CHANGGE CITY, China and BEIJING, Aug. 10
/PRNewswire-Asia-FirstCall/ -- 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: Mr. Warren (Feng) Wang (English and Chinese) Chief
Financial Officer Tel: +86-10-8286-1788 in Beijing Email:
Christensen Mr. Yuanyuan Chen (English and Chinese) Tel:
+86-10-5971-2001 in Beijing Mobile: +86-139-2337-7882 in Beijing
Email: Mr. Tom Myers (English) Mobile: +86-139-1141-3520 in Beijing
Email: Ms. Kathy Li (English and Chinese) Tel: +1-212-618-1978
Email: DATASOURCE: Zhongpin Inc. CONTACT: Zhongpin Inc. - Mr.
Sterling Song (English and Chinese), Investor Relations Manager,
+86-10-8286-1788 x101 in Beijing, or ; Mr. Warren (Feng) Wang
(English and Chinese), Chief Financial Officer, +86-10-8286-1788 in
Beijing, or ; Christensen - Mr. Yuanyuan Chen (English and
Chinese), +86-10-5971-2001 in Beijing, Mobile +86-139-2337-7882 in
Beijing, or ; Mr. Tom Myers (English), Mobile +86-139-1141-3520 in
Beijing, or ; Ms. Kathy Li (English and Chinese), +1-212-618-1978,
or Web Site: http://www.zpfood.com/
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