Deyu Agriculture Corp. Announces Third Quarter 2012 Results and Schedules Results Conference Call and Webcast

  Deyu Agriculture Corp. Announces Third Quarter 2012 Results and Schedules
                     Results Conference Call and Webcast

PR Newswire

BEIJING, Nov. 15, 2012

BEIJING, Nov. 15, 2012 /PRNewswire-FirstCall/ -- Deyu Agriculture Corp.
(OTCBB: DEYU) (the "Company"), a Shanxi Province, China based vertically
integrated producer, processor, marketer and distributor of organic and other
agricultural products made from corn and grains, today announced its financial
results for the third quarter ended September 30, 2012.

Third Quarter (Q3) Highlights:

For Q3 of Fiscal 2012 as compared to the same period in 2011:

  osales in the Grain Division improved 45.2% to $17.42 million
  ogross margin increased from 15.1% to 18.1%

For Q3 of Fiscal 2012 as compared to Q2 of Fiscal 2012:

  orevenue increased 1.1% to $56.5 million
  onet income rose 23.9% to $3.49 million
  oearnings per diluted share increased 21.7% to $0.28

Summarized Q3 2012 Results as compared to Q3 2011 Results:

                        Q3 2012              Q3 2011             CHANGE
Revenue                 $56.5 million        $84.4 million       (33.1)%
Gross profit            $10.2 million        $12.7 million       (19.8)%
Net Income*             $3.5 million         $7.6 million        (53.9)%
EPS (Diluted)**         $0.28                $0.61               (54.1)%
* Represents net income available to common stockholders.


**Earnings per diluted share for the quarter of $0.28 on 12.6 million shares.
For Q3 2011, the Company reported fully diluted earnings per share of $0.61 on
12.52 million shares.

Financial Results for Q3 2012 as compared to Q2 2012:

                        Q3 2012              Q2 2012              CHANGE
Revenue                 $56.5 million        $55.8 million        1.1%
Gross profit            $10.2 million        $10.5 million        (2.7)%
Net Income*             $3.5 million         $2.8 million         23.9%
EPS (Diluted)**         $0.28                $0.23                21.7%
* Represents net income available to common stockholders.


**Earnings per diluted share for the quarter of $0.28 on 12.6 million shares.
For Q2 2012, the Company reported fully diluted earnings per share of $0.23 on
12.6 million shares.

"We are repositioning ourselves to be a more integrated agriculture company in
China, not only as one of China's largest wholesalers of corn and grain
products, but also as one of the country's leading brands of grain products
for the consumer market," said Jianming Hao, Chief Executive Officer of the
Company. "In view of this goal, we are glad to see that our recent
acquisition, the Taizihu Group, which has a diversified product line of 100
types of grain products, contributed $5.7 million in revenues this past
quarter. To further penetrate the consumer market, we are also currently
exploring strategies that tap into China's emerging commercial sales market
for health foods."

"In Q3 of last year, we were able to achieve record levels in our revenue and
net profit with $12.1 million of bank loans and $28.5 million of bank notes,"
Mr. Hao continued. "However, this year, our management team has taken a more
sustainable approach to our operations by decreasing our overall borrowings
from banks from an aggregate of $40.6 million as of Q3 2011 to about $11.2
million as of Q3 2012. This primarily reflected a reduction in bank notes
from $28.5 million as of Q3 2011 to $0 as of Q3 2012. We believe such approach
significantly reduced our financial risks, especially considering the current
global economy downturn. Even though our Q3 2012 results were impacted by a
decrease in working capital supported by bank borrowings, we are confident
that this strategic move can benefit the Company and our shareholders in the
long run. Even with this shift in strategy, we were able to achieve growth in
our revenue and net income from Q2 2012 to Q3 2012."

"This has been a transformative couple of months for our Company, as we
recently elected a new President, Greg Chen, as well as increased our Board
with the additions of Greg and Jan Poulsen," Mr. Hao added. "With Greg's
experience in developing brands and companies in China, and Jan's twenty-plus
years of experience in both asset management and business development within
the food and beverage industries, we are confident that we can continue to
build on our recent quarter over quarter progress."

Third Quarter 2012 Financial Results

Net revenue for Q3 2012 was $56.5 million compared with $84.4 million for Q3
2011, a decrease of $27.9 million, or 33.1%. Net revenue from the Company's
Corn Division for Q3 2012 was approximately $34.9 million, a decrease of $27.3
million, or approximately 43.9%, as compared to Q3 2011, which was primarily
due to the reduction of working capital for inventory procurement supported by
bank loans and bank notes, which was reduced from an average balance of $38.1
million to $6.0 million for sustaining businesses. Net revenue from the
Company's Grain Division for Q3 2012 was $17.4 million, an increase of $5.4
million, or 45.2%, as compared to Q3 2011. The increase was attributable to an
increase of $5.7 million of sales revenue added by the Taizihu Group. Net
Revenue from the Company's Bulk Trading Division for Q3 2012 was $4.2 million,
a decrease of $6.0 million, or 59.1% as compared to Q3 2011. This decrease was
mainly attributable to the strategic reduction of certain portions of the
Company's bulk trade business by shifting more financial resources to the
Company's Corn Division and Grain Division.

The Company's gross profit decreased by $2.5 million, or 19.8%, from $12.7
million for Q3 2011 to $10.2 million for Q3 2012. The decrease was a combined
result of a decrease of $3.9 million in the Corn Division, an increase of $1.6
million in the Grain Division and a decrease of $0.2 million in the Bulk
Trading Division. The Company's gross margin increased from 15.1% in Q3 2011
to 18.1% in Q3 2012. Gross margin for the Corn Division was 15.4% for Q3 2012,
up by 54 basis points from 14.8% for Q3 2011, which was mainly attributable to
the Company's gross margin management. Gross margin for the Grain Division was
26.4% for Q3 2012, an increase of 100 basis points from 25.4% for Q3 2011,
which was mainly attributable to the additions of new product portfolios
containing mixed gross margins, which targeted a wider scope of end consumers.

The Company's operating expenses increased $1.3 million or 28.5% to $6.1
million for Q3 2012 as compared to $4.8 million for Q3 2011. This increase was
due to the increase of freight charges for product deliveries and
advertisement expenses spent on brand promotion, expenses added by the Taizihu
Group, increased depreciation and amortization caused by newly-acquired
buildings as well as increased payroll and other expenses caused by inflation.

Net income available to common stockholders of $3.5 million for Q3 2012
compared to a net income of $7.6 million for Q3 2011, a decrease of $4.1
million, or 53.9%.

Recent Updates

In August 2012, the Company reached an agreement with Beijing Suning Appliance
Co., Ltd. ("Suning") to supply Suning with refined packaged grain goods valued
at RMB115.9 million (approximately $18.4 million). Suning is one of the
largest electrical and electronic appliance retailers in China, with 1,700
chain stores of annual sales of $15 billion (RMB 93.9 billion) in 2011. With
the demand from the commercial sales market for health foods growing in China,
particularly for refined packaged products, the Company plans to continue
developing more strategic institutional clients to further enter into the
commercial sales segment.

Effective October 11, 2012, the Company's Board expanded the number of members
serving on the Board from five to seven in accordance with the Company's
Bylaws, and subsequently filled the vacancies created by the expansion by
appointing Greg Chen and Jan Poulsen to serve on the Board until the next
following annual meeting of the stockholders of the Company, at which such
directors shall be eligible for election by the stockholders.

Additionally, Mr. Chen was appointed the President of the Company, where his
responsibilities shall include assisting the Company with its international
and domestic market development, enhancing the Company's investor relations
programs and the execution of those programs and assisting the Company with
its corporate and operational strategies and business planning.

Also effective October 11, 2012, Mr. Longjiang Yuan resigned as a member of
the Company's Audit Committee, and Mr. Poulsen was appointed to serve on the
Audit Committee. Mr. Yuan will still serve as a Board member of the Company.

Also in October 2012, the Company announced that it is launching a series of
investor relations programs in the near future geared toward increasing
awareness in the investment community of the Company and maximizing
shareholder value.

Business Outlook

"We are optimistic about our future and our team is ready to make the most of
the opportunities that we see on the horizon," said Mr. Hao. "In recent years,
we have accumulated ample resources and advantages through our vertical value
chain from farmland to consumer market, reinforced by our advanced production
capacities, large warehousing facilities, exclusive logistic infrastructures
and extensive sale network. Today, our sales network covers around 20,000
supermarkets and convenience stores across China, with distribution in over 29
provinces in the nation, including key metropolitan areas like Beijing,
Tianjin, Jinan, Fuzhou, Chengdu and Shijiazhuang. Importantly, our products
are being presented in some supermarket chains under major global brands.
Overall, our mission is to grow into a global leader in vertical agricultural
value chains, providing diversified product lines delivered to commercial and
consumer markets."

"To further grow our business, we plan on extending our operations to other
producing areas of corn and grain such as Hebei and Jilin Provinces," Mr. Hao
continued. "Moreover, we intend to boost commercial sales to institutional
clients, particularly in the grain products for the consumer market. We are
also carefully considering vertical or horizontal acquisitions for our
business growth, although we do not currently have any agreements in place to
do so at this time. While we strive to reach these goals, we will continue to
develop a diversified vertical agricultural value chain by adding more food
products to our product lines and utilizing available global resources and
organic certifications to expand through exporting into the US and other
regions. 2012 has been a transformative year for our growing company and I am
confident that we now have the right people and strategies in place to drive
our growth and in effect, better reward the Company's shareholders."

Conference Call

The Company will host a conference call on November 20, 2012 at 8:30 AM EST to
discuss the Company's results for the third quarter ended September 30, 2012.

To join the conference call, use the dial-in information below. When prompted,
ask for the "Deyu Agriculture Call" and/or be prepared to provide the
conference ID.

Date:                  11/20/2012
Time:                  8:30 AM Eastern
Conference Line        877-407-9205
Dial-In (US):
International Dial-In: 201-689-8054
Conference ID#:        404045
Webcast Link:          http://www.investorcalendar.com/IC/CEPage.asp?ID=170257

Dial in at least 10 minutes before the call to ensure timely participation. A
playback will be available until 11:59 PM December 4, 2012. To listen, please
call 877-660-6853 within the United States or 201-612-7415 if calling
internationally.

Utilize the pass code below for replay (both required)

Account#:       286
Conference ID#: 404045

About Deyu Agriculture

Deyu Agriculture Corp. is a vertically integrated agricultural value chain
from farmland to consumer market, which produces, processes, markets and
distributes organic and other agricultural products made from corn and grains
operating in Shanxi Province in China. The Company has access to over 109,000
acres of farmland in Shanxi Province for breeding, cultivating, processing,
warehousing and distributing grain and corn products. Deyu Agriculture Corp.
has an extensive wholesale network in over 15 provinces and a retail
distribution network of approximately 20,000 supermarkets and convenience
stores in 29 provinces across China. Deyu Agriculture Corp.'s facilities
include sophisticated production lines and modern warehouses with a total
production capacity of over 105,000 tons for grain products, storage capacity
of over 100,000 tons and annual turnover of 700,000 tons for corn products.
The Company's website is located at www.deyuagri.com.

SafeHarborStatements

This press release contains forward-looking statements made under the "safe
harbor" provisions of the U.S. Private Securities Litigation Reform Act of
1995. Forward looking statements are based upon the current plans, estimates
and projections of Deyu Agriculture Corp.'s management and are subject to
risks and uncertainties, which could cause actual results to differ from the
forward looking statements. Such statements include, among others, those
concerning market and industry segment growth and demand and acceptance of new
and existing products; any projections of sales, earnings, revenue, margins or
other financial items; any statements of the plans, strategies and objectives
of management for future operations; any statements regarding future economic
conditions or performance; uncertainties related to conducting business in
China, as well as all assumptions, expectations, predictions, intentions or
beliefs about future events. Therefore, you should not place undue reliance on
these forward-looking statements. The following factors, among others, could
cause actual results to differ from those set forth in the forward-looking
statements: business conditions in China, general economic conditions;
geopolitical events and regulatory changes, availability of capital, changes
in the agricultural industry, the Company's ability to maintain its
competitive position. Additional Information regarding risks can be found in
the Company's quarterly and annual reports filed with the U.S. Securities and
Exchange Commission at www.sec.gov.

Company Contact:

Deyu Hotline: +1-646-499-5475

Mr. Greg Chen, President
Deyu Agriculture Corp.
Tel: +1-646-820-8085
Email:gregchen@china-deyu.com

Ms. Amy He, Chief Financial Officer
Deyu Agriculture Corp.
Tel: +86-10-5224-1802 X389
Email:amy@china-deyu.com

Investor Contact:

Mr. Kevin Ma
NUWA Group LLC
Tel: +1-212-984-1869
Email:qma@nuwagroup.com

- Financial Tables Follow -



DEYU AGRICULTURE CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


                                       September30, 2012   December31, 2011
                                       (Unaudited)          (Audited)
Assets
Current Assets
Cash and cash equivalents              $    11,963,208      $   8,741,703
Restricted cash                             982,593             1,850,999
Accounts receivable, net                    27,658,431          36,167,136
Due from related parties                    196,745             587,108
Inventory                                   26,741,018          20,314,090
Advance to supplier                         5,077,232           7,233,371
Prepaid expenses                            379,116             391,537
Assets held for sale                        —                   1,634,274
Other current assets                        440,397             2,204,934
Total Current Assets                        73,438,740          79,125,152
Property, plant, and equipment, net         19,621,491          12,355,946
Construction-in-progress                    2,638,347           —
Long-term Investment                        57,918              —
Other assets                                —                   727,535
Intangible assets, net                      13,335,500          10,651,844
Total Assets                           $    109,091,996     $   102,860,477
Liabilities and Equity
Current Liabilities
Short-term loan                        $    11,196,379      $   14,413,480
Accounts payable                            2,165,152           1,833,190
Note payables                               —                   1,588,840
Advance from customers                      2,278,185           8,488,272
Accrued expenses                            1,584,246           1,149,205
Tax payable                                 253,503             —
Preferred stock dividends payable           113,235             219,721
Due to related parties                      7,356,286           5,445,115
Other current liabilities                   1,813,668           583,196
Total Current Liabilities                   26,760,654          33,721,019
Equity
Series A convertible preferred stock,
$.001 par value, 10,000,000 shares          2,040               1,997
authorized, 2,039,970 and 1,997,467
shares outstanding, respectively
Common stock, $.001 par value;
75,000,000 shares authorized,               10,658              10,565
10,658,266 and 10,544,774 shares
outstanding, respectively
Additional paid-in capital                  20,910,876          20,367,138
Other comprehensive income                  5,018,518           4,831,354
Retained earnings                           55,996,699          43,491,464
Total Stockholders' Equity                  81,938,791          68,702,518
Noncontrolling Interests                    392,551             436,940
Total Equity                                82,331,342          69,139,458
Total Liabilities and Equity           $    109,091,996     $   102,860,477







DEYU AGRICULTURE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)


                ForTheThreeMonthsEnded        ForTheNineMonthsEnded
                September30,                     September30,
                2012             2011             2012              2011
Net revenue     $ 56,472,324     $ 84,379,681     $ 175,048,803     $ 170,482,201
Cost of goods     (46,256,954)     (71,643,030)     (141,911,226)     (140,985,703)
sold
Gross Profit      10,215,370       12,736,651       33,137,577        29,496,498
Selling           (3,795,367)      (3,165,190)      (11,926,786)      (8,188,037)
expenses
General and
administrative    (2,311,508)      (1,586,847)      (6,276,679)       (4,398,667)
expenses
Total
Operating         (6,106,875)      (4,752,037)      (18,203,465)      (12,586,704)
Expenses
Operating         4,108,495        7,984,614        14,934,112        16,909,794
income
Interest          7,242            4,387            24,918            30,848
income
Interest          (330,771)        (269,725)        (1,260,810)       (481,549)
expense
Non-operating     (7,063)          26,981           569,587           36,273
income
Total Other       (330,592)        (238,357)        (666,305)         (414,428)
Expenses
Income from
continuing
operations        3,777,903        7,746,257        14,267,807        16,495,366
before income
taxes
Income taxes      (184,485)        (541,464)        (1,475,181)       (28,959)
Income from
continuing        3,593,418        7,204,793        12,792,626        16,466,407
operations
Loss from
discontinued
operations,       —                681,712          —                 (2,886,430)
net of income
taxes
Net income        3,593,418        7,886,505        12,792,626        13,579,977
Net loss
attributable
to
noncontrolling
interests:
Net loss from
continuing        3,826            1,934            44,695            1,934
operations
Net loss from
discontinued      —                (247,339)        —                 738,374
operations
Total net loss
attributable
to                3,826            (245,405)        44,695            740,308
noncontrolling
interests
Net income
attributable
to Deyu           3,597,244        7,641,100        12,837,321        14,320,285
Agriculture
Corp.
Preferred
stock             (112,035)        (83,404)         (332,087)         (313,550)
dividends
Net income
available to      3,485,209        7,557,696        12,505,234        14,006,735
common
stockholders
Foreign
currency          822,431          917,581          187,472           1,887,420
translation
(loss) gain
Comprehensive     4,307,640        8,475,277        12,692,706        15,894,155
income
Other
comprehensive
income
attributable      (4,157)          (47,881)         (306)             (91,952)
to
noncontrolling
interests
Comprehensive
income
attributable    $ 4,303,483      $ 8,427,396      $ 12,692,400      $ 15,802,203
to Deyu
Agriculture
Corp.
Amounts
attributable
to common
stockholders:
Net income
from
continuing      $ 3,485,209      $ 7,123,323      $ 12,505,234      $ 16,154,791
operations,
net of income
taxes
Discontinued
operations,       —                434,373          —                 (2,148,056)
net of income
taxes
Net income
attributable    $ 3,485,209      $ 7,557,696      $ 12,505,234      $ 14,006,735
to common
stockholders
Net income
attributable
to common
stockholders
per share -
basic:
Income from
continuing      $ 0.33           $ 0.68           $ 1.18            $ 1.54
operations
Loss from
discontinuing     —                0.04             —                 (0.20)
operations
Net income
attributable    $ 0.33           $ 0.72           $ 1.18            $ 1.34
to common
stockholders
Net income
attributable
to common
stockholders
per share -
diluted:
Income from
continuing      $ 0.28           $ 0.58           $ 1.02            $ 1.32
operations
Loss from
discontinuing     —                0.03             —                 (0.17)
operations
Net income
attributable    $ 0.28           $ 0.61           $ 1.02            $ 1.15
to common
stockholders
Weighted
average number
of common         10,604,081       10,544,774       10,578,570        10,514,243
shares
outstanding -
basic
Weighted
average number
of common         12,632,585       12,522,039       12,585,860        12,481,313
shares
outstanding -
diluted





DEYU AGRICULTURE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)


                                               ForTheNineMonthsEnded
                                               September30,
                                               2012            2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income available to common stockholders    $ 12,505,234    $ 14,006,735
Loss from discontinued operations                —               2,886,430
attributable to Deyu Agriculture Corp.
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization                      1,801,515       676,807
Allowance for doubtful accounts                  16,314          —
Reserve for inventory valuation                  —               76,963
Share-based compensation                         250,290         412,745
Preferred stock dividends accrued                332,087         322,180
Common stocks issued for services                114,400         43,050
Grain on bargain purchase                        (499,079)       —
Deferred income tax expense (benefit)            875,706         26,234
Noncontrolling interests                         (44,695)        (1,934)
Decrease (increase) in current assets:
Accounts receivable                              8,616,800       (16,598,485)
Related-parties trade receivable                 466,980         (206,999)
Inventories                                      (5,060,976)     (9,949,227)
Advance to suppliers                             2,988,738       (1,763,486)
Prepaid expense and other current assets         907,358         (187,423)
Increase (decrease) in liabilities:
Accounts payable                                 8,987           2,087,140
Advance from customers                           (6,415,884)     (2,561,976)
Accrued expense and other liabilities            517,019         277,194
Net cash provided by (used in) operating         17,380,794      (10,454,052)
activities of continuing operations
Net cash used in operating activities of         —               (2,855,969)
discontinued operations
Net cash provided by (used in) operating         17,380,794      (13,310,021)
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Consideration paid for acquisition               (5,166,095)     —
Construction and remodeling of factory and       (312,588)       (109,287)
warehouses
Purchase of machinery and equipment              (47,829)        (458,214)
Advances to related parties                      (78,604)        —
Cash held by the Taizihu Group at acquisition    20,272          —
date
Net cash used in investing activities of         (5,584,844)     (567,501)
continuing operations
Net cash used in investing activities of         —               (2,183,644)
discontinued operations
Net cash used in investing activities            (5,584,844)     (2,751,145)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash released from restriction (restricted)      1,104,382       (11,676,877)
for credit line of bank acceptance notes
Net (repayments of) proceeds from short-term     (9,690,871)     9,235,600
loans from bank and others
Net (repayments of) proceeds from short-term     (1,579,604)     27,971,554
bank acceptance notes
Net proceeds from short-term loans from          1,812,544       5,009,698
related parties
Payment of preferred dividends                   (266,795)       (242,418)
Net proceeds from short-term loan from others    —               (883,591)
Proceeds from capital contributions              —               461,780
Release of cash restricted held at a trust       —               125,560
account
Net cash (used in) provided by financing         (8,620,344)     30,001,306
activities of continuing operations
Net cash provided by financing activities of     —               4,993,433
discontinued operations
Net cash (used in) provided by financing         (8,620,344)     34,994,739
activities
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND       45,899          547,575
CASH EQUIVALENTS
NET (DECREASE) INCREASE IN CASH & CASH           3,221,505       19,481,148
EQUIVALENTS
NET DECREASE IN CASH & CASH EQUIVALENTS FROM     —               (29,987)
DISCONTINUED OPERATIONS
NET (DECREASE) INCREASE IN CASH & CASH           3,221,505       19,511,135
EQUIVALENTS FROM CONTINUING OPERATIONS
CASH & CASH EQUIVALENTS, BEGINNING BALANCE       8,741,703       5,791,418
CASH & CASH EQUIVALENTS, ENDING BALANCE        $ 11,963,208    $ 25,302,553
SUPPLEMENTAL DISCLOSURES:
Income tax paid                                $ 180,705       $ 46
Interest paid                                  $ 765,725       $ 349,259
NONCASH INVESTING AND FINANCING ACTIVITIES:
Construction completed and transferred to      $ —             $ 5,762,034
property, plant, and equipment
Construction completed and transferred to      $ —             $ 2,308,900
land use rights

Note: Please refer to the Company's quarterly report on Form 10-Q for the
three months ended September 30, 2012 for additional notes, which are an
integral part of these consolidated financial statements

SOURCE Deyu Agriculture Corp.

Website: http://www.deyuagri.com
Website: http://www.investorcalendar.com/IC/CEPage.asp?ID=170257