 100 million meters, and its annual capacity for the raw material to make heparin sodium was 300 billion units.
Sales revenues in the first quarter 2013
Total sales revenues increased $8.3 million or 2% to $382.4 million in the first quarter 2013 from $374.1 million in the first quarter 2012 primarily due to higher sales volume for pork and pork products sold at lower average selling prices.
The higher revenues resulted mainly from continued increases in the number of retail outlets, geographic expansion of its distribution network and processing facilities, and higher sales to chain restaurants, food service providers, and wholesalers and distributors in China, which were partially offset by lower average pork prices resulting from market fluctuations and industry competition. The following table shows tonnage, sales revenues, and average selling price per metric ton by product division for the first quarters of 2013 and 2012.
Sales by Product Division | ||||||||||||||||
First quarter ended March 31, 2013 | First quarter ended | |||||||||||||||
Metric | Sales revenues (millions) | Average | Metric | Sales revenues (millions) | Average | |||||||||||
Pork and Pork Products | ||||||||||||||||
Chilled pork | 92,349 | $ | 243.1 | $ | 2,632 | 87,146 | $ | 248.8 | $ | 2,855 | ||||||
Frozen pork | 25,282 | 58.6 | $ | 2,318 | 25,523 | 67.0 | $ | 2,625 | ||||||||
Prepared pork products | 30,657 | 78.4 | $ | 2,557 | 21,426 | 55.7 | $ | 2,600 | ||||||||
Vegetables and Fruits | 2,498 | 2.3 | $ | 921 | 2,906 | 2.6 | $ | 895 | ||||||||
Total | 150,786 | $ | 382.4 | $ | 2,536 | 137,001 | $ | 374.1 | $ | 2,731 | ||||||
Chilled pork revenues decreased on higher tonnage at lower average prices per metric ton. Chilled pork revenues decreased 2% in the first quarter 2013 from the first quarter 2012. Chilled pork tonnage increased 6% and the average price per metric ton decreased 8% in the first quarter 2013 from the first quarter 2012. The lower revenues from chilled pork were mainly due to lower average selling prices for chilled pork as a result of fluctuations in market prices of chilled pork or chilled pork-related products, partly offset by the higher tonnage sold.
Frozen pork revenues decreased on lower tonnage at lower average prices. Frozen pork revenues decreased 13% in the first quarter 2013 from the first quarter 2012. Frozen pork tonnage decreased 1% and the average price per metric ton decreased 12% in the first quarter 2013 from the first quarter 2012. The lower tonnage in the first quarter 2013 was primarily due to Zhongpin's strategic adjustment of its product mix towards selling less frozen pork, which has a lower profit margin. The average price per metric ton for frozen pork decreased due to fluctuations in the market prices of frozen pork or frozen pork-related products.
Prepared pork revenues increased on higher tonnage at lower average prices. Revenues from prepared pork products increased 41% in the first quarter 2013 from the first quarter 2012. Prepared pork tonnage increased 43% and the average price per metric ton decreased 2% in the first quarter 2013 from the first quarter 2012. Prepared pork products are becoming more important to our business since customers are increasingly demanding them for their flavor and convenience and are willing to pay higher average prices for these products. We plan to gradually increase sales from prepared pork products by increasing our brand recognition and expanding our capacity for these products.
Pork products totaled 99.4% of total sales revenues in the first quarter 2013 and 99.3% in the first quarter 2012.
Geographic coverage and distribution channels
The sales of pork 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 in the first quarter 2013 was partly attributable to our efforts to expand our geographic coverage and broaden our distribution channels since 2011.
The following table shows sales revenues by distribution channel. In the first quarter 2013, sales to wholesalers and distributors accounted for 41% of sales revenues, restaurants and food services were 27%, retail channels were 30%, and export and import were 2%.
Sales Revenues by Distribution Channel | |||||||||||
U.S. $ in millions except % | First quarter ended | Net change | Percent change | ||||||||
2013 | 2012 | ||||||||||
Wholesalers and distributors | $ | 157.2 | $ | 153.7 | $ | 3.5 | 2% | ||||
Restaurants and food services | 104.6 | 96.1 | 8.5 | 9 % | |||||||
Retail channels | 115.3 | 117.0 | (1.7) | (1)% | |||||||
Export and import | 5.3 | 7.3 | (2.0) | (27)% | |||||||
Total | $ | 382.4 | $ | 374.1 | $ | 8.3 | 2 % | ||||
The increase in sales revenues from different distribution channels was mainly due to the following factors: (a) we have built our brand image and brand recognition through general advertising, display promotions, and sales campaigns; (b) we have increased the number of stores and other channels through which we sell our products; and (c) we believe consumers are placing more importance on food safety considerations and are willing to pay higher prices for safe food products.
As of March 31, 2013, Zhongpin's customers included 158 international and domestic fast food companies in China, 167 processing factories, and 1,392 school cafeterias, factory canteens, hotels, army bases, hospitals, and government departments. As of March 31, 2013, Zhongpin also sold directly to consumers in 3,502 retail outlets, including supermarkets, in China.
The following table shows the retail channels and number of stores and counters that generated sales volume in the first quarters of 2013 and 2012.
Numbers of Retail Stores and Counters | ||||||||
As of March 31, | Net change | Percent change | ||||||
Retail channels | 2013 | 2012 | ||||||
Showcase stores | 152 | 161 | (9) | (6)% | ||||
Branded stores | 1,497 | 1,329 | 168 | 13% | ||||
Supermarket counters | 1,853 | 1,948 | (95) | (5)% | ||||
Total retail | 3,502 | 3,438 | 64 | 2% | ||||
Geographic expansion and broader channel coverage together have been important factors in our long-term success, including in the first quarter 2013. The table below shows the number of cities, subdivided by the size, in which we distribute our products through all of our distribution channels at the end of the first quarters of 2013 and 2012.
Number of Cities by Tier | ||||||||
As of March 31, | Net | Percent change | ||||||
2013 | 2012 | |||||||
First-tier cities (largest) | 29 | 29 | - | 0% | ||||
Second-tier cities | 137 | 134 | 3 | 2% | ||||
Third-tier cities | 439 | 435 | 4 | 1% | ||||
Total cities | 605 | 598 | 7 | 1% | ||||
Cost of sales and gross profit margin
Cost of sales primarily includes the costs of raw materials, labor costs, and overhead. Of the total cost of sales, the cost of raw materials typically accounts for about 95.5% to 95.8%, overhead typically accounts for 2.7% to 2.8%, and labor costs typically account for 1.5% to 1.7%, with slight variations from period to period. All of our meat products are derived from the same raw materials, which are live hogs. Vegetable and fruit products are purchased from farmers located close to Zhongpin's processing facility in Changge in Henan province. As a result, the purchasing costs of live hogs and vegetables and fruits represent substantially all of the costs of raw materials. The increase in our cost of sales was consistent with but considerably lower than our increase in sales revenues.
Cost of Sales by Product Division | ||||||||||||||||
First quarter ended | First quarter ended | |||||||||||||||
Metric tons | Cost of | Average | Metric | Cost of | Average | |||||||||||
Pork and Pork Products | ||||||||||||||||
Chilled pork | 92,349 | $ | 221.3 | $ | 2,396 | 87,146 | $ | 227.1 | $ | 2,606 | ||||||
Frozen pork | 25,282 | 54.8 | $ | 2,168 | 25,523 | 62.8 | $ | 2,461 | ||||||||
Prepared pork products | 30,657 | 65.8 | $ | 2,146 | 21,426 | 46.5 | $ | 2,170 | ||||||||
Vegetables and Fruits | 2,498 | 2.0 | $ | 801 | 2,906 | 2.3 | $ | 791 | ||||||||
Total | 150,786 | $ | 343.9 | $ | 2,281 | 137,001 | $ | 338.7 | $ | 2,472 | ||||||
Gross profit margin (gross profit divided by sales revenues) increased to 10.1% in the first quarter 2013 from 9.5% in the first quarter 2012 primarily due to (a) a higher percentage of revenues from prepared pork products, which contribute a higher margin than other products, and (b) an increase in the gap between pork prices over hog prices, with hogs being the bulk of our cost of sales.
General, administrative, and selling expenses
General and administrative expenses increased $1.7 million or 18% to $11.1 million in the first quarter 2013 from $9.4 million in the first quarter 2012. As a percent of revenues, general and administrative expenses increased to 2.9% in the first quarter 2013 from 2.5% in the first quarter 2012. The higher general and administrative expenses in the first quarter 2013 were primarily the result of a $0.2 million increase in bad debt provision due to higher accounts receivable on March 31, 2013, a $0.3 million increase in salary expenses because the average salary paid to employees increased, and a $0.7 million increase in administrative expenses due mainly to higher expenses related to the going private transaction.
Selling expenses increased $2.3 million or 34% to $8.7 million in the first quarter 2013 from $6.4 million in the first quarter 2012. Selling expenses as a percent of revenues increased to 2.3% in the first quarter 2013 from 1.7% in the first quarter 2012. The higher selling expenses were primarily the result of the higher sales of pork and pork products and were primarily due to a $0.3 million increase in salary expenses because of an increase in the average salary paid to employees, $0.8 million increase in promotion expenses for higher promotional activities to compete more effectively in the industry, and a $0.6 million increase in super market management fees.
Interest expense, net
Interest expense, net of interest income, increased $0.7 million or 9% to $8.3 million in the first quarter 2013 from $7.6 million in the first quarter 2012. The increase in interest expense, net of interest income, was primarily due to higher average outstanding loan balances in the first quarter 2013 compared with the first quarter 2012.
Other income and government subsidies
Other income and government subsidies decreased $0.3 million or 20% to $1.2 million in the first quarter 2013 from $1.5 million in the first quarter 2012 primarily due to a $0.2 million decrease in other income and a $0.1 million decrease in government subsidies.
Provision for income taxes
The enterprise income tax rate in China on income generated from the sale of prepared products is 25% and there is no income tax on income generated from the sale of raw products, including raw meat products and raw vegetable and fruit products. The provision for income taxes decreased $0.4 million in the first quarter 2013 from the first quarter 2012 due to higher sales of prepared pork products at lower gross profit margins.
Net income
As a result of the foregoing, net income decreased $1.6 million or 13% to $10.6 million in the first quarter 2013 from $12.2 million in the first quarter 2012. The net profit margin (net income divided by sales revenues) declined to 2.8% in the first quarter 2013 from 3.3% in the first quarter 2012.
Earnings per share
The earnings per share numbers below are based on net income attributable to Zhongpin Inc. shareholders.
Basic earnings per share decreased 12% to $0.29 in the first quarter 2013 from $0.33 in the first quarter 2012. Weighted average basic shares outstanding decreased 1% to 37,209,344 shares in the first quarter 2013 from 37,498,563 shares in the first quarter 2012.
Diluted earnings per share decreased 15% to $0.28 in the first quarter 2013 from $0.33 in the first quarter 2012. Weighted average diluted shares outstanding decreased 1% to 37,278,630 shares in the first quarter 2013 from 37,503,019 shares in the first quarter 2012.
As of March 31, 2013, Zhongpin had 40,376,182 shares of common stock issued, of which 37,209,344 were outstanding and 3,166,838 were held as treasury stock.
Liquidity and capital resources
During the first quarter 2013, Zhongpin's cash and cash equivalents increased by $117.9 million. Cash and cash equivalents (excluding restricted cash) totaled $294.3 million as of March 31, 2013 compared with $176.4 million as of December 31, 2012. As of March 31, 2013, working capital (current assets minus current liabilities) was $31.6 million.
Net cash used in operating activities in the first quarter 2013 was $16.6 million, primarily from net income that provided $10.6 million, depreciation and amortization that provided $6.5 million, a provision for allowance for bad debts that provided $1.9 million, accounts receivable and accounts payable that used a net total of $35.7 million, inventories that provided $3.5 million, deposits from customers that used $2.6 million, and other items that used $0.8 million, net.
Net cash used in investing activities in the first quarter 2013 was $7.7 million for construction in progress, additions to land use rights, and additions to property and equipment.
Net cash provided by financing activities in the first quarter 2013 was $141.4 million, primarily from the proceeds from loans, notes, and bonds, net of repayments, that provided $107.5 million, proceeds from a capital lease obligation that provided $29.5 million, and an increase in restricted cash that provided $4.4 million.
As a result, including the effect from foreign currency exchange rate changes on cash, Zhongpin increased its cash and cash equivalents in the first quarter 2013 by $117.9 million. Cash and cash equivalents on March 31, 2013 totaled $294.3 million compared with $176.4 million as of December 31, 2012.
Zhongpin believes its existing cash and cash equivalents, together with its ability to secure bank borrowings, will be sufficient to finance its investment in new facilities, with budgeted capital expenditures of about $103.5 million over the next 12 months, and to satisfy its working capital needs. It intends to satisfy its short-term debt obligations that mature over the next 12 months through additional short-term bank loans, in most cases by rolling over the maturing loans into new short-term loans with the same lenders as the Company has done in the past.
Conference call and webcast
Zhongpin will host its first quarter 2013 earnings conference call and live webcast at 8:00 a.m. Eastern Daylight Time (New York) on Friday, May 10, 2013, which is also 8:00 p.m. in China and Hong Kong on the same day.
The dial-in details for the live conference call are:
1 866 978 9970 | United States toll free |
1 800 033 457 | Australia toll free |
1 855 790 8866 | Canada toll free |
800 803 6103 | China mainland toll free land line |
400 681 6405 | China mainland (small access fee) mobile |
400 658 8165 | China mainland (small access fee) mobile |
8025 0180 | Denmark toll free |
0805 631 899 | France toll free |
3027 5500 | Hong Kong local |
180 940 6949 | Israel toll free |
005 3112 2600 | Japan toll free |
8002 8922 | Luxembourg toll free |
0800 022 7874 | Netherlands toll free |
800 120 6122 | Singapore local |
800 600 667 | Spain toll free |
0800 279 7785 | United Kingdom toll free |
1 866 978 9970 | United States toll free |
+852 3027 5500 | International dial-in toll call |
326 957# | Live call -- participant access code |
The live webcast and archive of the conference call will be available on the Investor Relations section of Zhongpin's website at http://www.zpfood.com.
A telephone playback of the call will be available after the conclusion of the conference call through 8:00 a.m. Eastern Daylight Time, June 8, 2013.
The dial-in details for the telephone playback are:
1 866 753 0743 | United States toll free |
1 800 792 965 | Australia toll free |
1 866 518 1652 | Canada toll free |
800 876 5016 | China mainland toll free land line |
8088 6774 | Denmark toll free |
0800 901 585 | France toll free |
3027 5520 | Hong Kong local |
0053 1121 925 | Japan toll free |
800 852 3586 | Singapore toll free |
0808 234 7126 | United Kingdom toll free |
1 866 753 0743 | United States toll free |
+852 3027 5520 | International toll call |
145 136# | Playback -- conference reference |
About Zhongpin
Zhongpin Inc. is a leading meat and food processing company that specializes in pork and pork products, vegetables, and fruits in China. Its distribution network in China covers 20 provinces plus Beijing, Shanghai, Tianjin, and Chongqing and includes 3,502 retail outlets as of March 31, 2013. Zhongpin's export markets include Europe, Hong Kong, and other countries in 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 may be 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, interruptions in the supply of live pigs and or raw pork, the effects of weather on hog feed production, 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, the impacts of the proposed going private transaction, 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 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.
For more information, please contact:
Zhongpin Inc.
Mr. Sterling Song (English and Chinese)
Director of Investor Relations
Telephone +86 10 8455 4188 extension 106 in Beijing
ir@zhongpin.com
Mr. Warren (Feng) Wang (English and Chinese)
Chief Financial Officer
Telephone +86 10 8455 4388 in Beijing
warren.wang@zhongpin.com
Christensen
Mr. Victor Kuo (English and Chinese)
Telephone +86 10 5826 4939 in Beijing
vkuo@christensenir.com
Mr. Tom Myers (English)
Mobile +86 139 1141 3520 in Beijing
tmyers@christensenir.com
Financial statements follow.
ZHONGPIN INC. | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||
(In U.S.dollars) (Unaudited) | ||||||
Three Months Ended March 31, | ||||||
2013 | 2012 | |||||
Revenues | ||||||
Sales revenues | $ | 382,358,018 | $ | 374,127,384 | ||
Cost of sales | (343,913,400) | (338,651,649) | ||||
Gross profit | 38,444,618 | 35,475,735 | ||||
Operating expenses | ||||||
General and administrative expenses | (11,117,768) | (9,416,975) | ||||
Selling expenses | (8,650,157) | (6,437,120) | ||||
Research and development expenses | (132,331) | (86,628) | ||||
Total operating expenses | (19,900,256) | (15,940,723) | ||||
Income from operations | 18,544,362 | 19,535,012 | ||||
Other income (expense) | ||||||
Interest expenses, net | (8,289,066) | (7,625,481) | ||||
Other income, net | 400,325 | 563,605 | ||||
Government subsidies | 776,718 | 915,348 | ||||
Total other expenses | (7,112,023) | (6,146,528) | ||||
Net income before taxes | 11,432,339 | 13,388,484 | ||||
Provision for income taxes | (811,687) | (1,193,329) | ||||
Net income after taxes | 10,620,652 | 12,195,155 | ||||
Net (income) loss attributable to non-controlling interests | (10,938) | 2,160 | ||||
Net income attributable to Zhongpin Inc. shareholders | 10,609,714 | 12,197,315 | ||||
Foreign currency translation adjustment | 1,555,861 | 582,654 | ||||
Foreign currency translation adjustment attributable to | (2,337) | (863) | ||||
non-controlling interests | ||||||
Foreign currency translation adjustment attributable to | 1,553,524 | 581,791 | ||||
Zhongpin Inc. shareholders | ||||||
Comprehensive income | 12,176,513 | 12,777,809 | ||||
Comprehensive (income) loss attributable to non- | (13,275) | 1,297 | ||||
controlling interests | ||||||
Comprehensive income attributable to Zhongpin Inc. | $ | 12,163,238 | $ | 12,779,106 | ||
shareholders | ||||||
Basic earnings per common share | $ | 0.29 | $ | 0.33 | ||
Diluted earnings per common share | $ | 0.28 | $ | 0.33 | ||
Basic weighted average shares outstanding | 37,209,344 | 37,498,563 | ||||
Diluted weighted average shares outstanding | 37,278,630 | 37,503,019 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements. | ||||||
ZHONGPIN INC. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(In U.S.dollars) | ||||||
March 31, 2013 | December 31, 2012 | |||||
ASSETS | (Unaudited) | |||||
Current assets | ||||||
Cash and cash equivalents | $ | 294,315,174 | $ | 176,441,332 | ||
Restricted cash | 105,866,898 | 109,954,161 | ||||
Bank notes receivable | 102,110,143 | 72,369,700 | ||||
Accounts receivable, net of allowance for doubtful accounts of | 120,800,332 | 85,167,801 | ||||
$6,666,258 and $4,775,526 | ||||||
Other receivables, net of allowance for doubtful accounts of | 977,803 | 865,060 | ||||
$509,084 and $493,484 | ||||||
Purchase deposits | 7,034,952 | 6,798,356 | ||||
Inventories | 34,600,019 | 37,979,226 | ||||
Prepaid expenses | 389,955 | 449,127 | ||||
Allowance receivables | 958,698 | 956,166 | ||||
VAT recoverable | 33,410,038 | 32,719,543 | ||||
Deferred tax assets | 802,297 | 800,179 | ||||
Other current assets | 699,311 | 73,413 | ||||
Total current assets | 701,965,620 | 524,574,064 | ||||
Long-term investment | 478,553 | 477,289 | ||||
Property, plant and equipment, net | 514,193,986 | 470,447,775 | ||||
Deposits for purchase of land use rights | 15,389,482 | 17,285,461 | ||||
Construction in progress | 46,193,135 | 86,509,865 | ||||
Land use rights | 118,412,570 | 116,785,769 | ||||
Other non-current assets | 4,452,434 | 2,554,680 | ||||
Total assets | $ | 1,401,085,780 | $ | 1,218,634,903 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Short-term loans | $ | 246,785,205 | $ | 228,632,849 | ||
Bank notes payable | 209,955,495 | 219,333,386 | ||||
Long-term loans - current portion | 45,303,004 | 52,183,597 | ||||
Short-term financial bonds | 95,710,571 | - | ||||
Capital lease obligation - current portion | 7,298,023 | - | ||||
Accounts payable | 13,498,479 | 11,918,351 | ||||
Other payables | 23,663,592 | 24,053,321 | ||||
Accrued liabilities | 19,335,514 | 18,353,887 | ||||
Deposits from customers | 7,343,501 | 9,935,877 | ||||
Tax payable | 1,396,404 | 1,778,724 | ||||
Deferred subsidy - current portion | 84,943 | 84,852 | ||||
Total current liabilities | 670,374,731 | 566,274,844 | ||||
Long-term liabilities | ||||||
Deferred tax liabilities | 745,839 | 743,869 | ||||
Long-term loans | 143,374,475 | 101,792,652 | ||||
Capital lease obligation | 24,605,501 | - | ||||
Deferred subsidy - long-term portion | 2,371,185 | 2,386,002 | ||||
Total liabilities | 841,471,731 | 671,197,367 | ||||
Equity | ||||||
Common stock: par value $0.001; 100,000,000 authorized; | 40,376 | 40,376 | ||||
40,376,182 and 40,376,182 shares issued as of March 31, 2013 | ||||||
and December 31, 2012; and 37,209,344 and 37,209,344 shares | ||||||
outstanding as of March 31, 2013 and December 31, 2012 | ||||||
Additional paid-in capital | 240,063,993 | 240,063,993 | ||||
Retained earnings | 288,878,462 | 278,268,748 | ||||
Treasury stock, at cost: 3,166,838 and 3,166,838 shares as of | (26,225,646) | (26,225,646) | ||||
March 31, 2013 and December 31, 2012 | ||||||
Accumulated other comprehensive income | 55,967,484 | 54,413,960 | ||||
Total Zhongpin Inc. Shareholders' equity | 558,724,669 | 546,561,431 | ||||
Non-controlling interests | 889,380 | 876,105 | ||||
Total shareholders' equity | 559,614,049 | 547,437,536 | ||||
Total liabilities and shareholders' equity | $ | 1,401,085,780 | $ | 1,218,634,903 | ||
The accompanying notes are an integral part of these condensed consolidated financial statements. | ||||||
ZHONGPIN INC. | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(In U.S.dollars) (Unaudited) | ||||||
Three Months Ended March 31, | ||||||
2013 | 2012 | |||||
Cash flows from operating activities: | ||||||
Net income | $ | 10,620,652 | $ | 12,195,155 | ||
Adjustments to reconcile net income to net cash used in operations: | ||||||
Depreciation | 5,899,289 | 5,537,984 | ||||
Amortization of land use rights | 644,802 | 516,966 | ||||
Provision for allowance for bad debts | 1,889,563 | 1,657,949 | ||||
Other income | (88,790) | (129,699) | ||||
Deferred subsidy | (21,236) | - | ||||
Stock-based compensation expense | - | 417,749 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (37,228,084) | (31,521,161) | ||||
Other receivables | (124,907) | (950,981) | ||||
Purchase deposits | (218,259) | 1,489,444 | ||||
Prepaid expenses | 60,153 | 75,128 | ||||
Inventories | 3,474,455 | (13,251,435) | ||||
Allowance receivables | - | 2,160,068 | ||||
VAT recoverable | (602,931) | (5,225,549) | ||||
Other current assets | (2,023) | (118,029) | ||||
Deferred charges | - | 1,855 | ||||
Accounts payable | 1,546,201 | 28,643,061 | ||||
Other payables | (318,966) | (2,035,430) | ||||
Accrued liabilities | 933,980 | 388,216 | ||||
Taxes payable | (400,248) | 373,669 | ||||
Deposits from customers | (2,614,682) | (3,541,776) | ||||
Deposits from customers - long-term portion | - | (338,991) | ||||
Net cash used in operating activities | (16,551,031) | (3,655,807) | ||||
Cash flows from investing activities: | ||||||
Deposits for purchase of land use rights | - | (10,555,624) | ||||
Construction in progress | (5,413,842) | (11,461,585) | ||||
Additions to property and equipment | (2,267,416) | (2,585,772) | ||||
Additions to land use rights | (21,559) | - | ||||
Proceeds on sale of fixed assets | - | 5,905 | ||||
Net cash used in investing activities | (7,702,817) | (24,597,076) | ||||
Cash flows from financing activities: | ||||||
Proceeds from (repayment of) bank notes, net | (39,447,085) | 9,806,307 | ||||
Proceeds from short-term bank loans | 60,524,010 | 88,785,573 | ||||
Repayment of short-term bank loans | (43,003,902) | (49,538,008) | ||||
Proceeds from long-term loans | 54,790,156 | 7,926,069 | ||||
Repayment of long-term loans | (20,549,090) | - | ||||
Proceeds from short-term financial bonds, net of issuance costs | 95,181,970 | - | ||||
Proceeds from capital lease obligation, net of issuance costs | 29,529,346 | - | ||||
Repayment of capital lease obligation | - | (1,498,250) | ||||
Repurchases of common stock | - | (2,812,322) | ||||
Increase in restricted cash | 4,371,725 | - | ||||
Net cash provided by financing activities | 141,397,130 | 52,669,369 | ||||
Effects of rate changes on cash | 730,560 | 226,450 | ||||
Increase in cash and cash equivalents | 117,873,842 | 24,642,936 | ||||
Cash and cash equivalents, beginning of period | 176,441,332 | 135,845,095 | ||||
Cash and cash equivalents, end of period | $ | 294,315,174 | $ | 160,488,031 | ||
Supplemental disclosures of cash flow information: | ||||||
Cash paid for interest | $ | 9,596,014 | $ | 8,122,027 | ||
Cash paid for income taxes | $ | 1,199,986 | $ | 819,660 | ||
The accompanying notes are an integral part of these condensed consolidated financial statements. | ||||||
