2014

Yongye International Announces Fourth Quarter and Full Year 2013 Financial Results - Full Year Revenue Increased 49.4% to $661.9 Million -

- Full Year Net Income Increased 82.3% to $170.8 Million -

BEIJING, March 17, 2014 /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, 2013.

Full Year 2013 Financial Highlights

  • Revenue increased 49.4% to $661.9 million in 2013 from $443.0 million in 2012.
  • Shipment of Yongye's agricultural nutrient products increased 22.1% to $662.0 million in 2013 from $542.2 million in 2012, within the Company's guidance of $650 to $680 million.
  • Gross profit increased 54.3% year-over-year to $404.9 million.
  • Income from operations increased 83.7% to $214.8 million from $116.9 million in 2012.
  • Net income attributable to Yongye increased 82.3% to $170.8 million, or $2.93 per diluted share, compared to $93.7 million, or $1.62 per diluted share, in the same period of 2012.
  • 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 $173.8 million, or $2.99 per diluted share, compared to $111.4 million, or $1.94 per diluted share, in the same period of 2012.*
  • Operating cash inflow was $21.0 million in 2013 compared to an operating cash outflow of $51.4 million in 2012.
  • At the end of 2013, the amount of accounts receivable outstanding was $343.5 million, of which $124.1 million was past the Company's six-month credit term. As of March 12, 2014, approximately $260.2 million had been collected from the Company's distributors, including $236.2 million of the accounts receivable outstanding at December 31, 2013. $111.9 million of the past due accounts receivable at December 31, 2013 were subsequently collected.

Fourth Quarter 2013 Financial Highlights

  • Revenue increased 29.0% to $92.0 million from $71.3 million in the fourth quarter of 2012.
  • Shipment of Yongye's agricultural nutrient products increased 30.2% to $110.8 million from $85.1 million in the fourth quarter of 2012.
  • Gross profit increased 37.2% year-over-year to $52.7 million.
  • Income from operations was $16.3 million, compared to $18.7 million in the fourth quarter of 2012.
  • Net income attributable to Yongye was $14.6 million, or $0.24 per diluted share, compared to$19.4 million, or $0.32 per diluted share, in the same period of 2012.  
  • 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 $15.3 million, or $0.25 per diluted share, compared to $20.4 million, or $0.34 per diluted share, in the same period of 2012.*

Mr. Zishen Wu, Chairman and Chief Executive Officer of Yongye International, stated, "We are pleased with our overall performance in 2013. Our growth was in line with expectations, our branded retailer network exceeded the target of 36,000 and we also achieved positive cash flow from operations for the full year. We saw strong demand for Shengmingsu and two of our new products and we remain focused on our efforts to collect outstanding accounts receivable. As of March 12, 2014, we had collected a vast majority of the overdue accounts receivable at December 31, 2013."

Mr. Wu continued, "The underlying fundamentals of our business remain strong and the Board and management team will work closely together to explore all appropriate opportunities to maximize value for our shareholders. Looking to 2014, we will focus on executing several specific initiatives as a part of our plan to further grow our business, including diversifying our product offering by launching a new water soluble humic acid product, primarily used during irrigation. Although this product has lower margins compared to our existing products, our push into this new business segment is expected to both help us maintain the loyalty of our distributors while strengthening our market presence. In the coming year, we also intend to further expand our manufacturing capacity. Lastly, with increasing influence of our provincial-level distributors, we are actively pursuing opportunities to streamline our current distribution structure to support our efforts to improve prompt collection of accounts receivable. We believe these varied initiatives will enable us to continue to diversify the business and drive business growth and positive performance in 2014 and beyond."

Full Year 2013 Financial Results

Sales increased by $218.9 million, or 49.4%, to $661.9 million for the year ended December 31, 2013, from $443.0 million for the same period of 2012. For the full year, the Company derived $652.4 million, or 98.6% of total sales, from liquid crop nutrient, and derived $9.5 million, or 1.4% of total sales, from the powder animal nutrient. For the liquid crop nutrient, the regular crop nutrient contributed $559.9 million, or 85.8% of total sales of liquid crop nutrient, while two new products for crop seeds and roots contributed $92.5 million, or 14.2% of total liquid crop nutrient sales. During 2013, the number of branded retailers reached 36,100, compared to 35,058 as of December 31, 2012, an increase of 3.0%.

Gross profit was $404.9 million for the year ended December 31, 2013, compared to $262.4 million for the year ended December 31, 2012, an increase of 54.3%. Gross margin was 61.2% for the year ended December 31, 2013, compared to 59.2% for the same period of 2012.  The increase in gross margin was mainly due to the scale effect of increased sales and the Company's cost reduction initiatives. The Company recorded non-cash expenses of $3.0 million related to the amortization of the acquired Hebei customer list as part of its cost of sales for the full year 2013.  Excluding the aforementioned non-cash expenses related to the amortization of the acquired Hebei customer list, full year 2013 adjusted gross profit was $407.9 million, or 61.6% of sales.*

Selling expenses increased by $44.9 million to $149.0 million for the year ended December 31, 2013. As a percentage of sales for the year ended December 31, 2013, selling expenses remain the same level as that in 2012. The increase in selling expenses was primarily due to an increase in advertising and promotion expense and distributors' seminar expenditure of $45.6 million relating to marketing and promotional activities for the Company's products.

General and administrative ("G&A") expenses increased by $5.0 million, or 35.5%, to $19.1 million for the year ended December 31, 2013, from $14.1 million for the same period of 2012. The increase of G&A expenses was mainly due to that the equity based compensation expense of $3.7 million was recorded during 2012 while there was no award issued in 2013.

Research and development ("R&D") expenses were $22.1 million for the year ended December 31, 2013, compared to $16.6million for the same period of 2012. 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 $214.8 million, or 32.5% of sales for the year ended December 31, 2013, compared to $116.9 million, or 26.4% of sales, in the same period of 2012. 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 2013 adjusted operating income was $217.7 million, or 32.9% of sales.*  

Net income attributable to Yongye was $170.8 million, or $2.93 per diluted share for the year ended December 31, 2013, compared to a net income of $93.7 million, or $1.62 per diluted share, in the same period 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 full year 2013 was $173.8 million, or $2.99 per diluted share, compared to $111.4 million, or $1.94 per diluted share in the same period of 2012.*

Fourth Quarter 2013 Financial Results

Sales increased by $20.7 million, or 29.0%, to $92.0 million in the fourth quarter of 2013, from $71.3 million for the same period of 2012. At the end of the fourth quarter of 2013, the number of branded retailers increased to 36,100 from 35,506 at the end of the third quarter of 2013.

Gross profit was $52.7 million in the fourth quarter of 2013, compared to $38.4 million in the fourth quarter of 2012, an increase of 37.2%. Gross margin was 57.3% in the fourth quarter of 2013, compared to 53.9% for the same period of 2012. The increase in gross margin was mainly due to less products with lower margin were sold during the fourth quarter of 2013. 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 2013. Excluding the aforementioned non-cash expenses related to the amortization of the acquired Hebei customer list, fourth quarter 2013 adjusted gross profit was $53.4 million, or 58.2% of sales.*

Selling expenses increased by $11.9 million, or 83.2%, to $26.2 million in the fourth quarter of 2013, from $14.3 million for the same period of 2012. The increase in selling expenses was primarily due to increased promotion expenses of approximately $21.8 million incurred during the fourth quarter of 2013.

G&A expenses increased by $3.1 million, or 106.9%, to $6.0 million in the fourth quarter of 2013, from $2.9 million for the same period of 2012. The increase in G&A expenses was mainly due to the increased professional fee of approximately $1.9 million incurred during the fourth quarter of 2013.

R&D expenses were $4.3 million in the fourth quarter of 2013, compared to $2.5 million for the same period of 2012. 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 $16.3 million in the fourth quarter of 2013, compared to $18.7 million in the same period of 2012. 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 2013 adjusted operating income was $17.0 million, or 18.5% of sales.*  

Net income attributable to Yongye was $14.6 million, or $0.24 per diluted share in the fourth quarter of 2013, compared to $19.4 million, or $0.32 per diluted share, in the same period 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 2013 was $15.3 million, or $0.25 per diluted share, compared to $20.4 million, or $0.34 per diluted share in the same period of 2012.*

(*) 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, 2013, the Company had $123.8 million in cash and restricted cash, compared to $44.6 million as of December 31, 2012. Working capital was $594.6 million, compared to $383.3 million at the end of 2012.The Company had a $115.6 million short-term bank loan and $9.4 million in long-term debt as of December 31, 2013. Stockholders' equity totaled $632.9 million as of December 31, 2013, compared to $436.3 million at the end of 2012. Cash flow provided by operating activities was $21.0 million for the year ended December 31, 2013, compared to cash flow used in operating activities of $51.4 million in the year ended December 31, 2012. The year over year increase in cash flow from operating activities was primarily due to the increase of $81.0 million in net income.

Accounts Receivable

Accounts receivable increased by $40.5 million from the end of 2012, which was primarily due to the Company's continued business growth and was consistent with sales occurred in the second and third quarter of 2013 due to the seasonality of the Company's business.

At the end of 2013, the amount of accounts receivable outstanding was $343.5 million, of which $124.1 million was past the Company's six-month credit period, representing 36.2% of total gross accounts receivable balance as of December 31, 2013. Yongye recorded an allowance for doubtful receivables in the amount $9.3 million as of December 31, 2013, 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 $260.2 million from its distributors as of March 12, 2014, including $236.2 million of the accounts receivable outstanding at December 31, 2013. $111.9 million of the past due accounts receivable at December 31, 2013 were subsequently collected. 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 retailer network from 35,058 as of December 31, 2012 to 36,100 as of December 31, 2013, an increase of 3.0%. This exceeded the Company's target for 2013 of 36,000 branded retailers. The majority of the Company's newly recruited branded retailers are located in Inner Mongolia, Xinjiang, Yunnan/Guizhou, Guangdong/Hainan and Henan provinces. The Company remains focused on expanding its distribution networks and deepening its penetration in both new and traditional markets.

Update on Go-private Proposal

On September 23, 2013, the Company entered into an agreement and plan of merger (the "Merger Agreement") with Full Alliance International Limited, a British Virgin Islands company ("Holdco"), Yongye International Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly-owned subsidiary of Holdco ("Parent"), and Yongye International Merger Sub Limited, a Nevada corporation and a wholly owned subsidiary of Parent ("Merger Sub"). Pursuant to the Merger Agreement, upon the terms and subject to the conditions thereof, at the effective time of the merger, Merger Sub will be merged with and into the Company, the Company will become a wholly-owned subsidiary of Parent and each of the Company's shares of common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive US$6.69 in cash without interest, except for (i) shares owned by Holdco, Parent and Merger Sub, including shares of common stock and Preferred Shares to be contributed to Parent by Holdco, Mr. Zishen Wu, Prosper Sino Development Limited and MSPEA, immediately prior to the effective time of the merger pursuant to a contribution agreement, dated as of September 23, 2013, among Parent, Holdco, Mr. Zishen Wu, Prosper Sino Development Limited and MSPEA (except that, with respect to Prosper Sino, only such shares designated as "Prosper Sino rollover shares" in the definitive proxy statement in connection with the special meeting of stockholders will be contributed), and (ii) shares of common stock held by the Company or any subsidiary of the Company ((i) and (ii) collectively, the "Excluded Shares"), which will be cancelled for no consideration and cease to exist as of the effective time of the merger.

On January 3, 2014, the Company issued a press release announcing that it has established the close of business on January 10, 2014 as the record date for its special meeting of stockholders entitled to receive notice of and to vote at its upcoming special meeting of stockholders.

In connection with the special meeting of stockholders to approve the Merger Agreement, the Company filed a definitive proxy statement with the Securities and Exchange Commission (the "SEC") on January 9, 2014, and mailed the definitive proxy statement to its stockholders.

The Company's special meeting of stockholders was held on February 19, 2014, and the stockholders approved the adjournment of the special meeting and the special meeting was adjourned until 2:00 p.m. China time, on March 5, 2014 at Jinshan Economic Development Zone, Hohhot City, Inner Mongolia, the People's Republic of China. The special meeting was adjourned to provide the Company with additional time to solicit proxies from its stockholders in favor of the proposal to approve the Merger Agreement.

Subsequently, the adjourned special meeting of stockholders was held on March 5, 2014, and the proposal to approve the Merger Agreement did not receive approval from holders of at least a majority of the issued and outstanding shares of the Company (other than the Excluded Shares). The Merger Agreement was therefore not approved by the Company's stockholders. The Merger Agreement has not yet been terminated.

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. As a result, the Company is not in a position to predict with specificity what its revenue will be until cash collection is completed. As such, to provide further clarity for investors, Yongye will continue to provide expectations on shipments, a metric that is not impacted by the revenue recognition issue mentioned above.

The Company expects total shipments in 2014 to be in the range of $800 million to $850 million, representing a growth of 20.8% to 28.4% over 2013. The growth will be from increase of both our existing and new businesses. The Company also expects that its branded retailer network will be expanded to 36,500 by the end of 2014, which represents a 1.1% increase over the 2013 year-end number of 36,100.

Conference Call

The Company will host a conference call at 8:30 a.m. Eastern Time on March 17, 2014, to discuss its fourth quarter and full year 2013 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 (855) 298-3404. International callers should dial+1 (631) 514-2526. The conference pass code is 9958528.

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 March 17, 2014 to 11:59 p.m. Eastern Time on March 31, 2014. To access the replay, please dial +1 (866) 846-0868. International callers should dial+61 (2) 9641-7900. The replay pass code is 9958528. 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, 2013 and full year 2013 include non-cash item related to the amortization of the acquired Hebei customer list.  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 the item 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 2013. 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. Rain Xia
Phone: +86-10-8231-9608
E-mail: ir@yongyeintl.com

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

Ms. May Shen (China Contact)
Phone: +86-10-8591-1951
E-mail: may.shen@fticonsulting.com 

 

  

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS








December 31, 2013


December 31, 2012

Current assets




Cash

$

123,728,435


$

44,511,404

Restricted cash


40,000



40,000

Accounts receivable, net of allowance

for doubtful accounts


334,141,280



293,600,762

Inventories


251,372,750



118,693,596

Deposits to suppliers


54,400,166



24,048,028

Perpaid expenses


573,563



312,648

Other receivables


1,427,845



1,189,633

Deferred tax assets


12,615,399



11,591,797

Total Current Assets


778,299,438



493,987,868







Property, plant and equipment, net


23,675,240



26,224,957

Intangible assets, net


16,553,035



18,909,349

Land use right, net


4,862,877



4,807,313

Prepayment for mining project


37,035,215



35,792,410

Distributor vehicles


36,133,400



44,125,293







Total Assets

$

896,559,205


$

623,847,190







Current liabilities






Short-term bank loans

$

115,632,535


$

50,857,163

Long-term loans and payables - current portion


8,738,965



9,149,280

Capital lease obligations - current portion


220,018



395,878

Accounts payable 


8,137,337



12,364,193

Income tax payable


26,612,792



3,196,078

Advance from customers


606,423



154,944

Accrued expenses


19,465,163



31,389,630

Other payables


4,271,519



2,828,262

Derivative liabilities- fair value of warrants


-



348,364

Total Current Liabilities


183,684,752



110,683,792







Long-term loans and payables


8,593,469



10,254,922

Capital lease obligations - non-current


834,713



2,134,155

Other non-current liability


10,395,458



6,683,802

Deferred tax liabilities


5,410,240



6,618,794

Total Liabilities


208,918,632



136,375,465







Redeemable Series A convertible preferred

shares: par value $.001; 7,969,044 shares

authorized; 6,505,113 shares and 6,079,545

shares issued and outstanding as of December

31, 2013 and 2012, respectively


54,713,640



51,208,657







Equity






Common stock: par value $.001; 75,000,000

shares authorized; 50,685,216 shares and

50,604,026 shares issued and outstanding at

December 31, 2013 and 2012, respectively


50,685



50,604

Additional paid-in capital


155,265,347



154,792,050

Retained earnings


408,015,540



240,679,395

Accumulated other comprehensive income


38,674,997



19,950,447

Total equity attributable to Yongye International, Inc.


602,006,569



415,472,496

Noncontrolling interest


30,920,364



20,790,572

Total Equity


632,926,933



436,263,068

Commitments and Contingencies


-



-







Total Liabilities, Redeemable Series A

Convertible Preferred Shares and Equity

$

896,559,205


$

623,847,190







  













YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES 







CONSOLIDATED STATEMENTS OF INCOME
































For the Three Months Ended


For the Years Ended


December 31, 2013


December 31, 2012


December 31, 2013


December 31, 2012

Sales

$

92,035,637


$

71,260,204


$

661,881,100


$

442,986,604

Cost of sales


39,303,219



32,902,107



256,962,530



180,614,350

Gross profit


52,732,418



38,358,097



404,918,570



262,372,254

Selling expenses


26,175,904



14,269,679



148,967,729



104,036,345

Research and development expenses


4,327,340



2,521,976



22,119,473



16,575,976

General and administrative expenses, including a reversal of allowance for doubtful accounts of US$nil and US$6,332,022 for the year ended December 31, 2013 and 2012, respectively


5,972,848



2,862,448



19,063,800



14,123,521

Impairment loss of goodwill


-



25,375



-



10,774,106

Income from operations


16,256,326



18,678,619



214,767,568



116,862,306

Other (expenses)/income












Interest expenses


(1,726,661)



(957,439)



(6,990,661)



(4,193,909)

Interest income


223,606



7,653



3,167,936



455,269

Subsidy income


2,775,229



9,506,306



2,775,229



9,506,306

Other expenses, net


(93,244)



(395,348)



(335,986)



(496,014)

Change in fair value of derivative liabilities


-



(162,258)



-



(296,822)

Total other income/(expenses), net


1,178,930



7,998,914



(1,383,482)



4,974,830

Earnings before income tax expense


17,435,256



26,677,533



213,384,086



121,837,136

Income tax expense


2,202,231



5,706,980



33,350,985



22,803,881

Net income


15,233,025



20,970,553



180,033,101



99,033,255

Less: Net income attributable to the noncontrolling interest


682,189



1,599,720



9,191,973



5,350,190

Net income attributable to Yongye International, Inc.

$

14,550,836


$

19,370,833


$

170,841,128


$

93,683,065

























Net income per share of common stock












   Basic

$

0.24


$

0.32


$

2.93


$

1.62

   Diluted

$

0.24


$

0.32


$

2.93


$

1.62

Weighted average shares used in computation:












   Basic 


50,685,216



50,462,990



50,681,435



49,645,273

   Diluted 


50,685,216



50,462,990



50,681,435



49,645,273













Net income


15,233,025



20,970,553



180,033,101



99,033,255

Other comprehensive income












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


5,463,220



1,221,255



19,662,369



3,012,054













Comprehensive income


20,696,245



22,191,808



199,695,470



102,045,309

Less: Comprehensive income attributable to the noncontrolling interest


945,023



1,657,091



10,129,792



5,490,555

Comprehensive income attributable to Yongye International, Inc.


19,751,222



20,534,717



189,565,678



96,554,754













  










YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS











For the Years Ended


December 31, 2013


December 31, 2012


December 31, 2011

CASH FLOWS FROM OPERATING ACTIVITIES






Net income

$

180,033,101


$

99,033,255


$

$89,792,197

Adjustments to reconcile net income to net cash  provided by operating activities:









Depreciation and amortization


17,788,456



15,680,481



8,574,526

(Gain)/Loss on sale of property, plant and equipment


(128,000)



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)

Stock compensation expense


-



3,769,678



6,056,194

Deferred tax benefit


(2,474,423)



(10,974,693)



(2,639,450)

Changes in operating assets and liabilities:









Accounts receivable


(29,883,738)



(132,358,082)



(139,381,935)

Inventories


(126,599,706)



(31,880,264)



(17,326,312)

Deposit to suppliers


(28,978,710)



(21,162,361)



8,299,720

Prepaid expenses


(246,322)



4,676,605



(4,128,949)

Other receivables


(70,988)



(801,090)



390,750

Distributor Vehicles


(169,433)



(5,633,992)



(9,866,857)

Accounts payable


(4,585,253)



(837,196)



6,616,383

Income tax payable


26,241,693



2,360,375



1,060,140

Advance from customers


439,304



(3,971,143)



3,966,320

Accrued expenses


(12,801,222)



26,905,759



1,307,892

Other payables


2,416,286



(935,892)



1,821,586

Net Cash Provided by/(Used in) Operating Activities


20,981,045



(51,378,385)



(31,203,441)










CASH FLOWS FROM INVESTING ACTIVITIES









Payment for intangible asset


-



-



(3,000,000)

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



-

Purchase of property, plant and equipment


(1,222,033)



(3,001,749)



(2,264,361)

Net Cash Used in Investing Activities


(1,222,033)



(1,747,550)



(7,072,060)










CASH FLOWS FROM FINANCING ACTIVITIES














Proceeds from short-term bank loans


133,253,650



50,832,990



43,314,821

Repayment of short term loans


(71,203,886)



(28,518,918)



(15,469,579)

Repayment of long-term loans and payables


(5,127,519)



(6,416,977)



(1,738,717)

Proceeds from common stock and warrants issued and warrants exercised


125,014



103,115



-

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


-



-



49,399,990

Repayment for capital lease obligations


(255,521)



(87,467)



-

Net Cash Provided by Financing Activities


56,791,738



15,912,743



75,506,515

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH


2,666,281



569,716



2,010,397

NET INCREASE/(DECREASE) IN CASH


79,217,031



(36,643,476)



39,241,411

Cash at beginning of year


44,511,404



81,154,880



41,913,469

Cash at end of year


123,728,435



44,511,404



81,154,880










Supplemental cash flow information:









Cash paid for income taxes


9,583,716



31,756,081



19,986,864

Cash paid for interest expense


5,677,812



4,847,983



1,386,763










Noncash investing and financing activities:









Acquisition of property, plant and equipment under capital leases


335,871



2,617,541



-

Disposal of property, plant and equipment under capital leases


1,619,692



-



-

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


2,423,805



13,980,773



11,554,688

Acquisition of property, plant and equipment included in other payables


324,410



1,463,905



980,169

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


3,504,983



1,808,667



-

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


-



-



189,229

Exercise of warrants that were liability classified


348,364



265,641



-










  

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL DATA








Gross Profit


Three Months Ended December 31,


Year Ended December 31,


2013

2012


2013

2012

GAAP amount per consolidated statement of income

$52,732,418

$38,358,097


$404,918,570

$262,372,254

Amortization of the acquired Hebei customer list 

$748,156

$726,910


$2,955,263

$2,898,888

Adjusted Amount

$53,480,574

$39,085,007


$407,873,833

$265,271,142








Income from Operations


Three Months Ended December 31,


Year Ended December 31,


2013

2012


2013

2012

GAAP amount per consolidated statement of income

$16,256,326

$18,678,619


$214,767,568

$116,862,306

Amortization of the acquired Hebei customer list

$748,156

$726,910


$2,955,263

$2,898,888

Non-cash management compensation expense

-

$119,884


-

$3,769,678

Impairment of goodwill

-

$25,375


-

$10,774,106

Adjusted Amount

$17,004,482

$19,550,788


$217,722,831

$134,304,978








Net income (attributable to Yongye)


Three Months Ended December 31,


Year Ended December 31,


2013

2012


2013

2012

GAAP amount per consolidated statement of income

$14,550,836

$19,370,833


$170,841,128

$93,683,065

Amortization of the acquired Hebei customer list

$748,156

$726,910


$2,955,263

$2,898,888

Non-cash management compensation expense

-

$119,884


-

$3,769,678

Impairment of goodwill

-

$25,375


-

$10,774,106

Change in fair value of derivative liabilities

-

$162,258


-

$296,822

Adjusted Amount

$15,298,992

$20,405,260


$173,796,391

$111,422,559

Weighted average shares -- diluted

50,685,216

50,462,990


50,681,435

49,645,273

Adjusted diluted earnings per share

$0.25

$0.34


$2.99

$1.94

 

SOURCE Yongye International, Inc.



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