omniture

Harbin Electric Announces Earnings for the Third Quarter of Fiscal Year 2006

Harbin Electric, Inc.
2006-11-15 11:32 979

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

Source: Harbin Electric, Inc.
Keywords: Machinery
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