Beijing, China ?C May 26, 2009 ?C Origin Agritech Limited (NASDAQ: SEED) (??Origin?? or the ??Company??), a technology-focused supplier of crop seeds in China today announced unaudited financial results for the second quarter ended March 31, 2009. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.
FINANCIAL RESULTS OVERVIEW
During the second quarter of fiscal 2009, the Company generated revenues of RMB 1.16 million (US.17 million), a decrease of 25.64% from RMB 1.56 million (US.22 million) generated in the three months ended March 31, 2008. While the second quarter traditionally generates limited revenues, the deferred revenues on the balance sheet will be recognized as revenue in the third quarter.
Gross loss for the three-months ended March 31, 2009 was RMB3.37 million (US.49million) compared to RMB3.30 million (US.47 million) in the same period of the prior year.
Total operating expenses for the three-months ended March 31, 2009 were RMB31.29 million (US.58 million) compared with RMB33.84 million (US.83 million) reported for the same period in 2008, representing a decrease of 7.5%. Selling and marketing expenses were RMB9.64 million (US.41 million) for the second quarter of 2009, representing a decrease of 17.04% from RMB 11.62 million (US.66 million) for the same period of the last year. This decrease was mainly due to a change in the salary structure, lower rental fees, and lower advertising expenses although expenses were lower across a variety of categories. General and administrative expenses of RMB15.42 million (US.26 million) for the second quarter ended March 31, 2009, decreased 8.49% from RMB16.85 million (US.40 million) for the three months ended March 31, 2008 mainly due to the lower spending across a variety of different categories including lower consulting fees. Research and development expenses increased to RMB6.22 million (US.91 million) for the three-months ended March 31, 2009 from RMB5.37 million (US.77million) for the same quarter last year, with an increase of 15.83% as the Operating loss for the second quarter of 2009 amounted to RMB34.66million (US.07 million) compared with an operating loss of RMB37.14 million (US.30 million) for the same period in 2008.
Net loss for the second quarter of 2009 was RMB81.32 million (US.90 million), or RMB 3.53 (US.52) per diluted share, as compared to a net loss of RMB29.77 million (US.25 million), or RMB 1.30 (US.18) per diluted share in the same period one year ago.
On a non-GAAP basis, excluding non-recurring charges related to the convertible notes, net loss for the second quarter of 2009 was US.89 million, or US.17 per diluted share, as compared to a net loss of US.19 million), or US.18 per diluted share in the same period one year ago.
Note Repurchase Agreement
The 2009 GAAP EPS includes certain non-recurring charges related to the January 19 redemption of our convertible notes, including US .48 million in charges. These charges are mainly a result of the difference between the repurchase value and the carrying value of the notes and the embedded derivatives on our financial statements. The carrying value of the embedded derivatives was lowered in previous years in part by the gains from the write-downs in the fair value of embedded derivatives amounting in aggregate US $ 4.9 million.
The remaining difference can be attributed to the 6.65% premium paid on our note repurchase. While we held this portion of the note for a term of 2.44 years, this repurchased premium equates to an annual weighted average for these repurchased amount of 4.16%.
(1) Reflects the cash obligation of the company under the repurchase of the convertible note repurchase agreement dated 7/28/08 and the second note repurchase agreement dated 1/19/09.
(2) Reflects the cash obligation of the company under the original terms of the convertible note agreement dated 7/25/07 given that the convertible notes are carried to term in 2012.
Origin's balance sheet at March 31, 2009 included cash and cash equivalents of RMB232.99 million (US.08 million) and shareholders' equity of RMB165.85 million (US.26 million).
Deferred revenue was RMB443.39 million (US$ 64.86 million) for the three-months ended March 31, 2009 as compared to RMB400.15 million (US$ 57.07 million) for the same period end last year.
The Company received more advances from customers of RMB165.21 million (US.17 million) for the three-months ended March31, 2009 period as compared to RMB105.17 million (US.00 million) for the quarter ended March 31, 2008
FISCAL 2009 GUIDANCE
Based on its current outlook, and existing and anticipated business conditions, Origin reiterates the revenue guidance for FY 2009 in the range of RMB 560 million to RMB 580 million and operating cash flow range of RMB 80 million for the fiscal year ending September 30, 2009.
Forward Looking Statement
This release contains forward-looking statements. All forward-looking statements included in this release are based on information available to us on the date hereof. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results to differ materially from those implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "targets," "goals," "projects," "continue," or variations of such words, similar expressions, or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Neither we nor any other person can assume responsibility for the accuracy and completeness of forward-looking statements. Important factors that may cause actual results to differ from expectations include, but are not limited to, those risk factors discussed in Origin's filings with the SEC including its annual report on Form 20-F filed with the SEC on March 23, 2009. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
Vice President, Finance
Origin Agritech Limited
Tel: 949.726.8101 or 011.86.136.8108.0243