HARBIN, China, Nov. 15 /Xinhua-PRNewswire/ -- Harbin Electric, Inc.
(OTC Bulletin Board: HRBN) a U.S. company, with operations based in Harbin,
China, today announced financial results for the third quarter ended September
30, 2006. Sales for the quarter were $9.82 million, an increase of 39.4% over
the third quarter of last year. Sales of linear motor and special motor
products drove the growth the period. Industrial electric linear motors and
special motors continued to comprise significantly all of our total product
sales in both comparable periods.
Gross margins were 48.9% for the third quarter of 2006 compared to 49.8%
the third quarter of last year. Reported net income was $4.28 million with
fully diluted earnings per share of $0.24 compared to $2.98 million and $0.19
respectively for the three months ended September 30, 2005, an increase of
43.5%.
Highlights for the quarter include:
- Entering into a joint research and development agreement with the
Institute of Electrical Engineering of the Chinese Academy of Sciences
("IEECAS") to produce a train and system to be tested at the Beijing
Airport railway line in the People's Republic of China by the end of
2008
- Closing of a US$50.0 million financing with Citadel Equity Fund Ltd. and
Merrill Lynch International
- Entering into an agreement for lease and use of 40,800 square meters of
State-owned land in the Shanghai Zhuqiao Airport Industrial Zone
The Company ended the quarter with $60.6 million in cash, as compared with
$5.60 million for the corresponding period in 2005. The increased cash
position was mainly due the net funds raised through the Indenture related to
our financing dated August 30, 2006 and the increased cash flow from our
operations. These quarterly results can be seen in greater detail in the
Company's SEC Form 10-QSB filed with the Securities and Exchange Commission
(www.sec.gov) on November 14, 2006.
"This was an exciting and productive quarter for our company having
received investment and sponsorship from two well respected international
financial leaders, continuing our sales growth and corporate development
programs, signing the IEECAS development relationship, and planning for our
entry into the automotive component supply industry with the initial
construction of our new plant facility near the Shanghai Automotive District"
stated Tianfu Yang, Chairman and CEO of Harbin Electric, Inc. "The financing
comes at an important time in our Company's growth." Mr. Yang continued,
"Presently, we have many opportunities to expand our business into new product
areas. We will use the net proceeds of the recent financing to enable our
continued development into an internationally competitive leader in the
industrial motor marketplace."
Subsequent to the end of the quarter, we expanded and strengthened our
Board of Directors by adding 2 new independent board members, Mr Feng Bai and
Mr Yunyue Ye. Each new board member brings unique strengths to help improve
our governance, internal communications, and corporate growth efforts. The
Company will hold its Annual Meeting of Shareholders at its offices in
Philadelphia, PA on November 17, 2006 at 11am.
The Company has also posted its Corporate Presentation on the Investors
page of its website www.harbinelectric.com. Finally, the Company has recently
submitted a Listing Application to the NASDAQ Global Market and we look
forward to possibly receiving listing approval within the next few months.
About Harbin Electric, Inc.
Harbin Electric, Inc. designs, develops and manufactures linear motors and
special electric motors. With proprietary technology and core patents, the
Company builds a wide array of customized linear motors and other special
motor for a variety of applications and industries. The Company currently
designs and supplies its motor products and systems to numerous end users
throughout the Chinese domestic market, as well as, to other industrial OEM
customers overseas. Industry applications for linear motors include oilfield
services, conveyor systems, factory automation, packaging equipment, as well
as mass transportation systems. The Company is based in Harbin, China along
with its wholly owned subsidiaries. The Company has 235 employees with
approximately 200,000 square feet of state-of-the-art manufacturing space.
For further information, please see our filings with the Securities and
Exchange Commission ( http://www.sec.gov ).
Safe Harbor Statement
The actual results of Harbin Electric, Inc. could differ materially from
those described in this press release. Detailed information regarding factors
that may cause actual results to differ materially from the results expressed
or implied by statements in this press release may be found in the Company's
periodic filings with the U.S. Securities and Exchange Commission, including
the factors described in the section entitled "Risk Factors" in its quarterly
report on Form 10-QSB for the quarter ended September 30, 2006. The Company
does not undertake any obligation to update forward-looking statements
contained in this press release.
This press release contains forward-looking information about the Company
that is intended to be covered by the safe harbor for forward-looking
statements provided by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements that are not historical facts.
These statements can be identified by the use of forward-looking terminology
such as "believe," "expect," "may," "will," "should," "project," "plan,"
"seek," "intend," or "anticipate" or the negative thereof or comparable
terminology, and include discussions of strategy, and statements about
industry trends and the Company's future performance, operations and products.
HARBIN ELECTRIC, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash & cash equivalents $60,593,769
Accounts receivable, net of allowance of $29,837 9,586,547
Inventory 464,116
Advances to suppliers 2,642,269
Other assets 2,546,286
Debt issue cost, net of amortization of $39,656 2,914,977
Total current assets 78,747,964
PROPERTY AND EQUIPMENT, net 8,284,718
INTANGIBLE ASSETS, net 320,380
TOTAL ASSETS $87,353,062
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,199,870
Interest payable 277,778
Payment in advance 435,165
Total current liabilities 1,912,813
NOTES PAYABLE, net of debt discount $22,543,435 27,456,565
WARRANT LIABILITY 20,740,142
TOTAL LIABILITIES 50,109,520
STOCKHOLDERS' EQUITY
Common stock, .00001 par value; authorized shares
100,000,000; issued and outstanding 16,600,451 shares 166
Additional paid in capital 12,039,975
Statutory reserves 3,496,829
Accumulated other comprehensive income 1,140,392
Retained earnings 20,566,179
Total stockholders' equity 37,243,541
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $87,353,062
HARBIN ELECTRIC, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTH FOR THE NINE MONTH
PERIODS ENDED PERIODS ENDED
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2006 2005 2006 2005
Net revenue $9,817,053 $7,044,014 $28,407,056 $16,446,753
Cost of revenue 5,012,556 3,665,271 14,528,032 8,263,351
Gross profit 4,804,497 3,378,743 13,879,024 8,183,402
Operating expenses:
Selling expenses 227,566 100,923 652,172 225,256
General and
administrative
expenses 1,804,274 302,586 3,637,275 696,587
Total operating
expenses 2,031,840 403,509 4,289,447 921,843
Income from
operations 2,772,657 2,975,234 9,589,577 7,261,559
Non-operating income
Realized gain on
sale of marketable
securities - - 571,143 -
Interest income 26,569 - 57,601 -
Other expense (697,040) - (643,893) -
Change in fair value
of warrants 2,180,970 8,810 2,180,970 22,928
Net income 4,283,156 2,984,044 11,755,399 7,284,487
Other comprehensive
item:
Unrealized gain
(loss) on
marketable
securities - 120,400 - (25,245)
Translation gain 407,742 - 730,097 -
Reclassification
adjustment for
gains on sale
of marketable
securities - - (587,171) -
Comprehensive income 4,690,898 3,104,444 11,898,324 7,259,242
Basic weighted
average shares
outstanding 16,600,451 15,539,580 16,600,451 14,929,350
Basic net earnings
per share $ 0.26 $ 0.19 $ 0.71 $ 0.49
Diluted weighted
average shares
outstanding 17,495,254 15,554,012 19,235,134 14,929,350
Diluted net
earnings per share $ 0.24 $ 0.19 $ 0.61 $ 0.49
HARBIN ELECTRIC, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTH
PERIODS ENDED
September 30, 2006 September 30, 2005
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $11,755,399 $7,284,487
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 180,438 317,915
Amortization 34,402 14,924
Change in fair value of
warrants (2,180,970) -
Realized gain on sale of
marketable securities (571,143) -
Stock based compensation 701,918 -
(Increase) decrease in
current assets:
Accounts receivable (3,540,547) (3,888,253)
Inventory 894,533 (495,409)
Advances to suppliers 769,575 (2,468,746)
Other assets (3,134,032) -
Increase in current
liabilities:
Accounts payable 773,880 326,322
Payment in advance 429,661 -
Accrued expenses - (208,096)
Net cash provided by
operating activities 6,113,114 883,144
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of
marketable securities 1,093,165 -
Acquisition of intangible
assets - (266,200)
Acquisition on property &
equipment (534,113) (2,108,171)
Net cash provided by (used in)
investing activities 559,052 (2,374,371)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt issuance cost (2,914,977) -
Debt discounts (22,543,435) -
Notes payable 50,000,000 -
Interest payable 277,778 -
Warrant liabilities 22,921,112 -
Capital contribution 39,081 -
Advances to related party - 84,520
Cash received from shares - 4,800,000
Net cash provided by
financing activities 47,779,559 4,884,520
EFFECT OF EXCHANGE RATE CHANGE ON
CASH & CASH EQUIVALENTS 403,025 -
NET INCREASE IN CASH & CASH
EQUIVALENTS 54,854,750 3,393,293
CASH & CASH EQUIVALENTS, BEGINNING
OF PERIOD 5,739,019 2,210,803
CASH & CASH EQUIVALENTS, END OF
PERIOD $60,593,769 $5,604,096