EXHIBIT 1
[LETTERHEAD OF GLOBAL-TECH APPLIANCES INC.]
Release: IMMEDIATE RELEASE
-----------------
Contact: Brian Yuen
Global-Tech USA, Inc.
Tel.: 212-683-3320
Web Page: http://www.businesswire.com/cnn/gai.shtml
GLOBAL-TECH APPLIANCES REPORTS THIRD QUARTER RESULTS
AND INCREASED NET CASH VALUE PER SHARE
Hong Kong, January 31, 2003 -- Global-Tech Appliances Inc. (NYSE: GAI) announced
today its net sales and earnings for the third quarter of fiscal 2003 ended
December 31, 2002.
Net sales for the third quarter of fiscal 2003 were $16.5 million, compared to
$19.5 million for the third quarter of fiscal 2002. Net income for the third
quarter of fiscal 2003 was $0.8 million, or $0.06 per share, compared to $1.0
million, or $0.09 per share, in the prior corresponding fiscal period. The
decline in net sales for the third quarter was evenly spread amongst all of the
Company's product categories as the major retailers lowered their expectations
for the holiday season and stocked more low-end promotional products.
Additionally, one of the Company's major customers lost some shelf space to new
entrants in the floor care category.
Net sales for the nine months ended December 31, 2002 were $61.4 million,
compared to $67.5 million for the prior corresponding nine-month period. Net
income for the first three quarters of fiscal 2003 was $5.3 million, or $0.44
per share, compared to $5.5 million, or $0.46 per share, in the first nine
months of fiscal 2002.
As previously announced, the Company executed an agreement to sell the thin film
electroluminescent, or TFEL, display operation of its subsidiary, Lite Array,
Inc., on October 30, 2002. Accordingly, the financial statements reflect the
sales and expenses associated with the TFEL display business as a discontinued
operation. Lite Array is now totally dedicated to its organic light emitting
diode, or OLED, display R&D program, which costs approximately $1.5 million per
annum to pursue.
John C.K. Sham, President and Chief Executive Officer, said: "As previously
announced, the overall business environment continues to be soft. While simple,
small electrical appliances are becoming very price competitive, we believe that
our shift in focus to more complex appliances, particularly floor care products,
was a positive move that will continue to produce new business opportunities for
the Company."
Mr. Sham continued, "Though the global economic slowdown continues to be a
challenge, the Company's net cash and short-term investment position increased
by $7.4 million, or $0.61 per share, to $63.6 million, or $5.24 per share,
during the nine-month interim period, despite the ongoing expenditures on a
number of product development initiatives. We are dedicated to sustaining our
existing business while attempting to generate consistent free cash flow so that
we can continue funding the R&D programs and initiatives to further support the
strategies of transforming the Company's business."
Mr. Sham concluded, "We are now actively working on a number of development
programs, several of which utilize new technologies that we believe will
positively redirect the focus of our business in the next three to four years.
We are not relying on all of our development projects to succeed, but we do
expect to see positive results from certain of these projects. We believe that
once these successful development projects attain market acceptance, they will
provide us with a sustainable, growing revenue and income stream."
Global-Tech is a 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), Eureka(R), Hamilton Beach(R),
Krups(R), Morphy Richards(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 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 material customers and key strategic alliances, availability and
cost of raw materials, the timely and proper execution of certain business
plans, including the plan to diversify and transform a portion of manufacturing
capacity to higher-value, technology-oriented products, 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 United States dollars)
Three Months Ended Nine Months Ended
December 31, December 31,
---------------------------- ---------------------------
2002 2001 2002 2001
------------ ------------ ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
(in thousands, except per share data)
Net sales ....................................... $ 16,544 $ 19,470 $ 61,403 $ 67,536
Cost of goods sold .............................. (12,418) (14,774) (44,836) (51,491)
------------ ------------ ----------- -----------
Gross profit .................................... 4,126 4,696 16,567 16,045
Selling, general and administrative expenses .... (3,487) (3,301) (11,034) (10,686)
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Operating income ................................ 639 1,395 5,533 5,359
Other income, net ............................... 413 194 1,172 1,630
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Income from continuing operations before income
taxes ........................................ 1,052 1,589 6,705 6,989
Provision for income taxes ...................... (110) (93) (546) (397)
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Income from continuing operations ............... 942 1,496 6,159 6,592
Discontinued operations
Loss from operations of discontinued TFEL
business (including gain on disposal of
US$29,000) ................................ (175) (606) (812) (1,397)
Minority interests .............................. -- 150 -- 336
------------ ------------ ----------- -----------
Net income ...................................... $ 767 $ 1,040 $ 5,347 $ 5,531
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Basic and diluted earnings per common share ..... $ 0.06 $ $ 0.09 $ 0.44 $ 0.46
============ ============ =========== ===========
Basic and diluted weighted average number of
shares outstanding ........................... 12,141 12,138 12,141 12,138
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GLOBAL-TECH APPLIANCES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts expressed in United States dollars)
December March 31,
31, 2002 2002
----------- -----------
(unaudited) (audited)
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 25,130 $ 48,589
Short-term investments 39,442 8,678
Accounts receivable, net 9,858 12,318
Deposits, prepayments & other assets 2,490 2,158
Inventories, net 8,149 9,646
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Total current assets 85,069 81,389
Property, plant and equipment 32,580 34,198
Land use rights 1,964 2,002
License 3,792 4,317
Patents 248 286
Promissory note receivable 728 775
Loan to a director 230 306
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Total assets $ 124,611 $ 123,273
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings $ -- $ 76
Current portion of long-term bank loans 582 715
Accounts payable 5,539 6,238
Amount due to a director -- 180
Fees payable for license -- 1,800
Fees payable for land use rights 275 275
Salaries and allowance payable 908 541
Advance payments from customers 9 43
Accrued expenses 1,195 1,961
Investment in a joint venture -- 246
Income tax provision 3,691 4,384
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Total current liabilities 12,199 16,459
Long-term bank loans 386 271
Deferred tax liabilities, net 43 43
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Total liabilities 12,628 16,773
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Shareholders' equity:
Preferred stock, par value $0.01; 1,000,000 shares
authorized, no shares issued -- --
Common stock, par value $0.01; 50,000,000 shares
authorized; 12,830,000 shares issued as of December 31,
2002 and March 31, 2002 128 128
Additional paid-in capital 81,753 81,753
Retained earnings 34,763 29,416
Accumulated other comprehensive deficit (61) (197)
Less: Treasury stock, at cost, 689,147 shares as of
December 31, 2002 and March 31, 2002 (4,600) (4,600)
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Total shareholders' equity 111,983 106,500
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Total liabilities and shareholders' equity $ 124,611 $ 123,273
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