China BAK Reports Fourth Quarter and Fiscal Year 2012 Financial Results PR Newswire SHENZHEN, China, Dec. 20, 2012 SHENZHEN, China, Dec. 20, 2012 /PRNewswire/ -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced its financial results for the fourth quarter and fiscal year ended September 30, 2012. Recent Achievements and Highlights oIn December 2012, the Company's Technical R&D Program in Key Materials, Battery and Battery Pack for use in Electric Vehicles ("EV") was selected into the National Support List for the New-Energy Vehicle Industry Innovation Program, which acknowledged China BAK's top position as an EV battery supplier in China; oRevenues from lithium polymer cells were $8.7 million for the fourth quarter fiscal 2012, up 85.4% from $4.7 million in the last quarter and up 187.3% from $3.0 million in the same period in fiscal 2011, reflecting the Company's success in its product structure adjustment to capitalize on high-end smartphone business opportunities; oRevenues from high-power lithium-ion battery cells reached a record $3.8 million during the fourth quarter fiscal 2012 , an increase of 220.2% year-over-year, reflecting our progress in expanding the EV battery supply; oIn July 2012, the Company's Shenzhen-based subsidiary entered into a strategic cooperation program to develop electric vehicle battery modules and high-capacity battery products with FAWER Automotive Parts Limited Company, a subsidiary of China FAW Group Corporation, one of China's leading vehicle manufacturers; oIn August 2012, the Company received a sample order to deliver three lithium-ion battery units to FAW-Volkswagen Automotive Co., Ltd., a major passenger sedan joint-venture of FAW Group Corporation and Volkswagen AG. Fourth Quarter Fiscal Year 2012 Financial Results Net revenues for the fourth quarter were $55.1 million, up 17.8% from $46.8 million last quarter and down 10.6% from $61.6 million for the same period in fiscal 2011. Revenues from prismatic products, including aluminum-case cells and battery packs, which are used in mobile phones and certain personal electronic devices, were $27.9 million, same as the last quarter and down 40.9% from $47.2 million for the same period in fiscal 2011. The decline in prismatic products compared with last year was mainly attributable to the decline in both sales volume and average selling price as a result of the decrease in replacement market demand for traditional prismatic batteries. Revenues from cylindrical cells, used in notebook computers, electric vehicles, power banks and certain other electronic devices, were $14.7 million, up 35.4% from $10.9 million sequentially and up 44.6% from $10.2 million for the same period in fiscal 2011. Revenues from lithium polymer cells, used in smart phones, personal electronic devices such as PDAs, MP3 players and Bluetooth devices, were $8.7 million, up 85.4% from $4.7 million in the last quarter and up 187.3% from $3.0 million in the same period in fiscal 2011. Revenues from high-power lithium battery cells, used in electric bicycles, other electric vehicles, power tools, and uninterruptible power supplies, and other applications manufactured at the Company's Tianjin facility, were $3.8 million, up 13.2% from last quarter and up 220.2% from the same period in fiscal 2011. Gross loss for the fourth quarter of fiscal year 2012 was $3.6 million, compared to gross loss of $5.1 million last quarter and gross profit of $8.3 million in the same quarter of last year. Our significant change from gross profit to gross loss was mainly due to: oDecrease in sales volume and gross profit from prismatic products, including aluminum-case cells and battery packs, compared with fiscal year 2011, primarily due to the continued increase in cost of revenues as result of increases in raw materials costs and labor cost; oSignificant write-down of obsolete inventory over the fiscal year ended September 30, 2012. Operating expenses totaled $16.4 million, or 30.1% of revenue, in the fourth quarter compared to $19.4 million, or 41.4% of revenue, in the last quarter and $13.5 million, or 21.9% of revenue, in the fourth quarter of fiscal 2011. Operating expenses in the fourth quarter of fiscal 2012 include an impairment charge of negative $2.4 million, compared with an impairment charge of $6.5 million in the fourth quarter of 2011. Research and development expenses were $1.1 million, or 1.9% of revenue, as compared to $1.6 million, or 3.4% of revenue in the last quarter and $1.9 million, or 3.0% of revenue in the same quarter of fiscal 2011. Sales and marketing expenses were $2.5 million, or 4.6% of revenue compared to $2.3 million, or 4.8% of revenue in the last quarter and $2.0 million, or 3.3% of revenue in the same quarter of fiscal 2011. General and administrative expenses were $15.2 million, or 28.0% of revenue compared to $11.9 million, or 25.5% of revenue in the last quarter and $3.1 million or 5.0% of revenue in the same quarter of fiscal 2011. Operating loss for the fourth quarter was $20.0 million compared to $24.5 million in the last quarter and $5.2 million in the same quarter of fiscal 2011. Net loss was $20.8 million, or diluted loss per share of $0.33, in the fourth quarter of fiscal 2012 compared to a net loss of $27.6 million, or diluted loss per share of $0.44, in the last quarter and net loss of $9.6 million, or diluted loss per share of $0.15, in the same quarter of fiscal 2011. Fiscal Year 2012 Financial Results For fiscal year 2012, net revenues were $205.7 million, down 6.1% from $219.0 million in fiscal 2011. Gross profit was $1.5 million or 0.7% of net revenues, down 94.4% from $26.3 million or 12.0% of net revenues for fiscal 2011. Operating loss was $56.7 million compared to $14.2 million in fiscal 2011. Net loss was $65.8 million, or diluted loss per share of $1.04, compared to a net loss of $24.5 million, or diluted loss per share of $0.39, in fiscal 2011. Financial Condition On September 30, 2012, China BAK had $9.3 million in cash and cash equivalents. For the fourth quarter of fiscal year 2012, Days Sales Outstanding (DSO) decreased to 142 days from 182 days last quarter and Days Sales of Inventory decreased to 100 days from 103 days last quarter. Short-term bank loans and long-term bank loans totaled $175.0 million, as compared to $169.7 million on June 30, 2012. Shareholders' equity totaled $71.8 million. China BAK had $27.6 million available for borrowing under its credit facilities. The Company generated $4.7 million in cash flow from operating activities in fiscal year 2012. Business Outlook "Despite the continued weakness in global economy, we are excited to see a rapid growth in the EV market, and the Company has gained satisfactory achievement as one of the best battery suppliers in the EV industry. We are confident in our ability to expand our products in high-end market for higher revenue growth and gross margin. We will also continue to strive to implement cost control measures to improve our margins and achieve profitability," commented Mr. Xiangqian Li, CEO of China BAK. "In addition, it is expected that we will receive unearned rental income from leasing certain parts of our new R&D Center to third parties and subsidies from the Chinese government for our Technical R&D Program, which will support the Company's cash flow for operations in year 2013," added Mr. Li. Conference Call China BAK will host a conference call at 8:00 p.m. ET on Thursday, December 20, 2012 to discuss results for the fourth quarter and fiscal year 2012 ended September 30, 2012. To participate in the conference call, please dial the following number approximately ten minutes prior to the scheduled conference call time: 866-520-2327 or 212-444-0065. International callers should dial (86-10) 5759-2800. The meeting number for the call is *90722525* (Press * key before and after). About China BAK Battery, Inc. China BAK Battery, Inc. (NASDAQ: CBAK) is a leading global manufacturer of lithium-based battery cells. The Company produces battery cells that are the principal component of rechargeable batteries commonly used in cellular phones, smart phones, notebook computers, e-bikes, electric vehicles, power tools, uninterruptible power supplies, and portable consumer electronics such as portable media players, portable gaming devices, personal digital assistants, or PDAs, camcorders, digital cameras, and Bluetooth headsets. China BAK Battery, Inc.'s production facilities, located in Shenzhen and Tianjin, PRC, cover over three million square feet. For more information regarding China BAK Battery, Inc., please visit http://www.bak.com.cn. Safe Harbor Statement This press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All "forward-looking statements" relating to the business of China BAK Battery, Inc. and its subsidiary companies, which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to: the ability of the Company to meet its contract obligations; the uncertain market for the Company's high-power lithium and other battery cells; business, macroeconomic, technological, regulatory, or other factors affecting the profitability of battery cells designed for electric vehicles; and risks related to China BAK's business and risks related to operating in China. Please refer to China BAK's Annual Report on Form 10-K for the fiscal year ended September 30, 2011, as well as other SEC reports that have been filed since the date of such annual report, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. China BAK's actual results could differ materially from those contained in the forward-looking statements. China BAK undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release. -Financial Tables Follow- China BAK Battery,Inc. and Subsidiaries Consolidated Statements of Operations and Comprehensive Income / (Loss) For the Three Months and Fiscal Years Ended September 30, 2012 and 2011 (Amounts in thousands, except per share data) ThreeMonthsEndedSeptember30, YearsEndedSeptember30, 2012 2011 2012 2011 (Unaudited) (Unaudited) Net Revenues $ $ $ 205,671 $ 54,291 61,582 218,953 Cost of revenues (57,916) (53,316) (204,198) (192,649) Grossprofit (3,625) 8,266 1,473 26,304 Operating expenses: Research and development expenses (1,054) (1,871) (5,759) (7,287) Sales and marketing expenses (2,521) (2,027) (8,489) (8,542) General and administrative expenses (15,183) (3,060) (40,009) (18,130) Impairment charge 2,405 (6,517) (3,919) (6,517) Total operating expenses (16,353) (13,475) (58,176) (40,476) Operating loss (19,978) (5,209) (56,703) (14,172) Finance costs, net (2,950) (2,766) (11,266) (10,829) Government grant income 3,324 411 5,354 1,454 Other (expense) / income (1,162) (369) (798) 312 Loss before income taxes (20,766) (7,933) (63,413) (23,235) Income tax benefits / (expense) 3 (1,618) (2,394) (1,302) Net loss $ $ $ (65,807) $ (20,763) (9,551) (24,537) Other comprehensive income / (loss) 720 2,393 - Foreign currency translation adjustment 1,525 7,794 Comprehensive loss $ $ $ (64,282) $ (20,043) (7,158) (16,743) Net loss per share: -Basic $ $ $ $ (0.33) (0.15) (1.04) (0.39) -Diluted $ $ $ $ (0.33) (0.15) (1.04) (0.39) Weighted average shares outstanding: -Basic 63,095 63,093 63,095 62,945 -Diluted 63,095 63,093 63,095 62,945 China BAK Battery,Inc. and Subsidiaries Consolidated Balance Sheets As of September 30, 2012 and 2011 (Amounts in thousands) As of September 30, 2012 2011 Assets Current assets Cash and cash equivalents $ 9,272 $ 24,858 Pledged deposits 5,510 5,726 Trade accounts receivable, net 77,450 88,261 Inventories, net 65,384 67,141 Prepayments and other receivables 7,70 7 5,242 Deferred tax assets 4,000 6,001 Total current assets 169,323 197,229 Property, plant and equipment, net 238,758 243,238 Lease prepayments, net 32,504 32,731 Intangible assets, net 628 295 Deferred tax assets 1,737 1,749 Total assets $ 442,950 $ 475,242 Liabilities Current liabilities Short-term bank loans $ 151,382 $ 139,706 Current maturities of long-term bank loans - 23,495 Accounts and bills payable 143,745 118,423 Accrued expenses and other payables 25,960 20,976 Total current liabilities 321,087 302,600 Long-term bank loans, less current 23,65 7 14,975 maturities Other long-term loan 7,587 2,457 Deferred revenue 7,700 7,456 Other long-term payables 10,364 11,732 Deferred tax liabilities 759 748 Total liabilities 371,154 339,968 Commitments and contingencies Shareholders' equity: Ordinary shares US$ 0.001 par value; 100,000,000 authorized; 63,612,526 and 63,816,276 issued 64 64 and outstanding as of September 30, 2010 and 2011 respectively Donation Shares 14,102 14,102 Additional paid-in-capital 126,940 126,135 Statutory reserves 7,786 7,645 Accumulated deficit (110,358) (44,410) Accumulated other comprehensive income 37,329 35,805 Less: Treasury shares (4,067) (4,067) Total shareholders' equity 71,796 135,274 Total liabilities and shareholders' equity $ 442,950 $ 475,242 China BAK Battery,Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Three Months and Fiscal Years Ended September 30, 2012 and 2011 (Amounts in thousands) ThreeMonthsEndedSeptember30, YearsEndedSeptember30, 2012 2011 2012 2011 (Unaudited) (Unaudited) Cash flow from operating activities Netloss $ (20,764) $ (9,551) $ (65,807) $ (24,537) Adjustments to reconcile net loss to net cash provided by / (used in) operating activities: Depreciation and amortization 2,98 3 4,359 18,519 18,628 Provision for / (recovery of) doubtful debts (5,033) (1,580) 6,749 1,911 Provision for / (recovery of) obsolete inventories 776 (1,562) 5,140 (1,807) Share-based compensation 148 317 804 1,584 Deferred income taxes 6 1,650 2,1 17 1,231 Impairment charge (2,405) 6,517 3,919 6,517 Deferred revenue 316 (62) 126 (244) Exchange loss 2,7 10 1,365 2,828 1,424 Gain on disposal of property, plant and equipment (16) (2) (16) (471) Changes in operating assets and liabilities: Trade accounts receivable 17,961 (14,564) 5,9 39 (157) Inventories (5,404) 14,286 (2,391) 2,089 Prepayments and other receivables 6, 010 65 (2,962) 473 Accounts and bills payable 9,552 9,097 2 2,048 20,032 Accrued expenses and other payables (14,137) (735) 8,073 8,645 Net cash (used in) / provided by operating activities $ (7,297) $ 9,600 $ 5,086 $ 35,318 Cash flow from investing activities Purchases of property, plant and equipment (4,572) (4,994) (20,004) (31,520) Purchases of intangible assets (3) (177) (467) (181) Government grants received 82 - 82 - Proceeds from disposal of property, plant and equipment 21 32 21 656 Net cash used in investing activities $ (4,472) $ (5,139) $ (20,368) $ (31,045) Cash flow from financing activities Proceeds from borrowings 66, 520 26,118 194, 730 165,712 Repayment of borrowings (57,998) (23,796) (195,488) (172,642) (Increase) / decrease in pledged deposits (789) 928 303 4,130 Net cash provided by / (used in) financing activities $ 7,733 $ 3,250 $ $ (455) (2,800) Effect of exchange rate changes on cash and cash equivalents 231 48 15 0 797 Net increase / (decrease) in cash and cash equivalents (3,805) 7,759 (15,587) 2,270 Cash and cash equivalents at the beginning of the period 13,076 17,099 24,858 22,588 Cash and cash equivalents at the end of the period $ 9,272 $ 24,858 $ 9,272 $ 24,858 SOURCE China BAK Battery, Inc. Website: http://www.bak.com.cn Contact: Investor Relations Department, China BAK Battery, Inc., 86-755-61886818 ext 6856, firstname.lastname@example.org
China BAK Reports Fourth Quarter and Fiscal Year 2012 Financial Results
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