Global-Tech Appliances Announces Restatement of Fiscal 2004 and 2005 Results to Correct Non-Cash Accounting Error.HONG KONG Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. -- Global-Tech Appliances Inc. (NYSE NYSE See: New York Stock Exchange : GAI GAI General Applet Interface GAI Giustizia e Affari Interni (Italian) GAI Global-Tech Appliances Inc GAI Guild of Architectural Ironmongers GAI Global Atmospherics Inc GAI General Ability Index GAI Great American Insurance ) announced today that it is restating its previously reported financial results for fiscal 2004 and interim periods of fiscal 2005 to correct an accounting error relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc non-cash stock compensation expense for stock options subject to variable accounting. In the fiscal 2005 periods, the restated figures also present reclassifications for royalty expense related to sales of displays. When preparing its financial statements for fiscal 2005, the Company discovered an error in its previously reported results for its fiscal year ended March 31, 2004 and previously announced fiscal 2005 periods. For fiscal 2004, the Company inadvertently failed to recognize an additional non-cash stock compensation expense of approximately $2.4 million, and as a result the Company did not record a partial reversal of this stock compensation expense in the previously reported fiscal 2005 periods. The error resulted from the failure for the last three quarters of fiscal 2004 and the first three quarters of fiscal 2005 to recognize non-cash compensation expense and income, respectively, related to the application of variable accounting to unexercised stock options issued by the Company in 2000 in an option exchange program. Variable accounting for stock options does not affect cash flows or total shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . During fiscal 2004, as a result of an increase in the quoted market price of the Company's stock, the Company's selling, general and administrative expenses were increased by approximately $2.4 million related to the additional compensation expense, from approximately $16.6 million as reported to $19.0 million as restated, and the net loss increased from approximately $1.6 million, or $0.13 per share, as reported, to $3.9 million, or $0.32 per share, as restated. For the nine months ended December 31, 2004, as a result of the decline in the market price of the Company's stock during the period, the Company's selling, general and administrative expenses were decreased by approximately $0.3 million, and the net loss decreased from $11.4 million, or $0.94 per share, as reported, to $11.1 million, or $0.91 per share, as restated. The Company plans to file an amended Form 20-F for fiscal 2004 and an amended Form 6-K with an amended quarterly report for the three and nine months ended December 31, 2004 that will contain the restated financial statements reflecting these changes. It is anticipated that the aggregate non-cash compensation expense reversal related to the stock options for the entire 2005 fiscal year will be approximately $1.2 million. The Company first generated sales from licensed display products during fiscal 2005. Accordingly, the minimum royalty paid related to these products for fiscal 2005 has been reclassified to cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold from selling, general and administrative expense. The only impact of this reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. in the 2005 fiscal interim periods is a change in cost of goods sold, gross profit, and selling, general and administrative expenses, as shown below. The following tables show the reconciliation between the interim and annual results impacted by the restatements as previously reported in the Company's quarterly earnings releases since September 30, 2003 and as restated, as well as the impact of the reclassification on the 2005 interim periods. For the interim periods ended September 30, 2003 and December 31, 2003 and the fiscal year ended March 31, 2004:
Six Months Ended Nine Months Ended
September 30, 2003 December 31, 2003
----------------------------------------------------------------------
(Amounts expressed in thousands of U.S. dollars except
per share data)
----------------------------------------------------------------------
As reported As restated As reported As restated
----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
----------------------------------------------------------------------
Selling, general and
administrative
expenses 7,954 8,433 12,394 14,065
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Operating loss (520) (999) (1,327) (2,998)
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Income (loss) from
continuing
operations
before income
taxes 141 (338) (622) (2,293)
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Net income (loss) 100 (379) (694) (2,365)
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Basic and diluted
earnings (loss) per
common share $0.01 $(0.03) $(0.06) $(0.19)
----------------------------------------------------------------------
Fiscal Year Ended March
31, 2004
----------------------------------------------------------------------
(Amounts expressed in thousands of U.S. dollars except
per share data)
----------------------------------------------------------------------
As reported As restated
----------------------------------------------------------------------
(audited) (unaudited)
----------------------------------------------------------------------
Selling, general and administrative expenses 16,664 19,019
----------------------------------------------------------------------
Operating loss (2,705) (5,060)
----------------------------------------------------------------------
Income (loss) from continuing operations before
income taxes (1,443) (3,798)
----------------------------------------------------------------------
Net income (loss) (1,551) (3,906)
----------------------------------------------------------------------
Basic and diluted earnings (loss) per common
share $(0.13) $(0.32)
----------------------------------------------------------------------
For the interim periods ended June 30, 2004, September 30, 2004
and December 31, 2004:
Three Months Ended Six Months Ended
June 30, 2004 September 30, 2004
----------------------------------------------------------------------
(Amounts expressed in thousands of U.S. dollars except
per share data)
----------------------------------------------------------------------
As As As As
reported restated reported restated
----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
----------------------------------------------------------------------
Cost of goods
sold (Note 1) 8,740 8,864 19,921 20,169
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Gross profit (Note 1) 1,159 1,035 1,436 1,188
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Selling, general and
administrative
expenses (Note 2) 4,229 4,045 8,576 8,175
----------------------------------------------------------------------
Operating loss (3,070) (3,010) (7,140) (6,987)
----------------------------------------------------------------------
Loss from
continuing
operations
before income
taxes (2,824) (2,764) (6,680) (6,527)
----------------------------------------------------------------------
Net loss before
minority
interests (2,824) (2,764) (6,680) (6,527)
----------------------------------------------------------------------
Net loss (2,824) (2,764) (6,680) (6,527)
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Basic and diluted loss
per common share $(0.23) $(0.23) $(0.55) $(0.53)
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Nine Months Ended December 31, 2004
----------------------------------------------------------------------
(Amounts expressed in thousands of U.S. dollars except
per share data)
----------------------------------------------------------------------
As reported As restated
----------------------------------------------------------------------
(unaudited) (unaudited)
----------------------------------------------------------------------
Cost of goods sold (Note 1) 28,845 29,218
----------------------------------------------------------------------
Gross profit (Note 1) 853 480
----------------------------------------------------------------------
Selling, general and administrative
expenses (Note 2) 13,037 12,334
----------------------------------------------------------------------
Operating loss (12,184) (11,854)
----------------------------------------------------------------------
Loss from continuing operations
before income taxes (11,411) (11,081)
----------------------------------------------------------------------
Net loss before minority interests (11,427) (11,097)
----------------------------------------------------------------------
Net loss (11,422) (11,092)
----------------------------------------------------------------------
Basic and diluted loss per common
share $(0.94) $(0.91)
----------------------------------------------------------------------
Note 1: During fiscal 2005, the restated figures reflect a re-classification of approximately $124,000, $248,000 and $373,000 of royalty expense from selling, general and administrative (SG&A) expense to cost of goods sold for the three-, six- and nine-month periods ended June 30, September 30, and December 31, 2004, respectively. The gross profit for each period has been adjusted accordingly. The reclassification results from the Company's recognition of revenues during these periods from selling display components under the terms of a license, which requires the Company to make royalty payments. Since there were no sales of such goods in prior fiscal years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time minimum royalty payments made were recorded in SG&A expense. Note 2: The restated figures for SG&A reflect reversal of non-cash stock compensation expense of approximately $60,000, $153,000 and $330,000 accompanied by the reclassification of royalty expense of approximately $124,000 $248,000 and $373,000 from SG&A to cost of goods sold for the three-, six- and nine-month periods ended June 30, September 30, and December 31, 2004, respectively. The restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. relates to non-cash compensation expense or reversal thereof resulting from variable accounting for stock options. The restatement impacts the Company's previously reported balance sheet at the end of each period presented above by decreasing retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. and increasing additional paid-in capital additional paid-in capital Stockholder contributions that are in excess of a stock's stated or par value. For example, if a firm issues stock with a par value of $1 per share but sells the stock to investors at $10 per share, the firm's financial statements in equal amounts based on the amount of compensation expense or reversal. At the end of fiscal 2004, the Company's retained earnings were approximately $2.4 million lower and its additional paid-in capital was approximately $2.4 million higher than previously reported due to the recognition of non-cash compensation expenses of approximately $479,000, $1,671,000 and $2,355,000, respectively, during the six- and nine-month and annual periods ended September 30, 2003, December 31, 2003 and March 31, 2004. At the end of the nine-month period ended December 31, 2004, the Company's retained earnings were approximately $2.0 million lower and its additional paid-in capital was approximately $2.0 million higher than previously reported. This resulted from the recognition of reversal of non-cash compensation expense of approximately $60,000, $153,000 and $330,000, respectively, at the end of each of the three-, six- and nine-month periods ended June 30, 2004, September 30, 2004 and December 31, 2004, that partially offset the accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. $2.4 million of non-cash stock compensation expense carried forward from fiscal 2004. The Company is still in the process of finalizing its audit and will release its fiscal 2005 financial results in due course. Global-Tech is a holding company, owning subsidiaries that manufacture and market a wide range of consumer electrical products worldwide, including floor care products and small household appliances. These products are marketed by customers under brand names such as Black & Decker(R), DeLonghi(R), Dirt Devil Dirt Devil is a brand name household vacuum cleaner. It is an icon and one of the best selling in the United States. There are two main units Power for large houses, and RV unit for smaller houses or apartments, as well as a number of other floor care products including hand-held (R), Eureka(R), GE(R), Hamilton Beach(R), Kenwood(R), Proctor-Silex(R), Sanyo(R), Sunbeam(R), and West Bend West Bend, industrial city (1990 pop. 23,916), seat of Washington co., E Wis., on the Milwaukee River; inc. 1885, consolidated with Barton in 1961. Tools and dies, plastics, machines, dairy items, and leather products are made there. A two-year branch of the Univ. (R). Global-Tech's subsidiary, Global Display Limited, is currently developing and introducing a wide range of consumer products incorporating high-definition flat panel displays A thin display screen for computer and TV usage. The first flat panels appeared on laptop computers in the mid-1980s, and the LCD technology became the standard. Stand-alone LCD screens became available for desktop computers in the mid-1990s and exceeded sales of CRTs for the first time (FPDs) that utilize liquid crystal display liquid crystal display (LCD) Optoelectronic device used in displays for watches, calculators, notebook computers, and other electronic devices. Current passed through specific portions of the liquid crystal solution causes the crystals to align, blocking the passage of light. (LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. ), plasma display panel See plasma display. (PDP (1) (Plasma Display Panel) See plasma display. (2) (Policy Decision Point) See COPS and XACML. (3) (Programmed Data P ), liquid crystal on silicon Liquid crystal on silicon (LCOS or LCoS) is a "micro-projection" or "micro-display" technology typically applied in projection televisions. It is a reflective technology similar to DLP projectors; however, it uses liquid crystals instead of individual mirrors. (LCOS (Liquid Crystal on Silicon) A technology used to make microdisplays for rear-projection TVs and head-mounted displays (HMDs). Each LCoS chip hosts a grayscale LCD shutter sandwiched between a cover glass and a mirror. ), optical, and digital display technologies. Lite Array, Inc., another subsidiary of Global-Tech, is developing and introducing a range of display modules utilizing proprietary small molecule organic light emitting diode See LED. (OLED (Organic Light Emitting Device, Organic Light Emitting Diode) A thin film light-emitting technology that is expected to compete with LCD and plasma TVs as well as LCD monitors and readouts. ) technology for use in electronic devices, such as cellular phones and MP3 players A digital music player that supports the MP3 format, which was the audio format that started a revolution in online music downloads and distribution. All portable music players, the iPod being the most popular, support MP3 along with one or more other audio formats. . Except for historical information, certain statements contained herein are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 display products, our ability to establish ourselves as a proven and reliable manufacturer of LCD TVs A flat panel TV that uses LCD technology or a rear-projection TV that is based on LCD microdisplay panels. See flat panel TV, rear-projection TV and LCD. , the success of new product development especially in the area of cellular phone components and solutions, compact camera modules, digital MP3 players 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 diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. and transform a portion of manufacturing capacity to higher-value, technology-oriented products, currency fluctuations, including the revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. of the Chinese Renminbi
"CNY" and "RMB" redirect here. For other uses, see CNY (disambiguation) and RMB (disambiguation). , the imposition The printing of pages on a single sheet of paper in a particular order so that they come out in the correct sequence when cut and folded. by China's trading partners of economic sanctions Economic sanctions are economic penalties applied by one country (or group of countries) on another for a variety of reasons. Economic sanctions include, but are not limited to, tariffs, trade barriers, import duties, and import or export quotas. and/or protective tariffs Noun 1. protective tariff - a tariff imposed to protect domestic firms from import competition tariff, duty - a government tax on imports or exports; "they signed a treaty to lower duties on trade between their countries" on Chinese manufactured goods manufactured goods npl → manufacturas fpl; bienes mpl manufacturados manufactured goods npl → produits manufacturés , 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 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . |
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