Global-Tech Advanced Innovations Reports Third Quarter Results for Fiscal 2010 with an Increase in Net Sales and Continuing Improvement in Profitability

HONG KONG--(BUSINESS WIRE)--Global-Tech Advanced Innovations Inc. (NASDAQ:GAI) today announced its financial results for the fiscal quarter ended December 31, 2009 (the Company’s third quarter of fiscal 2010).

“Continued efforts towards improving our operating margins remain necessary until expectations for margins are met. With increasing labor and commodity prices, it is essential that we continue to focus on the development of new products with higher profit margins and the further expansion of our business.”

Net sales for the third quarter of fiscal 2010 increased 68.1% to $25.7 million, when compared to $15.3 million for the corresponding quarter in fiscal 2009. Net sales of electronic components increased approximately 37% in the third quarter of fiscal 2010, compared to the corresponding period in fiscal 2009. Net revenues from telecommunication manufacturing services exceeded 10% of total revenues in the third quarter of fiscal 2010, compared to less than 3% of total revenues in the third quarter of fiscal 2009.

Net income for the third quarter of fiscal 2010 was $0.7 million, or $0.24 per share, compared to a net loss of $1.8 million, or $0.57 per share, for the third quarter of fiscal 2009.

Net sales for the nine months ended December 31, 2009 were $80.4 million, an increase of 13.7%, compared to $70.7 million in the corresponding period in fiscal 2009. Net sales for the first nine months of fiscal 2010 included sales of approximately $29.6 million of electronic components (an increase of approximately 7.7% when compared to the prior corresponding period in fiscal 2009) and revenues of approximately $5.9 million from telecommunication manufacturing services. Net income for the first nine months of fiscal 2010 was $3.4 million, or $1.13 per share, compared to a net loss of $1.7 million, or $0.54 per share, for the first nine months of fiscal 2009.

John C.K. Sham, the Company's President and Chief Executive Officer, said: “While our results of operations showed major improvement during the third quarter of fiscal 2010 compared to the same period in fiscal 2009, the comparison is somewhat misleading given the impact of the world-wide financial crisis on the prior corresponding period’s operating results. We are pleased with the improvement in our gross profit margins in both the third quarter of fiscal 2010 and year to date, with year to date margins exceeding 16%. These improvements in gross profit margins were largely the result of an increase in sales of higher pixel camera modules, which now represent approximately 28% of our electronic components business.”

Mr. Sham continued, “Even though we are pleased with the progress in our electronic components and telecommunication manufacturing service businesses, the Company’s strategy to further diversify its mix of business remains vital given the current economic climate, which continues to be affected by recessionary pressures and weak consumer demand, particularly in the United States.”

Mr. Sham concluded, “Continued efforts towards improving our operating margins remain necessary until expectations for margins are met. With increasing labor and commodity prices, it is essential that we continue to focus on the development of new products with higher profit margins and the further expansion of our business."

Global-Tech Advanced Innovations Inc. is a holding company, owning subsidiaries that manufacture and market a diversified portfolio of products, such as complementary metal oxide semiconductor (CMOS) camera modules (CCMs) and floor care products. 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 North America, Europe, and 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 December 31,				Nine Months Ended December 31,
	2009		2008		2009		2008
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Net sales	$	25,734	$	15,309	$	80,374	$	70,710
Cost of goods sold		(21,455)		(15,093)		(67,230)		(65,604)
Gross profit		4,279		216		13,144		5,106
Selling, general and administrative expenses		(3,572)		(3,158)		(10,253)		(9,328)
Other operating income (expense)		(46)		(20)		(140)		1,799
Operating income (loss)		661		(2,962)		2,751		(2,423)
Interest expense		(22)		(1)		(35)		(2)
Interest income		62		181		216		548
Other income, net		199		1,031		703		211
Income (loss) from operation before income taxes		900		(1,751)		3,635		(1,666)
Provision for income taxes		(170)		(1)		(214)		(2)
Net income (loss)	$	730	$	(1,752)	$	3,421	$	(1,668)
Basic and diluted earnings (loss) per common share	$	0.24	$	(0.57)	$	1.13	$	(0.54)
Basic and diluted weighted average number of shares outstanding		3,038		3,057		3,038		3,057

GLOBAL-TECH ADVANCED INNOVATIONS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts expressed in thousands of United States dollars)
	December 31, 2009		March 31, 2009
	(unaudited)		(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	16,370	$	11,313
Time deposits		4,062		4,411
Restricted cash		6,887		4,390
Available-for-sale investments		16,003		15,985
Accounts and bills receivable, net		34,210		18,438
Inventories		8,782		8,448
Prepaid expenses		125		264
Deposits and other assets		1,723		1,493
Legal claims receivable		5,090		5,100
Amount due from a related party		29		33
Amount due from a jointly-controlled entity		21		70
Convertible note		-		5,599
Interest receivable		-		504
Total current assets		93,302		76,048
Interests in jointly-controlled entities		-		-
Property, plant and equipment, net		23,381		24,592
Land use rights, net		3,088		3,073
Deposits paid for purchase of property, plant and equipment		87		201
Total assets	$	119,858	$	103,914
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts and bills payable and trust receipt loans		12,842		7,963
Discounted bills		5,164		-
Temporary receipts		687		717
Accrued salaries, allowances and other employee benefits		4,526		3,194
Accrual for loss contingencies		6,233		6,077
Other accrued liabilities		7,060		6,234
Income tax payable		5,621		5,501
Total current liabilities		42,133		29,686
Deferred tax liabilities		27		27
Total liabilities		42,160		29,713
Shareholders' equity:
Common stock, par value $0.04 per share; 12,500,000 shares authorized; 3,228,090 and 3,227,064 shares issued and outstanding as of December 31 and March 31, 2009		129		129
Additional paid-in capital		84,272		84,266
Accumulated deficit		(7,134)		(10,555)
Accumulated other comprehensive income		5,094		5,022
Less: Treasury stock, at cost, 189,587 and 189,387 shares as of December 31 and March 31, 2009		(4,663)		(4,661)
Total shareholders’ equity		77,698		74,201
Total liabilities and shareholders' equity	$	119,858	$	103,914