-- 3Q09 Revenues Increase 35.8% to $127.2 Million -- -- 3Q09 Gross Margin Increases 11.8% to 23.5% -- -- 3Q09 Net Income Increases 187.9% to $18.8 Million, or $0.73 per Diluted Share -- -- Raises Full Year Revenue and Net Income Guidance --

SHENZHEN, China, Nov. 9 /PRNewswire-Asia/ -- FUQI International, Inc. (Nasdaq: FUQI) today announced financial results for the third quarter ended September 30, 2009.

"I am pleased to report that, our team has once again delivered strong third quarter results, especially as the third quarter has historically been a seasonally slower quarter for FUQI. During the third quarter, we were able to report stronger than expected wholesale results primarily due to increased sales volume and through our original design manufacturing (ODM) work. As our brand grows throughout China, we plan to continue to capitalize on such opportunities to enhance our wholesale and retail businesses. Furthermore, we will continue with our collaborative relationship with several well-known universities specialized in gemological training in China to further enhance our product and designs as well as to develop innovative technological products. We remain confident with our fully-integrated wholesale and retail platforms, and we believe that we are well on our way to becoming one of the dominant jewelry enterprises in China," commented Mr. Yu Kwai Chong, CEO and Chairman of Fuqi International.

In the third quarter of 2009, the company opened a total of eleven new retail counters. Three FUQI counters were opened in Beijing, Shanghai and Shenyang and eight Temix brand counters were opened in Beijing and Shanghai. Three counters closed in the same period. As of September 30, 2009, the Company had a total of 72 retail counters, including 58 under the Temix brand and 14 under the FUQI brand, and a total of 7 retail stores, which are all under the Temix brand. The Company continues to grow its counter space and plans to have a total of 95-100 retail locations by the end of 2009 and additional 80-100 retail locations in 2010.

Revenues for the third quarter of 2009 increased 35.8% to $127.2 million from $93.7 million in the third quarter of 2008. The increase was attributable to an increase of sales volume in the wholesale business, including original design manufacturing (ODM) work, as well as from increased revenues derived from the Company's retail business. Wholesale revenue contributed approximately $117.5 million to overall revenues for the quarter, representing year-over-year growth of approximately 29.7%, and retail revenue contributed approximately $9.7 million to overall revenue for the quarter, which is a 208.7% increase compared to $3.2 million the same period of the prior year.

Gross profit in the third quarter of 2009 increased 172.0% to $29.9 million from $11.0 million for the same period in the prior year. Gross profit margin for the third quarter of 2009 increased to 23.5% compared to 11.7% in the same period in the prior year. The improvement in gross margin was primarily due to higher wholesale margins resulting from several sizeable ODM orders fulfilled during the third quarter. Third quarter wholesale gross margin increased 12.8% to 23.6% compared to 10.8% in the prior year period while retail gross margin was 22.6% in the third quarter of 2009 compared to 38.0% in the third quarter of the prior year.

Operating expenses in the third quarter increased 110.8% to $5.7 million compared to $2.7 million in the prior year period. The increase was primarily a result of higher professional fees as a result of the expansion of the retail business and increased payroll cost for the additional employees hired in the accounting and finance department, salary expenses incurred in relation to the expansion of the wholesale and retail business and an increase in variable rents and fees to department stores and malls for retail business. Income from operations for the third quarter increased 192.3% to $24.2 million from $8.3 million in the third quarter of 2008.

Net income for the third quarter of 2009 increased 187.9% to $18.8 million, or $0.73 per diluted share, compared to $6.5 million, or $0.31 per diluted share in the same period of the prior year.

On September 30, 2009, the Company had cash and cash equivalents of $173.2 million, compared with $49.3 million at the end of the second quarter. Inventory at the end of the third quarter was $85.8 million, down slightly from $86.8 million in the second quarter, but reflecting anticipated demand for jewelry products in the upcoming Christmas holiday season.

2009 Financial Outlook

Mr. Chong continued, "The third quarter came in stronger than we expected, considering the long National Holiday week and the dearth of gift-giving holidays during the quarter. Nevertheless, our ability to generate strong revenue and earnings growth during a seasonally slow period is extremely encouraging for our management team, as we look towards our goals for the future. As a result of the stronger-than-expected third quarter performance, we will be raising our revenue and net income guidance for the fourth quarter and full year. We believe that FUQI has laid the plans for strong continued growth in the wholesale and retail markets, and our branding, marketing and distribution plans will enable us to leverage the foundation we have built for more market penetration. We are excited about the coming quarters and the plans we have in place, and look forward to providing our shareholders with optimal value."

For the fourth quarter of 2009, the Company anticipates total revenue between approximately $182.0-$191.0 million, which includes wholesale and retail revenues. Net income in the fourth quarter is expected to be in the range of $15.2-$16.6 million, or $0.55-$0.60 per diluted share, based on a weighted average share count of approximately 27.6 million shares.

For the full year 2009, the Company now expects full-year revenue of approximately $519.4-$528.4 million. These estimates include both wholesale and retail revenues and exclude the impact from any potential acquisitions. The Company also anticipates net income of approximately $53.5-$54.9 million, or diluted EPS of $2.21-$2.27, based on a weighted average share count of approximately 24.2 million shares, reflecting the partial-year impact of the shares issued in our recent offering.

Conference Call

The Company will conduct a conference call to discuss its third quarter 2009 results today, Monday, November 9th at 8:30 am ET. Listeners may access the call by dialing #1-480-629-9858. To listen to the live webcast of the event, please go to http://www.viavid.net . Listeners may access the call replay, which will be available through November 23rd, by dialing #1-303-590- 3030; pin number: 4182147.

About FUQI International

Based in Shenzhen, China, FUQI International, Inc. is a leading designer of high quality precious metal jewelry in China, developing, promoting, and selling a broad range of products in the large and rapidly expanding Chinese luxury goods market.

Safe Harbor Statement

This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Forward- looking statements can be identified by the use of forward-looking terminology such as "will" "believes", "expects" or similar expressions. These forward- looking statements may also include statements about the Company's proposed discussions related to its business or growth strategy, which is subject to change. Such information is based upon expectations of the Company's management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions. Such risks and uncertainties include, but are not limited to, risks related to our acquisition of Temix in August 2008, adverse capital and credit market conditions, the vulnerability of the Company's business to a general economic downturn in China; fluctuation and unpredictability of costs related the gold, platinum and precious metals and other commodities used to make the Company's products; the Company's ability to obtain all necessary government certifications and/or licenses to conduct its business; the Company's recent entry into the retail jewelry market; the Company's reliance on one source for gold; and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company does not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see the Company's most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and its subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at http://www.sec.gov .

    For more information, please contact:

     Mr. Frederick Wong
     Chief Financial Officer
     Tel:   +852-6199-0741 (Hong-Kong)

     Ms. Charlene Hua
     EVP of Finance, Capital Market & Corporate Development
     Tel:   +852-9468-2497 (Hong Kong)
     Email: IR@Fuqiintl.com

     Bill Zima
     ICR Inc. (US)
     Tel:   +1-203-682-8200



                              FUQI INTERNATIONAL, INC.
        CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                    (UNAUDITED)

                           Three Months Ended           Nine Months Ended
                              September 30,                September 30,
                           2009          2008           2009         2008
    Net sales:
      Wholesale and
       distribution   $117,450,677   $90,523,143   $306,780,848  $233,011,441
      Retail             9,737,783     3,154,558     30,609,867     5,108,874
                       127,188,460    93,677,701    337,390,715   238,120,315

    Cost of sales:
      Wholesale and
       distribution     89,712,957    80,723,212    250,306,439   207,616,922
      Retail             7,538,332     1,956,227     21,740,102     3,596,854
                        97,251,289    82,679,439    272,046,541   211,213,776

    Gross Profit        29,937,171    10,998,262     65,344,174    26,906,539

    Operating
     expenses:
    Selling and
     marketing           3,893,122     1,559,892      9,731,593     2,486,020
    General and
     administrative      1,828,675     1,153,666      5,690,294     3,222,725

    Total operating
     expenses            5,721,797     2,713,558     15,421,887     5,708,745

    Income from
     operations         24,215,374     8,284,704     49,922,287    21,197,794

    Other income
     (expenses):
    Interest expense     (667,537)      (400,799)    (1,463,510)   (1,086,954)
    Interest income        54,303          6,715        114,928        20,050
    (Loss)/gain from
     derivative
     instrument           (18,652)        22,954         77,019     1,584,220
    Miscellaneous         150,648         16,111        190,905       272,271

    Total other
     income (expenses)   (481,238)      (355,019)    (1,080,658)      789,587

    Income before
     provision for
     income taxes      23,734,136      7,929,685     48,841,629    21,987,381

    Provision for
     income taxes       4,962,627      1,409,127     10,542,380     3,820,983

    Net income         18,771,509      6,520,558     38,299,249    18,166,398

    Other compre-
     hensive income
     (loss) - foreign
     currency
     translation
     adjustments           47,969        707,332         39,190     7,213,788

    Comprehensive
     income           $18,819,478     $7,227,890    $38,338,439   $25,380,186

    Earnings per
     share - basic          $0.75          $0.31          $1.69         $0.86

    Earnings per
     share - diluted        $0.73          $0.31          $1.66         $0.86

    Weighted average
     number of
     common shares -
     basic            24,964,966      21,247,868     22,654,228    21,033,701

    Weighted average
     number of common
     shares- diluted  25,722,344      21,247,868     23,045,424    21,033,701



                               FUQI INTERNATIONAL, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS

                                                 September 30,   December 31,
                                                     2009            2008
                                                  (Unaudited)
                               ASSETS
    Current assets:
    Cash                                         $173,169,185    $56,569,733
    Accounts receivable, including amount due
     from related party of $9,376,955 for 2009
     and $2,837,907 for 2008, net of allowance
     for doubtful accounts of $1,171,000 for
     2009 and $1,620,000 for 2008                  73,825,242     73,949,200
    Value added taxes receivable                    5,824,290      2,170,669
    Inventories                                    85,774,101     44,409,645
    Prepaid expenses and other current assets         561,747        286,405
    Advances to suppliers                          26,120,827      8,468,971
    Gold future contracts                                  --      1,426,236
    Deferred taxes                                     26,820        142,608
    Total current assets                          365,302,212    187,423,467

    Property, equipment, and improvements, net      4,046,172      3,400,642
    Deposits                                          114,909        104,414
    Goodwill                                          585,693        583,269
    Acquired intangibles, net                       3,103,914      3,197,344
    Other assets                                       93,658        140,278

                                                 $373,246,558   $194,849,414

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Notes payable                                 $48,323,327    $21,944,904
    Accounts payable and accrued liabilities        8,261,630     12,511,519
    Other payable, related parties                  3,076,720      6,287,102
    Customer deposits                              18,271,322     14,474,178
    Income tax payable                              6,682,964      2,802,110
    Total current liabilities                      84,615,963     58,019,813

    STOCKHOLDERS' EQUITY
    Preferred stock, $0.001 par value,
     5,000,000 shares authorized, none issued
     and outstanding                                       --             --
    Common stock, $0.001 par value,
     100,000,000 shares authorized, shares
     issued and outstanding - 27,628,656 for
     2009 and 22,005,509 for 2008                      27,629         22,006
    Additional paid in capital                    195,960,570     82,503,638
    Accumulated foreign currency translation
     adjustments                                    9,659,714      9,620,524
    Retained earnings                              82,982,682     44,683,433

    Total stockholders' equity                    288,630,595    136,829,601

                                                 $373,246,558   $194,849,414



                             FUQI INTERNATIONAL, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                           INCREASE (DECREASE) IN CASH

                                                    Nine Months Ended
                                                      September 30,
                                                   2009            2008
    Cash flows provided by operating
     activities:
    Net income                                 $38,299,249      $18,166,398
    Adjustments to reconcile net income to
     net cash provided by (used for) operating
     activities:
    Depreciation and amortization                  905,330          363,644
    Provision for inventory reserve                     --        1,958,552
    Bad debt provision                            (449,290)         100,633
    Stock-based compensation                       467,729          445,653
    Loss on disposal on property, equipment
     and improvements                               55,355           18,189

    Changes in operating assets and
     liabilities:
    Accounts receivable                         (3,749,103)     (24,737,675)
    Value added taxes receivable                (3,649,481)      (2,951,671)
    Inventories                                (41,299,295)     (10,614,653)
    Prepaid expenses and other current
     assets                                       (215,109)        (148,260)
    Gold future contracts                        1,426,716          609,615
    Advances to suppliers                      (17,633,714)        (576,491)
    Deferred taxes                                 115,851       (2,239,121)
    Other assets                                    46,722         (111,561)
    Accounts payable, accrued expenses,
     accrued business tax, and other payable    (4,218,947)       4,957,894
    Customer deposits                            3,781,576        2,311,975
    Income tax payable                           3,876,000        1,658,344
    Net cash (used for) provided by
     operating activities                      (22,240,411)     (10,788,535)

    Cash flows (used for) investing
     activities:
    Purchase of property, equipment and
     improvements                               (1,624,738)        (959,435)
    Proceeds from disposal of property,
     equipment and improvements                     79,028               --
    Business acquisition                                --       (3,911,646)
    Decrease in restricted cash                         --          431,282
    Net cash used for investing activities      (1,545,710)      (4,439,799)

    Cash flows provided by (used for)
     financing activities:
    Proceeds from short-term borrowing          26,342,748        3,594,019
    Repayments to a related party                 (965,901)              --
    Advances from a related party                2,071,706               --
    Issuance of common stock related to
     public offering, net of financing cost    112,994,826               --
    Net cash provided by (used for)
     financing activities                      140,443,379        3,594,019

    Effect of exchange rate changes on cash        (57,806)       4,522,759

    Net increase (decrease) in cash            116,599,452       (7,111,556)

    Cash, beginning of the period               56,569,733       63,293,653

    Cash, end of the period                   $173,169,185      $56,182,097

    Supplemental disclosure of cash flow
     information:
    Interest paid                               $1,533,925         $604,505
    Income taxes paid                           $6,550,534       $4,449,155

    Non-cash disclosure:
    Issuance of common stock for the Temix
     acquisition                                       $--       $4,021,160
    Offset of accounts receivables from
     related party and other payable to
     a related party                            $4,392,387              $--
    Non monetary exchanges related to
     certain retail sales                       $1,553,949         $607,186
    Transfer of acquisition deposit as a
     payment of the purchase price for
     business acquisition                              $--         $718,804

SOURCE FUQI International, Inc.

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