Zhongpin Reports Higher Revenues and Lower Net Income for the Third Quarter 2012

 Zhongpin Reports Higher Revenues and Lower Net Income for the Third Quarter
                                     2012

PR Newswire

BEIJING and CHANGGE, China, Nov. 8, 2012

BEIJING and CHANGGE, China, Nov. 8, 2012 /PRNewswire-FirstCall/ -- Zhongpin
Inc. ("Zhongpin" or the "Company," Nasdaq: HOGS), a leading meat and food
processing company in the People's Republic of China, today reported higher
sales revenues and lower net income for the three months ended September 30,
2012 compared with the third quarter 2012.

Third quarter 2012 highlights:

  oSales revenues increased 4% to $415.7 million for the three months ended
    September 30, 2012 from $398.1 million in the third quarter 2011 primarily
    due to higher sales volume for pork products sold at lower average selling
    prices.
  oNet income decreased 40% to $11.0 million in the third quarter 2012 from
    $18.3 million in the third quarter 2011 primarily due to a lower gross
    profit margin, the cost of more employees to support expansion, higher
    salaries, higher promotional activities, rising labor and utility costs,
    and higher interest expenses. The higher expenses were mainly due to the
    higher volume of business and intense competitive pressure in the pork
    market.
  oBasic earnings per common share (based on net income attributable to
    Zhongpin shareholders) decreased 35% to $0.30 in the third quarter 2012
    from $0.46 in the third quarter 2011. Weighted average basic shares
    outstanding decreased 7% to 37,198,909 shares in the third quarter 2012
    from 39,918,816 shares in the third quarter 2011.
  oDiluted earnings per common share (based on net income attributable to
    Zhongpin shareholders) decreased 35% to $0.30 in the third quarter 2012
    from $0.46 in the third quarter 2011. Weighted average diluted shares
    outstanding decreased 7% to 37,240,843 shares in the third quarter 2012
    from 39,918,816 shares in the third quarter 2011.
  o40,376,182 common shares were issued as of September 30, 2012, of which
    37,209,344 were outstanding and 3,166,838 were held by Zhongpin as
    treasury shares.
  oThe Company maintains its previous guidance for 2012. Zhongpin expects
    that sales revenues should be within a range ofUS$1.55 billion to $1.72
    billion for 2012. Gross profit margin is expected to be within the range
    of8.6% to 10.2%. Net profit margin is expected to be within the range of
    3.3% to 4.2%. The resulting diluted earnings per share for the fiscal year
    ending December 31, 2012 is expected to be within the range of$1.36 to
    $1.92 per share, assuming average diluted common shares outstanding of
    about 37.5 million shares in 2012. Assumptions and judgments supporting
    the guidance are shown below.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer for Zhongpin, said, "We
achieved 4 percent sales revenue growth in the third quarter on higher tonnage
at lower average prices, compared with last year's third quarter, in the face
of intense competitive pressure. The competitive pressure in the market
remains very high due, in part, to industry consolidation in the pork industry
in China. Our costs continued to increase, mainly to support our current
operations and planned expansions. While pork prices were generally lower,
mainly due to intense competitive market pressure, hog prices also declined,
but not as rapidly as pork prices. That is the primary factor for our lower
gross profit margin in the third quarter compared with last year's third
quarter.

Capacity and market expansions in 2012

Zhongpin is investing approximately $58.5 million to build a new production,
research and development, and training complex in Changge, Henan province,
excluding the cost of land use rights that it has already obtained. When
completed, this new facility is expected to have an annual production capacity
of about 100,000 metric tons for prepared pork products. Adjacent to this new
production facility, Zhongpin plans to develop a center for research and
development, training, and quality assurance and control. Construction for the
first phase with a production capacity of approximately 50,000 metric tons for
prepared pork products started in the third quarter of 2011 and was completed
in the second quarter of 2012. Trial production was started in July 2012, and
the plant has been in regular production since the end of September 2012.

Zhongpin established a joint venture company in June 2011, of which the
Company owns 65%, with Henan Xinda Animal Husbandry Company Limited. The joint
venture company is financed by capital contributions and bank loans. All
capital contributions to the joint venture company have been made. The joint
venture company is expected to provide 20,000 sire boars annually. Upon the
completion of the building of infrastructures for sire boar breeding in the
third quarter of 2012,Zhongpin leased the facility to a third party for
annual rental in the amount of RMB5.0 million.

Zhongpin is investing approximately $18.0 million in a cold-chain logistics
distribution center in Anyang, Henan province. This distribution center will
have a temperature adjustable warehouse with a floor area of approximately
27,000 square meters, processing capacity, distribution center, and a quality
control center. The distribution center will be used for third-party
cold-chain logistics service. Zhongpin expects to put this distribution center
into operation in the fourth quarter of 2012.

Zhongpin plans to invest approximately $87.5 million in a chilled and frozen
food processing and distribution center in Kunshan, Jiangsu province, which is
near Shanghai. The center will be built in three phases. The first phase will
include a processing center, cold-chain logistics center, and business
complex. Zhongpin expects to invest about $35.0 million on the first phase
that should be put into operation in the fourth quarter of 2012.

Zhongpin is investing approximately $10.5 million in a by-product processing
plant in Changge, Henan province. This facility will have a production
capacity for 100 million meters of sausage casings and 300 billion units of
raw material to make heparin sodium. The construction started in March 2012,
and the new facility is expected to begin operations in the fourth quarter of
2012.

Zhongpin will be investing approximately $47.6 million to build a cold-chain
logistics distribution center in Tangshan, Hebei province. This distribution
center will have a 27,000 square meter temperature-adjustable warehouse,
processing capacity, distribution center, and quality control center. This
distribution center will be used for third-party cold-chain logistics service
and is expected to be in operation in the fourth quarter of 2013.

As of September 30, 2012, Zhongpin had an annual capacity of 728,760 metric
tons for chilled and frozen pork, 176,000 tons for prepared pork products,
20,000 tons for pork oil, and 30,000 tons for vegetables and fruits, for a
combined total of 954,760 metric tons.

Guidance for the year 2012

Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "We are maintaining
our prior guidance.

"Our guidance for 2012 is based on several assumptions that include:

  oContinuation of China's policies designed to stimulate domestic
    consumption and economic growth.
  oAverage hog prices in China are expected to decrease about 15% to 20% in
    2012 from 2011, based on the assumed forecasted trend for the supply of
    live hogs and the increasing cost to raise hogs.
  oA higher percentage of sales from our higher-margin chilled pork and
    prepared pork products in 2012 compared with 2011, while we plan to
    continue to increase sales volumes of processed pork products to optimize
    our product structure.
  oAverage capacity utilization for the year of about 75% for pork products.
  oIncreasing distribution efficiencies and reduction in the duration of
    delivery times through the expansion of our cold-chain logistics system,
    networks, and services.
  oTotal government subsidies for Zhongpin are expected to be $5 million in
    2012.

"In addition, we have assumed that the more aggressive price competition that
we saw in the latter part of 2011 and the first quarter of 2012 will continue
in 2012, especially aggressive promotion efforts by our major competitors.

"We have assumed that we will increase our expenses in four areas in 2012:

  oFirst, we will continue to build our brand more aggressively;
  osecond, we will increase our investments in human resources, especially
    in training and recruiting;
  othird, we will increase research and development for new customized
    products with different styles and tastes to further satisfy customer
    needs in different regions, with the objective of capturing more market
    share for prepared pork products; and
  ofourth, we will advance our information technology and information systems
    more rapidly to support our cold-chain logistics system, optimize the
    structure of the supply chain, and to reduce the management cost.

"Lastly, we have assumed that the historical trend of increasing costs for
labor, energy, environmental protection, and quality assurance and control
will continue into the future, including in 2012.

"Given those comments and assumptions, we are maintaining our prior guidance.

"For the year 2012, we expect that Zhongpin's sales revenues should be within
a range ofUS$1.55 billion to $1.72 billion.

"Gross profit margin is expected to be within the range of8.6% to 10.2%.

"Net profit margin is expected to be within the range of3.3% to 4.2%.

"Diluted earnings per share for the year 2012 are expected to be within the
range of$1.36 to $1.92 per share, assuming average diluted common shares
outstanding of about 37.5 million shares in 2012."

Sales revenues in the third quarter 2012

Total sales revenues increased $17.6 million or 4% to $415.7 million for the
three months ended September 30, 2012 from $398.1 million in the third quarter
2011 primarily due to higher sales volume for pork and pork products sold at
lower average selling prices.

The higher revenues resulted mainly from continued increases in the number of
retail outlets, geographic expansion of its distribution network and
processing facilities, and higher sales to chain restaurants, food service
providers, and wholesalers and distributors in China, and higher selling
prices for prepared pork products, partly offset by lower average selling
prices for chilled and frozen pork. The following table shows tonnage, sales
revenues, and average price per metric ton by product division for the third
quarters of 2012 and 2011.

                         Sales by Product Division
                         (unaudited)
                         Three months ended               Three months ended
                         September 30, 2012               September 30, 2011
                         Metric   Sales       Average     Metric   Sales       Average
                         tons     revenues    priceper   tons     revenues    priceper
                                  (millions)  metricton           (millions)  metricton
PorkandPorkProducts
 Chilled pork          101,198  $        $        73,771   $       $    
                                  253.6      2,506               247.7      3,358
 Frozen pork           38,101   84.9        $        33,045   93.0        $    
                                              2,228                           2,814
                        28,754   72.3        $        21,600   52.4        $    
Preparedporkproducts                       2,514                           2,426
Vegetables and Fruits   5,733    4.9         $       6,034    5.0         $    
                                               855                             829
Total                    173,786  $        $        134,450  $        $    
                                  415.7       2,392               398.1      2,961

Chilled pork revenues increased on higher tonnage at lower average prices per
ton. Chilled pork revenues increased 2% in the third quarter 2012 from the
third quarter 2011. Chilled pork tonnage increased 37% and the average price
per metric ton decreased 25% in the third quarter 2012 from the third quarter
2011. The higher revenues from chilled pork were mainly due to higher tonnage
sold as a result of higher capacity, increased sales to existing customers,
and increased volume of sales from new geographic markets, expanded points of
sales, and added new customers, partly offset by the lower average selling
price that resulted from fluctuations in market price for chilled pork or
chilled pork-related products in a more competitive market.

Frozen pork revenues decreased on higher tonnage at lower average prices.
Frozen pork revenues decreased 9% in the third quarter 2012 from the third
quarter 2011. Frozen pork tonnage increased 15% and the average price per
metric ton decreased 21% in the third quarter 2012 from the third quarter
2011. The lower average selling price of frozen pork products was the result
of fluctuations in market prices for frozen pork or frozen pork-related
products in a more competitive market, which was partly offset by higher
tonnage sold.

Prepared pork revenues increased on higher tonnage at higher average prices.
Revenues from prepared pork products increased 38% in the third quarter 2012
from the third quarter 2011. Prepared pork tonnage increased 33% and the
average price per metric ton increased 4% in the third quarter 2012 from the
third quarter 2011. Prepared pork products are becoming more important to our
business since customers are increasingly demanding them for their flavor and
convenience and are willing to pay higher average prices for these products.
We plan to gradually increase sales from prepared pork products by increasing
our brand recognition and expanding our capacity for these products.

Pork products totaled 98.8% of total sales revenues in the third quarter 2012
and 98.7% in the third quarter 2011.

Geographic coverage and distribution channels

The sales of pork and vegetable products are closely related to the particular
regional markets in which our distribution channels are located. Therefore,
the increase in metric tons sold in the third quarter of 2012 was partly
attributable to our efforts to expand our geographic coverage and broaden our
distribution channels since the third quarter 2011.

The following table shows sales revenues by distribution channel. In the third
quarter 2012, sales to wholesalers and distributors accounted for 42% of sales
revenues, restaurants and food services were 29%, retail channels were 27%,
and exports were 2%.

                               Sales Revenues by Distribution Channel
                               (unaudited)
U.S. $ in millions except %    Three months ended         Net          Percent
                               September 30,
                               2012          2011         change       change
Wholesalers and distributors  $         $         $         13%
                               172.8        152.9        19.9
Restaurantsandfoodservices  122.1         113.9        8.2          7%
Retail channels               112.7         120.2        (7.5)        (6)%
Export                        8.1           11.1         (3.0)        (27)%
Total                          $         $          $         4%
                               415.7         398.1       17.6

The increase in sales revenues from different distribution channels was mainly
due to the following factors: (a) our production capacity has increased
because we completed the expansion of our facilities in Taizhou, Jiangsu
province and in Changchun, Jilin province in December 2011, and Changge, Henan
province, in July 2012; to increase the utilization of our new facilities, we
focused our sales efforts on the wholesalers and distributors, as it is easier
to achieve higher volume sales within this channel; as a result, we had
significantly higher sales in the wholesalers and distributors channel than in
other distribution channels, with the overall capacity utilization rate
maintained at a level consistent with that in the prior year; (b) we have
built our brand image and brand recognition through general advertising,
display promotions, and sales campaigns; (c) we have increased the number of
stores and other channels through which we sell our products; and (d) we
believe consumers are placing more importance on food safety and are willing
to pay higher prices for safe food products.

As of September 30, 2012, Zhongpin's customers included 148 international and
domestic fast food companies, 143 processing factories, and 1,395 school
cafeterias, hotels, factory canteens, army bases, and government departments.
As of September 30, 2012, Zhongpin also sold directly to consumers in 3,447
retail outlets in China.

The following table shows the retail channels and number of stores and
counters that generated sales volume in the third quarters of 2012 and 2011.

                       Numbers of Retail Stores and Counters
                       (Generating Sales Volume, unaudited)
                       As of September 30,    Net     Percent
                                              change
Retail channels        2012          2011             change
Showcase stores        159           164      (5)     (3)%
Branded stores        1,352         1,239    113     9%
Supermarket counters  1,936         2,016    (80)    (4)%
Total                  3,447         3,419    28      1%

Geographic expansion and broader channel coverage together have been important
factors in our long-term success, including in the third quarter of 2012. The
table below shows the number of cities, subdivided by the size, in which we
distribute our products through all of our distribution channels as of the end
of the third quarters of 2012 and 2011.

                             Number of Cities by Tier
                             for All Distribution Channels
                             As of September 30,  Net     Percent
                                                  change
                             2012        2011             change
First-tier cities (largest)  29          29       -       0%
Second-tier cities          135         133      2       2%
Third-tier cities           436         429      7       2%
Total cities                 600         591      9       2%

Cost of Sales

Cost of sales primarily includes the costs of raw materials, labor costs, and
overhead. Of the total cost of sales, the cost of raw materials typically
accounts for about 95% to 96%, overhead typically accounts for 2.5% to 3%, and
labor costs typically account for 1.5% to 1.7%, with slight variations from
period to period. All of our meat products are derived from the same raw
materials, which are live hogs. Vegetable and fruit products are purchased
from farmers located close to Zhongpin's processing facility in Changge in the
Henan province. As a result, the purchasing costs of live hogs and vegetables
and fruits represent substantially all of the costs of raw materials. The
increase in the cost of sales was consistent with but considerably higher than
the increase in sales revenues.

                        Cost of Sales by Product Division
                        (unaudited)
                        Three months ended               Three months ended
                        September 30, 2012               September 30, 2011
                        Metric   Amount      Average     Metric   Amount      Average
                        tons     (millions)  cost per    tons     (millions)  cost per
                                             metricton                       metricton
PorkandPorkProducts
 Chilled pork         101,198  $         $         73,771   $        $   
                                 231.2      2,285               223.6      3,031
 Frozen pork          38,101   80.1        $         33,045   86.4        $   
                                             2,102                           2,615
                       28,754   60.7        $         21,600   43.9        $   
Preparedporkproducts                       2,111                           2,032
Vegetables and Fruits  5,733    4.2         $       6,034    4.1         $    
                                             733                               679
Total                   173,786  $         $         134,450  $        $   
                                 376.2      2,165               358.0       2,663

Gross profit margin (gross profit divided by sales revenues) decreased to 9.5%
in the third quarter 2012 from 10.1% in the third quarter 2011 primarily due
to (a) higher competition in the market, (b) the decrease in the gap between
pork prices over hog prices, (c) increased promotional activities to grow our
market share, and (d) the increase in overhead due to the higher labor costs
and utility costs.

General, administrative, and selling expenses

General and administrative expenses increased $2.3 million or 31% to $9.7
million in the third quarter 2012 from $7.4 million in the third quarter 2011.
As a percent of revenues, general and administrative expenses increased to
2.3% in the third quarter 2012 from 1.9% in the third quarter 2011. The higher
general and administrative expenses in the third quarter 2012 were primarily
due to a $0.6 million increase in salary expenses that resulted from hiring
more employees required to support the expansion of the business, an increase
in the average salary we paid to our employees, an $0.9 million increase in
the bad debt provision due to increases in revenues and accounts receivable,
and a $0.4 million increase in other taxes due to land of property placed into
service in December 2011 for two new facilities in Taizhou and Changchun on
which the Company started paying land and property taxes in the first quarter
of 2012.

Selling expenses increased $3.5 million or 44% to $11.4 million in the third
quarter 2012 from $7.9 million in the third quarter 2011, mainly as a result
of higher sales of pork and pork products and primarily due to a $1.5 million
increase in advertising expenses, a $1.2 million increase in transportation
fees due to the increase in sales volume, a $0.2 million increase in
supermarket management fees, and a $0.2 million increase in salaries. Selling
expenses as a percent of revenues increased to 2.7% in the third quarter 2012
from 2.0% in the third quarter 2011.

Interest expense, net

Interest expense, net of interest income, increased $1.3 million or 19% to
$8.3 million in the third quarter 2012 from $7.0 million in the third quarter
2011. The increase in interest expense was primarily the result of an increase
of $39.1 million in long-term bank loans and an increase of $105.6 million in
short-term bank loans. The interest expense increase was partly offset by
higher interest income due to higher bank deposits.

Other income and government subsidies

Other income and government subsidies increased $1.0 million to $2.4 million
in the third quarter 2012 from $1.4 million in the third quarter 2011
primarily due to higher government subsidies.

Provision for income taxes

The enterprise income tax rate in China on income generated from the sale of
prepared products is 25% and there is no income tax on income generated from
the sale of raw products, including raw meat products and raw vegetable and
fruit products. The provision for income taxes increased $0.5 million in the
third quarter 2012 from the third quarter 2011 due to higher sales of prepared
pork products.

Net income

Net income decreased $7.3 million or 40% to $11.0 million in the third quarter
2012 from $18.3 million in the third quarter 2011. The Company's net profit
margin (net income divided by sales revenues) declined to 2.7% in the third
quarter 2012 from 4.6% in the third quarter 2011.

The reduction in net income was mainly due to (a) higher competition in the
market; (b) higher sales revenues from higher tonnage sold at lower average
prices per ton; (c) the higher sales revenues were more than offset by higher
cost of sales since the cost of hogs increased at a higher percentage than did
the price of pork products, higher promotional activities were required to
maintain and grow market share, and labor and utility costs that continued to
rise; (d) general and administrative expenses were higher, mainly due to
hiring more employees to support the Company's expanded operations, higher
average salaries paid to employees, a higher bad debt provision due to higher
revenues and higher accounts receivable, and higher land and property taxes
due the addition of two new plants in December 2011; and (e) higher interest
expense due to higher borrowings, partly offset by higher government
subsidies.

The higher expenses were mainly due to intense competitive pressure in the
pork market as the industry continues to consolidate and companies are
required to vie aggressively to win additional market share in a variety of
ways.

Earnings per share

The earnings per share numbers below are based on net income attributable to
Zhongpin Inc. shareholders.

Basic earnings per common share decreased 35% to $0.30 in the third quarter
2012 from $0.46 in the third quarter 2011. Weighted average basic shares
outstanding decreased 7% to 37,198,909 shares in the third quarter 2012 from
39,918,816 shares in the third quarter 2011.

Diluted earnings per common share decreased 35% to $0.30 in the third quarter
2012 from $0.46 in the third quarter 2011. Weighted average diluted shares
outstanding decreased 7% to 37,240,843 shares in the third quarter 2012 from
39,918,816 shares in the third quarter 2011.

40,376,182 common shares were issued as of September 30, 2012, of which
37,209,344 were outstanding and 3,166,838 were held by Zhongpin as treasury
shares.

For a discussion of the Company's first nine-month results of 2012 and 2011,
please see the Form 10-Q that Zhongpin will file with the Securities and
Exchange Commission on November 9, 2012.

Liquidity and capital resources

During the nine months ended September 30, 2012, Zhongpin's net cash flow
increased cash and cash equivalents by $10.4 million. Cash and cash
equivalents (excluding restricted cash) totaled $146.2 million as of September
30, 2012 compared with $135.8 million as of December 31, 2011. As of September
30, 2012, working capital (current assets minus current liabilities) was a
negative $16.8 million. Based on the anticipated operating cash flow of the
company and its subsidiaries, the availability remaining under its banking
facilities, as well as alternative sources of financing available to the
company, Zhongpin believes it will have the ability to meet its liabilities as
and when they become due within the next 12 months.

Net cash used in operating activities in the first nine months of 2012 was
$5.5 million, primarily from net income that provided $34.2 million,
depreciation and amortization that provided $19.0 million, a provision for
allowance for bad debts that provided $2.8 million, accounts receivable and
accounts payable that used a total of $58.0 million, purchase deposits that
provided $6.3 million, inventories that used $10.8 million, tax refunds
receivable that used $5.1 million, and other items that provided $6.1 million,
net.

Net cash used in investing activities in the first nine months of 2012 was
$85.2 million, primarily for construction in progress, additions to land use
rights, and prepayment for and additions to property, plant, and equipment
that together used $85.9 million.

Net cash provided by financing activities in the first nine months of 2012 was
$102.2 million, primarily from the proceeds from loans and notes, net of
repayments, that provided $113.2 million, an increase in restricted cash that
used $5.0 million, a repayment of a capital lease obligation that used $4.6
million, repurchases of common stock that used $2.8 million, and other items
that provided a net of $1.4 million.

As a result, including the effect from foreign currency exchange rate changes
on cash, Zhongpin increased its cash and cash equivalents in the first nine
months of 2012 by $10.4 million. Cash and cash equivalents on September 30,
2012 totaled $146.2 million compared with $135.8 million as of December 31,
2011.

Zhongpin believes its existing cash and cash equivalents, together with its
ability to secure bank borrowings, will be sufficient to finance its
investment in new facilities, with budgeted capital expenditures of about
$114.4 million over the next 12 months, and to satisfy its working capital
needs. It intends to satisfy its short-term debt obligations that mature over
the next 12 months through additional short-term bank loans, in most cases by
rolling over the maturing loans into new short-term loans with the same
lenders as the Company has done in the past.

Conference call and webcast

Zhongpin will host its third quarter 2012 earnings conference call and live
webcast at 8:00 a.m. Eastern Standard Time (New York) on Friday, November 9,
2012, which is also 9:00 p.m. in China and Hong Kong on the same day.

The dial-in details for the live conference call are:

1 866 549 1292      U.S. toll free
1 800 356 465       Australia local
1 866 869 1825      Canada toll free
800 876 8626        China mainland toll free land line
400 681 6949        China mainland toll free mobile
400 889 9481        China mainland toll free mobile
8088 6026           Denmark toll free
0805 632 002        France toll
                    free
3005 2050           Hong Kong local
180 921 4963        Israel toll free
005 3112 1852       Japan toll free
8002 7188           Luxembourg toll free
0800 022 0733       Netherlands toll free
800 120 5959        Singapore local
900 941 847         Spain toll free
0800 279 7818       United Kingdom toll free
1 866 549 1292      United States toll free
+852 3005 2050      International dial-in toll call
326                 Participant access code
957#

The live webcast and archive of the conference call will be available on the
Investor Relations section of Zhongpin's website at http://www.zpfood.com.

A telephone replay of the call will be available after the conclusion of the
conference call through 8:00 a.m. Eastern Standard Time, November 23, 2012.
The dial-in details for the telephone replay are:

1 866 753 0743          U.S. toll free
1800 792 965            Australia toll free
1 866 518 1652          Canada toll free
800 876 5016            China mainland toll free land line
808 86 774              Denmark toll free
0800 901 585            France toll free
3005 2020               Hong Kong local
0053 1121 925           Japan toll free
800 852 3586            Singapore toll free
0808 234 7126           United Kingdom toll free
1 866 753 0743          United States toll free
+852 3005 2020          International toll call
145 136# Conference reference

About Zhongpin

Zhongpin Inc. is a leading meat and food processing company that specializes
in pork and pork products, vegetables, and fruits in China. Its distribution
network in China covers 20 provinces plus Beijing, Shanghai, Tianjin, and
Chongqing and includes 3,447 retail outlets as of September 30, 2012.
Zhongpin's export markets include Europe, Hong Kong, and other countries in
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 may be 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, interruptions in the
supply of live pigs and or raw pork, the effects of weather on hog feed
production, 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. These filings are available
fromwww.sec.govor from Zhongpin's website atwww.zpfood.com.

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.

For more information, please contact:

Zhongpin Inc.
Mr. Sterling Song (English and Chinese)
Director of Investor Relations\
Telephone +86 10 8455 4188 extension 106 in Beijing
ir@zhongpin.com

Mr. Warren (Feng) Wang (English and Chinese)
Chief Financial Officer
Telephone +86 10 8455 4388 in Beijing
warren.wang@zhongpin.com

Christensen

Mr. Victor Kuo (English and Chinese)
Telephone +86 10 5826 4939 in Beijing
vkuo@christensenir.com

Mr. Tom Myers (English)
Mobile +86 139 1141 3520 in Beijing
tmyers@christensenir.com
www.zpfood.com

Financial statements follow.

ZHONGPIN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND AND COMPREHENSIVE INCOME
(Amount in U.S.dollars) (Unaudited)
                                                      Three Months Ended              Nine Months Ended
                                                      September 30,                     September 30,
                                                      2012             2011             2012               2011
Revenues
 Sales revenues                                     $ 415,744,666    $ 398,086,490    $ 1,198,083,901    $ 1,050,322,271
 Cost of sales                                       (376,246,415)    (358,049,826)    (1,087,489,159)    (935,223,736)
 Gross profit                                     39,498,251       40,036,664       110,594,742        115,098,535
Operating expenses
 General and administrative expenses                 (9,694,515)      (7,423,392)      (28,023,615)       (20,873,595)
 Selling expenses                                    (11,384,229)     (7,866,984)      (26,640,871)       (22,597,879)
 Research & development expenses                     (139,302)        (20,127)         (382,946)          (475,437)
 Total operating expenses                        (21,218,046)     (15,310,503)     (55,047,432)       (43,946,911)
Income from operations                                  18,280,205       24,726,161       55,547,310         71,151,624
Other income (expense)
 Interest expenses, net                              (8,280,935)      (7,017,272)      (22,191,446)       (15,828,655)
 Other income, net                                  853,973          269,577          2,009,347          157,356
 Government subsidies                               1,507,872        1,142,388        3,073,709          2,594,295
Total other expense                                     (5,919,090)      (5,605,307)      (17,108,390)       (13,077,004)
Net income before taxes                                 12,361,115       19,120,854       38,438,920         58,074,620
 Provision for income taxes                          (1,331,286)      (799,129)        (4,233,120)        (3,553,613)
Net income after taxes                               $ 11,029,829     $ 18,321,725     $ 34,205,800       $ 54,521,007
 Net loss attributable to noncontrolling interests    13,501           1,167            15,676             22
NetincomeattributabletoZhongpinInc.shareholders   11,043,330       18,322,892       34,221,476         54,521,029
Foreign currency translation adjustment              $ (1,416,358)    $ 9,098,658      $ (3,496,380)      $ 19,031,328
Foreign currency translation adjustment attributable    6,592            (14,885)         9,725              (26,450)
to noncontrolling interests
Foreign currency translation adjustment attributable    (1,409,766)      9,083,773        (3,486,655)        19,004,878
to Zhongpin Inc. shareholders
Comprehensive income                                   9,613,471        27,420,383       30,709,420         73,552,335
Comprehensive loss (income) attributable to             20,093           (13,718)         25,401             (26,428)
noncontrolling interests
Comprehensive income attributable to Zhongpin Inc.    $ 9,633,564      $ 27,406,665     $ 30,734,821       $ 73,525,907
shareholders
Basic earnings per common share                       $ 0.30           $ 0.46           $ 0.92             $ 1.41
Diluted earnings per common share                     $ 0.30           $ 0.46           $ 0.92             $ 1.41
Basic weighted average shares outstanding               37,198,909       39,918,816       37,295,245         38,723,299
Diluted weighted average shares outstanding             37,240,843       39,918,816       37,303,300         38,781,507
The accompanying notes are an integral part of these condensed consolidated financial
statements.





ZHONGPIN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amount in U.S.dollars)
                                                             September 30,    December 31,
                                                             2012             2011
ASSETS                                                       (Unaudited)
Current assets
 Cash and cash equivalents                                 $ 146,240,450    $ 135,845,095
 Restricted cash                                             95,880,072       91,444,216
 Bank notes receivable                                       66,263,996       29,171,060
Accountsreceivable,netofallowancefordoubtfulaccounts    92,648,294       40,161,898
of $5,065,526 and $2,323,920
Other receivables, net of allowance for doubtful accounts      1,675,490        1,081,311
of $514,099 and $449,048
 Purchase deposits                                           7,956,858        14,320,357
 Inventories                                                 52,431,905       41,944,020
 Prepaid expenses                                           470,228          379,633
 VAT recoverable                                             35,320,505       30,472,864
 Allowance receivables                                       947,797          3,116,108
 Deferred tax assets                                         569,169          572,791
 Other current assets                                        1,166,449        1,545,534
Total current assets                                           501,607,213      390,054,887
 Long-term investment                                        473,111          476,122
 Property, plant, and equipment, net                         465,795,213      427,929,871
 Deposits for purchase of land use rights                    20,623,927       27,930,404
 Construction in progress                                    59,684,788       47,887,224
 Land use rights                                            113,194,935      96,981,393
 Deferred charges                                            3,075            8,665
 Prepayment on property, plant, and equipment                3,595,410        -
Total assets                                                 $ 1,164,977,672  $ 991,268,566
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
 Short-term loans                                         $ 210,861,343    $ 115,653,574
 Bank notes payable                                          190,304,368      177,627,006
 Long-term loans - current portion                           44,545,316       16,016,419
 Capital lease obligation                                    1,184,779        5,769,600
 Accounts payable                                            13,389,257       15,693,948
 Other payables                                              31,230,591       26,873,586
 Accrued liabilities                                         14,757,280       12,596,651
 Deposits from customers                                     10,338,534       12,550,096
 Tax payable                                                 1,692,812        1,822,812
 Deferred subsidy - current portion                          68,338           68,773
Total current liabilities                                      518,372,618      384,672,465
 Deferred tax liabilities                                    521,083          524,399
 Deposits from customers - long-term portion                 2,127,591        2,615,449
 Long-term loans                                            108,322,994      97,261,330
 Deferred subsidy - long-term portion                        1,924,863        1,988,693
Total liabilities                                              631,269,149      487,062,336
Equity
Common stock: par value $0.001; 100,000,000 authorized;
40,376,182 and 40,355,502 shares issued as of September 30,    40,376           40,355
2012 and December 31, 2011; and 37,209,344 and 37,556,964
outstanding as of September 30, 2012 and December 31, 2011
 Additional paid-in capital                                  240,063,994      239,364,449
 Retained earnings                                           268,421,547      234,200,071
Treasury stock, at cost: 3,166,838 and 2,798,538 shares as     (26,225,647)     (23,131,074)
of September 30, 2012 and December 31, 2011
 Accumulated other comprehensive income                      49,418,398       52,905,053
Total Zhongpin Inc. shareholders' equity                       531,718,668      503,378,854
 Noncontrolling interests                                    1,989,855        827,376
Total shareholders' equity                                     533,708,523      504,206,230
Total liabilities and shareholders' equity                   $ 1,164,977,672  $ 991,268,566
The accompanying notes are an integral part of these condensed consolidated financial
statements.



ZHONGPIN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount in U.S.dollars) (Unaudited)
                                              Nine Months Ended September 30,
                                              2012             2011
Cash flows from operating activities:
   Net income                                 $ 34,205,800     $ 54,521,007
   Adjustments to reconcile net income to
   net cash provided by (used in) operations:
        Depreciation                            17,334,633       12,542,855
        Amortization of land use rights         1,660,272        1,386,615
        Provision for allowance for bad debts   2,834,924        780,323
        Gain on disposal of property and        (134,389)        (15,174)
        equipment
        Deferred subsidy                        (51,448)
        Stock-based compensation expense       515,566          1,193,067
        Changes in operating assets and
        liabilities:
            Accounts receivable                (55,743,663)     (12,087,046)
            Other receivables                   (953,122)        (2,467,660)
            Purchase deposits                   6,296,770        (15,311,424)
            Prepaid expenses                   (92,737)         12,906
            Inventories                         (10,793,990)     (9,281,330)
            Allowance receivables               2,156,768        (300,748)
            Tax refunds receivable              (5,059,499)      (13,003,464)
            Other current assets                370,717          35,141
            Deferred charges                   5,556            11,899
            Accounts payable                    (2,213,823)      30,300,071
            Other payables                      4,659,448        1,104,339
            Grants payable                      -                769,527
            Accrued liabilities                 2,244,396        1,680,231
            Taxes payable                       (118,923)        (225,688)
            Deposits from customers             (2,140,298)      8,726,458
            Deposits from customers -           (473,108)        (117,064)
            long-term portion
   Net cash (used in) provided by operating     (5,490,150)      60,254,841
   activities
Cash flows from investing activities:
   Prepayment on property, plant, and           (3,609,070)      -
   equipment
   Refund (deposits) for purchase of land use   532,975          (16,453,540)
   rights
   Construction in progress                     (62,153,166)     (102,225,007)
   Additions to property and equipment          (8,155,015)      (4,645,211)
   Additions to land use rights                 (11,927,087)     -
   Proceeds from sale of property, plant, and   115,983          36,983
   equipment
   Increase in restricted cash                  -                (35,666,692)
            Net cash used in investing          (85,195,380)     (158,953,467)
            activities
Cash flows from financing activities:
   Proceeds from (repayment of) bank notes,     (23,565,944)     59,574,005
   net
   Increase in restricted cash                  (5,033,193)      -
   Proceeds from short-term bank loans          229,666,614      122,354,751
   Repayment of short-term bank loans           (133,362,962)    (112,957,341)
   Proceeds from long-term loans                42,117,373       24,607,716
   Repayment of long-term loans                 (1,657,316)      (13,807,043)
   Repayment of capital lease obligation        (4,565,614)      (5,097,774)
   Proceeds from offering of common stock      -                66,356,662
   Repurchases of common stock                  (2,812,322)      (15,797,352)
   Proceeds from option exercise                184,000          -
   Capital contribution by non-controlling      1,187,881        808,003
   interest
            Net cash provided by financing      102,158,517      126,041,627
            activities
   Effects of rate changes on cash              (1,077,632)      5,104,029
   Increase in cash and cash equivalents        10,395,355       32,447,030
   Cash and cash equivalents, beginning of      135,845,095      84,172,186
   period
   Cash and cash equivalents, end of period   $ 146,240,450    $ 116,619,216
Supplemental disclosures of cash flow
information:
   Cash paid for interest                       24,490,837       16,292,479
   Cash paid for income taxes                   4,352,043        3,768,455
The accompanying notes are an integral part of these condensed consolidated
financial statements.

SOURCE Zhongpin Inc.

Website: http://www.zpfood.com
 
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