EXHIBIT 1
Friday March 1, 7:31 am Eastern Time
Press Release
Global-Tech Appliances Reports Third Quarter Results
HONG KONG--(BUSINESS WIRE)--March 1, 2002--Global-Tech Appliances Inc. (NYSE -
GAI) announced today its net sales and earnings for the third quarter of fiscal
2002 ended December 31, 2001.
Net sales for the third quarter of fiscal 2002 were $19.5 million compared to
$29.8 million for the third quarter of fiscal 2001. Net income for the third
quarter of fiscal 2002 was $1.0 million, or $0.09 per share, compared to $2.8
million, or $0.23 per share, in the third quarter of fiscal 2001. Results for
the third quarter of fiscal 2002 included the operations of Lite Array, Inc., a
flat-panel display business in which the Company acquired a controlling interest
effective May 31, 2001.
Net sales for the nine months ended December 31, 2001 were $67.6 million
compared to $84.9 million for the first nine months of the prior fiscal year.
Net income for the first three quarters of fiscal 2002, which included the
results of Lite Array, declined to $5.5 million, or $0.46 per share, compared
with $8.6 million, or $0.71 per share, in the same prior year period.
John C.K. Sham, President and Chief Executive Officer, stated: "Our traditional
small appliance business continues to be negatively affected as fewer and fewer
financially secure customers participate in the business. While we made steady
progress at Lite Array by achieving consistent production in the quarter, delays
in securing orders for that business resulted in losses which adversely impacted
the quarter by $0.5 million, or $0.04 per share, and the nine months by $0.7
million, or $0.06 per share."
Mr. Sham continued, "As we have previously stated, if adequate returns are not
achieved from our current business, we plan to devote our resources to other
product categories. Our recent acquisition of heat engine technology is an area
of considerable promise. The Company has reallocated and reorganized its
engineering and development resources and intends to concentrate on a number of
innovative products and product categories outside of the small appliance arena
and on expanding the Company's floor care business."
Mr. Sham concluded, "Internally, we have implemented further cutbacks and are
being diligent in controlling costs to maintain profitability. Circumstances
have clearly demonstrated the importance of changing our focus and diversifying
the Company into a manufacturer of technology-oriented products. The progress is
proceeding as planned and we believe that it will pay off in the near future."
Global-Tech is an original designer, manufacturer, and marketer of a wide range
of small household appliances in four primary product categories: kitchen
appliances; garment care products; travel products and accessories; and floor
care products. The Company's products are marketed by its customers under brand
names such as Black & Decker(R), DeLonghi(R), Dirt Devil(R), Hamilton Beach(R),
Krups(R), Morphy Richards(R), Moulinex(R), Mr. Coffee(R), Proctor-Silex(R),
Sunbeam(R), and West Bend(R).
Except for historical information, certain statements contained herein are
forward-looking statements that are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
or variations
5
of such words and similar expressions are intended to identify such forward
looking statements. These forward looking statements are subject to risks and
uncertainties, including but not limited to, the impact of competitive products
and pricing, the financial condition of the Company's customers, product demand
and market acceptance, the success of new product development, reliance on key
strategic alliances, availability and cost of raw materials, the timely and
proper execution of certain business plans, currency fluctuations, uncertainties
associated with investments, the regulatory environment, fluctuations in
operating results, the impact of changing global, political and economic
conditions and other risks detailed from time to time in the Company's filings
with the Securities and Exchange Commission including its most recent Report on
Form 20-F.
GLOBAL-TECH APPLIANCES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts expressed in thousands of United States dollars)
Three Months Ended Nine Months Ended
December 31, December 31,
-------------------- -----------------------
2001 2000 2001 2000
-------- ------- ------- --------
(unaudited) (unaudited) (unaudited) (unaudited)
(in thousands, except per share data)
Net sales $ 19,488 $ 29,755 $ 67,578 $ 84,881
Cost of goods sold (14,785) (23,370) (51,516) (66,322)
-------- -------- -------- --------
Gross profit 4,703 6,385 16,062 18,559
Selling, general and
administrative
expenses (3,374) (4,475) (11,359) (12,292)
Share of losses
in joint venture (540) - (741) -
-------- -------- -------- --------
Operating income 789 1,910 3,962 6,267
Other income, net 194 1,045 1,630 2,781
-------- -------- -------- --------
Income before
income taxes 983 2,955 5,592 9,048
Provision for
income taxes (93) (169) (397) (490)
-------- -------- -------- --------
Income before
minority interests 890 2,786 5,195 8,558
Minority interests 150 - 336 -
-------- -------- -------- --------
Net income $ 1,040 $ 2,786 $ 5,531 $ 8,558
======== ======== ======== ========
Net income per
common share $ 0.09 $ 0.23 $ 0.46 $ 0.71
======== ======== ======== ========
6
Weighted average
number of shares
outstanding 12,138 12,136 12,138 12,134
======== ======= ======= ========
GLOBAL-TECH APPLIANCES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts expressed in thousands of United States dollars)
December 31, March 31,
------------ -----------
2001 2001
------------ -----------
(unaudited) (audited)
------------ -----------
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 49,081 $ 28,489
Short-term investments 7,661 31,221
Interests in joint venture 5,983 -
Accounts receivable, net 11,070 9,390
Deposits, prepayments
& other assets 3,078 9,160
Inventories, net 10,976 14,898
----------- -----------
Total current assets 87,849 93,158
Property, plant and equipment 37,497 38,493
Goodwill (Note 1) 4,845 -
Intangible assets 1,835 13
Loan to a director 307 384
----------- -----------
Total assets $132,333 $ 132,048
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings 78 -
Current portion of
long-term bank loans 795 1,139
Accounts payable 5,878 14,007
Advance payments from customers 177 184
Accrued expenses 5,300 3,737
Income tax provision 3,408 3,014
------------ -----------
Total current liabilities 15,636 22,081
Long-term bank loans 402 908
Minority interests 1,163 -
------------ -----------
7
Total liabilities 17,201 22,989
------------ -----------
Shareholders' equity:
Common stock, par value $0.01;
50,000,000 shares authorized;
12,830,000 shares issued as of
December 31, 2001 and
March 31, 2001 128 128
Additional paid-in capital 81,662 81,662
Retained earnings 37,980 32,456
Accumulated other
comprehensive deficit (14) (550)
------------ -----------
119,756 113,696
Less: Treasury stock, at cost (4,624) (4,637)
------------ -----------
Total shareholders' equity 115,132 109,059
------------ -----------
Total liabilities and
shareholders' equity $ 132,333 $ 132,048
============ ===========
(Note 1)
The amount represented the excess of cost over fair value of net assets acquired
of Global Lite Array (BVI) Limited ("Lite Array") on May 31, 2001. On that day,
Global-Tech Appliances Inc. entered into an agreement to acquire 76.75% of the
outstanding shares of Lite Array. Total consideration for 76.75% of the
outstanding shares of Lite Array was approximately $9.8 million.
Management has assessed the fair value of the purchase consideration of
approximately $9.8 million and the fair value of the net assets acquired and
liabilities assumed of Lite Array based on their best estimates at the
acquisition date. The fair value of the 76.75% of the net assets acquired is
approximately $4.9 million. Since the formal appraisal process of the net assets
acquired and liabilities assumed of Lite Array has not yet been completed as of
December 31, 2001, the allocation of purchase consideration and the excess of
cost over fair value of net assets acquired are subject to change upon the
finalization of the appraisals.
- ------------------
Contact:
Global-Tech USA, Inc., New York
Brian Yuen, 212/683-3320
Web Page: http://www.businesswire.com/cnn/gai.shtml
-----------------------------------------
8