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Global-Tech Advanced Innovations Reports First Quarter Results for Fiscal 2015

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Global-Tech Advanced Innovations Inc. (NASDAQ:GAI) today announced its net sales and earnings for the quarter ended June 30, 2014 (the Company’s first quarter of fiscal 2015).

Net sales for the first quarter of fiscal 2015 ended June 30, 2014 were $24.6 million, compared to net sales of $12.5 million from continuing operations for the corresponding quarter in fiscal 2014. Net sales, as presented for the comparable quarter in fiscal 2014, exclude sales from our EMS business, which was discontinued in December 2013. Net loss for the first quarter of fiscal 2015 was $0.3 million, or $0.10 per share, compared to a net loss of $1.5 million, or $0.51 per share, for the first quarter of fiscal 2014.

John C.K. Sham, the Company’s President and Chief Executive Officer, said: “Despite an 82% increase in shipments of our CCM units and an overall increase of 104% in net sales in the electronic components segment, profitability in this segment declined about $0.4 million when compared to the prior year. This decline in profitability is primarily attributable to pricing concessions necessitated by the intense competition within the industry, as well as continuing increases in labor and overhead costs.”

Mr. Sham continued, “While we are continuing our efforts towards increasing productivity, the key to improving our operating results remains improving our product mix, specifically the increased sales, as a percentage of overall sales, of higher-pixel CCM units which only represented approximately 18% of our unit volume in the first quarter of fiscal 2015. Operating results for the first quarter of fiscal 2015 benefited from the leasing of the facilities that previously housed our discontinued home appliance and EMS businesses, which generated approximately $1.0 million in gross income and $0.3 million in income after depreciation, taxes and common charges.”

Mr. Sham concluded, “Our primary business focus remains the improvement of profit margins of our electronic components business segment and we are evaluating whether capital improvements and/or other strategic actions can adequately address current operating issues. In the interim, our cash position remains strong and is expected to gradually improve as our rental income increases.”

Global-Tech Advanced Innovations Inc. is a holding company, owning subsidiaries that manufacture and market electronic components and other related products, such as complementary metal oxide semiconductor (CMOS) camera modules (CCMs). The primary focus of its subsidiaries is to develop and market high-quality products for the communications industry in China and export such products to markets in other countries throughout the world.

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,” “should,” “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, demand for new and existing products in our core business, the financial condition of the Company’s customers, product demand and market acceptance especially of our new products, the success of new product development especially in the area of cellular phone components and solutions, compact camera modules and other pending projects, reliance on material customers, suppliers and key strategic alliances, the terms and conditions of customer contracts and purchase orders, 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, including the revaluation of the Chinese Renminbi, the imposition by China’s trading partners of economic sanctions and/or protective tariffs on Chinese manufactured goods, 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 U.S. Securities and Exchange Commission including its most recent Report on Form 20-F. The Company does not undertake to update its forward-looking information, or any other information contained or referenced in this press release to reflect future events or circumstances.

GLOBAL-TECH ADVANCED INNOVATIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts expressed in thousands of United States dollars except per share data)

Three Months Ended June 30,
2014 2013
(unaudited) (unaudited)
Net sales $ 24,607 $ 12,468
Cost of goods sold (22,865 ) (11,188 )
Gross profit 1,742 1,280
Selling, general and administrative expenses (2,955 ) (2,625 )
Operating loss (1,213 ) (1,345 )
Interest income, net 104 132
Other income, net 917 828
Loss from continuing operations before income taxes (192 ) (385 )
Income tax benefit (expenses) (124 ) 36
Loss from continuing operations, net of tax (316 ) (349 )
Loss from discontinuing operations, net of tax (1,217 )
Net loss (316 ) (1,566 )
Net loss attributable to non-controlling interests 15 26
Net loss attributable to shareholders of Global-Tech Advanced Innovations Inc. $ (301 ) $ (1,540 )
Basic and diluted loss per common share $ (0.10 ) $ (0.51 )
Basic and diluted weighted average number of shares of common shares 3,042 3,040

GLOBAL-TECH ADVANCED INNOVATIONS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts expressed in thousands of United States dollars)

June 30, 2014 March 31, 2014
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 17,035 $ 22,820
Time deposits 11,332 11,340
Restricted cash 5,589 4,014
Available-for-sale investments 1,051 1,050
Accounts and bills receivable, net 28,454 21,217
Inventories 12,782 7,163
Prepaid expenses 118 123
Deposits and other assets 2,246 2,476
Amount due from a related party 15 13
Total current assets 78,622 70,216
Interests in jointly-controlled entities
Property, plant and equipment, net 26,002 26,317
Land use rights, net 2,896 2,923
Deposits paid for purchase of property, plant and equipment 295 212
Available for sales investments
Total assets $ 107,815 $ 99,668
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term bank loans 9,740 7,280
Accounts payable 17,855 12,520
Customer deposits 1,113 1,138
Accrued salaries, allowances and other employee benefits 3,160 2,981
Other accrued liabilities 6,228 5,721
Income tax payable 4,357 4,233
Total current liabilities 42,453 33,873
Deferred tax liabilities 5 5
Total liabilities 42,458 33,878

Shareholders’ equity:

Common stock, par value $0.04 per share; 12,500,000 shares authorized;
3,233,814 shares issued as of June 30 and March 31, 2014

129

129

Additional paid-in capital 85,104 85,104
Statutory reserves 1,340 1,340
Accumulated deficit (26,891 ) (26,590 )
Accumulated other comprehensive income 10,738 10,855
Less: Treasury stock, at cost, 189,587 shares as of June 30 and March 31, 2014 (4,663 ) (4,663 )
Total Global-Tech Advanced Innovations Inc. shareholders’ equity 65,757 66,175
Non-controlling interests (400 ) (385 )
Total equity 65,357 65,790
Total liabilities and shareholders’ equity $ 107,815 $ 99,668

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