AgFeed Industries, Inc. Announces 2010 Results

NEW YORK, March 17, 2011 – AgFeed Industries, Inc. (Nasdaq: FEED, NYSE Alternext: ALHOG - News) (“AgFeed” or the “Company”), an international agribusiness company with operations in the U.S. and China and one of the large independent hog producers and manufacturers of animal nutrients in China announced record levels of revenue in both its animal nutrition and U.S. hog production units for the fourth quarter of 2010 and for the full year 2010. The Company’s 2010 fourth quarter and year-end revenues were the highest in company history representing an increase over revenues for the same periods in 2009 of 77.2% and 40.7%, respectively. 

AgFeed reported a fourth quarter 2010 loss of $20.2 million, or $(0.42) per fully diluted share, on revenues of $99.5 million. For the full year 2010 the Company reported a loss of $ 42.7 million, or $(0.90) per fully diluted share on revenues of $ 243.6 million.   This loss was principally attributable to the performance of the Company’s legacy Chinese hog production system, the hog farms acquired by former management during 2007 and 2008. 

AgFeed’s loss for 2010 is attributable to operating losses in its legacy Chinese hog production system of $14.9 million of which $8.9 million was attributable to eight legacy farms being closed and non-cash, non-recurring, write downs and reserves related to the restructuring of this business unit of $30.6 million.  This $30.6 million in asset write downs is comprised of $16.8 million of goodwill written off during the third quarter of 2010, $4.8 million of goodwill written off during the fourth quarter of 2010 and fixed assets written down during the fourth quarter of 2010 of $9.0 million. 

John A. Stadler, AgFeed’s Chairman and Interim President and Chief Executive Officer stated, “While we are pleased with the continued operating excellence demonstrated by the performance of both our animal nutrition business and our U.S. hog production business, the performance of our legacy Chinese hog production system is unacceptable. The team at M2P2 has demonstrated great success in executing our U.S. business plan and has positioned us to pursue growth opportunities that present themselves domestically.  This team is now fully engaged in leading the restructuring and execution of operational changes to return our legacy Chinese hog production system to profitability.  Our plan is to add to our team international professionals to firmly establish AgFeed as a global agribusiness.”

Recognizing the unacceptable performance of the Company’s legacy Chinese hog production system, AgFeed’s Board of Directors completed its detailed analysis and operational review of this business unit that commenced during the fall of 2010.  This review has resulted in additional actions and asset-write downs to those announced by the Company in November 2010.

AgFeed’s new Board of Directors has made the following management changes and implemented operational changes to support the execution of the Company’s international strategic plan while aggressively addressing the operating issues confronted by the legacy Chinese hog production system.

• Appointed John Stadler as the Company’s Chairman and Interim President and Chief Executive Officer;

• Appointed Edward Pazdro as the Company’s Chief Financial Officer;

• Appointed McGladrey & Pullen, LLP as the Company’s auditor;

• Deployed managers and executives from its M2P2 subsidiary to lead the restructuring and return to profitability of the legacy Chinese hog production system;

• Commenced the closing of eight legacy Chinese hog farms considered to be of a configuration and quality that they were deemed incapable of meeting AgFeed’s long-term operating benchmarks;

• Reduced overall headcount from 1,843 to 1,673. 

The Company’s Chief Financial Officer, Edward Pazdro, said, “We have worked closely with outside consultants, auditors and our new management team to thoroughly assess the long-term viability and profitability of our legacy Chinese hog farms, and based on current market conditions, believe that our asset values are appropriate and present a long-term picture of the value of our legacy farms.” Mr. Pazdro stated further, “The combination of M2P2’s operating discipline with our management information systems will allow us to monitor and execute our strategic plan.” 

Income from Operations
Summary by Segment
Legacy Chinese
Farms
Animal
Nutrition
M2P2 New Western-Style
Chinese Farm
Corporate
Overhead
Non-Cash Items:
 Goodwill ($ 21,612,398)
 Asset Write Down ($ 9,021,583)
Audit Adjustments:
Legacy Chinese Farms
($ 1,721,417)
Legacy Chinese Farms
to be Closed
($ 8,632,230)
Other Legacy Chinese
Farms
($ 4,603,151)
Non-Capitalized
Investment in Western
Style Chinese Farms
($578,900)
Animal Nutrition $10,915,748
M2P2 (acquired 9/13/10) $1,657,490
Corporate Overhead ($6,839,838)
Totals ($ 45,590,779) $10,915,748 $1,657,490 ($578,900) ($6,839,838)

ABOUT AGFEED INDUSTRIES, INC. 

NASDAQ Global Market Listed AgFeed Industries (www.agfeedinc.com) is an international agribusiness with operations in the U.S. and China.  AgFeed has two business lines animal nutrition in premix, concentrates and complete feeds and hog production. In the U.S., AgFeed’s hog production unit, M2P2, is a market leader in setting new standards for production efficiency and productivity. AgFeed believes the transfer of these processes, procedures and techniques will allow its new Western-style Chinese hog production units to set new standards for production in China. China is the world's largest pork market consuming 50% of global production and over 62% of total protein consumed in China is pork.  Hog production in China enjoys income tax free status.  

SAFE HARBOR DISCLOSURE NOTICE 

Certain statements regarding AgFeed Industries set forth in this press release contain forward-looking information and speak only as of the date of such statement.  You can identify these statements by the fact that they use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans and prospects.  This forward-looking information is subject to numerous material risks, uncertainties and assumptions, certain of which are beyond the control of AgFeed Industries, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, competition from other industry participants, stock market volatility, ability to access sufficient capital from internal and external sources. Readers are cautioned that the material assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise.  Actual results, performance or achievement could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that AgFeed Industries will derive therefrom.  AgFeed Industries disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.  For additional information and risk factors that could affect AgFeed Industries, see its filings with the Securities and Exchange Commission, including “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “Cautionary Statement for Forward-Looking Statements,” set forth in the Company’s Annual Report on Form 10-K for the period ended December 31, 2010.  The information contained in this press release is made as of the date of the press release, even if subsequently made available by AgFeed Industries on its website or otherwise.

Contact:  Investor Relations: AgFeed Industries, Inc.     Tel: (917) 804-3584     Email: [email protected] 

The Company's policy is to handle all questions by email to [email protected] and they will be answered as soon as possible.

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