Global-Tech Advanced Innovations Reports First Quarter Results For Fiscal 2011

Global-Tech Advanced Innovations Inc. (NASDAQ:GAI) today announced its net sales and earnings for the quarter ended June 30, 2010 (the Company’s first quarter of fiscal 2011).

Net sales for the quarter ended June 30, 2010 were $25.8 million, compared to $25.7 million for the corresponding quarter in fiscal 2010. While there was less than a 1% increase in net sales, first quarter results revealed significant changes in sales trends when compared to the prior fiscal year. In the first quarter of fiscal 2011, net sales of home appliances declined 19%, electronic components increased 19% and electronic manufacturing service (EMS) revenues more than doubled, compared to corresponding net sales in the first quarter of fiscal 2010. In addition, sales to Asia markets in the first quarter of fiscal 2011 represented 48% of total net sales.

Net income for the first quarter of fiscal 2011 was $0.8 million, or $0.26 per share, compared to a net income of $1.2 million, or $0.38 per share, for the first quarter of fiscal 2010.

John C.K. Sham, President and Chief Executive Officer, said, “Our financial results in the first quarter of fiscal 2011 were indicative of the changes taking place within our business segments. While our electronic component and EMS businesses resumed their growth and maintained profitability, operating margins in our home appliance business continued to decline as a result of increases in material cost and wage inflation. The trend of increasing raw material cost and decreasing margins are threatening the continued viability of our home appliance business.”

Mr. Sham continued, “As we continue to diversify and refocus our efforts on the telecommunications business in China, weakening of the export markets we have been serving is having less of an impact on our overall business prospects. We plan to place less emphasis on our home appliance business as we continue to expand our capabilities and sales efforts on the EMS and electronic component businesses.”

Mr. Sham concluded, “Absent a recovery in the United States markets, we expect operating margins in our home appliance business will continue to decline as costs continue to increase and volume continues to decrease. However, we expect continued growth in the electronic component and EMS businesses, which may or may not be sufficient to offset ongoing weaknesses in the appliance business in the short term.”

Global-Tech Advanced Innovations Inc. is a holding company, owning subsidiaries that manufacture and market a diversified portfolio of products and services, such as complementary metal oxide semiconductor (CMOS) camera modules (CCMs), floor care products, and electronic manufacturing services (EMS). The primary focus of its subsidiaries is to develop and market high-quality products and services for the communications industries within the China market, as well as markets in North America, Europe, and other countries throughout the world.

Except for historical information, certain statements contained herein are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," “should,” "estimates," or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including but not limited to, the impact of competitive products and pricing, demand for new and existing products in our core business, the financial condition of the Company’s customers, product demand and market acceptance especially of our new products, the success of new product development especially in the area of cellular phone components and solutions, compact camera modules and other pending projects, reliance on material customers, suppliers and key strategic alliances, the terms and conditions of customer contracts and purchase orders, availability and cost of raw materials, the timely and proper execution of certain business plans, including the plan to diversify and transform a portion of manufacturing capacity to higher-value, technology-oriented products, currency fluctuations, including the revaluation of the Chinese Renminbi, the imposition by China’s trading partners of economic sanctions and/or protective tariffs on Chinese manufactured goods, uncertainties associated with investments, the regulatory environment, fluctuations in operating results, the impact of changing global, political and economic conditions and other risks detailed from time to time in the Company's filings with the U.S. Securities and Exchange Commission including its most recent Report on Form 20-F. The Company does not undertake to update its forward-looking information, or any other information contained or referenced in this press release to reflect future events or circumstances.
 

GLOBAL-TECH ADVANCED INNOVATIONS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Amounts expressed in thousands of United States dollars except per share data)
 
Three Months Ended June 30,
2010   2009
(unaudited) (unaudited)
 
 
 
Net sales $ 25,823 $ 25,663
Cost of goods sold   (22,671 )   (21,300 )
Gross profit 3,152 4,363
Selling, general and administrative expenses (4,028 ) (3,214 )
Other operating income (loss), net   1,139     (53 )
Operating income 263 1,096
Interest expense (27 ) (6 )
Interest income 113 99

Other income (expenses), net
  608     (16 )
Income before income taxes 957 1,173
Provision for income taxes   (170 )   (13 )

Net income
$ 787   $ 1,160  
 
Basic earnings per common share $ 0.26   $ 0.38  
 
Basic weighted average number of shares outstanding   3,039     3,037  
 
Diluted earnings per common share $ 0.26   $ 0.38  
 
Diluted weighted average number of shares outstanding   3,039     3,037  
 
 

GLOBAL-TECH ADVANCED INNOVATIONS INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Amounts expressed in thousands of United States dollars)
 
 
June 30, 2010   March 31, 2010
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 14,197 $ 24,809
Time deposits 4,417 -
Restricted cash 15,184 4,398
Available-for-sale investments 15,899 15,990
Accounts and bills receivable, net 28,832 23,244
Inventories 8,844 9,410
Prepaid expenses 204 278
Deposits and other assets 2,806 1,915
Legal claims receivable 5,091 5,090
Amount due from a related party 29 28
Amount due from a jointly-controlled entity   14     22  
Total current assets 95,517 85,184
Interests in jointly-controlled entities - -
Property, plant and equipment, net 22,563 22,708
Land use rights, net 3,023 3,033
Deposits paid for purchase of property, plant and equipment 392 58
Deferred tax assets   104     104  
Total assets $ 121,599   $ 111,087  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings 7,030 -
Accounts payable 8,225 5,131
Bills payable 2,094 1,504
Discounted bills 1,499 3,364
Temporary receipts 1,416 965
Accrued salaries, allowances and other employee benefits 4,062 3,777
Accrual for loss contingencies 5,072 5,967
Other accrued liabilities 7,438 6,896
Income tax payable   5,516     5,709  
Total current liabilities 42,352 33,313
Deferred tax liabilities   38     38  
Total liabilities   42,390     33,351  

Shareholders' equity:

 

 

 

 
Common stock, par value $0.04 per share; 12,500,000 shares authorized; 3,228,564 shares issued and outstanding as of June 30 and March 31, 2010

129

129
Additional paid-in capital 84,746 84,280
Accumulated deficit (6,300 ) (7,088 )
Accumulated other comprehensive income 5,297 5,078
Less: Treasury stock, at cost, 189,587 shares as of June 30 and March 31, 2010   (4,663 )   (4,663 )
Total shareholders’ equity   79,209     77,736  
Total liabilities and shareholders' equity $ 121,599   $ 111,087  

Copyright Business Wire 2010

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