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Yongye International Announces Third Quarter 2013 Unaudited Financial Results

Yongye International Announces Third Quarter 2013 Unaudited Financial Results

PR Newswire

BEIJING, Nov. 12 , 2013

BEIJING, Nov. 12 , 2013 /PRNewswire-FirstCall/ --Yongye International, Inc.
(NASDAQ: YONG), ("Yongye" or the "Company") a leading developer, manufacturer,
and distributor of crop nutrient products in the People's Republic of China
("PRC"), today announced its financial results for the quarter ended September
30, 2013.

Third Quarter 2013 Financial Highlights

  oRevenue increased 72.1% to $223.2 million from $129.7 million in the third
    quarter of 2012. Of the 223.2 million in revenue recognized this quarter,
    $89 million was due to cash collection from certain distributors for sales
    made in prior quarters in 2012 and 2013. The Company recognizes revenue
    for those distributors on a cash collection basis, rather than a shipment
    basis. In the third quarter of 2013, product shipments actually increased
    3.5% over the same period last year.
  oGross profit increased 76.1% year-over-year to $141.8 million. The
    increase was primarily due to collection for past sales we made to certain
    distributors from whom we recognize revenue on a cash collection basis,
    instead of a shipment basis.
  oIncome from operations was $88.2 million, compared to $22.8 million in the
    third quarter of 2012. The increase was primarily due to collection for
    past sales and a one-time impairment loss of goodwill of $10.7 million the
    Company recorded in the third quarter of 2012.
  oNet income attributable to Yongye increased 318.9% to $70.5 million from
    $16.8 million for the same period of 2012. Diluted earnings per share for
    the quarter was $1.22, compared to $0.28 for the same period of 2012. The
    increase was primarily due to collection for past sales and a one-time
    impairment loss of goodwill of $10.7 million the Company recorded in the
    third quarter of 2012.
  oAdjusted net income attributable to Yongye, which excludes non-cash
    expenses related to the amortization of the acquired Hebei customer list,
    share-based compensation for management and independent directors, a
    change in the fair value of derivative liabilities, and goodwill
    impairment charge, was $71.2 million, or $1.23 per diluted share, compared
    to $29.7 million, or $0.51 per diluted share for the same period of last
    year*. The increase was primarily due to collection for past sales we made
    to certain distributors from whom we recognize revenue on a cash
    collection basis instead of a shipment basis.
  oOperating cash inflow was $28.3 million for nine months ended September
    30, 2013, compared to an operating cash outflow of $52.3 million in the
    same period of 2012.

Mr. Zishen Wu, Chairman and Chief Executive Officer of Yongye, stated, "We are
pleased with our financial performance in the third quarter of 2013. Top line
year-over-year growth was primarily driven by collection of payments in the
quarter from distributors for which we recognize revenue on a cash basis,
rather than a shipment basis. The cash collections from this group of
distributors were for sales that occurred in prior quarters, which is
consistent with the revenue recognition policy we implemented in the fourth
quarter of 2011. During this quarter, our net profit also reflected an
increase, primarily driven by collection for past sales as well as a goodwill
impairment loss recorded in the same period of 2012."

Mr. Wu continued, "In 2013, China's macro-economic trend remains more
challenging compared to prior years. While our product shipments were up only
3.5% for the quarter on a year-over-year basis, year-to-date shipments were up
approximately 20% over last year. As a result, we believe that we can achieve
our full year guidance for shipments in the range of $650 million to $680
million, representing a growth of 20% to 25% over 2012, as well as the
expansion of our branded retailer network to 36,000 by the end of 2013,
representing a 3% increase over the 2012 year-end number of 35,058."

Third Quarter 2013 Results

Sales increased by $93.5 million, or 72.1%, to $223.2 million in the third
quarter of 2013, from $129.7 million for the same period of 2012. The
significant increase in revenue was primarily due to collection for past sales
we made to certain distributors from whom we recognize revenue on a cash
collection basis instead of a shipment basis. In the third quarter of 2013,
$221.1 million, or 99.1% of total sales, was attributable to sales of liquid
crop nutrient, and $2.1 million, or 0.9% of total sales, was attributable to
sales of powder animal nutrient. Product shipments actually increased 3.5%
during the third quarter of 2013. The number of branded retailers increased
from 35,409 to 35,506.

Gross profit was $141.8 million in the third quarter of 2013, compared to
$80.5 million in the same period of 2012, an increase of 76.1%. The increase
in gross profit was primarily due to collection for past sales we made to
certain distributors from whom we recognize revenue upon cash collection
instead of shipment.

Selling expenses increased by $5.4 million, or 14.5%,to $42.4 million in the
third quarter of 2013, from $37.0 million for the same period of 2012. The
increase in selling expenses was primarily due to an increase in advertising
and promotion expenses and expenditure on seminars for distributors of $4.6
million.

General and administrative expenses slightly increased by $0.9 million, or
19.4%, to $5.7 million in the third quarter of 2013, from $4.8 million for the
same period of 2012.

Research and development ("R&D") expenses were $5.4 million in the third
quarter of 2013, compared to $5.2 million for the same period of 2012. The R&D
expenses mainly consisted of field test expenses for existing and new products
on different crops and in various geographic markets.

Income from operations was $88.2 million in the third quarter of 2013,
compared to $22.8 million in the same period of 2012. Excluding non-cash
expenses related to the amortization of the acquired Hebei customer list,
share-based compensation for management and independent directors, third
quarter 2013 adjusted income from operations was $88.9 million, or 39.8% of
sales.* The increase in income from operations was mainly due to collection of
past sales we made to certain distributors from whom we recognize revenue on a
cash collection basis instead of a shipment basis, as well as a goodwill
impairment loss of $10.7 million in the same period of 2012.

Net income attributable to Yongye was $70.5 million, or $1.22 per diluted
share in the third quarter of 2013, compared to net income of $16.8 million,
or $0.28 per diluted share, in the same period of 2012. Excluding the impact
of non-cash expenses related to the amortization of the acquired Hebei
customer list, share-based compensation for management and independent
directors, a change in the fair value of derivative liabilities, and goodwill
impairment charge, adjusted net income attributable to Yongye for the third
quarter of 2013 was $71.2 million, or $1.23 per diluted share, compared to
adjusted net income of $29.7 million, or $0.51 per diluted share in the same
period of 2012.* The increase was primarily due to collection for past sales
we made to certain distributors from whom we recognize revenue on a cash
collection basis instead of a shipment basis.

Nine Month Financial Results

Revenue for the nine months ended September 30, 2013 increased 53.3% to $569.8
million from $371.7 million for the comparable period in 2012, while gross
profit was $352.2 million, compared to $224.0 million in the first nine months
of 2012. The increase in revenue and gross profit was mainly due to collection
for past sales we made to certain distributors from whom we recognize revenue
on a cash collection basis instead of a shipment basis. Product shipments
increased 19.8% compared to the same period in 2012. 

Income from operations in the first nine months of 2013 was $198.5 million,
compared to $98.2 million in the same period of 2012. Net income attributable
to Yongye for the first nine months of 2013 was $156.3 million, compared to
$74.3 million in the prior year period. In the first nine months of 2013, net
income per diluted share was $2.70, as compared to $1.31 diluted earnings per
share for the same period of 2012. Excluding the impact of non-cash expenses
related to the amortization of the acquired Hebei customer list, share-based
compensation for management and independent directors, a change in the fair
value of derivative liabilities, and goodwill impairment charge, adjusted net
income attributable to Yongye for the nine months ended September 30, 2013 was
$158.5 million, or $2.73 per diluted share, compared to $91.0 million, or
$1.60 per diluted share in the same period last year.* The increase was mainly
due to collection for past sales we made to certain distributors from whom we
recognize revenue on a cash collection basis instead of a shipment basis.

(*) 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 the amortization of the acquired Hebei customer list, 
share-based compensation for management and independent directors, 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 September 30, 2013, the Company had $101.1 million in cash and
restricted cash, compared to $44.6 million as of December 31, 2012. Working
capital was $567.0 million, compared to $383.3 million at the end of 2012. The
Company had $83.0 million in short-term bank loans and $18.0 million in
current and non-current long-term loans and payables, and $2.8 million in
current and non-current capital lease obligations as of September 30, 2013.
Stockholders' equity totaled $612.2 million as of September 30, 2013,
compared to $436.3 million at the end of 2012. Cash provided by operating
activities was $28.3 million for the nine months ended September 30, 2012,
compared to cash used in operating activities of $52.3 million for the nine
months ended September 30, 2012. The change was primarily driven by collection
of accounts receivable, as well as the reduction of inventory. Other factors
include an increase of $86.7 million in earnings.

Accounts Receivable
Accounts receivable increased by $96.7 million from the end of 2012, which was
consistent with our sales occurred in the second and third quarter of 2013 due
to the seasonality of our business. During the nine months ended September 30,
2013, the entire accounts receivable as of December 31, 2012, including all
the past due accounts, were collected.

As of September 30, 2013, the amount of gross accounts receivable outstanding
was $399.6 million. Of the $399.6 million of our gross accounts receivable as
of September 30, 2013, $9.8 million of the accounts receivable were past our
six month credit term, representing 2.4% of total gross account receivable
balance as of September 30, 2013. The Company provided an allowance for
doubtful accounts in the amount of $9.2 million, taking into account current
market conditions, the customers' financial condition, the accounts receivable
ageing and the customers' repayment patterns. The Company continues to take
measures to increase collection efforts and closely monitor its distributors'
financial status.

Recent Developments

Expansion of Branded Retailer Network
The Company continued the expansion of its branded retailers from 35,409 as of
June 30, 2013 to 35,506 as of September 30, 2013.

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", together with the Company, Holdco and
Parent, the "Parties" and any one of them a "Party").

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 preliminary 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. Currently, Holdco, Mr. Zishen Wu, Prosper Sino
Development Limited and MSPEA, collectively beneficially own approximately
33.1% of the Company's outstanding shares of common stock, on an as converted
basis.

On October 28, 2013, the Company filed a Preliminary Proxy Statement on
Schedule 14A, as amended on November 6, 2013, together with a Schedule 13E-3,
as amended on November 6, 2013, with the Securities Exchange Commission
indicating its intention to call a special meeting of its shareholders at a
still to be specified date to vote on the Merger Agreement for the Company to
go private.

If the merger is completed, the Company will cease to be a publicly traded
company.

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.

For the full year 2013, the Company reiterates its expectation that total
shipments will be in the range of $650 million to $680 million, representing
growth of 20% to 25% over 2012. The Company continues to expect that its
branded retailer network will be expanded to 36,000 by the end of 2013, which
represents a 3% increase over the 2012 year-end number of 35,058.

Conference Call

The Company will host a conference call at 8:30 a.m. Eastern Time on November
12, 2013, to discuss its third quarter 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 3620280.

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
November 12 to 11:59 p.m. Eastern Time on November 26. To access the replay,
please dial +1 (866) 846-0868. International callers should dial +61 (2)
9641-7900. The replay pass code is 3620280. 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 and nine months ended September 30, 2013 and 2012
include non-cash items related to the amortization of the acquired Hebei
customer list, share-based compensation for management and independent
directors, a change in the fair value of derivative liabilities, and goodwill
impairment charge. To supplement the Company's condensed consolidated
financial statements presented on a U.S. GAAP basis, the Company has provided
adjusted financial information excluding the impact of these items in this
release. Such adjustment 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, Inc.

Yongye International, Inc. 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 2012. 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, Inc.

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

FTI Consulting

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

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



YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
                                         September30,2013  December31,2012
Current assets
Cash                                     US$   101,064,636   US$  44,511,404
Restricted cash                                40,000             40,000
Accounts receivable, net of allowance          390,325,780        293,600,762
for doubtful accounts
Inventories                                    101,919,511        118,693,596
Deposits to suppliers                          117,044,550        24,048,028
Prepaid expenses                               2,820,511          312,648
Other receivables                              1,030,030          1,189,633
Deferred tax assets                            10,011,456         11,591,797
Total Current Assets                           724,256,474        493,987,868
Property, plant and equipment, net             25,507,415         26,224,957
Intangible asset, net                          17,173,869         18,909,349
Land use right, net                            4,853,303          4,807,313
Prepayment for mining project                  36,751,900         35,792,410
Distributor vehicles                           38,786,205         44,125,293
Total Assets                             US$   847,329,166   US$  623,847,190
Current liabilities
Short-term bank loans                    US$   83,009,164    US$  50,857,163
Long-term loans and payables - current         9,803,306          9,149,280
portion
Capital lease obligations - current            505,449            395,878
portion
Accounts payable                               11,717,757         12,364,193
Income tax payable                             34,287,230         3,196,078
Advance from customers                         102,166            154,944
Accrued expenses                               14,502,049         31,389,630
Other payables                                 3,304,091          2,828,262
Derivative liabilities - fair value of         -                  348,364
warrants
Total Current Liabilities                      157,231,212        110,683,792
 Long-term loans and payables                 8,162,478          10,254,922
 Capital lease obligations -                  2,310,242          2,134,155
non-current
 Other non-current liability                 6,862,975          6,683,802
 Deferred tax liabilities                     5,817,931          6,618,794
Total Liabilities                        US$   180,384,838   US$  136,375,465
Redeemable Series A convertible
preferred shares: par value
$.001; 7,969,044 shares authorized;
6,505,113 and 6,079,545                  US$   54,713,640    US$  51,208,657
shares issued and outstanding as of
September 30, 2013
and December 31, 2012, respectively
Equity
Common stock: par value $.001;
75,000,000 shares
authorized; 50,685,216 shares and
50,604,026 shares                        US$   50,685        US$  50,604
issued and outstanding at September 30,
2013 and
December 31, 2012, respectively
Additional paid-in capital                    155,265,347        154,792,050
Retained earnings                             393,464,704        240,679,395
Accumulated other comprehensive income        33,474,611         19,950,447
Total equity attributable to Yongye           582,255,347        415,472,496
International, Inc.
Noncontrolling interest                       29,975,341         20,790,572
Total Equity                            US$   612,230,688   US$  436,263,068
Commitments and Contingencies                  -                  -
 Total Liabilities, Redeemable
Series A Convertible                     US$   847,329,166   US$  623,847,190
 Preferred Shares and Equity

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                   FortheThreeMonthsEnded              FortheNineMonthsEnded
                   September30,2013  September30,2012  September30,2013  September30,2012
Sales              US$  223,239,572   US$  129,734,770   US$  569,845,463   US$  371,726,400
Cost of sales            81,449,550          49,223,371          217,659,311         147,712,243
Gross profit             141,790,022         80,511,399          352,186,152         224,014,157
Selling expenses         42,392,643          37,009,019          122,791,825         89,766,666
Research and
development              5,446,115           5,160,458           17,792,133          14,054,000
expenses
General and
administrative
expenses,
including a
reversal
of allowance for
doubtful accounts        5,758,034           4,823,781           13,090,952          11,261,073
of nil and
US$6,334,832 for
nine months ended
September 30,
2013
and 2012,
respectively
Impairment loss          -                   10,748,731          -                   10,748,731
of goodwill
Income from              88,193,230          22,769,410          198,511,242         98,183,687
operations
Other
income/(expenses)
 Interest               (1,734,934)         (1,130,175)         (5,264,000)         (3,236,470)
expense
 Interest income        2,337,234           312,206             2,944,330           447,616
 Other expenses,        (174,494)           (135,382)           (242,742)           (100,666)
net
 Change in fair
value of                 -                   (203,851)           -                   (134,564)
derivative
liabilities
Total other
income/                  427,806             (1,157,202)         (2,562,412)         (3,024,084)
(expenses), net
Earnings before
income tax               88,621,036          21,612,208          195,948,830         95,159,603
expense
Income tax               14,295,663          4,084,473           31,148,754          17,096,901
expense
Net income               74,325,373          17,527,735          164,800,076         78,062,702
Less: Net income
attributable to
the                      3,863,494           707,656             8,509,784           3,750,470
noncontrolling
interest
Net income
attributable to
Yongye             US$  70,461,879    US$  16,820,079    US$  156,290,292         74,312,232
International,
Inc.
Net income per
common stock:
Basic              US$  1.22          US$  0.28          US$  2.70                1.31
Diluted            US$  1.22          US$  0.28          US$  2.70                1.31
Net income               74,325,373          17,527,735          164,800,076         78,062,702
 Foreign
currency
translation              3,790,624           (847,511)           14,199,149          1,790,799
adjustment, net
of nil
 income taxes
Comprehensive            78,115,997          16,680,224          178,999,225         79,853,501
income
Less:
Comprehensive
income
attributable to          4,045,049           667,794             9,184,769           3,833,464
the
noncontrolling
interest
Comprehensive
income
attributable to          74,070,948          16,012,430          169,814,456         76,020,037
Yongye
International,
Inc.





YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                          For the Nine Months Ended
                                                                                                          September30,2013  September30,2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                                                US$  164,800,076    US$  78,062,702
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization                                                                                  13,566,582          11,347,718
Goodwill impairment loss                                                                                       -                   10,748,731
Amortization of loan discount                                                                                  666,669             -
(Gain)/loss on sale of property, plant and equipment                                                           (33,606)            5,865
Reversal of allowance for doubtful accounts                                                                    -                   (6,334,832)
Change in fair value of derivative liabilities                                                                 -                   134,564
Stock compensation expense                                                                                     -                   3,649,794
Deferred tax (benefit)/expense                                                                                 493,474             (276,459)
Changes in operating assets and liabilities:
Accounts receivable                                                                                            (90,915,305)        (133,726,272)
Inventories                                                                                                    20,022,536          (24,286,936)
Deposit to suppliers                                                                                           (91,823,831)        (23,970,641)
Prepaid expenses                                                                                               (2,490,078)         4,365,644
Other receivables                                                                                              176,813             (2,040)
Distributor vehicles                                                                                           (112,379)           (6,417,878)
Accounts payable                                                                                               (1,006,212)         13,526,323
Income tax payable                                                                                             30,770,181          9,955,073
Advance from customers                                                                                         (61,317)            (3,987,053)
Accrued expenses                                                                                               (17,564,289)        14,657,056
Other payables                                                                                                 1,781,369           271,634
Net Cash Provided by/(Used in) Operating Activities                                                            28,270,683          (52,277,007)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment                                                                      (1,575,636)         (2,778,431)
Net Cash Used in Investing Activities                                                                          (1,575,636)         (2,778,431)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term bank loans                                                                            79,803,429          25,318,859
Repayment of long-term loans and payables                                                                      (4,313,662)         (5,172,447)
Repayment of short-term bank loans                                                                             (49,947,636)        (28,483,717)
Proceeds from warrants exercised                                                                               125,014             -
Principle payments under capital lease obligation                                                              (205,384)           -
Net Cash Provided by/(Used in) Financing Activities                                                            25,461,761          (8,337,305)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH                                                                4,396,424           277,452
NET INCREASE/(DECREASE) IN CASH                                                                                56,553,232          (63,115,291)
Cash at beginning of period                                                                                    44,511,404          81,154,880
Cashatendofperiod US$  101,064,636    US$  18,039,589
Supplemental cash flow information:
Cash paid for income taxes                                                                                US$  -              US$  7,444,236
Cash paid for interest expense                                                                                 3,662,024           3,178,077
Noncash investing and financing activities:
Acquisition of property, plant and equipment under capital leases                                              331,434             2,610,135
Acquisition of distributor vehicles by assuming long-term loans and                                            2,373,238           13,012,137
payables
Acquisition of property, plant and equipment included in other payables                                        371,132             1,459,764
Exercise of warrants that were liability classified                                                            348,364             -
Paid-in-kinddividendsonredeemableSeriesAconvertiblepreferred shares                                     3,504,983           1,808,667

YONGYE INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL DATA
                     Gross Profit
                     Three Months Ended September  Nine Months Ended September
                     30,                           30,
                     2013           2012           2013          2012
GAAP amount per
consolidated         $141,790,022   $80,511,399    $352,186,152  $224,014,157
statement of income
Amortization of the
acquired Hebei       $741,907       $723,107       $2,207,107    $2,171,978
customer list
Adjusted Amount      $142,531,929   $81,234,506    $354,393,259  $226,186,135
                     Income from Operations
                     Three Months Ended September  Nine Months Ended September
                     30,                           30,
                     2013           2012           2013          2012
GAAP amount per
consolidated         $88,193,230    $22,769,410    $198,511,242  $98,183,687
statement of income
Amortization of the
acquired Hebei       $741,907       $723,107       $2,207,107    $2,171,978
customer list
Non-cash management
compensation         -              $1,225,478     -             $3,649,794
expense
Adjusted Amount      $88,935,137    $24,717,995    $200,718,349  $104,005,459
                     Net income (attributable to Yongye)
                     Three Months Ended September  Nine Months Ended September
                     30,                           30,
                     2013           2012           2013          2012
GAAP amount per
consolidated         $70,461,879    $16,820,079    $156,290,292  $74,312,232
statement of income
Amortization of the
acquired Hebei       $741,907       $723,107       $2,207,107    $2,171,978
customer list
Non-cash management
compensation         -              $1,225,478     -             $3,649,794
expense
Change in fair value
of derivative        -              $203,851       -             $134,564
liabilities
Impairment of        -              $10,748,731    -             $10,748,731
Goodwill
Adjusted Amount      $71,203,786    $29,721,246    $158,497,399  $91,017,299
Weighted average     50,685,216     49,370,711     50,680,160    49,370,711
shares -- diluted
Adjusted diluted     $1.23          $0.51          $2.73         $1.60
earnings per share

SOURCE Yongye International, Inc.

Website: http://www.yongyeintl.com