CHANGGE CITY, China and BEIJING, Aug. 10 /PRNewswire-Asia/ -- Zhongpin Inc. (“Zhongpin”, Nasdaq: HOGS), a leading meat and food processing company in the People’s Republic of China (“China”), today reported higher revenues, net income, and diluted earnings per share for the second quarter 2009 and reaffirmed its prior guidance for the full year 2009.
Second quarter 2009 highlights:
-- Revenues increased 17.7 percent in the second quarter 2009 to $161.8
million from $137.5 million in the second quarter 2008.
-- Net income increased 25.9 percent to $10.7 million in the second
quarter 2009 from $8.5 million in the second quarter 2008.
-- Diluted earnings per share increased 24.1 percent to $0.36 in the
second quarter 2009 from $0.29 in the second quarter 2008.
-- The downward trend of hog and pork prices during the second quarter
turned upward in June and prices have continued at higher levels in
July and early August.
-- Prior guidance for 2009 is reaffirmed.
-- New vegetable and fruit processing plant in Changge began production
in April.
-- Construction of a new pork processing plant in Tianjin began in April.
Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin Inc., said, “The second quarter was unusual for us, primarily due to the temporary fear consumers had about getting the A(H1N1) flu from pork products, which the world’s health agencies have confirmed is not possible.”
In late April 2009, the A(H1N1) flu was reported in Mexico, the United States, Europe, and other countries. In June 2009, the A(H1N1) flu was reported in China, which adversely affected the country’s pork industry, as it has in other countries throughout the world. Pork sales significantly declined in China due to consumers’ fear of contracting the disease through pork consumption. The Chinese government took steps to ease the fear by educating consumers that eating pork will not cause the flu and by renaming the virus as the “A(H1N1) flu” (the same identification used by the World Health Organization and the U.S. Centers for Disease Control and Prevention) in an effort to resume the consumption of pork products and to protect the hog breeding and pork industries. With these efforts, the consumption of pork in China recovered in mid-May, approximately two weeks after the initial reports of the A(H1N1) flu in North America.
Pricing and tonnage
Hog and pork prices decreased sequentially about 20 percent during the second quarter from the first quarter 2009, primarily because the supply of hogs was higher than the market demand. The imbalance in supply and demand was due primarily to three factors (1) an oversupply of hogs, (2) to a lesser extent, the seasonal decline in market demand for pork that is typically associated with warmer weather, and (3) the global outbreak of the A(H1N1) flu virus in April 2009, which temporarily scared consumers and adversely affected the hog and pork industries.
Mr. Zhu continued, “During the second quarter, with the disruptions in the market, we acted to minimize the effect on the company and maximize our potential benefit from the temporary price and volume declines by (1) increasing our sales in our highest gross margin products, which are prepared pork products, (2) extending payment terms to encourage sales, especially in prepared pork products with the highest margins, (3) purchasing more hogs as the prices declined to increase our inventory of frozen pork, because we assumed that prices were temporarily depressed and would recover, which should give us higher gross profits as we sell from lower-cost inventory at higher prices, and (4) sustaining our market and capacity expansions and research and development program.”
Hog and pork prices began to increase in June and have continued at higher levels in July and early August 2009.
Pork prices were also affected in June by the Chinese government, which bought frozen pork to add to the country’s national pork reserves. The government increased the national pork reserves to stabilize the price and protect the interests of hog breeding farmers. The government’s purchasing policy is based on the relationship of the price of hogs to the price of corn (the principal hog feed). The government authorized certain qualified enterprises, including Zhongpin, to acquire hogs and to slaughter, process, and stock them as frozen pork. That purchasing has tended to support higher hog and pork prices, so that the market price of hogs was above the breakeven point for farmers. Since the end of the second quarter of 2009, hog and pork prices have increased about 10 percent.
For the second half of 2009, we continue to expect steady growth in the sales of our pork and pork products. The recent decline in the price of live hogs has caused a number of hog breeders to terminate their breeding operations, which we expect will reduce the oversupply of live hogs during the second half of 2009. We anticipate a change in the supply of live hogs, which we expect will cause prices to stabilize and to begin increasing in the second half of 2009.
Market and capacity expansions continue
Mr. Zhu continued, “This year we are continuing to implement our strategic plan to sustain the growth we have experienced in the last five years.
“For example, in January 2009, we began operating our new chilled and frozen pork plant in eastern Henan province. It has an annual capacity of approximately 80,000 metric tons. In April 2009, we started processing in our new vegetable and fruit facility in Changge, It has an annual capacity of 30,000 metric tons.
“Over the next 12 months, we expect to continue to expand our distribution channel and develop new markets. Through our aggressive marketing campaign, we also expect to increase our brand awareness and customer loyalty. In addition, we intend to streamline further our supply chain to create a unified, safe, and efficient cold-chain logistics system.
“Research and development is important for our continuing success. Working with China Agriculture University, we have established the Henan Province Prepared Meat Products Technology Research Center, which has been certified by the Technology Bureau of Henan Province. This research center will increase our research and development capability.
“We also have invested in training and human resources development for our employees so that we can sustain rapid and healthy growth while maintaining an attractive profit margin.
Outlook for pork demand in the expanding Chinese economy
“As a result of the education consumers have received about the recent A(H1N1) virus, they increasingly are focusing on food safety, which highlights the importance of high-quality products and stringent testing procedures. Highest quality and stringent testing are the foundation of Zhongpin’s modernized, safe, and hygienic processing facilities.
“With China’s live hog prices and pork prices beginning to recover during the latter part of the second quarter, we expect that the upward trend is likely to continue in the cooler second half of 2009, when pork consumption typically increases. Further supporting that outlook is China’s economy, which is expected to grow at higher rates than in the first half of 2009.
“Pork is China’s primary source of protein. We believe the outlook for the long-term potential of China’s meat processing industry remains very positive. We plan to continue to expand our distribution and processing plants to serve this market opportunity and build a leading brand position in the pork category.
“We expect to increase our market share in the meat and meat products segment of our target markets in the second half of this year.
“Based on our operating results for the first half of 2009, we remain confident in our ability to reach our forecast results for the full year 2009 and are maintaining our prior guidance.”
Guidance
Zhongpin’s full year 2009 guidance for revenues continues to be in the range of $780 million to $810 million, with a gross margin of approximately 12.0 percent, net profit margin of at least 6.0 percent, and diluted earnings per share in the range of $1.50 to $1.63, assuming common shares used to calculate diluted EPS are 30.7 million shares. This guidance also assumes that hog and pork prices increase about 10 percent during the third quarter and stabilize at that new level in the fourth quarter.
Revenues
Revenues in the second quarter 2009 increased 17.7 percent to $161.8 million from $137.5 million in the second quarter 2008. The growth was primarily due to higher demand for pork and pork products, partly offset by lower average prices.
The following table shows sales by product division for the three months ended June 30, 2009 and 2008.
Sales by Division
(unaudited)
Three Months Ended Three Months Ended
June 30, 2009 June 30, 2008
Average Average
Metric Sales Price / Metric Sales Price /
Tons Revenues Metric Tons Revenues Metric
(in millions) Ton (in millions) Ton
Pork and
Pork Products
Chilled pork 52,086 $83.3 $1,599 29,435 $71.9 $2,443
Frozen pork 36,231 55.0 $1,518 20,881 49.0 $2,347
Prepared pork products 10,189 20.4 $2,002 5,720 13.2 $2,308
Vegetables and Fruits 2,731 3.1 $1,135 4,349 3.4 $782
Total 101,237 $161.8 $1,598 60,385 $137.5 $2,277
Chilled pork revenues increased on higher tonnage at lower average prices. In the second quarter 2009, our revenues from chilled pork products increased by 15.9 percent above the second quarter 2008. Chilled pork tonnage increased 77.0 percent in the second quarter 2009 over the second quarter 2008. Our average price per metric ton for chilled pork during the second quarter 2009 decreased 34.5 percent from the second quarter 2008.
Frozen pork revenues increased on higher tonnage at lower average prices. During the second quarter, our revenues from frozen pork products increased by 12.2 percent from the second quarter 2008. Frozen pork tonnage increased 73.5 percent in the second quarter 2009 over the second quarter 2008. Our average price per metric ton for frozen pork during the second quarter 2009 decreased 35.3 percent from the second quarter 2008.
Prepared pork revenues increased on higher tonnage at lower average prices. In the second quarter, our revenues from prepared pork products increased 54.5 percent over the second quarter 2008. Prepared pork tonnage increased 78.1 percent in the second quarter 2009 over the second quarter 2008. Our average price per metric ton for prepared pork products during the second quarter 2009 decreased 13.3 percent from the second quarter 2008.
Pork and pork products in total were 98.1 percent of total revenues in the second quarter 2009.
Vegetables and fruits revenues decreased on lower tonnage at higher average prices. In the second quarter, our revenues from vegetables and fruits decreased 8.8 percent from the second quarter 2008. Tonnage of vegetables and fruits decreased 37.2 percent in the second quarter 2009 over the second quarter 2008. Our average price per metric ton for vegetables and fruits in the second quarter increased 45.1 percent from the second quarter 2008.
Vegetables and fruits were 1.9 percent of total revenues in the second quarter 2009.
The increase in metric tons of pork and pork products sold during the second quarter 2009 was partly due to our effort to expand our retail distribution channels. The following table shows the changes in our retail distribution channels since June 30, 2008.
Numbers of Stores and Cities Generating Sales Volume
(unaudited)
June 30, Net Percentage
2009 2008 Increase Increase
STORES AND COUNTERS
Showcase stores 138 116 22 19.0%
Branded stores 982 934 48 5.1%
Supermarket counters 2,015 1,910 105 5.5%
Total 3,135 2,960 175 5.9%
CITIES
First-tier cities 29 29 0 0.0%
Second-tier cities 113 97 16 16.5%
Third-tier cities 355 300 55 18.3%
In addition, expansion in our distribution channels and geographical coverage has been a significant factor in increasing our sales volume. The following table shows our revenues by distribution channel for the second quarters of 2009 and 2008.
Sales by Distribution Channel
(Dollars in millions)
(unaudited)
Three months ended Net Percentage
June 30, Increase Increase
2009 2008
Retail channels $71.1 $55.7 $15.4 27.6%
Food services distributors 46.6 39.7 6.9 17.4%
Restaurants and noncommercial 42.4 40.7 1.7 4.2%
Export 1.7 1.4 0.3 21.4%
Total $161.8 $137.5 $24.3 17.7%
The increase in sales to different distribution channels was mainly due to the following factors: (1) our production capacity has increased because our new Jilin, Tianjin, Hebei, and Yongcheng production facilities started production in late 2008 or early 2009; (2) we have built up our brand image and recognition through advertisements on national and local television and through product promotions; (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 revenue increases were generated from our retail channels and our food services distributors. Retail channels are the highest-gross-profit-margin channels and are the channels through which we build up our Zhongpin brand recognition in the market.
Cost of sales and gross profit margin
Our cost of sales increased 18.7 percent to $142.9 million in the second quarter 2009 from $120.4 million in the second quarter 2008. Our costs of sales primarily include our expenses in raw materials, labor costs, and overhead.
Cost of Sales by Division
(unaudited)
Three Months Ended Three Months Ended
June 30, 2009 June 30, 2008
Average Average
Cost of Price / Cost of Price /
Metric Sales Metric Metric Sales Metric
Tons (in millions) Ton Tons (in millions) Ton
Pork and
Pork Products
Chilled pork 52,086 $74.6 $1,432 29,435 $62.9 $2,137
Frozen pork 36,231 51.1 $1,410 20,881 44.0 $2,107
Prepared pork
products 10,189 14.7 $1,443 5,720 10.6 $1,853
Vegetables and
Fruits 2,731 2.5 $915 4,349 2.9 $667
Total 101,237 $142.9 $1,412 60,385 $120.4 $1,994
Our gross profit margin (gross profit divided by sales revenue) decreased to 11.7 percent in the second quarter 2009 from 12.4 percent in the second quarter 2008. The decrease in the gross margin was primarily due to higher labor costs due to implementing the new labor law in China, the increase in our depreciation expense resulting from the new production facilities that were put into service over the past year, and our strategic decision to take steps to increase our market share and 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 decreased 22.2 percent to $4.2 million in the second quarter 2009 from $5.4 million in the second quarter 2008. As a percentage of revenues, general and administrative expenses decreased to 2.6 percent in the second quarter 2009 from 4.0 percent in the second quarter 2008. The decrease was primarily due to a $0.7 million decrease in advertising expenses and a $0.4 million decrease in consulting fees, partly offset by a $0.6 million increase in salary expense due to the expansion of our business.
Selling expenses increased 21.7 percent to $2.8 million in the second quarter 2009 from $2.3 million in the second quarter 2008, mainly due to successful selling efforts to achieve higher sales in pork and pork products and to higher transportation fees and higher salaries. Selling expenses as a percent of revenues remained at 1.7 percent in the second quarters of 2009 and 2008.
Interest expense
Interest expense, net of interest income, increased 116.7 percent to $1.3 million in the second quarter 2009 from $0.6 million in the second quarter 2008, due to an increase of $10.4 million in short-term bank loans and an increase of $26.4 million in long-term bank loans.
Gain on disposal of a subsidiary
On June 30, 2009, an unaffiliated company purchased the equity of our former subsidiary, Henan Zhongpin Industry Company Limited, for RMB 8.4 million (about $1.2 million), which resulted in a gain of about $0.7 million. This subsidiary held the assets of our former production facilities in Yanling city in the Henan province that we decided to sell, mainly because of the population expansion near the plant and the projected cost to retrofit the plant to meet new environmental requirements.
Income taxes
The effective tax rate in China on income generated from the sale of prepared products is 25 percent. There is no income tax on income generated from the sale of raw meat, raw vegetables, or raw fruits. The increase of $0.4 million in the provision for income taxes in the second quarter 2009 from the second quarter 2008 was due to our higher revenue from prepared pork products.
Net income
Net income increased 25.9 percent to $10.7 in the second quarter 2009 from $8.5 million in the second quarter 2008 primarily due to higher revenues from higher tonnage sold at lower average prices, good control of expenses, and the gain on the disposal of a subsidiary, partly offset by higher interest expense supporting capacity and systems expansions and by higher income taxes on higher-margin prepared pork products.
Earnings per share
Primary earnings per share increased 24.1 percent to $0.36 in the second quarter 2009 from $0.29 in the second quarter 2008. Diluted earnings per share increased 24.1 percent to $0.36 in the second quarter 2009 from $0.29 in the second quarter 2008.
Liquidity and Capital Resources
At June 30, 2009 we had cash and cash equivalents of $26.3 million, and our working capital was $(14.4) million. Working capital is defined as current assets minus current liabilities.
For the six months ended June 30, 2009, net cash provided by operating activities was $7.0 million, net cash used in investing activities was $50.8 million, and net cash provided from financing activities was $28.3 million. Cash and cash equivalents decreased by $15.5 million in the six months ended June 30, 2009, primarily due to higher accounts receivable in support of higher revenues, higher inventories as we bought lower-priced hogs to stockpile frozen pork in anticipation of higher pork prices later, and higher depreciation expense due to higher property, plant, and equipment in service.
We believe our existing cash and cash equivalents, together with our available lines of credit that totaled $206.8 million at June 30, 2009, will be sufficient to finance our investment in new facilities, operating requirements, and anticipated capital expenditures of approximately $62.8 million over the next 12 months to fund our capacity expansion, construct supporting facilities, and supplement our working capital 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 in New York on Monday, August 10, 2009 (which is 2000 hours in Beijing on the same day).
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 40 0681 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 September 9, 2009. 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, fruits, and vegetables 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. 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 INCOME AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
In U.S. dollars 2009 2008 2009 2008
Revenues
Sales revenues $161,847,101 $137,526,574 $315,696,550 $246,254,324
Cost of sales (142,879,580) (120,422,667) (277,585,227) (214,958,874)
Gross profit 18,967,521 17,103,907 38,111,323 31,295,450
Operating expenses
General and
administrative
expenses (4,239,704) (5,433,433) (8,847,990) (9,419,462)
Selling expenses (2,787,080) (2,331,400) (5,580,358) (4,315,633)
Research &
development
expenses 5,227 (6,778) (25,351) (425,410)
Gain on disposal
of a subsidiary 654,086 -- 654,086 --
Amortization of
loss from sale-
leaseback
transaction (16,672) -- (33,329) --
Total
operating
expenses (6,384,143) (7,771,611) (13,832,942) (14,160,505)
Income from
operations 12,583,378 9,332,296 24,278,381 17,134,945
Other income (expense)
Interest
expense, net (1,263,975) (632,542) (2,763,495) (803,028)
Other income
(expense), net 121,943 (143,457) 291,349 (101,323)
Government
subsidies 127,453 432,339 222,408 571,883
Total other
income
(expense) (1,014,579) (343,660) (2,249,738) (332,468)
Net income before
taxes 11,568,799 8,988,636 22,028,643 16,802,477
Provision for
income taxes (845,351) (466,827) (1,563,896) (992,907)
Net income $10,723,448 $8,521,809 $20,464,747 $15,809,570
Foreign currency
translation
adjustment $ 115,825 $ 3,831,009 $ (263,147) $ 9,770,503
Comprehensive
income $10,839,273 $12,352,818 $20,201,600 $25,580,073
Basic earnings per
common share $0.36 $0.29 $0.69 $0.54
Diluted earnings
per common share $0.36 $0.29 $0.69 $0.53
Basic weighted
average shares
outstanding 29,709,893 29,417,845 29,694,105 29,375,615
Diluted weighted
average shares
outstanding 29,905,720 29,822,935 29,852,635 29,841,190
ZHONGPIN INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In U.S. dollars
June 30, 2009 December 31, 2008
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $26,344,867 $41,857,166
Restricted cash 20,776,018 17,040,201
Bank notes receivable 6,448,719 1,268,890
Accounts receivable, net of allowance
for doubtful accounts of
$1,741,421 and $1,215,901 32,643,512 20,432,752
Other receivables, net of allowance
for doubtful accounts of $176,559
and $500,447 1,535,797 1,907,243
Purchase deposits 3,701,447 4,308,852
Inventories 27,706,723 16,724,217
Prepaid expenses and deferred charges 333,803 360,265
VAT recoverable 11,011,520 7,432,365
Assets held for sale -- 623,871
Deferred tax assets 310,627 311,055
Other current assets 166,071 96,402
Total current assets 130,979,104 112,363,279
Property, plant, and equipment (net) 174,211,358 133,684,051
Deposits for purchase of land
usage rights 8,830,929 6,429,295
Construction in progress 21,455,568 40,773,039
Land usage rights 60,521,188 35,983,947
Deferred charges 214,706 231,769
Other non-current assets 411,935 412,503
Total assets $396,624,788 $329,877,883
LIABILITIES AND EQUITY
Current liabilities
Short-term loans $82,144,059 $67,893,001
Bank notes payable 18,494,123 13,252,180
Long-term loans - current portion 4,536,836 145,671
Accounts payable 12,129,725 9,528,937
Other payables 16,859,553 7,130,384
Accrued liabilities 5,211,242 5,055,660
Deposits from customers 4,349,826 4,331,774
Tax payable 1,561,732 1,382,589
Deferred tax liabilities 94,682 94,812
Total current liabilities 145,381,778 108,815,008
Deposits from customers 2,229,041 2,420,967
Capital lease obligation 3,526,204 4,252,743
Long-term loans 33,618,140 23,475,174
Total liabilities 184,755,163 138,963,892
Equity
Preferred stock: par value $0.001;
25,000,000 authorized; 2,094,037
and 2,129,200 shares
issued and outstanding 2,094 2,129
Common stock: par value $0.001;
100,000,000 authorized; 27,629,951
and 27,504,918 shares
issued and outstanding 27,630 27,505
Additional paid in capital 106,434,716 105,680,772
Retained earnings 86,573,742 66,108,995
Accumulated other comprehensive
income 18,831,443 19,094,590
Total equity 211,869,625 190,913,991
Total liabilities and equity $396,624,788 $329,877,883
ZHONGPIN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In U.S. dollars Six Months Ended June 30,
2009 2008
Cash flows from operating activities:
Net income $20,464,747 $15,809,570
Adjustments to reconcile net income
to net cash provided by (used in)
operations:
Depreciation 3,772,108 1,876,533
Amortization 400,476 218,720
Allowance for doubtful accounts 204,524 585,626
Other income (105,725) --
Gain on disposal of a subsidiary (649,669) --
Non-cash compensation expense 754,034 809,146
Changes in operating assets and
liabilities:
Accounts receivable (12,807,660) (817,864)
Other receivables 654,943 1,122,962
Purchase deposits 402,479 1,581,114
Prepaid expense 42,697 12,649
Inventories (11,012,841) 1,311,277
Tax refunds receivable (3,588,961) (1,627,559)
Other current assets (69,793) --
Accounts payable 2,632,558 1,532,950
Other payables 5,533,564 993,816
Accrued liabilities 258,905 1,351,874
Taxes payable 181,024 1,944,718
Deposits from customers (32,698) 5,092,966
Net cash provided (used) by operating
activities 7,034,712 31,798,498
Cash flows from investing activities:
Deposits for purchase of land usage
rights (7,245,146) (28,361)
Construction in progress (19,063,158) (46,485,710)
Additions to property and equipment (6,064,018) (3,077,784)
Additions to land usage rights (15,896,295) (360,698)
Proceeds on disposal of fixed assets 50,023 74,281
Increase in restricted cash (3,758,823) (2,709,643)
Proceeds from the disposal of a
subsidiary 1,226,182 --
Net cash used in investing activities (50,751,235) (52,587,915)
Cash flows from financing activities:
Proceeds from (repayment of) bank
notes, net 78,593 (1,167,933)
Proceeds from short-term bank loans 14,342,993 20,410,477
Proceeds from long-term bank loans 14,635,501 9,921,759
Repayment of long-term bank loans (70,776) (183,236)
Proceeds from capital lease
obligations (720,604) --
Proceeds from exercise warrants -- 1,236,923
Net cash provided by financing
activities 28,265,707 30,217,990
Effects of rate changes on cash (61,483) 3,385,625
Increase (decrease) in cash and cash
equivalents (15,512,299) 12,814,198
Cash and cash equivalents, beginning
of period 41,857,166 45,142,135
Cash and cash equivalents, end of
period $26,344,867 $57,956,333
Supplemental disclosures of cash flow
information:
Cash paid for interest $3,438,560 $2,079,051
Cash paid for income taxes 1,503,753 431,604
For more information, please contact:
Zhongpin Inc.
Mr. Sterling Song (English and Chinese)
Investor Relations Manager
Tel: +86-10-8286-1788 x101 in Beijing
Email: ir@zhongpin.com
Mr. Warren (Feng) Wang (English and Chinese)
Chief Financial Officer
Tel: +86-10-8286-1788 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
