China BAK Reports Fourth Quarter and Fiscal Year 2012 Financial Results

   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, ir@bak.com.cn
 
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