GLOBAL-TECH ADVANCED INNOVATIONS INC. 
By Global-Tech Advanced Innovations Inc. (NASDAQ:GAI) today announced its financial results for the fiscal quarter ended December 31, 2013 (the Company’s third quarter of fiscal 2014).
Net sales for the third quarter of fiscal 2014 were $20.5 million, up approximately 31% when compared to $15.6 million for the corresponding quarter in fiscal 2013. Net sales for the third quarter of fiscal 2013 excluded $5.0 million in revenues from our EMS business segment that is now reflected in discontinued operations. Net loss for the third quarter of fiscal 2014 was $0.7 million, or $0.22 per share, compared to a net income of $0.1 million, or $0.02 per share, for the third quarter of fiscal 2013. Despite the increase in net sales, our gross profit margin decreased significantly due to unit pricing declining faster than we could reduce our material costs and labor productivity lagging compensation costs. Additionally, in the third quarter of fiscal 2014, our general and administrative expenses increased $0.5 million, primarily due to our investment in the chip-on-board operation for producing computer tablet camera modules.
Net sales for the nine months ended December 31, 2013 were $45.0 million, compared to $56.1 million in the corresponding nine-month period in fiscal 2013. Net sales for the nine-month period in fiscal 2013 excluded $11.0 million in EMS revenues now reflected in discontinued operations. Net loss for the first nine months of fiscal 2014 was $7.4 million, or $2.43 per share, compared to a net income of $0.3 million, or $0.10 per share, for the first nine months of fiscal 2013. Included in the net loss for the first nine months of fiscal 2014 was $4.6 million of losses from discontinued operations.
John C.K. Sham, the Company's President and Chief Executive Officer, said: “As previously disclosed, increasing expenses, including rising labor costs, downward pricing demands and a weakening Chinese domestic market required the closure of our EMS business. In connection with our exit from the EMS business, we incurred $0.9 million in impairment charges, $0.9 million in severance costs, and $0.2 million in provision for doubtful debts for the nine-month period ended December 31, 2013. The closure of our EMS business, while disappointing, allows us to concentrate additional resources towards the further development of our electronic components business as well as the pursuit of other potential opportunities.”
Mr. Sham continued, “As part of our plans to improve our profitability, we intend to lease the space and equipment that were formerly used in the operation of our EMS business, together with other excess manufacturing space, until we can achieve a more productive utilization of this space."
Mr. Sham concluded, “We are continuing to explore and evaluate potential opportunities to further expand our electronic components business beyond camera modules for mobile phones and computer tablets, but for any such expansion to be viable, low labor input would need to be maintained which could prove difficult given the issues with both the cost and availability of labor in the southern part of China.”
Global-Tech Advanced Innovations Inc. is a holding company, owning subsidiaries that manufacture and market a diversified portfolio of products, such as complementary metal oxide semiconductor (CMOS) and camera modules (CCMs). The primary focus of its subsidiaries is to develop and market high-quality products for the communications industry in China and export such products to markets in 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 APPLIANCES INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Amounts expressed in thousands of United States dollars, except per share data) | ||||||||||||||||
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Net sales | $ | 20,511 | $ | 15,637 | $ | 44,973 | $ | 56,129 | ||||||||
| Cost of goods sold | (18,579) | (13,639) | (41,189) | (48,043) | ||||||||||||
| Gross profit | 1,932 | 1,998 | 3,784 | 8,086 | ||||||||||||
| Selling, general and administrative expenses | (3,325) | (2,850) | (9,097) | (8,401) | ||||||||||||
| Other operating income (expense) | - | - | - | - | ||||||||||||
| Operating income (loss) | (1,393) | (852) | (5,313) | (315) | ||||||||||||
| Interest income, net | 159 | 163 | 461 | 508 | ||||||||||||
| Other income (expense), net | 863 | 141 | 2,141 | 527 | ||||||||||||
| Income (loss) from continuing operations before income taxes | (371) | (548) | (2,711) | 720 | ||||||||||||
| Income tax expenses | (133) | 384 | (163) | 282 | ||||||||||||
| Income (loss) from continuing operations | (504) | (164) | (2,874) | 1,002 | ||||||||||||
| Income (loss) from discontinued operations, net of tax | (185) | 197 | (4,595) | (768) | ||||||||||||
| Net income (loss) | (689) | 33 | (7,469) | 234 | ||||||||||||
| Net income (loss) attributable to non-controlling interests | 18 | 27 | 91 | 78 | ||||||||||||
| Net income (loss) attributable to shareholders | $ | (671) | $ | 60 | $ | (7,378) | $ | 312 | ||||||||
| Basic earnings (loss) per common share | $ | (0.22) | $ | 0.02 | $ | (2.43) | $ | 0.10 | ||||||||
| Diluted earnings (loss) per common share | $ | (0.22) | $ | 0.02 | $ | (2.43) | $ | 0.10 | ||||||||
| Basic weighted average number of shares outstanding | 3,043 | 3,040 | 3,041 | 3,039 | ||||||||||||
| Diluted weighted average number of shares outstanding | 3,043 | 3,040 | 3,041 | 3,039 | ||||||||||||
GLOBAL-TECH ADVANCED INNOVATIONS INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Amounts expressed in thousands of United States dollars) | ||||||||
December 31, |
March 31, | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 15,701 | $ | 32,385 | ||||
| Time deposits | 13,293 | - | ||||||
| Restricted cash | 7,754 | 14,592 | ||||||
| Available-for-sale investments | 1,049 | 17 | ||||||
| Accounts and bills receivable | 23,085 | 19,714 | ||||||
| Inventories | 7,531 | 5,392 | ||||||
| Prepaid expenses | 206 | 181 | ||||||
| Deposits and other assets | 2,519 | 5,044 | ||||||
| Amount due from a related party | 13 | 19 | ||||||
| Total current assets | 71,151 | 77,344 | ||||||
| Interests in jointly-controlled entities | - | - | ||||||
| Property, plant and equipment, net | 28,889 | 26,529 | ||||||
| Land use rights, net | 3,036 | 3,027 | ||||||
| Deposits paid for purchase of property, plant and equipment | 268 | 280 | ||||||
| Available for sales investments | - | 1,045 | ||||||
| Total assets | $ | 103,344 | $ | 108,225 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Short-term bank loans | 4,212 | 4,826 | ||||||
| Accounts payable | 13,968 | 7,135 | ||||||
| Customer deposits | 1,284 | 1,331 | ||||||
| Accrued salaries, allowances and other employee benefits | 3,932 | 4,368 | ||||||
| Other accrued liabilities | 5,158 | 9,644 | ||||||
| Income tax payable | 4,652 | 4,659 | ||||||
| Total current liabilities | 33,206 | 31,963 | ||||||
| Deferred tax liabilities | 5 | 5 | ||||||
| Total liabilities | 33,211 | 31,968 | ||||||
Shareholders' equity: |
|
|
|
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Common stock, par value $0.04 per share; 12,500,000 shares
authorized; 3,233,814 and 3,230,814 | 129 | 129 | ||||||
| Additional paid-in capital | 85,076 | 85,053 | ||||||
| Statutory reserves | 1,238 | 1,238 | ||||||
| Accumulated deficit | (23,311) | (15,933) | ||||||
| Accumulated other comprehensive income | 12,031 | 10,710 | ||||||
| Less: Treasury stock, at cost, 189,587 shares as of December 31 and March 31, 2013 | (4,663) | (4,663) | ||||||
| Total Global-Tech Advanced Innovations Inc. shareholders’ equity | 70,500 | 76,534 | ||||||
| Non-controlling interests | (367) | (277) | ||||||
| Total equity | 70,133 | 76,257 | ||||||
| Total liabilities and shareholders’ equity | $ | 103,344 | $ | 108,225 | ||||
