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Deer Consumer Products, Inc. Reports Record First Quarter 2010 Results: 248% Revenue Growth, 515% Net Income Growth, 16.9% Net Income Margin, EPS $0.12, Strong Earnings Growth Momentum Continues in 2010

NEW YORK, May 10, 2010 /PRNewswire via COMTEX/ -- Revenues of $23.9 million, an increase of 248% from Q1/09 Net income of $4.04 million, an increase of 515% from Q1/09 Fully diluted EPS (Earnings per Share) of $0.12, an increase of 300% from EPS $0.03 in Q1/09 Strong balance sheet: $75.3 million in cash (approximately $2.31 per common share in cash) without any long term debts or bank borrowing High margin China domestic sales increased 1305% to 27% of revenue in Q1/2010 Expanded gross profit margin to 28.8%, compared to 24.2% in Q1/09 Expanded operating margin to 20%, compared to 16% in Q1/09 Expanded net income margin to 16.9%, compared to 9.6% in Q1/09 Anticipates the high margin China domestic sales to exceed 40% of revenues in 2010, compared to 17.6% in 2009 Sees record earnings growth momentum to continue in 2010 Sees positive impact to earnings from China's current macro economic environment Deer Consumer Products, Inc. (Nasdaq: DEER; website: www.deerinc.com), one of the world's largest vertically integrated designers and ODM/OEM manufacturers of home and kitchen electronics marketing to both global and China domestic consumers, announced today record financial results for the quarter ended March 31, 2010. Deer's senior management will host an investor conference call today at 8:30 am Eastern Daylight Time to discuss first quarter results.

Financial Summary for Q1/2010 versus Q1/2009: YoY% Q1 2010 Q1 2009 Change Revenue $23,902,457 $6,872,216 248% China Sales $6,394,880 $455,211 1,305% China sales % of revenue 26.8% 6.6% -- International Sales $17,507,577 $6,417,005 173% International sales % of revenue 73.3% 93.4% -- Gross Profit $6,877,848 $1,659,512 314% Gross Margin 28.8% 24.2% -- Income from Operations $4,774,818 $1,104,589 332% Operating Margin 20.0% 16.1% -- Income Tax Rate 15.7% 28.5% -- Net Income $4,037,023 $656,874 515% Net Margin 16.9% 9.6% -- Diluted EPS $0.12 $0.03 300% Record First Quarter Revenues Revenues for the first quarter of 2010 were $23.9 million, an increase of approximately 248% from $6.87 million in first quarter 2009. Deer attributes the significant revenue increase to stronger than expected revenue growth in the high margin China domestic market which grew 1,305% year over year. Deer continues to experience strong organic growth rate in all its global markets.

Record First Quarter Net Income Net income for the first quarter of 2010 was approximately $4.04 million, an increase of approximately 515% from first quarter 2009. Fully diluted EPS was $0.12 compared to $0.03 in 2009.

Anticipates Rapid Earnings Growth Momentum to Continue in 2010 Deer is currently experiencing robust product sales across all product lines in the current second quarter. The Company anticipates continued China domestic and global market expansion for the rest of 2010. Deer previously provided 2010 revenue guidance of $155 million, an increase of 91% from 2009, as well as net income guidance of $24 million, an increase of 94% from 2009. Deer is confident in its abilities to achieve and exceed these previous sales and earnings targets.

Strategically Well Positioned as a Direct Access to the Vast Chinese Consumer Markets China has the world's fastest growing small household appliance market, however, not a single global brand in the industry has any meaningful sales presence in China. Deer's fully integrated model of aligning a strong cash position, product design, internal low cost manufacturing and quality control, supply chain management and direct access to end user customers has positioned Deer as a strategic platform for accessing the Chinese consumers.

Management Comments on First Quarter 2010 Financial Results Bill He, Deer's Chairman and Chief Executive Officer, commented: "Deer management continued its relentless focus on execution and sales expansion in the first quarter. We are pleased with our significant organic revenue and margin expansion. Deer has a strong cash position and has no exposure to the credit markets. Our integrated 'production to market' model has made Deer one of the most profitable companies in terms of net income margins in the small household appliance industry in the world." Management Comments on Positive 2010 Outlook Mr. He continued: "For the rest of 2010, Deer anticipates significant growth from domestic product sales as well as global sales expansion. Chinese consumers' demand for modern lifestyle products, including convenient small household appliances, has been growing in double digits as a result of China's economic expansion. We see our market presence continuing to expand and our rapid earnings growth to continue in 2010. We look forward to delivering strong results in the coming quarters in 2010." Investor Conference Call Instructions Deer management will host an earnings conference call today to discuss its financial results for the quarter ended March 31, 2010.

Date and time: 8:30 am U.S. Eastern Daylight Time, May 10, 2010 U.S. toll free number: 1-800-688-0796 International direct dial-in: +1 617-614-4070 Conference passcode: 64286251 About Deer Consumer Products, Inc.

Deer Consumer Products, Inc. (Nasdaq: DEER; website: www.deerinc.com) is a NASDAQ Global Select Market listed U.S. registered public company headquartered in China. Deer has a 15-year operating business as well as a strong balance sheet. Supported by more than 103 patents, trademarks, copyrights and approximately 2,000 company-trained seasonal and full time staff, Deer is a leading designer, ODM/OEM manufacturer and global marketer of quality small home and kitchen electric appliances. Deer's product lines include blenders, juicers, soy milk makers and a large variety of other home appliances designed to make today's lifestyles simpler and healthier. With more than 100 global clients/branded products such as Black & Decker, Ariete, Disney, Toastmaster, Magic Bullet, Back to Basics and Wal-Mart, and rapidly expanding China domestic market footprint, Deer has enjoyed rapid sales and earnings growth in recent years.

Safe Harbor Statement All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect Deer's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in Deer's filings with the Securities and Exchange Commission.

Contact Information: -------------------- Corporate Contact: Mrs. Yongmei Wang Deer Consumer Products, Inc.

Tel: 011-86-755-86028285 Email: investors@deerinc.com ---------------------------- DEER CONSUMER PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 2010 2009 ---- ---- (unaudited) ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $75,305,378 $79,333,729 Restricted cash 162,057 35,701 Accounts receivable, net 19,628,162 17,070,781 Advances to suppliers 4,158,482 3,299,107 Other receivables 213,624 213,487 Inventories 21,206,828 18,061,282 Other current assets 51,922 12,500 ------ ------ Total current assets 120,726,453 118,026,587 PROPERTY AND EQUIPMENT, net 11,140,018 11,325,999 CONSTRUCTION IN PROGRESS 5,717,420 3,724,337 INTANGIBLE ASSETS, net 769,343 394,684 OTHER ASSETS 15,169 20,073 ------ ------ TOTAL ASSETS $138,368,403 $133,491,680 LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $14,471,976 $13,055,110 Other payables 1,287,600 1,061,460 Unearned revenue 967,044 1,719,761 Accrued payroll 871,474 1,148,663 Notes payable 6,433,067 6,212,911 Tax and welfare payable 1,070,063 862,332 --------- ------- Total current liabilities 25,101,224 24,060,237 STOCKHOLDERS' EQUITY: Common Stock, $0.001 par value; 75,000,000 shares authorized; 32,631,748 and 32,631,748 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively 32,632 32,632 Additional paid-in capital 90,875,009 91,111,661 Development funds 1,399,818 1,185,859 Statutory reserve 2,799,636 2,371,718 Other comprehensive income 2,370,581 2,335,216 Retained earnings 15,789,503 12,394,357 ---------- ---------- Total stockholders' equity 113,267,179 109,431,443 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $138,368,403 $133,491,680 DEER CONSUMER PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME Three Months Ended March 31, ------------------------- 2010 2009 ---- ---- (unaudited) (unaudited) Revenue $23,902,457 $6,872,216 Cost of Revenue 17,024,609 5,212,704 ---------- --------- Gross profit 6,877,848 1,659,512 Operating expenses Selling expenses 1,427,964 183,342 General and administrative expenses 675,066 371,581 Total operating expenses 2,103,030 554,923 Income from operations 4,774,818 1,104,589 Non-operating income (expense): Interest expense and financing costs (29,706) (114,831) Interest income 91,921 1,619 Other expense (14,601) (1,881) Foreign exchange loss (33,134) (70,506) Total non-operating income (expense) 14,480 (185,599) Income before income tax 4,789,298 918,990 Income tax 752,275 262,116 Net income 4,037,023 656,874 Other comprehensive income Foreign currency translation gain (loss) 35,365 (20,332) Comprehensive Income $4,072,388 $636,542 ========== ======== Weighted average shares outstanding : Basic 32,631,748 19,998,956 ========== ========== Diluted 33,767,212 20,010,034 ========== ========== Earnings per share: Basic $0.12 $0.03 ===== ===== Diluted $0.12 $0.03 ===== ===== DEER CONSUMER PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, ------------------ 2010 2009 ---- ---- (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $4,037,023 $656,874 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 353,963 349,492 Amortization 4,762 2,357 Stock based compensation 83,348 - (Increase) /decrease in assets: Accounts receivable (2,556,509) (573,464) Other receivables (137) 252,241 Inventories (3,144,474) 1,936,703 Advances to suppliers (859,081) (37,484) Other assets (34,520) 10,392 Increase /(decrease) in current liabilities: Accounts payable 1,416,382 (2,273,406) Unearned revenue (752,461) (1,541,804) Other payables 274,644 (183,644) Accrued payroll (277,095) 18,724 Tax and welfare payable 207,661 450,715 Net cash used in operating activities (1,246,494) (932,304) ---------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment (168,091) - Acquisition of intangible assets (379,293) - Construction in process (1,992,404) (590,067) Changes in restricted cash (126,313) 54,723 Sale of short-term investments - 29,302 Net cash used in investing activities (2,666,101) (506,042) ---------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of notes payable 220,081 1,418,859 Proceeds from sale of common stock - 625,500 Offering costs paid (320,000) (84,515) Payment on short term loans - (764,550) Net cash provided by (used in) financing activities (99,919) 1,195,294 ------- --------- Effect of exchange rate changes on cash and cash equivalents (15,837) (3,737) ------- ------ NET INCREASE IN CASH & CASH EQUIVALENTS (4,028,351) (246,789) CASH & CASH EQUIVALENTS, BEGINNING BALANCE 79,333,729 2,782,026 ---------- --------- CASH & CASH EQUIVALENTS, ENDING BALANCE $75,305,378 $2,535,237 =========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ - $57,370 === ======= Income taxes paid $489,784 $ - ======== === SOURCE Deer Consumer Products, Inc.

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