Yongye International Announces Fourth Quarter and Full Year 2012 Financial Results and Filing of Form 10-K

01 Apr, 2013, 12:30 ET from Yongye International, Inc.

BEIJING, April 1, 2013 /PRNewswire-FirstCall/ -- Yongye International, Inc. (NASDAQ: YONG), ("Yongye" or the "Company") a leading developer, manufacturer, and distributor of crop nutrient products in the People's Republic of China ("PRC"), today announced its financial results for the fourth quarter and full year ended December 31, 2012.

Full Year 2012 Financial Highlights

  • Revenue increased 13.5% to $443.0 million in 2012 from $390.4 million in 2011.
  • Shipment of Yongye's agricultural nutrient products increased 33.9% to $542.2 million in 2012 from $405.1 million in 2011, exceeding the Company's guidance of $510 million.
  • Gross profit increased 14.9% year-over-year to $262.4 million.
  • Income from operations increased 10.7% to $116.9 million from $105.6 million in 2011.
  • Net income attributable to Yongye increased 10.4% to $93.7 million, or $1.62 per diluted share, compared to $84.9 million, or $1.55 per diluted share, in the same period of 2011.
  • Adjusted net income attributable to Yongye, which excludes non-cash expenses related to share-based compensation for management and independent directors, the amortization of the acquired Hebei customer list, a change in the fair value of derivative liabilities, and goodwill impairment charge, was $111.4 million, or $1.94 per diluted share, compared to $93.0 million, or $1.71 per diluted share, in the same period of 2011.*
  • Operating cash outflow was $51.4 million in 2012 compared to an operating cash outflow of $31.2 million in 2011.
  • At the end of 2012, the amount of accounts receivable outstanding was $302.6 million, of which $114.9 million was past the Company's six-month credit term. As of March 29, 2013, the Company has collected approximately $225 million from its distributors, including the entire overdue accounts receivable balance as of December 31, 2012.

Fourth Quarter 2012 Financial Highlights

  • Revenue increased 58.9% to $71.3 million from $44.9 million in the fourth quarter of 2011.
  • Gross profit increased 62.2% year-over-year to $38.4 million.
  • Income from operations was $18.7 million, compared to a loss from operations of $7.8 million in the fourth quarter of 2011.
  • Net income attributable to Yongye was $19.4 million, or $0.32 per diluted share, compared to a net loss of $2.2 million, or a loss of $0.05 per diluted share, in the same period of 2011.  
  • Adjusted net income attributable to Yongye, which excludes non-cash expenses related to share-based compensation for management and independent directors, the amortization of the acquired Hebei customer list, a change in the fair value of derivative liabilities, and goodwill impairment charge was $20.4 million, or $0.34 per diluted share, compared to a loss of $0.5 million, or a loss of $0.03 per diluted share, in the same period of 2011.*

Mr. Zishen Wu, Chairman and Chief Executive Officer of Yongye International, stated, "2012 was another solid year for Yongye, as we delivered double digit growth on both the top and bottom line, and continued the expansion of our branded retailer network. The introduction of our two new products, Zhongbaosheng and Qianggenbao, further solidified our market-leading position and enhanced our already strong brand. Additionally, we expanded our manufacturing capacity in order to take advantage of the growing market demand for our products, and now have 70,000 tons of combined annual design production capacity at our Wuchuan and Jinshan Facilities. Yongye continues to be well positioned for long-term growth given China's limited arable land and demand for better agricultural productivity. After our stock trading was halted by NASDAQ on March 18, 2013, we have worked diligently to provide NASDAQ with all the necessary information they requested, and on Tuesday, March 26 we provided a full, detailed response to NASDAQ. We have not yet received a response from them as of today.  We will maintain an open line of communications with NASDAQ so as to address all of their concerns and ensure compliance with their regulations."

Full Year 2012 Financial Results

Sales increased by $52.6 million, or 13.5%, to $443.0 million for the year ended December 31, 2012, from $390.4 million for the same period of 2011. For the full year, the Company derived $438.4 million, or 99.0% of total sales, from liquid crop nutrient, and derived $4.6 million, or 1.0% of total sales, from the powder animal nutrient. For the liquid crop nutrient, the regular crop nutrient contributed $367.6 million, or 83.8% of total liquid crop nutrient, while the two new products for crop seeds and roots contributed $70.8 million, or 16.2% of total liquid crop nutrient sales. During 2012, the number of branded retailers reached 35,058, compared to 30,086 as of December 31, 2011, an increase of 16.5%.

Gross profit was $262.4 million for the year ended December 31, 2012, compared to $228.3 million for the year ended December 31, 2011, an increase of 14.9%. Gross margin was 59.2% for the year ended December 31, 2012, compared to 58.5% for the same period of 2011.  The increase in gross margin was mainly due to the decreased purchase price of certain raw materials. The Company recorded non-cash expenses of $2.9 million related to the amortization of the acquired Hebei customer list as part of its cost of sales for the full year 2012.  Excluding the aforementioned non-cash expenses related to the amortization of the acquired Hebei customer list, full year 2012 adjusted gross profit was $265.3 million, or 59.9% of sales.*

Selling expenses increased by $30.1 million to $104.0 million for the year ended December 31, 2012. As a percentage of sales for the year ended December 31, 2012, selling expenses increased 4.6% to 23.5% as compared to 18.9% of sales in the year ended December 31, 2011. The increase in selling expenses was primarily due to an increase in advertising and promotion expense and distributors' seminar expenditure of $28.9 million relating to marketing and promotional activities for the Company's original and newly launched products in their respective markets. 

General and administrative ("G&A") expenses decreased by $21.6 million, or 60.4%, to $14.1 million for the year ended December 31, 2012, from $35.7 million for the same period of 2011.  The decrease in G&A expenses was mainly due to the bad debt expenses amounting to $15.0 million for the year of 2011, and reversal of allowance for doubtful accounts of $6.3 million which was recorded in the first quarter of 2012, as well as a decrease in management equity compensation expenses for the year ended December 31, 2012.

Research and development ("R&D") expenses were $16.6 million for the year ended December 31, 2012, compared to $13.1 million for the same period of 2011. The R&D expenses mainly consisted of field testing expenses for new and existing products on various crops and in different geographic markets.

Operating income was $116.9 million, or 26.4% of sales for the year ended December 31, 2012, compared to $105.6 million, or 27.0% of sales, in the same period of 2011. Excluding non-cash expenses related to share-based compensation for management and independent directors, the amortization of the acquired Hebei customer list, and goodwill impairment charge, full year 2012 adjusted operating income was $134.3 million, or 30.3% of sales.*  

Net income attributable to Yongye was $93.7 million, or $1.62 per diluted share for the year ended December 31, 2012, compared to a net income of $84.9 million, or $1.55 per diluted share, in the same period of 2011. The Company recorded a non-cash expense related to a change in fair value of derivative liabilities of $0.3 million in the full year 2012. Excluding the impact of non-cash expenses related to share-based compensation for management and independent directors, the amortization of the acquired Hebei customer list, a change in the fair value of derivative liabilities, and goodwill impairment charge, adjusted net income attributable to Yongye for the full year 2012 was $111.4 million, or $1.94 per diluted share, compared to $93.0 million, or $1.71 per diluted share in the same period of 2011.*

Fourth Quarter 2012 Financial Results

Sales increased by $26.4 million, or 58.9%, to $71.3 million in the fourth quarter of 2012, from $44.9 million for the same period of 2011. During the fourth quarter of 2012, the number of branded retailers increased to 35,058 from 33,298 in the third quarter of 2012.

Gross profit was $38.4 million in the fourth quarter of 2012, compared to $23.7 million in the fourth quarter of 2011, an increase of 62.2%.  Gross margin was 53.8% in the fourth quarter of 2012, compared to 52.7% for the same period of 2011. The increase in gross margin was mainly due to the decreased purchase price of certain raw materials. The Company recorded non-cash expenses of $0.7 million related to the amortization of the acquired Hebei customer list as part of its cost of sales for the fourth quarter of 2012. Excluding the aforementioned non-cash expenses related to the amortization of the acquired Hebei customer list, fourth quarter 2012 adjusted gross profit was $39.1 million, or 54.8% of sales.*

Selling expenses increased by $2.8 million, or 24.1%, to $14.3 million in the fourth quarter of 2012, from $11.5 million for the same period of 2011. The increase in selling expenses was primarily due to advertising costs associated with branding programs and commercials.

G&A expenses decreased by $15.1 million, or 84.1%, to $2.9 million in the fourth quarter of 2012, from $18.0 million for the same period of 2011. The decrease in G&A expenses was mainly due to the bad debt expenses amounting to $15.0 million for the year of 2011.

R&D expenses were $2.5 million in the fourth quarter of 2012, compared to $2.0 million for the same period of 2011. The R&D expenses mainly consisted of field test expenses for new and existing products on various crops and in different geographic markets.

Operating income was $18.7 million in the fourth quarter of 2012, compared to an operating loss of $7.8 million in the same period of 2011. Excluding non-cash expenses related to share-based compensation for management and independent directors, the amortization of the acquired Hebei customer list, and goodwill impairment charge, fourth quarter 2012 adjusted operating income was $19.6 million, or 27.4% of sales.*  

Net income attributable to Yongye was $19.4 million, or $0.32 per diluted share in the fourth quarter of 2012, compared to a net loss of $2.2 million, or a loss of $0.05 per diluted share, in the same period of 2011. The Company recorded non-cash expenses related to a change in fair value of derivative liabilities of $0.2 in the fourth quarter of 2012. Excluding the impact of non-cash expenses related to share-based compensation for management and independent directors, the amortization of the acquired Hebei customer list, a change in the fair value of derivative liabilities, and goodwill impairment charge, adjusted net income attributable to Yongye for the fourth quarter of 2012 was $20.4 million, or $0.34 per diluted share, compared to an adjusted net loss of $0.5 million, or a loss of $0.03 per diluted share in the same period of 2011.*

 (*) See the table following this press release for a reconciliation of gross profit, income from operations, net income and diluted EPS to exclude non-cash items related to share-based compensation for management and independent directors, the amortization of the acquired Hebei customer list, a change in the fair value of derivative liabilities, and goodwill impairment charge to the comparable financial measure prepared in accordance with US Generally Accepted Accounting Principles ("U.S. GAAP").  

Financial Condition

Balance Sheet and Cash Flow

As of December 31, 2012, the Company had $44.6 million in cash and restricted cash, compared to $81.2 million as of December 31, 2011. Working capital was $383.3 million, compared to $270.4 million at the end of 2011. The Company had a $50.9 million short-term bank loan and $12.4 million in long-term debt as of December 31, 2012. Stockholders' equity totaled $436.3 million as of December 31, 2012, compared to $331.9 million at the end of 2011. Cash flow used in operating activities was $51.4 million for the year ended December 31, 2012, compared to cash flow used in operating activities of $31.2 million in the year ended December 31, 2011. The year over year increase in cash used in operating activities was primarily due to the increase of $25.7 million in working capital employed. That was mainly driven by the increase of accounts receivable and inventory.

Accounts Receivable

At the end of 2012, the amount of Accounts Receivable outstanding was $302.6 million, of which $114.9 million was past the Company's six-month credit period.  The significant increase in accounts receivable was primarily due to continued business growth and longer collection days from certain distributors. Yongye recorded an allowance for doubtful receivables in the amount $9.0 million as of December 31, 2012, taking into account current market conditions, customers' financial condition, the accounts receivable ageing and the customers' repayment patterns. Subsequent to this, the Company has collected approximately $225 million from its distributors as of March 29, 2013. The Company continues to take measures to increase collection efforts and closely monitor its distributors' financial status.

Recent Developments

Expansion of Branded Retailer Network

The Company continued the expansion of its branded retailers from 30,086 as of December 31, 2011 to 35,058 as of December 31, 2012, an increase of 16.5%, exceeding the Company's target for 35,000 branded retailers in 2012. The majority of the Company's newly recruited branded retailers are located in Hebei, Henan, Jiangsu, Inner Mongolia, Guangdong, Shanxi and Xinjiang provinces. The Company remains focused on expanding its distribution networks and deepening its penetration in both new and traditional markets.

Capacity Expansion

In 2012, the Company also completed a capacity expansion project at the Wuchuan Facility. Yongye now has a total of 70,000 tons of combined annual design production capacity at the Wuchuan Facility and the Jinshan Facility.

Update on Go-private Proposal

In the fourth quarter of 2012, the Company's Board of Directors received a preliminary, non-binding proposal made by Mr. Zishen Wu, the Company's Chairman of the Board and Chief Executive Officer, Full Alliance International Limited ("Full Alliance"), Morgan Stanley Private Equity Asia Agriculture Holding Limited ("MSPEA"), and Abax Global Capital (Hong Kong) Limited (collectively, "Abax," together with Mr. Wu, Full Alliance and MSPEA, the "Buyer Parties"), to acquire all of the outstanding shares of common stock of Yongye not currently owned by the Buyer Parties in a going private transaction for $6.60 per share in cash, subject to certain conditions. The Board of Directors formed a Special Committee to consider certain potential transactions involving the Company (including the proposal), and the Special Committee has retained Cleary Gottlieb Steen & Hamilton LLP as its legal counsel to assist it in consideration of such matters. 

In relation to the above-referenced going private transaction, on October 25, 2012, the Special Committee of the Company's Board of Directors retained Houlihan Lokey as the Special Committee's independent financial advisor.  The Special Committee is evaluating and considering the Proposal as well as the Company's other alternatives.  The Special Committee has been in discussions with the Buyer Parties regarding the proposed transaction and such discussions are continuing.

On April 1, 2013, the Buyer Parties confirmed to the Special Committee that they remain interested in pursuing the proposed going private transaction set forth in their proposal. On the same day, the Special Committee was provided an amended and restated financing commitment letter issued by Abax to Full Alliance, pursuant to which Abax has extended the expiration of its $35 million conditional mezzanine financing commitment to the earliest of (i) April 15, 2013, if the common stock of the Company has not resumed trading on NASDAQ by 4 p.m. (New York City time) on such date, (ii) April 30, 2013, (iii) the date of definitive documentation for which such financing becomes effective and (iv) the date the acquisition agreement for the proposed transaction becomes effective.  Additionally, Abax's commitment is subject to a number of conditions, including among others, Abax's completion of its review of and satisfaction in all respect with, the audited financial statements of the Company for the fiscal year ended December 31, 2012. No decisions have been made by the Special Committee with respect to the Company's response to the going private proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.

Business Outlook

According to the Company's revenue recognition policy, certain distributors' revenue is being recognized on a cash basis rather than a shipment basis. In addition, the Company's distributors' payment cycle has been longer in 2012 compared to prior years. As a result, the Company has difficulty knowing what its revenue will be with specificity until cash collection is completed. Yongye will continue to provide expectations on shipments, which is not impacted by the revenue recognition issue mentioned above. The Company expects total shipments in 2013 to be in the range of $650 million to $680 million, representing a growth of 20% to 25% over 2012. The Company also expects that its branded retailer network will be expanded to 36,000 by the end of 2013, which represents a 3% increase over the 2012 year-end number of 35,058.

Filling of Form 10-K and Conference Call

The Company has filed its Annual Report on Form 10-K on April 1, 2013. The Company will host a conference call at 8:30 a.m. Eastern Time on April 2, 2013, to discuss its fourth quarter and full year 2012 results.

To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (866) 519-4004. International callers should dial +1 (718) 354-1231. The conference pass code is 305 61 574.

For those who are unable to participate on the live conference call, a replay will be available for fourteen days starting from 11:30 a.m. Eastern Time on April 2, 2013 to 09:59 a.m. Eastern Time on April 16, 2013. To access the replay, please dial +1 (855) 452-5696. International callers should dial +1 (646) 254-3697. The replay pass code is 305 61 574. A webcast recording of the conference call will be accessible through Yongye's website at www.yongyeintl.com.

Use of Non-GAAP Financial Measures

GAAP results for the three months ended December 31, 2012 and full year 2012 include non-cash items related to share-based compensation for management and independent directors, the amortization of the acquired Hebei customer list, a change in fair value of derivative liabilities, and goodwill impairment charge.  To supplement the Company's condensed consolidated financial statements presented on a U.S. GAAP basis, the Company has provided adjusted financial information excluding the impact of these items in this release. It is a departure of U.S. GAAP; however, the Company's management believes that these adjusted measures provide investors with a better understanding of how the results relate to the Company's historical performance. These adjusted measures should not be considered an alternative to net income, or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP.  These measures are not necessarily comparable to a similarly titled measure of another company. A reconciliation of the adjustments to U.S. GAAP results appears in the table accompanying this press release. This additional adjusted information is not meant to be considered in isolation or as a substitute for U.S. GAAP financials. The adjusted financial information that the Company provides also may differ from the adjusted information provided by other companies.

About Yongye International

Yongye International is a leading crop nutrient company headquartered in Beijing, with its production facilities located in Hohhot, Inner Mongolia, China. Yongye's principal product is a liquid crop nutrient, from which the Company derived substantially all of the sales in 2011. The Company also produces powder animal nutrient product which is mainly used for dairy cows. Both products are sold under the trade name "Shengmingsu," which means "life essential" in Chinese. The Company's patented formula utilizes fulvic acid as the primary compound base and is combined with various micro and macro nutrients that are essential for the health of the crops. The Company sells its products primarily to provincial level distributors, who sell to the end-users either directly or indirectly through county-level and village-level distributors. For more information, please visit the Company's website at www.yongyeintl.com.

Safe Harbor Statement

This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Contacts

Yongye International Ms. Kelly Wang Finance Director – Capital Markets Phone: +86-10-8231-9608; +86-10-8232-8866 x 8827 E-mail: ir@yongyeintl.com

FTI Consulting Mr. John Capodanno (U.S. Contact) Phone: +1-212-850-5705 E-mail: john.capodanno@fticonsulting.com

(Financial Tables to Follow)

###

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS

December 31, 2012

December 31, 2011

Current assets

Cash

$

44,511,404

$

81,154,880

Restricted cash

40,000

40,000

Accounts receivable, net of allowance for doubtful accounts

293,600,762

153,629,522

Inventories

118,693,596

86,117,000

Deposits to suppliers

24,048,028

2,664,360

Prepaid expenses

312,648

4,954,359

Other receivables

1,189,633

385,263

Deferred tax assets

11,591,797

2,283,388

Total Current Assets

493,987,868

331,228,772

Property, plant and equipment, net

26,224,957

21,929,444

Intangible assets, net

18,909,349

21,649,890

Land use right, net

4,807,313

6,129,151

Prepayment for mining project

35,792,410

35,511,520

Distributor vehicles

44,125,293

31,621,465

Goodwill

-

10,694,636

Total Assets

$

623,847,190

$

458,764,878

Current liabilities

Short-term bank loans

$

50,857,163

$

28,308,563

Long-term loans and payables - current portion

9,149,280

4,279,234

Capital lease obligations - current portion

395,878

-

Accounts payable 

12,364,193

13,098,183

Income tax payable

3,196,078

3,161,538

Advance from customers

154,944

4,095,580

Accrued expenses

31,389,630

4,437,220

Other payables

2,828,262

3,159,070

Derivative liabilites- fair value of warrants

348,364

317,183

Total Current Liabilities

110,683,792

60,856,571

Long-term loans and payables

10,254,922

7,464,683

Capital lease obligations - non-current

2,134,155

-

Other non-current liability

6,683,802

4,297,842

Deferred tax liabilities

6,618,794

4,857,800

Total Liabilities

136,375,465

77,476,896

Redeemable Series A convertible preferred shares: par value $.001; 7,969,044 shares authorized; 6,079,545 shares and 5,681,818 shares issued and outstanding as of December 31, 2012 and 2011, respectively

51,208,657

49,399,990

Equity

Common stock: par value $.001; 75,000,000 shares authorized; 50,604,026 shares and 49,370,711 shares issued and outstanding at December 31, 2012 and 2011, respectively

50,604

49,371

Additional paid-in capital

154,792,050

150,654,849

Retained earnings

240,679,395

148,804,997

Accumulated other comprehensive income

19,950,447

17,078,758

Total equity attributable to Yongye International, Inc.

415,472,496

316,587,975

Noncontrolling interest

20,790,572

15,300,017

Total Equity

436,263,068

331,887,992

Commitments and Contingencies

-

-

Total Liabilities, Redeemable Series A Convertible Preferred Shares and Equity

$

623,847,190

$

458,764,878

  

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended

For the Years Ended

December 31, 2012

December 31, 2011

December 31, 2012

December 31, 2011

Sales

$

71,260,204

$

44,859,636

$

442,986,604

$

390,379,489

Cost of sales

32,902,107

21,203,955

180,614,350

162,078,410

Gross profit

38,358,097

23,655,681

262,372,254

228,301,079

Selling expenses

14,269,679

11,494,664

104,036,345

73,886,542

Research and development expenses

2,521,976

1,980,621

16,575,976

13,130,627

General and administrative expenses, including a reversal of allowance for doubtful accounts of US$6,332,022 and US$ nil for the year ended December 31, 2012 and 2011, respectively

2,862,448

17,975,496

14,123,521

35,694,045

Impairment loss of goodwill

25,375

-

10,774,106

-

Income from operations

18,678,619

(7,795,100)

116,862,306

105,589,865

Other (expenses)/income

Interest expenses

(957,439)

(622,740)

(4,193,909)

(1,429,111)

Interest income

7,653

55,188

455,269

123,054

Subsidy income

9,506,306

2,318,291

9,506,306

2,973,362

Other (expenses)/income, net

(395,348)

45,556

(496,014)

223,496

Change in fair value of derivative liabilities

(162,258)

185,835

(296,822)

719,085

Total other income, net

7,998,914

1,982,130

4,974,830

2,609,886

Earnings before income tax expense

26,677,533

(5,812,970)

121,837,136

108,199,751

Income tax expense

5,706,980

(3,468,964)

22,803,881

18,407,554

Net income/(loss)

20,970,553

(2,344,006)

99,033,255

89,792,197

Less: Net income/(loss) attributable to the noncontrolling interest

1,599,720

(178,252)

5,350,190

4,930,571

Net income/(loss) attributable to Yongye International, Inc.

$

19,370,833

$

(2,165,754)

$

93,683,065

$

84,861,626

Net income/(loss) per share of common stock

   Basic

$

0.32

$

(0.05)

$

1.62

$

1.57

   Diluted

$

0.32

$

(0.05)

$

1.62

$

1.55

Weighted average shares used in computation:

   Basic 

50,462,990

49,370,711

49,645,273

49,055,252

   Diluted 

50,462,990

49,370,711

49,645,273

49,161,073

Net income/(loss)

20,970,553

(2,344,006)

99,033,255

89,792,197

Other comprehensive income

Foreign currency translation adjustment, net of US$ nil income taxes

1,221,255

1,944,408

3,012,054

10,951,316

Comprehensive income

22,191,808

(399,598)

102,045,309

100,743,513

Less: Comprehensive income attributable to the noncontrolling interest

1,657,091

(88,459)

5,490,555

5,426,935

Comprehensive income attributable to Yongye International, Inc.

20,534,717

(311,139)

96,554,754

95,316,578

  

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended

December 31, 2012

December 31, 2011

December 31, 2010

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

99,033,255

$

$89,792,197

$

51,331,981

Adjustments to reconcile net income to net cash (used in)/ provided by operating activities:

Depreciation and amortization

15,680,481

8,574,526

3,723,839

Loss on sale of property, plant and equipment

11,269

-

-

Impairment loss of goodwill

10,774,106

-

-

(Reversal)/Provision of allowance for doubtful accounts

(6,332,022)

14,973,439

-

Change in fair value of derivative liabilities

296,822

(719,085)

41,212

Stock compensation expense

3,769,678

6,056,194

4,310,640

Deferred tax benefit

(10,974,693)

(2,639,450)

(154,767)

Changes in operating assets and liabilities:

Accounts receivable

(132,358,082)

(139,381,935)

(19,252,818)

Inventories

(31,880,264)

(17,326,312)

(21,859,880)

Deposit to suppliers

(21,162,361)

8,299,720

(4,436,327)

Prepaid expenses

4,676,605

(4,128,949)

(603,146)

Other receivables

(801,090)

390,750

(354,500)

Distributor Vehicles

(5,633,992)

(9,866,857)

(6,076,207)

Accounts payable- related party

-

-

(887,614)

Accounts payable- third parties

(837,196)

6,616,383

5,628,946

Income tax payable

2,360,375

1,060,140

1,868,346

Advance from customers

(3,971,143)

3,966,320

29,934

Accrued expenses

26,905,759

1,307,892

2,444,434

Other payables

(935,892)

1,821,586

137,178

Net Cash (Used in)/Provided by Operating Activities

(51,378,385)

(31,203,441)

15,891,251

CASH FLOWS FROM INVESTING ACTIVITIES

Change in restricted cash

-

-

(40,000)

Payment for intangible asset

-

(3,000,000)

-

Prepayment for mining project

-

-

(33,309,976)

Payment for land use right

-

(1,807,699)

-

Government subsidy received for land use right

1,245,326

-

-

Proceeds from sale of property, plant and equipment

8,873

-

93,412

Purchase of property, plant and equipment

(3,001,749)

(2,264,361)

(11,028,190)

Purchase of property, plant and equipment from a related party

-

-

(1,677,532)

Net Cash Used in Investing Activities

(1,747,550)

(7,072,060)

(45,962,286)

 

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term bank loans

50,832,990

43,314,821

-

Repayment of short term loans

(28,518,918)

(15,469,579)

(2,950,396)

Repayment of long-term loans and payables

(6,416,977)

(1,738,717)

(712,391)

Proceeds from common stock and warrants issued and warrants exercised

103,115

-

8,634,397

Proceeds from preferred shares, net of issuance cost of $600,010

-

49,399,990

-

Repayment for capital lease obligations

(87,467)

-

-

Net Cash Provided by Financing Activities

15,912,743

75,506,515

4,971,610

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH

569,716

2,010,397

1,494,713

NET (DECREASE)/INCREASE IN CASH

(36,643,476)

39,241,411

(23,604,712)

Cash at beginning of year

81,154,880

41,913,469

65,518,181

Cash at end of year

44,511,404

81,154,880

41,913,469

Supplemental cash flow information:

Cash paid for income taxes

31,756,081

19,986,864

9,154,278

Cash paid for interest expense

4,847,983

1,386,763

93,402

Noncash investing and financing activities:

Acquisition of property, plant and equipment under capital leases

2,617,541

-

-

Acquisition of distributor vehicles by assuming long-term loans and payables

13,980,773

11,554,688

525,739

Acquisition of property, plant and equipment included in other payables

1,463,905

980,169

1,852,473

Issuance of paid-in-kind dividends on Redeemable Series A convertible preferred shares

1,808,667

-

-

Acquisition of property, plant and equipment by assuming long-term loans and payables

-

189,229

315,426

Exercise of warrants that were liability classified

265,641

-

385,149

  

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL DATA

Gross Profit

Three Months Ended December 31,

Year Ended December 31,

2012

2011

2012

2011

GAAP amount per consolidated statement of income

$38,358,097

$23,655,681

$262,372,254

$228,301,079

Amortization of the acquired Hebei customer list 

$726,910

$718,324

$2,898,888

$2,830,410

Adjusted Amount

$39,085,007

$24,374,005

$265,271,142

$231,131,489

Income from Operations

Three Months Ended December 31,

Year Ended December 31,

2012

2011

2012

2011

GAAP amount per consolidated statement of income

$18,678,619

($7,795,100)

$116,862,306

$105,589,865

Amortization of the acquired Hebei customer list

$726,910

$718,324

$2,898,888

$2,830,410

Non-cash management compensation expense

$119,884

$1,105,594

$3,769,678

$6,056,194

Impairment of goodwill

$25,375

-

$10,774,106

-

Adjusted Amount

$19,550,788

($5,971,182)

$134,304,978

$114,476,469

Net income (attributable to Yongye)

Three Months Ended December 31,

Year Ended December 31,

2012

2011

2012

2011

GAAP amount per consolidated statement of income

$19,370,833

($2,165,754)

$93,683,065

$84,861,626

Amortization of the acquired Hebei customer list

$726,910

$718,324

$2,898,888

$2,830,410

Non-cash management compensation expense

$119,884

$1,105,594

$3,769,678

$6,056,194

Impairment of goodwill

$25,375

-

$10,774,106

-

Change in fair value of derivative liabilities

$162,258

($185,835)

$296,822

($719,085)

Adjusted Amount

$20,405,260

($527,671)

$111,422,559

$93,029,145

Weighted average shares -- diluted

50,462,990

49,370,711

49,645,273

49,161,073

Adjusted diluted earnings per share

$0.34

($0.03)

$1.94

$1.71

SOURCE Yongye International, Inc.



RELATED LINKS

http://www.yongyeintl.com