EX-99.1 2 exhibit99_1.htm EXHIBIT 99.1 exhibit99_1.htm
Exhibit 99.1
SkyPeople Fruit Juice Reports Strong Revenue and Net Income Growth
for Third Quarter 2009


XI’AN, China – November 16, 2009 – SkyPeople Fruit Juice, Inc. (NYSE Amex: SPU) (“SkyPeople” or “the Company”), a leading processor and manufacturer of concentrated apple, kiwifruit, pear and other fruit juices and fruit products in the People's Republic of China, today announced financial results for the third quarter ended September 30, 2009.

Third Quarter 2009 and Recent Highlights

·  
Revenue increased 67.1% year-over-year to $10.6 million.
 
·  
Operating expenses decreased 30.9% year-over-year to $1.0 million.
 
·  
Income from operations increased 76.8% year-over-year to $2.9 million.
 
·  
Net income increased 75.8% year-over-year to $2.1 million or $0.11 per diluted share.
 
·  
New Vegetable and Fresh Fruits Division established to promote the sales of fresh kiwifruit in the Chinese domestic market.
 
·  
The Company's common stock, which previously traded on the OTC Bulletin Board, began trading on the NYSE Amex on October 29, 2009.
 
·  
In November, the Company completed a public offering by two selling stockholders of the Company’s common stock. In connection with the offering, the selling stockholders exercised warrants to purchase an aggregate of 2.7 million shares of the Company's common stock. The Company will receive approximately $6.9 million in gross proceeds from the exercise of these warrants during the current quarter.
 
Management’s Commentary

“Our strong third quarter financial results prove the potential of our business for solid sales growth and enhanced profitability,” said Mr. Yongke Xue, Chief Executive Officer of SkyPeople.  “Demand for fresh kiwifruit, fruit beverages and fruit vinegar beverages has accelerated substantially in the Chinese market due in part to moderate overall improvement in the Chinese economy and bolstered by the growing adoption of healthier lifestyles.  Our sales growth shows that we are playing an important role in China’s fruit juice market and building awareness for our innovative products.  To further capitalize on this market momentum, we recently launched a new vegetable and fresh fruits division to promote our leading fresh kiwifruit products.  Sale of fresh kiwifruit counted for 28% of total sales for the third quarter.  In addition to solid growth in sales of fruit beverages and fresh kiwifruit, third quarter sales of apple related products increased by 184% year-over-year.  Apple juice demand has accelerated sharply since the weak year-ago squeezing season, which was substantially impacted by the instability of the global economy.  To capture the renewed strength of the apple market, we began the production of concentrated apple juice in August 2009 and have already reached full capacity.

“We successfully reduced our general and administrative expenses to just 5% of total revenue, from 11% in the year-ago-period, due to our prudent controls on spending.  We are equally pleased with our bottom line performance for the third quarter.

 
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“Our cash position will be bolstered during the current quarter as a result of the offering completed earlier this month.  This, plus our NYSE Amex listing, gives us better visibility among customers and investors in the U.S. and will be instrumental as we move forward with our development plans in each of the markets we serve.  We will continue to leverage our unique production processes and technologies and leadership in specialty juices to meet growing consumer demand in China and further penetrate the high-growth pure juice beverage international markets,” Mr. Xue concluded.

Third Quarter 2009 Results

Revenue for the third quarter of 2009 increased 67.1% year-over-year to $10.6 million, compared to $6.3 million in the third quarter of 2008. This increase was primarily associated with sales of fresh kiwifruit, fruit beverages and fruit vinegar beverages in China. A new Vegetable and Fresh Fruits Division was established by the Company in July 2009 to promote the sales of fresh kiwifruit in the Chinese domestic market. Sales of fresh kiwifruit in the three months ended September 30, 2009 were $2.9 million; there were no comparable sales of fresh kiwifruit in the year-ago period. In addition to new fresh kiwifruit sales, the Company generated sales growth of 17.8% in sales of fruit beverages and 184.1% in sales of concentrated apple juice and apple aroma products.  This growth was partially offset by a modest year-over-year decrease of 2.6% in sales of concentrated pear juice and a year-over-year decrease of 26.2% in sales of concentrated kiwifruit juice and kiwifruit puree.

The Company reported gross profit of $3.9 million for the third quarter of 2009, compared with $3.0 million for the third quarter of 2008. Gross margin as a percent of revenue for the third quarter of 2009 was 36.3%, compared with 47.8% in the comparable 2008 period.  The decrease in gross margin as a percentage of revenue in the third quarter of fiscal 2009 was primarily due to a decrease in the selling price of concentrated juice products in the international market in the current squeezing season, which began in July [and is typical during the summer season]. Due to heavy competition in the concentrated juice market and the instability of the financial markets and their influence on the global economy, the price of concentrated juice in the international market continued to decrease in the third quarter of fiscal 2009.

Operating expenses decreased 30.9% to $1.0 million in the third quarter of 2009, compared with $1.4 million in the third quarter of 2008. The decrease in operating expenses in the third quarter of fiscal 2009 was mainly due to a decrease in general and administrative expenses, selling expenses, and accrued liquidated damages, partially offset by an increase in research and development expenses.

Income from operations increased 76.8% to $2.9 million for the third quarter of 2009, from $1.6 million for the third quarter of 2008.

Provision from income taxes was $783,000 for the third quarter of 2009, compared with $214,000 for the third quarter of 2008. The increase in tax provision was due to an increase in income before income tax and an increase in the effective tax rate of Shaanxi Tianren.  (SkyPeople Fruit Juice, Inc. is the holding company for Shaanxi Tianren Organic Food Co., Ltd.). Shaanxi Tianren was awarded the status of a nationally recognized High and New Technology Enterprise in December 2006, which entitled Shaanxi Tianren to tax-free treatment for two years starting from 2007.  Starting in 2009, Shaanxi Tianren became subject to the regular tax rate of 25% according to the new tax law in China, which was effective on January 1, 2008.

Net income increased 75.8% year-over-year to $2.1 million, or $0.11 per diluted share, for the third quarter of 2009, compared to net income of $1.2 million, or $0.06 per basic and diluted share, for the third quarter of 2008.

 
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Balance Sheet Highlights
 
As of September 30, 2009, cash and cash equivalents totaled $12.3 million, working capital was $17.6 million and stockholders’ equity was $46.2 million.

Subsequent Event
 
On November 3, 2009, the Company completed a previously announced public offering of shares of Common Stock that were issued upon exercise of warrants pursuant to an exchange agreement dated May 28, 2009.  The Company received approximately $6.9 million in gross proceeds from the exercise of all of the foregoing warrants. The Company intends to use the net proceeds to fund potential acquisitions and for general corporate purposes, including acquisitions and other expansion of its current production capacity.

About SkyPeople Fruit Juice, Inc.

SkyPeople Fruit Juice, Inc. is a holding company for Shaanxi Tianren. Shaanxi Tianren is a company organized according to the laws of the People's Republic of China. SkyPeople's main products are concentrated apple, kiwifruit, pear and other fruit juices for domestic and international consumers. Its brand, HEDETANG, is positioned as a high quality, healthy and nutritious juice concentrate and clear juice product used both as an ingredient component in other products and an end-use juice concentrate product. Shaanxi Tianren utilizes the largest kiwifruit plantation in China and is a leading worldwide
producer of concentrated kiwifruit juice. For more information, please visit http://www.skypeoplefruitjuice.com.

Forward-Looking Statements

This press release contains certain "forward-looking statements" that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, the Company's ability to obtain the necessary financing to continue and expand operations, to market its products in new markets and to offer products at competitive pricing, to attract and retain management, and to integrate and maintain technical information and management information systems, political and economic factors in the People's Republic of China, compliance requirement of laws and regulations of the PRC, the effects of currency policies and fluctuations, general economic conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
Contact:
SkyPeople Fruit Juice, Inc.
Ms. Spring Liu, CFO
818-390-1272
springliu@skypeoplejuice.com

The Piacente Group, Inc.
Kristen McNally
212-481-2050
kristen@thepiacentegroup.com
 
Financial Tables to Follow

 
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SKYPEOPLE FRUIT JUICE, INC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS,
(AMOUNTS EXPRESSED IN US DOLLAR)

   
September 30,
   
December 31,
 
   
2009
   
2008
 
ASSETS
 
(Unaudited)
       
             
CURRENT ASSETS
           
Cash and equivalents
  $ 12,320,597     $ 15,274,171  
Accounts receivable
    14,905,880       11,610,506  
Other receivables
    1,448,234       297,394  
Inventories
    3,768,088       1,844,397  
Prepaid expenses and other current assets
    859,620       1,087,076  
                       Total current assets
    33,302,419       30,113,544  
                 
PROPERTY, PLANT AND EQUIPMENT, Net
    19,321,792       20,406,967  
LAND USAGE RIGHTS
    6,275,908       6,404,771  
OTHER ASSETS
    5,053,049       2,362,049  
TOTAL ASSETS
  $ 63,953,168     $ 59,287,331  
                 
LIABILITIES AND EQUITY
               
                 
 CURRENT LIABILITIES
               
        Accounts payable
  $ 1,126,080     $ 663,092  
        Accrued expenses
    735,715       1,657,437  
        Accrued liquidated damages
    -       254,301  
        Related party payables
    -       23,452  
        Income taxes payable
    783,022       1,450,433  
        Advances from customers
    1,781,699       1,375,460  
        Short-term notes payable
    11,280,068       11,256,871  
                   Total current liabilities
    15,706,584       16,681,046  
                 
                 
TOTAL LIABILITIES
    15,706,584       16,681,046  
                 
                 
EQUITY
               
SkyPeople Fruit Juice, Inc. stockholders' equity:
               
Preferred Stock, $0.001 par value; 10,000,000 shares authorized;  3,448,480 Series B Preferred Stock issued and outstanding as of  September 30, 2009 and December 31, 2008, respectively
    3,448       3,448  
Common Stock, $0.001 par value; 66,666,666 shares authorized; 14,847,857 shares issued and outstanding as of September 30, 2009  and December 31, 2008, respectively
     14,848       14,848  
        Additional paid-in capital
    14,253,894       13,999,593  
        Accumulated retained earnings
    27,465,404       22,468,934  
        Accumulated other comprehensive income
    4,462,381       4,573,143  
                   Total SkyPeople Fruit Juice, Inc. stockholders' equity
    46,199,975       41,059,966  
 Noncontrolling interests
    2,046,609       1,546,319  
       TOTAL EQUITY
    48,246,584       42,606,285  
                 
TOTAL LIABILITIES AND EQUITY
  $ 63,953,168     $ 59,287,331  

 
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SKYPEOPLE FRUIT JUICE, INC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS EXPRESSED IN US DOLLAR)


   
Three Months Ended
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
September 30,
   
September 30,
 
 
 
2009
 
2008
 
2009
   
2008
 
   
(Unaudited)
 
(Unaudited)
 
(Unaudited)
   
(Unaudited)
 
                     
Revenue
  $ 10,604,655   $ 6,345,778   $ 23,472,717     $ 22,442,329
Cost of Sales
    6,753,327     3,315,431     14,773,081       14,635,767
Gross Profit
    3,851,328     3,030,347     8,699,636       7,806,562
                           
Operating Expenses
                         
            General and administrative
    501,831     702,385     1,469,128       1,409,895
            Selling expenses
    188,426     311,931     563,548       808,576
            Research and development
    275,571     175,431     827,363       199,056
            Accrued liquidated damages
    -     208,658     -       208,658
                    Total operating expenses
    965,828     1,398,405     2,860,039       2,626,185
                           
Income from Operations
    2,885,500     1,631,942     5,839,597       5,180,377
                           
Other Income (Expense)
                         
             Interest expense
Interest expense
    (191,717 )   (179,699     (677,375 )     (624,802)
             Interest income
    15,371     18,377     54,404       41,342
             Subsidy income
    4,661     3,428     1,557,340       52,206
             Other income (expense)
    334,058     (1,119 )   691,935       32,827
                     Total other income (expense)
    162,373     (159,013     1,626,304       (498,427)
                           
Income Before Income Taxes
    3,047,873     1,472,929     7,465,901       4,681,950
                           
Income Tax Provision
    782,660     214,387     1,998,227       525,585
                           
Net Income
    2,265,213     1,258,542     5,467,674       4,156,365
                           
Less: Net income attributable to noncontrolling interests
    181,292     73,459     471,204       256,242
NET INCOME ATTRIBUTABLE TO SKYPEOPLE FRUIT JUICE, INC.
 
  $ 2,083,921   $ 1,185,083   $ 4,996,470     $ 3,900,123
                           
Earnings Per Share:
                         
Basic earnings per share
  $ 0.12   $ 0.06   $ 0.28     $ 0.22
Diluted earnings per share
  $ 0.11   $ 0.06   $ 0.25     $ 0.21
                           
Weighted Average Shares Outstanding:
                         
Basic
    14,847,789     14,847,789     14,847,789       14,810,966
Diluted
    18,502,518     18,480,109     19,633,360       18,151,026
                           
Comprehensive Income:
                         
Net income
  $ 2,265,213   $ 1,258,542   $ 5,467,674     $ 4,156,365
Foreign currency translation adjustment
    28,268     414,475     (81,676 )     1,711,288
                           
Comprehensive Income
  $ 2,293,481   $ 1,673,017   $ 5,389,998     $ 5,867,653
Comprehensive income attributable to the noncontrolling interest
    (181,246 )   (69,863     (500,290 )      53,654
Comprehensive Income Attributable to SkyPeople Fruit Juice, Inc.
  $ 2,112,235   $ 1,603,154   $ 4,885,708     $ 5,921,307

 
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SKYPEOPLE FRUIT JUICE, INC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS EXPRESSED IN US DOLLAR)
 
   
September 30,
   
September 30,
 
   
2009
   
2008
 
   
(Unaudited)
   
(Unaudited)
 
Cash Flow from Operating Activities
           
Net income
  $ 4,996,470     $ 3,900,123  
Adjustments to reconcile net income to
               
     net cash flow (used in) provided by operating activities
               
Bad debt expenses
    1,130       -  
Depreciation and amortization
    1,488,748       1,409,907  
     Loss on sale of property, plant and equipment
    -       1,274  
D Earnings attributable to noncontrolling interests
 
    471,204       256,242  
Changes in operating assets and liabilities,
               
net of acquisition effects
               
  Accounts receivable
    (3,300,512 )     6,030,436  
  Other receivables
    (1,150,327 )     13,759  
  Prepaid expenses and other current assets
    (2,463,972 )     (1,224,295 )
  Inventories
    (1,923,564 )     2,847,423  
  Accounts payable
    244,392       (1,662,730 )
  Accrued expenses and other current liabilities
    322,711       114,013  
  Accrued liquidated damages
    -       208,658  
  Advances from customers
    406,746       17,425  
  Taxes  payable
    (1,427,024 )     90,920  
Net cash (used in)  provided by operating activities
    (2,333,998 )     12,003,155  
                 
Cash Flow from Investing Activities
               
Prepayment for lease improvement
    -       (356,860 )
Deposits to purchase target company
    -       (2,141,158 )
Loan repayment from related parties
    -       5,475,092  
Loan advanced to related parties
    -       (7,179,883 )
Additions to property, plant and equipment
    (289,945 )     (2,826,179 )
      Proceeds from sale of property, plant and equipment
            4,996  
Net cash used in investing activities
    (289,945 )     (7,023,992 )
                 
Cash Flow from Financing Activities
               
Proceeds from stock issuance
    -       3,115,072  
Proceeds from bank loans
    9,516,559       14,988,105  
Repayment of bank loans
    (9,487,277 )     (14,531,324 )
Dividend paid to non-controlling interest
    -       (309,896 )
Repayments of related party loan
    -       (149,486 )
Net cash provided by financing activities
    29,282       3,112,471  
                 
Effect of Changes in Exchange Rate
    (358,913 )     610,687  
                 
NET (DECREASE) INCREASE IN CASH
    (2,953,574 )     8,702,321  
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    15,274,171       4,094,238  
CASH AND CASH EQUIVALENTS, END OF PERIOD
  $ 12,320,597     $ 12,796,559  
Supplementary Information of Cash Flows
               
Cash paid for interest
  $ 677,446     $ 649,327  
Cash paid for taxes
  $ 2,664,330     $ 1,049,534  
Purchase of Huludao, offset by related party receivables
  $ -     $ 6,887,391