Suntech Announces Preliminary Financial Results for the Third Quarter of 2012
Announces Planned Restatement of Prior Years' Financial Statements
SAN FRANCISCO and WUXI, China, Dec. 7, 2012
SAN FRANCISCO and WUXI, China, Dec. 7, 2012 /PRNewswire/ --Suntech Power
Holdings Co., Ltd. (NYSE: STP), one of the world's largest producers of solar
panels, today announced preliminary financial results for the third quarter
ended September 30, 2012.
Preliminary results indicate that Suntech's shipments of photovoltaic (PV)
products for the third quarter of 2012 declined by approximately 10% from the
second quarter of 2012. Revenues in the third quarter of 2012 were
approximately $387 million, a sequential decline of 18%. Approximately 88% of
revenues were generated from the sale of PV modules, and 12% of revenues were
generated from the sale of PV systems, cells, silicon wafers and production
equipment. Gross margin in the third quarter of 2012 was approximately 5%.
Gross margin benefited from the reversal of a prior provision for anti-dumping
tariffs and countervailing duties in the United States of $18 million, which
was partially offset by a $13 million provision for purchase commitments
related to long-term supply agreements. In the third quarter of 2012,
Suntech's operating expenses were approximately $98 million. Operating
expenses were impacted by $6 million of legal fees related to GSF and other
legal matters; $8 million in restructuring fees associated with the reduction
of PV cell production capacity and headcount; and a $6 million impairment of
"In the third quarter, subsidy adjustments led to slower demand in European
markets, however, quarterly shipments grew to Suntech customers in China,
Japan and Thailand," said David King, Suntech's CEO. "With the soft demand
environment expected to persist into early 2013, we have taken decisive steps
to right-size production capacity and streamline operations, which will reduce
production cost and operating expenses over time. We are also working with our
banking partners and bondholders to ensure we have a capital structure that
will enable Suntech to be successful in the current challenging industry
environment. We are confident that these initiatives will strengthen our
business and enable us to improve profitability as the market recovers."
Suntech expects shipments of PV products in the fourth quarter of 2012 to
decline by a low single digit percentage compared to the third quarter of
2012. The gross margin in the fourth quarter of 2012 is expected to be
slightly negative. Suntech now expects 2012 annual PV shipments to be in the
range of 1.7GW to 1.8GW, compared to previous guidance of 1.8GW to 2.0GW.
The estimates presented in this press release are preliminary, unaudited and
subject to further adjustments. The actual results could turn out to be higher
GSF Operations Update
Suntech announced that 110.5MW of the 141.7MW solar plants owned by Global
Solar Fund, S.C.A., Sicar ("GSF") operating companies have been accepted into
the Italian feed-in-tariff ("FiT") program, an increase from 74MW that had
been accepted into the FiT program as of 14 August, 2012. GSF continues its
efforts to have the remaining PV plants accepted into the FiT program, which
will increase the revenue generated by the PV plants.
Suntech also announced that the Public Prosecutor of Brindisi, Italy has
brought charges against certain officers of GSF subsidiaries alleging that
they have failed to comply with the necessary permitting process and building
regulations for 12.7MW of PV plants in Italy. Investigations into a further
7.9MW of GSF-owned PV plants are also pending, but have not yet resulted in
any charges being brought. Suntech has been advised that the GSF officers are
vigorously contesting the charges and believe that the plants at issue are in
compliance with Italian law. The Company is not the subject of, or otherwise
involved in, these proceedings.
In addition, an internationally accredited accounting firm will be undertaking
an audit of GSF's prior and current financial statements. GSF management
currently expects that this audit will be completed in early 2013.
Planned Restatement of Prior Years' Financial Statements
In July 2012, Suntech announced that it was conducting an investigation into a
security interest it received from GSF Capital in connection with financing of
Italian solar facilities related to its investment in GSF. Suntech has
recently come to the conclusion that the security interest does not exist and
that it has been the victim of a fraud by others. As a result, with respect to
the guarantee that Suntech provided to lenders to a GSF project company in
2010, the Company is required to record a guarantee obligation in the range of
$60 million to $80 million, which is an increase from the prior guarantee
obligation of $3 million. The Company expects that this will result in a
corresponding reduction in net income of $60 million to $80 million for the
year ended December 31, 2010. The impact to net income for the years ended
December 31, 2011 and December 31, 2012 is expected to be immaterial.
Accordingly, Suntech's Audit Committee of the Board of Directors and the
management team have concluded that Suntech's interim condensed financial
information for 2010, 2011 and first quarter 2012, and its annual consolidated
financial statements for 2010 and 2011 together with the accompanying reports
of Suntech's independent registered accounting firm for 2010 and 2011 should
not be relied upon by investors. The Company intends to file its restated
consolidated financial statements once the assessment of the guarantee
obligation and GSF's financial audit are completed. Suntech currently expects
that this will be in early 2013 and will continue to inform investors of any
material developments in a timely manner. The Company cannot assure you that
the ongoing assessment of the guarantee obligations and the results of GSF's
financial audit will not result in additional changes to the Company's prior
financial statements that will need to be reflected in its restated
consolidated financial statements.
Suntech Power Holdings Co., Ltd. (NYSE: STP) produces solar products for
residential, commercial, industrial, and utility applications. With regional
headquarters in China, Switzerland, and the United States, and gigawatt-scale
manufacturing worldwide, Suntech has delivered more than 25,000,000
photovoltaic panels to over a thousand customers in more than 80 countries.
Suntech's pioneering R&D creates customer-centric innovations that are
designed to drive solar to grid parity against fossil fuels. Our mission is to
provide everyone with reliable access to nature's cleanest and most abundant
For more information about our people and products visit
Safe Harbor Statement
This press release contains forward-looking statements. These statements
constitute "forward-looking" statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and as defined in the U.S. Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "plans to", "expects to," "anticipates,"
"future," "intends to," "optimistic," "plans," "believes," "considers" and
similar statements and includes Suntech's preliminary results for the third
quarter of 2012; its projections for the fourth quarter and of 1.7GW-1.8GW of
shipments for the full year 2012; its ability to reduce production costs and
operating expenses over time through right-sizing production capacity and
streamlining operations; its ability to strengthen its business, improve
profitability, and improve its capital structure; future market demand; the
timing of when solar plants owned by GSF operating companies that have not yet
been accepted into the Italian FiT program will be accepted into the FiT
program; the timing for completing the audit of GSF and the restatement of
Suntech's financial statements; and the expected results of the restatement.
Such statements involve certain risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Further information regarding these and other risks is included in
Suntech's filings with the U.S. Securities and Exchange Commission, including
its annual report on Form 20-F. Suntech does not undertake any obligation to
update any forward- looking statement as a result of new information, future
events or otherwise, except as required under applicable law.
For further information, please contact:
Investor Relations Director
Ph: +86 21 2416 3888
SOURCE Suntech Power Holdings Co., Ltd.
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