Global-Tech Appliances Reports Fiscal Year Financial Results and Continues to Pursue New Business Initiatives to Reinvent Itself.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 ) today announced its financial results for the fiscal year and fourth quarter ended March 31, 2006. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fiscal year ended March 31, 2006 were $73.8 million, up 76%, compared to $41.9 million in the prior fiscal year. Net loss for fiscal 2006 was $11.2 million, or $0.92 per share, compared to a net loss of $18.6 million, or $1.52 per share, in the prior fiscal year. Included in the net loss for fiscal year 2006 were impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges of approximately $2.6 million, or approximately $0.22 per share, which relate primarily to the Company's 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. ) and in part to its liquid crystal display television Liquid crystal display television (LCD TV) is television that uses LCD technology for its visual output. The technology used is generally TFT. In the early 2000s, LCD flat-panels captured a large part of the computer monitor market from traditional CRTs. (LCD TV 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. ) programs. Net sales for the fourth quarter of fiscal 2006 were $15.7 million, up 29%, compared to $12.2 million for the fourth quarter of fiscal 2005. Net loss for the fourth quarter of fiscal 2006 was $1.2 million, or $0.10 per share, compared to a net loss of $7.5 million, or $0.62 per share, in the prior corresponding fiscal period. John C.K. Sham, the Company's President and Chief Executive Officer, said: "While net sales were up and net loss declined in fiscal 2006 compared to fiscal 2005, gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. in the Company's core business of floor care and kitchen appliance products were and are expected to remain adversely impacted by the continuing increase in material costs, particularly plastic resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing , which is a derivative of natural gas and other oil distillates. Additionally, our operating results for fiscal 2006 were further impacted by the continuing low absorption of our manufacturing and administrative fixed overhead resulting from insufficient sales in our core business. In an attempt to improve our financial results, actions have been taken to reduce certain fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). , including a reduction in our work force." Mr. Sham continued, "We are pleased to report that, in the second half of fiscal 2006, our compact camera module (CCM CCM Contemporary Christian Music CCM Critical Care Medicine CCM County College of Morris (New Jersey) CCM Chama Cha Mapinduzi (political party, Tanzania) CCM CORBA Component Model ) components, used primarily in cellular phones, achieved net sales of approximately $5.9 million. We are continuing our efforts to expand the CCM business, including the formation of an experienced R&D team in Taiwan to further enhance our product development capabilities, so that we can maintain technological leadership in the market. We expect this business to continue to grow in the coming quarters as new products are developed and are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that it will improve our financial performance in the near future." Mr. Sham concluded, "In addition to the CCM business, we recently introduced and started marketing a line of digital imaging products and anticipate that this new product category will soon become a growing part of our overall business. We are now directing our new product development programs to innovative electronics products as we also continue to explore other business initiatives. We continue to believe it's essential for us to reinvent re·in·vent tr.v. re·in·vent·ed, re·in·vent·ing, re·in·vents 1. To make over completely: "She reinvented Indian cooking to fit a Western kitchen and a Western larder" and reposition ourselves so that we can take advantage of opportunities that are evolving in this rapidly changing business climate. Despite our net loss for fiscal 2006, our cash and short-term investments were over $46 million as of March 31, 2006, or approximately $3.77 per share, which we believe is more than sufficient to support our ongoing business initiatives and strategies." Global-Tech Appliances Inc. 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), Hamilton Beach(R), Kenwood(R), Presto(R), Proctor-Silex(R), Sanyo(R), Sharper Image(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). 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 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 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 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 United States dollars)
Fiscal Years Ended March 31,
-----------------------------
2006 2005
-------------- --------------
(unaudited) (audited)
Net sales $ 73,812,100 $ 41,851,163
Cost of goods sold (69,816,822) (44,595,004)
-------------- --------------
Gross profit (loss) 3,995,278 (2,743,841)
Selling, general and administrative
expenses (18,010,869) (16,053,820)
-------------- --------------
Operating loss (14,015,591) (18,797,661)
Interest expense (55,435) (9,855)
Interest income 1,278,093 976,753
Other income (expenses), net 1,533,949 (778,411)
-------------- --------------
Loss from operations before income taxes (11,258,984) (18,609,174)
Provision for income taxes 22,998 (33,650)
-------------- --------------
Net loss before minority interests (11,235,986) (18,642,824)
Minority interests 12,592 19,525
-------------- --------------
Net loss $(11,223,394) $(18,623,299)
============== ==============
Basic and diluted loss per common share $ (0.92) $ (1.52)
============== ==============
Basic and diluted weighted average number
of shares outstanding 12,223,608 12,214,800
============== ==============
GLOBAL-TECH APPLIANCES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts expressed in United States dollars)
March 31,
--------------------------
2006 2005
------------ -------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $27,313,746 $ 8,790,594
Restricted cash - 430,974
Callable deposit - 5,000,000
Short-term investments 18,715,682 33,966,281
Accounts and bills receivable, net 8,446,502 7,194,894
Deposits, prepayments and other assets 1,929,626 2,323,895
Other receivable 4,577,186 -
Inventories 10,780,816 14,056,562
------------ -------------
Total current assets 71,763,558 71,763,200
Loan to a director - 76,667
Property, plant and equipment, net 24,164,775 27,779,778
Land use rights 2,151,444 2,191,759
License, net - 2,201,124
------------ -------------
Total assets $98,079,777 $104,012,528
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings $ 37,698 $ 37,507
Accounts payable 5,075,248 5,258,005
Salaries and allowances payable 587,717 730,976
Accrued expenses 3,797,401 3,061,568
Accrual for contingent losses 5,464,134 810,000
Income tax payable 3,730,043 3,698,237
------------ -------------
Total current liabilities 18,692,241 13,596,293
Deferred tax liabilities 38,619 142,888
------------ -------------
Total liabilities 18,730,860 13,739,181
------------ -------------
Minority interests - 12,528
------------ -------------
Shareholders' equity:
Common stock, par value $0.01;
50,000,000 shares authorized;
12,902,755 shares issued as of March 31,
2006 and 2005 129,028 129,028
Preferred stock, par value $0.01;
1,000,000 shares authorized; no shares
issued - -
Additional paid-in capital 83,030,824 83,264,716
Retained earnings 879,673 12,103,067
Accumulated other comprehensive losses (197,161) (742,545)
Less: Treasury stock, at cost, 679,147
shares as of March 31, 2006 and 2005 (4,493,447) (4,493,447)
------------ -------------
Total shareholders' equity 79,348,917 90,260,819
------------ -------------
Total liabilities and shareholders'
equity $98,079,777 $104,012,528
============ =============
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