Global-Tech Advanced Innovations Reports First Quarter Results for Fiscal 2016

HONG KONG–(BUSINESS WIRE)–Global-Tech Advanced Innovations Inc. (NASDAQ:GAI) today announced its
net sales and earnings for the quarter ended June 30, 2015 (the
Company’s first quarter of fiscal 2016).

Net sales for the first quarter of fiscal 2016 ended June 30, 2015 were
$15.3 million, compared to net sales of $24.6 million for the
corresponding quarter in fiscal 2015. Net loss for the first quarter of
fiscal 2016 was $1.0 million, or $0.34 per share, compared to a net loss
of $0.3 million, or $0.10 per share, for the first quarter of fiscal
2015.

John C.K. Sham, the Company’s President and Chief Executive Officer,
said: “As anticipated, net sales decreased significantly when compared
to the prior corresponding period, due almost entirely to declining
sales in commodity CCMs, a lower price-point category where increases in
labor and overhead costs have eliminated any advantage previously held
over competitors.”

Mr. Sham continued, “Despite a decrease in overall sales, average unit
pricing improved as a result of a more favorable product mix and our
efforts to control production costs, leading to increases in profit
margins.”

Mr. Sham concluded, “The outlook on our overall business is tempered by
growing sentiment of a slowing Chinese economy together with the
potential impacts of the recent devaluation of the Chinese currency, as
much of our business is U.S. dollar related. We do not expect our
business to improve in the near future as our customers are likely to
take a conservative position to reduce excess inventory and are prepared
to make further cost reductions if necessary in an effort to protect our
continued viability.”

Recent Developments

Announced Receipt of “Going Private” Offer

  • On August 3, 2015, the Company announced that its board of directors
    (the “Board”) has received an unsolicited preliminary non-binding
    proposal letter (the “Proposal Letter”), dated August 1, 2015, from
    Mr. John C.K. Sham, President and Chief Executive Officer of the
    Company, and certain of his controlled or affiliated entities
    (collectively, the “Acquirer”), proposing a potential offer to acquire
    all of the outstanding common shares of the Company (the “Offer”) not
    already beneficially owned or controlled by the Acquirer for $8.75 in
    cash per share (“Shares”). According to the Proposal Letter, the
    Acquirer plans to form an acquisition company for the purpose of
    implementing the Offer, and the Offer is intended to be financed with
    a combination of cash and debt.
  • On August 10, 2015, the Company announced that in response to the
    Proposal Letter received by the Board from the Acquirer, the Board has
    formed a special committee of independent directors who are not
    affiliated with the Acquirer (the “Special Committee”) to consider
    potential transactions involving the Company, including the previously
    announced Proposal Letter. The Special Committee consists of Mr. Barry
    J. Buttifant and Mr. Patrick Po-On Hui, with Mr. Buttifant acting as
    the chairman of the Special Committee.
  • On August 24, 2015, the Company announced that the Special Committee
    plans to retain Cleary Gottlieb Steen & Hamilton LLP as its United
    States legal counsel, Maples & Calder as its British Virgin Islands
    legal counsel and Houlihan Lokey (China) Limited as its independent
    financial advisor to assist in the evaluation of potential
    transactions involving the Company, including the Proposal Letter
    received by the Board from the Acquirer.

The Special Committee cautions the Company’s shareholders and others
considering trading its securities that the Special Committee is
continuing its evaluation of the Offer or other alternatives and that,
at this time, no decisions have been made by the Special Committee with
respect to the Company’s response to the Offer. There can be no
assurance that any definitive offer will be made, that any definitive
agreement will be executed or that the Offer or any other transaction
will be approved or consummated.

Global-Tech Advanced Innovations Inc. is a holding company, owning
subsidiaries that manufacture and market electronic components and other
related products, such as complementary metal oxide semiconductor (CMOS)
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
June 30,
2015   2014
(unaudited) (unaudited)
   
Net sales $ 15,307 $ 24,607
Cost of goods sold   (14,229)   (22,865)
Gross profit 1,078 1,742
Selling, general and administrative expenses (3,501) (2,955)
Other operating income (expense)    
Operating income (loss)   (2,423)   (1,213)
Interest income, net   175   104
Other income (expense), net   1,206   917
Income (loss) from continuing operations before income taxes   (1,042)   (192)
Income tax expenses     (124)
Income (loss) from continuing operations (1,042) (316)
Income (loss) from discontinued operations, net of tax    
Net income (loss) (1,042) (316)
Net income (loss) attributable to non-controlling interests   13   15
Net income (loss) attributable to shareholders $ (1,029) $ (301)
 
Basic earnings (loss) per common share $ (0.34) $ (0.10)
 
Diluted earnings (loss) per common share $ (0.34) $ (0.10)
 
Basic and diluted weighted average number of shares outstanding   3,044   3,042
 
 
GLOBAL-TECH ADVANCED INNOVATIONS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Amounts expressed in thousands of United States dollars)

 
 
June 30, 2015     March 31, 2015
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 9,436 $ 14,502
Time deposits 18,717 12,649
Restricted cash 4,594 9,851
Accounts and bills receivable, net 25,681 20,494
Inventories 7,862 6,419
Prepaid expenses 96 95
Deposits and other assets 3,080 3,754
Amount due from a related party   15   15
Total current assets 69,481 67,779
Interests in jointly-controlled entities
Property, plant and equipment, net 23,402 24,175
Land use rights, net 2,800 2,827
Deposits paid for purchase of property, plant and equipment 176 200
Deferred tax assets   3   3
Total assets $ 95,862 $ 94,984
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term bank loans 4,301 6,780
Accounts payable 18,939 14,248
Customer deposits 1,430 1,252
Accrued salaries, allowances and other employee benefits 3,147 3,078
Other accrued liabilities 5,756 6,284
Income tax payable   4,029   4,029
Total current liabilities 37,602 35,671
Deferred tax liabilities    
Total liabilities   37,602   35,671

Shareholders’ equity:

 

 

Common stock, par value $0.04 per share; 12,500,000 shares
authorized; 3,233,814 shares issued as of June 30 and March 31, 2015

129

129

Additional paid-in capital 85,108 85,108
Statutory reserves 1,328 1,328
Accumulated deficit (34,028) (32,999)
Accumulated other comprehensive income 10,839 10,850
Less: Treasury stock, at cost, 189,587 shares as of June 30 and
March 31, 2015
  (4,663)   (4,663)
Total Global-Tech Advanced Innovations Inc. shareholders’ equity 58,713 59,753
Non-controlling interests (453) (440)
Total equity   58,260   59,313
Total liabilities and shareholders’ equity $ 95,862 $ 94,984
 

Contacts

Global-Tech Advanced Innovations Inc.
Cecilia Au-Yeung, (852)
2814-0601
investorrelations@global-webpage.com
http://global-webpage.newshq.businesswire.com