Global-Tech Advanced Innovations Inc. (NASDAQ:GAI) today announced its financial results for the quarter ended September 30, 2013 (the Company’s second quarter of fiscal 2014). Additionally, the Company announced the closure of its EMS business.
Net sales for the second quarter of fiscal 2014 were $12.6 million, compared to $26 million for the corresponding quarter in fiscal 2013. This decrease in net sales is primarily attributable to sharp declines in sales in our EMS business which, as previously disclosed, continues to be adversely affected by a slowing Chinese domestic market, high turnover and rapidly decreasing margins. Net loss for the second quarter of fiscal 2014 was $5.2 million, or $1.70 per share, compared to a net income of $0.2 million, or $0.07 per share, for the second quarter of fiscal 2013. Net losses for the second quarter of fiscal 2014 included non-cash impairment charges of $0.9 million, provision for doubtful debts of $0.2 million and severance expenses of $0.9 million incurred in connection with reductions in workforce within our EMS segment. Of the total charges/expenses listed above, $0.6 million was reflected in cost of goods and $1.4 million in SG&A.
Net sales for the six months ended September 30, 2013 were $27.4 million, compared to $46.5 million in the corresponding six-month period in fiscal 2013. Net loss for the first six months of fiscal 2014 was $6.7 million, or $2.21 per share, compared to a net income of $0.3 million, or $0.08 per share, for the first half of fiscal 2013.
As previously disclosed, the results of the Company’s EMS business have been adversely affected by rising labor costs, high turnover and downward pricing demands from major customers. Given the weakening Chinese domestic market, management felt that these issues were likely to continue, if not worsen, and that the decision to close the EMS business was necessary to avoid incurring further losses. John C.K. Sham, the Company's President and Chief Executive Officer, said: “After careful review and consideration of this quarter’s results, it became clear that this business was no longer economically viable for us in our current location.”