omniture

Recon Technology Announces First Quarter Fiscal 2011 Financial Results

2010-11-17 22:27 1259

BEIJING, Nov. 17, 2010 /PRNewswire-Asia/ -- Recon Technology, Ltd. (Nasdaq: RCON) ("Recon" or the "Company"), a leading Chinese non-state-owned oil field services provider to oil and gas companies and their affiliates, has announced its financial results for the first fiscal quarter ended September 30, 2010. Summary financial data is provided below:

First Quarter Fiscal 2011 Financial Highlights

  • Revenues for the first quarter of fiscal year 2011 decreased by 3.0% year-over-year to $3,254,551, down from $3,354,921 in the first quarter of fiscal 2010
  • Net income for the first quarter increased 98.8% year-over-year to $125,969 compared with $63,364 for the first quarter of fiscal 2010
  • Gross margin for the first quarter was 35.4% based on gross profit of $1,152,239, compared with a 10.6% margin in the same period last year
  • Operating income and operating margin for the first quarter were $252,735 and 7.8%, respectively, compared to $193,217 and 5.8%, respectively, in the first quarter of fiscal 2010
  • Earnings per diluted share were $0.03 for the quarter, compared with diluted EPS of $0.02 achieved in the same period a year ago

Shenping Yin, Recon's Chief Executive Officer, stated, "Net income nearly doubled during the first fiscal quarter, and our margins improved significantly. During the first quarter, which is traditionally our weakest sales quarter due to our clients' budgeting and planning cycles, we focused on executing a number of key projects in our considerable sales backlog. We expect a rebound in sales over the next few quarters as these projects are completed."

Mr. Yin continued, "The International Energy Agency recently projected that China will account for nearly half of the net growth in global oil demand through 2035. Additionally, the recent gas shortage in China highlighted the need for domestic natural gas providers to increase their production output to meet the nation's growing energy needs. We believe that large domestic oil and gas companies will need to upgrade their equipment and technology in the years ahead to remain competitive in their respective industries. Our strong working relationship with China's largest oil and gas providers, combined with our extensive industry expertise, gives us a major strategic advantage and positions us for continued growth in China's oilfield services market."

First Quarter Fiscal 2011 Results of Operations

Revenues

Revenues for the three months ended September 30, 2010 were $3,254,551 as compared to $3,354,921 for the three months ended September 30, 2009. The slight decrease of $100,370, or 3.0%, was primarily due to seasonality as well as the Company's continued execution of key projects in its sales backlog, which are expected to generate revenues upon their completion.

Gross Profit

Gross profit for the three months ended September 30, 2010 was $1,152,239 as compared to $955,353 for the three months ended September 30, 2009.  The increase of $196,886, or 20.6%, was primarily due to an emphasis on higher-margin projects. Costs of sales for the three-month period were $2,102,312 as compared to $2,399,568 for the same period a year ago. The Company's gross margin was 35.4% and 10.6%, for the three months ended September 30, 2010 and 2009, respectively.

Income from Operations

Operating income for the three months ended September 30, 2010 amounted to $252,735 as compared to $193,217 for the three months ended September 30, 2009. The increase of $59,518 was primarily due to an emphasis on higher-margin projects. Operating expenses for the three-month period totaled $899,504 as compared to $762,137 for the same period a year ago.

Net Income

Net income for the three months ended September 30, 2010 was $125,969 as compared to $63,364 for the three months ended September 30, 2009, due to the reasons set forth above. Earnings per diluted share were $0.03 for the quarter, compared with diluted EPS of $0.02 for the same period a year ago.

Liquidity and Capital Resources

As of September 30, 2010, the Company's current assets were $25.8 million and current liabilities were $7.9 million. Cash and cash equivalents totaled $1.5 million as of September 30, 2010. The Company's shareholders' equity at September 30, 2010 was $26.0 million. The Company used $2,883 in cash for operating activities during the three months ended September 30, 2010, compared to cash provided by operating activities of $83,410 for the three months ended September 30, 2009. The Company used $991 in cash for investing activities during the three months ended September 30, 2010, compared to $11,321 for the three months ended September 30, 2009. The Company used $340,139 in cash for financing activities during the three months ended September 30, 2010, compared to cash provided by financing activities of $8,505,179 for the three months ended September 30, 2009.

Shareholder Meeting

Recon will hold its 2010 Annual Meeting of Shareholders on Wednesday, December 1, 2010, at 9:00 a.m. (Beijing time). The meeting will be held in Room 1801 of the King Long International Mansion, located at No. 9 Fulin Road, Beijing, P.R. China. Shareholders may also access the annual meeting via conference call. Instructions for accessing the call will be available on the Company's website at http://www.recon.cn.

About Recon Technology, Ltd.

Recon Technology, Ltd. has been providing leading Chinese oil and gas companies with automation services that increase efficiency and profitability in exploring, extracting, producing, processing, refining and transporting petroleum products for over 10 years. The company's proprietary computerized process control system manages oil production in real-time to increase extraction levels, reduce impurities in extracted petroleum and lower production costs. In addition, as one of only two acoustic system providers in the world, Recon's acoustic pipeline monitoring system is widely used to prevent gas leakage in the transport pipeline. Recon's technology is based on three software copyrights, eight product patents and four pending patents. Recon Technology is the first Chinese non-state-owned oil and gas service company to go public in the U.S.

More information may be found at http://www.recon.cn or via e-mail at info@recon.cn.

Forward-Looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports field by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.



RECON TECHNOLOGY, LTD


CONSOLIDATED STATEMENTS OF BALANCE SHEETS











September 30,


June 30,



2010


2010


ASSETS

U.S. Dollars


U.S. Dollars


Current assets


(Unaudited)





Cash and cash equivalents

$

1,464,275


$

1,812,896


Trade accounts receivable, net of allowance for doubtful accounts of RMB1,089,331 and RMB1,449,453($216,398), respectively


12,309,366



13,350,949


Other receivables, net of allowance for doubtful accounts of  RMB1,089,331  and RMB96,527($14,411) respectively


2,381,945



1,918,536


Purchase advances


5,710,021



6,949,941


Prepaid expenses


124,917



114,456


Inventories


3,728,662



1,963,379


Deferred tax assets


34,847



41,200




25,754,033



26,151,357


Property and equipment, net of accumulated depreciation of  RMB1,190,970 and RMB1,289,567($192,527), respectively


207,659



221,388



$

25,961,692


$

26,372,745









LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities







Trade accounts payable

$

2,221,678


$

2,468,879


Other payables


500,330



462,267


Deferred income


553,763



637,152


Advances from customers


24,979



65,655


Accrued payroll and employees' welfare


39,697



53,827


Accrued expenses


48,968



43,416


Taxes payable


2,780,612



3,016,244


Short-term notes payable


887,547



750,195


Short-term notes payable-related parties


875,517



1,096,349


Total current liabilities


7,933,091



8,593,984


Total Liabilities


7,933,091



8,593,984


Commitments and Contingencies














Shareholders' equity







Common shares, $0.0185 U.S. dollar par value, 25,000,000 shares authorized; 3,951,811 and 3,951,811 shares issued and outstanding at June 30 and September 30, 2010


79,124



79,124


Additional paid-in capital


10,405,803



10,339,812


Appropriated retained earnings


560,682



560,682


Unappropriated retained earnings


5,516,204



5,379,809


Accumulated other comprehensive loss


(16,129)



(11,495)


Total controlling shareholders' equity


16,545,684



16,347,932


Non-controlling interest, net of tax


1,482,917



1,430,830


Total equity


18,028,601



17,778,762


Total Liabilities and Equity

$

25,961,692


$

26,372,745






















RECON TECHNOLOGY, LTD


CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



For the Three Months Ended Sep. 30



2010


2009



U.S. Dollars


U.S. Dollars




(Unaudited)



(Unaudited)


Revenues







Hardware

$

3,254,551


$

2,877,181


Service


-



443,926


Software


-



33,815


Total revenues


3,254,551



3,354,921









Cost of revenues


2,102,312



2,399,568


Gross margin


1,152,239



955,353









Selling and distribution expenses


269,204



322,362


General and administrative expenses


630,300



439,775


Operating expenses


899,504



762,137









Income from operations


252,735



193,217









Other income (expenses)







Subsidy income


67,410



3,930


Interest income


207



250


Interest expense


(16,936)



(6,158)


Other income (expenses)


(6,330)



10,969




44,351



8,992









Income before income taxes and non-controlling interest


297,086



202,209


Provision for income taxes


(120,307)



(103,414)


Net income before allocation to non-controlling interests


176,779



98,794


Less: Net income attributable to non-controlling interest


(50,810)



(35,430)


Net income attributable to common shareholders


125,969



63,364









Comprehensive income







Net income before allocation to non-controlling interests


176,779



98,794


Foreign currency translation adjustment


(16,129)



(7,730)


Comprehensive income


160,650



91,065


Comprehensive income attributable to non-controlling interests


(49,197)



(34,657)


Comprehensive income attributable to common shareholders

$

111,453


$

56,407


Earnings per common share - basic







Net income attributable to common shareholders

$

0.03


$

0.02


Earnings per common share - diluted







Net income attributable to common shareholders

$

0.03


$

0.02


Weighted - average shares -basic


3,951,811



3,360,743


Weighted - average shares -diluted


3,951,811



3,457,394















RECON TECHNOLOGY, LTD.


CONSOLIDATED STATEMENTS OF CASH FLOWS










For the Three Months Ended Sep. 30



2010


2009



U.S. Dollars


U.S. Dollars




(Unaudited)



(Unaudited)


Cash flows from operating activities:







Net income before allocation to noncontrolling interests

$

176,780


$

98,794


Adjustments to reconcile net income before noncontrolling interests to net cash







provided by operating activities:







Depreciation


14,720



12,403


Stock-based payment


65,497



43,994


Movement of deferred taxation


6,353



(111,646)


Changes in operating assets and liabilities:







Trade accounts receivable, net


1,041,582



(847,481)


Trade accounts receivable-related parties, net


-



75,063


Other receivables, net


(206,750)



(143,584)


Other receivables related parties, net


-



(34,510)


Purchase advance, net


1,252,089



438,175


Prepaid expense


(10,461)



(157,044)


Inventories


(1,765,283)



(530,379)


Trade accounts payable


(247,201)



809,426


Trade accounts payable-related parties


-



2,110


Other payables


38,063



41,344


Deferred income


(83,390)



199,338


Advances from customers


(40,675)



(36,399)


Accrued payroll and employees' welfare


(14,130)



(10,622)


Accrued expenses


5,552



1,790


Taxes payable


(235,628)



232,638


Net cash provided by (used in) operating activities


(2,883)



83,410









Cash flows from investing activities:







Purchases of property and equipment


(991)



(11,321)


Net cash used in investing activities


(991)



(11,321)







-


Cash flows from financing activities:





-


Proceeds from stock issuance


-



8,988,976


Proceeds from short-term notes payable


137,352



(186,835)


Repayment for short-term notes payable-related party


(220,832)



(296,962)


Loan to third-party companies 


(256,659)



-


Net cash provided by (used in) financing activities


(340,139)



8,505,179







-


Effect of exchange rate fluctuation on cash and cash equivalents


(4,608)



(7,730)







-


Net increase (decrease) in cash and cash equivalents


(348,621)



8,569,538


Cash and cash equivalents at beginning of period


1,812,896



407,240


Cash and cash equivalents at end of period

$

1,464,275


$

8,976,778









Supplemental cash flow information







Cash paid during the period for interest


2,687



-


Cash paid during the period for taxes

$

242,729


$

7,420



















This information is intended to be reviewed in conjunction with the Company's filings with the Securities and Exchange Commission, which includes the accompanying notes.

Contact:




At the Company:


Recon Technology, Ltd


Tel:   +86-10-8494-5799


Email: info@recon.cn




Investor Relations:


Dave Gentry, U.S.


RedChip Companies, Inc.


Tel: +1-800-733-2447, Ext. 104


Email: info@redchip.com




Jing Zhang, China


RedChip Beijing Representative Office


Tel: +86 10-8591-0635


Web: http://www.RedChip.com



Source: Recon Technology, Ltd.
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