EX-2 4 dex2.txt PRESS RELEASE DATED JULY 2, 2001 EXHIBIT 2 8 (BW)(GLOBAL-TECH-APPLIANCES)(GAI) Global-Tech Appliances Maintains Improved Net Sales for Fiscal 2001 and Plans to Accelerate Its Business Transformation Business Editors HONG KONG--(BUSINESS WIRE)--July 2, 2001--Global-Tech Appliances Inc. (NYSE:GAI) today announced improved net sales for the fourth quarter and fiscal year ended March 31, 2001. Net sales for the fourth quarter of fiscal 2001 increased 20% to $23.5 million, compared to $19.5 million for the fourth quarter of fiscal 2000. Net income before non-cash, non-recurring charges rose 23% for the fourth quarter of fiscal 2001 to $1.7 million, or $0.14 per share, compared to $1.4 million, or $0.11 per share, for the same period in fiscal 2000. In the fourth quarter, the Company recorded a non-cash, non-recurring charge of $5.0 million for inventory and tooling related to obsolete and non- strategic products that were dedicated to certain customers. Additionally, a further non-cash, non-recurring charge of $2.5 million was incurred for the write-down of certain assets associated with the Company's decision to exit the personal care product line, which is becoming less profitable and more commoditized. Including the total charge of $7.5 million net of taxes, or $0.62 per share, the Company reported a net loss of $5.8 million, or $0.48 per share, in the fourth quarter of fiscal 2001. Net sales for the fiscal year ended March 31, 2001 increased 17% to $108.4 million, compared with $92.4 million in the prior year. Before special charges in both years, net income for fiscal 2001 increased 12% to $10.3 million, or $0.85 per share, compared to $9.2 million, or $0.76 per share, in the prior fiscal year. Net income for fiscal 2001, including the non-cash charges, was $2.8 million, or $0.23 per share, compared to $8.7 million, or $0.72 per share, in the prior fiscal year. John C.K. Sham, President and Chief Executive Officer, said: "Despite the competitive environment, we were able to achieve top line growth for the fourth quarter and improved performance on net sales for fiscal 2001 primarily due to increased sales in floor care products. We have, within the last 12 months, successfully expanded and diversified into the floor care category, in which the net sales have increased significantly to $26.9 million in fiscal 2001 from $2.3 million in fiscal 2000. This achievement supported our strategy of upgrading the value of the products that we manufacture and demonstrated our ability to diversify into other product categories." Mr. Sham continued, "We believe that our exit from the personal care product line and our decision to de-emphasize kitchen appliances will allow the Company to redirect about $3 million in R&D and tooling resources annually to our development of new product categories and other projects. One of the projects requiring such resources is Lite Array, Inc., a developer of solid state flat-panel displays, in which we recently concluded an agreement to acquire a majority equity interest." Mr. Sham concluded, "While we remain committed to our existing business of manufacturing electrical household appliances, we plan to accelerate our overall strategy of transforming our business to become a diversified manufacturer of non-commodity, higher-margin products. We intend to actively pursue both acquisitions and joint ventures that would support our long-term objective of accelerated growth and increased return on investment necessary to enhance shareholder value." Global-Tech is an original designer, manufacturer, and marketer of a wide range of small household appliances in five primary product categories: kitchen appliances; garment care products; travel products and accessories; floor care products; and environmental 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," 9 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, product demand and market acceptance, 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 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 except per share data)
Years Ended March 31, ---------------------------------- 2001 2000 ------------ ------------ (audited) (audited) Net Sales $108,378,912 $ 92,356,993 Cost of goods sold (85,563,357) (70,646,639) ------------ ------------ Gross profit 22,815,555 21,710,354 Selling, general and administrative expenses (15,927,158) (15,947,514) Unusual item - (500,484) Write-off of inventory and tooling (4,991,407) - Loss on cessation of a product line (2,523,293) - ------------ ------------ Operating income (loss) (626,303) 5,262,356 Interest expense (269,297) (216,894) Interest income 3,729,455 3,461,098 Other income, net 448,618 450,901 ------------ ------------ Income before income taxes 3,282,473 8,957,461 Provision for income taxes (513,147) (224,890) Net income $ 2,769,326 $ 8,732,571 ============ ============ Net income per common share $ 0.23 $ 0.72 ============ ============ Weighted average number of shares outstanding 12,134,846 12,109,136 ============ ============
10 GLOBAL-TECH APPLIANCES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts expressed in United States dollars)
Years Ended March 31, ---------------------------------- 2001 2000 ------------ ------------ (audited) (audited) ASSETS Current assets: Cash and cash equivalents $ 28,489,112 $ 53,647,296 Short-term investments 31,220,932 20,278,224 Accounts receivable, net 9,389,632 7,167,468 Deposits prepayments & other assets 9,160,171 3,364,470 Inventories 14,898,127 18,159,948 ------------ ------------ Total current assets 93,157,974 102,617,406 Property, plant and equipment 38,493,045 29,304,669 Construction-in-progress - 7,319,980 Patents 13,168 14,459 Loan to a director 384,114 461,217 ------------ ------------ Total assets $132,048,301 $139,717,731 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term bank borrowings $ - $ 1,895 Current portion of long-term bank loans 1,138,505 1,063,084 Accounts payable 14,007,213 8,734,132 Fees payable for land use rights 257,888 378,118 Salaries and allowances payable 928,193 459,349 Advance payments from customers 184,408 70,580 Accrued expenses 2,551,376 2,191,741 Income tax provision 3,013,901 2,505,132 ------------ ------------ Total current liabilities 22,081,484 15,404,031 Long-term bank loans 907,753 1,407,453 ------------ ------------ Total liabilities 22,989,237 16,811,484 ------------ ------------
11 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 March 31, 2000 and March 31, 128,300 128,300 2001 Additional paid-in capital 81,661,840 81,661,840 Retained earnings 32,456,646 46,237,343 Accumulated other comprehensive deficit (550,257) (363,734) Less: Treasury stock, at cost, 703,899 shares as of March 31, 2000; 692,647 shares as of March 31, 2001 (4,637,465) (4,757,502) ------------ ------------ Total shareholders' equity 109,059,064 122,906,247 ------------ ------------ Total liabilities and shareholders' equity $132,048,301 $139,717,731 ============ ============
--30--AC/na* CONTACT: Global-Tech Appliances Inc. Brian Yuen, 212/683-3320 http://www.businesswire.com/cnn/gai.shtml ----------------------------------------- KEYWORD: NEW YORK CHINA INTERNATIONAL ASIA PACIFIC INDUSTRY KEYWORD: ADVERTISING/MARKETING APPAREL/TEXTILES CONSUMER/HOUSEHOLD MANUFACTURING TRAVEL EARNINGS 12