omniture

China BAK Reports Second Quarter Fiscal Year 2011 Financial Results

2011-04-29 04:25 1139

SHENZHEN, China, April 29, 2011 /PRNewswire-Asia/ -- 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 second quarter of fiscal year 2011 ended March 31, 2011 ("Q2 2011").


Recent Achievements and Highlights

  • In February 2011, China BAK secured a new contract to supply lithium-ion high-power batteries to leading e-bike manufacturer, XDS Shenzhen Xidesheng Bicycle Co., Ltd.
  • During the second quarter of fiscal 2011, the Company's Tianjin subsidiary, BAK Tianjin continued to expand its customer base and shipped four electric car packs to Tianjin Auto, which will be used to power pure electric cars used for postal deliveries. Upon approval by the local government, the pure electric cars will be used in over 20 cities in China for postal deliveries and is expected to generate high demand

Second Quarter Fiscal Year 2011 Financial Results

Net revenues for the second quarter were $46.7 million, down 26.5% from $63.5 million last quarter and down 7.4% from $50.4 million for the same period in fiscal 2010.

Revenues from prismatic products, including aluminum-case cells and battery packs, which are used in mobile phones and certain personal electronic devices, were $29.0 million, down 38.8% from $47.5 million last quarter and down 16.9% from $35.0 million for the same period in fiscal 2010.

Revenues from cylindrical cells used in notebook computers were $15.2 million, up 45.2% from $10.5 million last quarter and up 13.5% from $13.4 million for the same period in fiscal 2010.

Revenues from lithium polymer cells, used in personal electronic devices such as PDAs, MP3 players and Bluetooth devices, were $1.7 million, down 51.6% from last quarter and down 2.4% from the same period in fiscal 2010.

Revenues from high-power lithium battery cells, used in electric vehicles, electric bicycles, power tools, uninterruptible power supplies, and other applications manufactured at the Company's Tianjin facility, were $0.8 million, down 62.5% from last quarter and up 123.6% from the same period in fiscal 2010.

Gross profit for the second quarter of fiscal year 2011 was $4.4 million, down 55.5% from $10.0 million last quarter and down 50.6% from $9.0 million in the same quarter of last year. Gross margin was 9.5%, compared with 15.7% last quarter and 17.9% in the year ago period. The decline in gross profit was mainly attributable to decline in sales volume and selling price of prismatic cells as a result of traditional seasonality and intense competition in the market. In addition, the decline in selling price of cylindrical cells also caused the decline in gross profit.

Operating expenses totaled $6.3 million, or 13.4% of revenue, in the second quarter down 46.8% from $11.8 million, or 18.6% of revenue, in the last quarter and down 22.9% from $8.1 million, or 16.2% of revenue, in the second quarter of fiscal 2010. Research and development expenses were $1.9 million, or 4.1% of revenue, up 17.4% from $1.6 million, or 2.6% of revenue in the last quarter and up 18.9% from $1.6 million, or 3.2% of revenue in the same quarter of fiscal 2010. Sales and marketing expenses were $2.2 million, or 4.7% of revenue down 3.3% from $2.3 million, or 3.6% of revenue in the last quarter and up 28.9% from $1.7 million, or 3.4% of revenue in the same quarter of fiscal 2010. General and administrative expenses were $2.1 million, or 4.6% of revenue down 72.7% from $7.9 million, or 12.4% of revenue in the last quarter and down 55.4% from $4.8 million or 9.6% of revenue in the same quarter of fiscal 2010. In the second quarter of FY 2011, the Company recognized recovery of doubtful debts of $0.6 million compared with provision for bad debts of $0.9 million in the same quarter of last year.

Operating loss for the second quarter was $1.8 million compared to operating loss of $1.8 million in the last quarter and operating income of $0.9 million in the same quarter of fiscal 2010.

Net loss was $4.1 million, or diluted loss per share of $0.06, in the second quarter of fiscal 2011 compared to net loss of $3.7 million, or diluted loss per share of $0.06, in the last quarter and net loss of $2.5 million, or diluted loss per share of $0.04, in the same quarter of fiscal 2010.

Financial Condition

On March 31, 2011 China BAK had $25.6 million in cash and cash equivalents. For the second quarter of fiscal year 2011, Days Sales Outstanding (DSO) increased to 177 days from 126 days last quarter and Days Sales of Inventory increased to 143 days from 110 days last quarter. Short-term bank loans and long-term bank loans totaled $173.0 million as compared to $177.6 million on December 31, 2010. Shareholders' equity totaled $146.9 million. China BAK had $68.1 million available for borrowing under its credit facilities. The Company generated $2.6 million from cash flow from operating activities in the second quarter of fiscal 2011.

Business Outlook

"Although we experienced seasonality due to the Chinese New Year in February, we were able to report a positive operating cash flow. The decline in average selling prices of our prismatic cells is mainly due to aggressive competition in the market and we are actively pursuing new OEM orders from brand-name cell phone manufactures to increase our OEM market share. We also continue to direct our efforts on enhancing our cost control measures to reduce expenses and improve margins. During the second quarter, we were successful in further reducing our overall debt exposure in line with the goals of our turnaround strategy," commented Ke Marcus Cui, Interim CFO of China BAK.

"We expect our cylindrical cells business to break even in the fourth quarter of fiscal year 2011 due to improved pricing strategy as we expect our new low-cost and longer life cycle cylindrical cells used in notebook computers and power-tool manufacturers to exhibit strong sales volume in the coming quarters. In addition, we anticipate profitability from our prismatic battery business to show improvement in the third quarter due to improved yield and higher capacity utilization," commented Mr. Xiangqian Li, CEO of China BAK.

Conference Call

China BAK will host a conference call at 8:00 p.m. ET on Thursday, April 28, 2011 to discuss results for the second quarter of fiscal year 2011 ended March 31, 2011. Joining Xiangqian Li, China BAK's President and Chief Executive Officer on the call will be Ke Marcus Cui, Interim Chief Financial Officer. To participate in the conference call, please dial the following number approximately fifteen minutes prior to the scheduled conference call time: 877-847-0047 or 212-444-0113. International callers should dial 852-3006-8101. The pass code for the call is 647-312. If you are unable to participate in the call at this time, a replay will be available from 11:00 p.m. ET on Thursday, April 28, 2011 through 11:00 p.m. ET, Friday, May 13, 2011. To access the replay, please dial 866-572-7808. International callers should dial (852) 3012-8000. The pass code for the replay is 647-312. The conference call will be broadcast live over the Internet and can be accessed by all interested parties on the China BAK website at http://www.bak.com.cn/. To listen to the live webcast, please go to China BAK's website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live broadcast, after the call a replay will be available on China BAK's website for a period of one year.

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, notebook computers and portable consumer electronics such as digital media devices, portable media players, portable audio players, portable gaming devices, and PDAs. China BAK Battery, Inc.'s production facilities, located in Shenzhen and Tianjin, PRC, cover over three million square feet and have been recently expanded to support the production of larger batteries for various types of vehicles. 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: 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, 2010, as well as China BAK's Quarterly Reports on Form 10-Q 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-

Table 1

China BAK Battery, Inc. and Subsidiaries

Condensed Interim Consolidated Statements of Operations and Comprehensive Loss

For the Three Months Ended March 31, 2011, December 31, 2010 and March 31, 2010

(Amounts in thousands, except per share data)


 

 

 

Three Months Ended

 

 

 

March 31, 2011

 

 

December 31, 2010

 

 

March 31, 2010

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

Net Revenues

 

$          46,710

 

 

$          63,530

 

 

$           50,424

 

 

Cost of revenues

 

(42,261)

 

 

(53,534)

 

 

(41,421)

 

 

Gross profit

 

4,449

 

 

9,996

 

 

9,003

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

   Research and development expenses

 

(1,932)

 

 

(1,645)

 

 

(1,625)

 

 

   Sales and marketing expenses

 

(2,199)

 

 

(2,273)

 

 

(1,706)

 

 

   General and administrative expenses

 

(2,150)

 

 

(7,878)

 

 

(4,819)

 

 

      Total operating expenses

 

(6,281)

 

 

(11,796)

 

 

(8,150)

 

 

 

 

 

 

 

 

 

Operating (loss) / income

 

(1,832)

 

 

(1,800)

 

 

853

 

 

 

 

 

 

 

 

 

Finance costs, net

 

(2,512)

 

 

(2,840)

 

 

(2,190)

 

 

Government grant income

 

31

 

 

607

 

 

79

 

 

Other income / (expense)

 

48

 

 

241

 

 

(145)

 

 

Loss before income taxes

 

(4,265)

 

 

(3,792)

 

 

(1,403)

 

 

 

 

 

 

 

 

 

Income tax benefits / (expense)

 

182

 

 

134

 

 

(1,147)

 

 

Net loss

 

$           (4,083)

 

 

$          (3,658)

 

 

$          (2,550)

 

 

 

 

 

 

 

 

 

Other comprehensive income / (loss)

 

1,228

 

 

2,050

 

 

(164)

 

 

- Foreign currency translation adjustment

 

$           (2,855)

 


 

$          (1,608)

 


 

$          (2,714)

 

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

   Basic

 

$            (0.06)

 

 

$           (0.06)

 

 

$           (0.04)

 

 

   Diluted

 

$            (0.06)

 

 

$           (0.06)

 

 

$           (0.04)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

   Basic

 

62,895

 

 

62,895

 

 

62,882

 

 

   Diluted

 

62,895

 

 

62,895

 

 

62,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Table 2


China BAK Battery, Inc. and Subsidiaries

Condensed Interim Consolidated Balance Sheets

As of March 31, 2011 and September 30, 2010

(Amounts in thousands)


 

 

 

March 31,

 

 

September 30,

 

 

 

2011

 

 

2010

 

 

 

(Unaudited)

 

 

(Audited)

 

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$         25,558

 

 

$          22,589

 

 

Pledged deposits

 

5,882

 

 

9,426

 

 

Trade accounts receivable, net

 

91,586

 

 

86,198

 

 

Inventories

 

66,797

 

 

64,048

 

 

Prepayments and other receivables

 

3,808

 

 

5,513

 

 

Deferred tax assets

 

7,452

 

 

6,888

 

 

       Total current assets

 

201,083

 

 

194,662

 

 

 

 

 

 

 

Property, plant and equipment, net

 

232,297

 

 

228,885

 

 

Lease prepayments, net

 

32,332

 

 

31,924

 

 

Intangible assets, net

 

167

 

 

184

 

 

Deferred tax assets

 

1,720

 

 

1,681

 

 

Total assets

 

$        467,599

 

 

$         457,336

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

Short-term bank loans

 

$        142,447

 

 

$         137,418

 

 

Current maturities of long-term bank loans

 

15,270

 

 

11,956

 

 

Accounts and bills payable

 

109,599

 

 

93,725

 

 

Accrued expenses and other payables

 

19,095

 

 

22,411

 

 

        Total current liabilities

 

286,411

 

 

265,510

 

 

 

 

 

 

 

Long-term bank loans, less current maturities

 

15,270

 

 

29,890

 

 

Deferred revenue

 

7,391

 

 

7,353

 

 

Other long-term payables

 

10,893

 

 

3,431

 

 

Deferred tax liabilities

 

729

 

 

719

 

 

Total liabilities

 

320,694

 

 

306,903

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

Ordinary shares US$ 0.001 par value; 100,000,000 authorized; 63,612,526 and 63,616,276 issued and outstanding as of September 30, 2010 and March 31, 2011 respectively

 

64

 

 

64

 

 

Donation Shares

 

14,101

 

 

14,102

 

 

Additional paid-in-capital

 

125,486

 

 

124,551

 

 

Statutory reserves

 

7,645

 

 

7,315

 

 

Accumulated deficit

 

(27,614)

 

 

(19,542)

 

 

Accumulated other comprehensive income

 

31,289

 

 

28,010

 

 

 Less: Treasury shares

 

(4,067)

 

 

(4,067)

 

 

        Total shareholders' equity

 

146,904

 

 

150,433

 

 

Total liabilities and shareholders' equity

 

$         467,599

 

 

$         457,336

 

 

 

 

 

 

 

 



Table 3


China BAK Battery, Inc. and Subsidiaries

Condensed Interim Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2011, December 31, 2010 and March 31, 2010

(Amounts in thousands)


 

 

 

Three Months Ended

 

 

 

March 31, 2011

 

 

December 31, 2010

 

 

March 31, 2010

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

Cash flow from operating activities

 

 

 

 

 

 

 

Net loss

 

$        (4,083)

 

 

$           (3,658)

 

 

$          (2,550)

 

 

Adjustments to reconcile net loss to net cash provided by / (used in)operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

4,656

 

 

4,319

 

 

4,600

 

 

(Recovery of) / provision for doubtful debts

 

(614)

 

 

3,061

 

 

921

 

 

(Recovery of) / provision for obsolete inventories

 

(737)

 

 

-

 

 

142

 

 

Share-based compensation

 

409

 

 

525

 

 

800

 

 

Deferred income taxes

 

(182)

 

 

(236)

 

 

200

 

 

Deferred revenue

 

(61)

 

 

(60)

 

 

(58)

 

 

Exchange (gain) / loss

 

(135)

 

 

(66)

 

 

416

 

 

Changes in operating assets and liabilities:    

 

 

 

 

 

 

 

   Trade accounts receivable

 

1,997

 

 

(7,872)

 

 

(10,399)

 

 

   Inventories

 

1,657

 

 

(2,228)

 

 

3,475

 

 

   Prepayments and other receivables

 

1,284

 

 

522

 

 

4,754

 

 

   Accounts and bills payable

 

(1,273)

 

 

15,962

 

 

(7,593)

 

 

   Accrued expenses and other payables

 

(293)

 

 

8,117

 

 

3,774

 

 

Net cash provided by / (used in) operating activities    

 

$          2,625

 

 

$           18,386

 

 

$          (1,518)

 

 

 

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(6,349)

 

 

(5,968)

 

 

(3,804)

 

 

Net cash used in investing activities

 

$        (6,349)

 

 

$           (5,968)

 

 

$          (3,804)

 

 

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

 

Proceeds from borrowings

 

66,874

 

 

27,755

 

 

100,894

 

 

Repayment of borrowings

 

(72,954)

 

 

(31,760)

 

 

(74,555)

 

 

Decrease / (increase)in pledged deposits

 

10,567

 

 

(6,758)

 

 

1,018

 

 

Net cash provided by / (used in) financing activities

 

$         4,487

 

 

$          (10,763)

 

 

$          27,357

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

268

 


 

283

 

 

(694)

 

 

Net increase in cash and cash equivalents

 

1,031

 

 

1,938

 

 

21,341

 

 

Cash and cash equivalents at the beginning of the period

 

24,527

 

 

22,589

 

 

18,303

 

 

Cash and cash equivalents at the end of the period

 

$        25,558

 

 

$           24,527

 

 

$          39,644

 

 

 

 

 

 

 

 

 

 
Source: China BAK Battery, Inc.
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