SHENZHEN, China, Dec. 2 /PRNewswire-Asia-FirstCall/ -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), one of the largest lithium-ion battery cell manufacturers in the world, as measured by production output, today announced its financial results for the fourth quarter ("Q409") and fiscal year ended September 30, 2009 ("FY09").

    Recent Achievements and Highlights
    -- We saw strong recovery from the downturn with sequential growth in
       revenue ($57.6M) and operating cash flow ($5.8M) in Q409 as compared to
       Q309;
    -- Profitability further improved with higher gross margin (14.1%,) and
       smaller loss ($1.4M) than Q309;
    -- We have successfully established ourselves as a major competitor in the
       cylindrical cell market; revenues from cylindrical cells in FY09
       increased to $55.3 million, up 30.0% from FY08;.
    -- Revenues from prismatic battery packs increased to $8.9 million or
       15.5% of revenues in Q409, becoming our third largest revenue source,
       in response to customer needs;
    -- In November 2009, BAK Tianjin signed Letters of Intent with Tianjin
       Qingyuan Electric Vehicle Co., Ltd., Dongfeng Electric Vehicle Co., Ltd.
       and Brilliance Auto Engineering Research Institute for providing
       high-power batteries for use in electric cars, and with Suzhou NOAHtek
       Electric Bicycles Co., Ltd. for providing high-power batteries for use
       in electric bicycles;
    -- We raised $20.6 million in a Registered Direct Offering in October 2009,
       which will further strengthen our financial position and improve the
       operating flexibility.

Fourth Quarter FY09 Financial Results

Net revenues for the fourth quarter of FY09 were $57.6 million, up 28.8% from $44.7 million last quarter and down 20.9% from $72.7 million in the same quarter of last year.

Revenues from cylindrical cells used in notebook computers were $15.0 million, up 18.6% from $12.7 million last quarter and down 23.4% from $19.7 million in the same quarter of last year.

Revenues from prismatic cells, including aluminum-case cells, steel-case cells and battery packs, which are used in mobile phones and certain personal electronic devices, were $37.5 million, up 31.4% from $28.6 million last quarter and down 16.6% from $45.0 million in the same quarter of last year. Revenues from aluminum-case cells were $28.6 million, up 27.1% from $22.5 million last quarter and down 20.6% from $36.0 million in the same quarter of last year. Revenues from battery packs were $8.9 million, up 55.3% from $5.7 million last quarter and up 64.4% from $5.4 million in the same quarter of last year. Revenues from steel-case cells were minimal as we ended production in January 2009.

Revenues from lithium polymer cells, used in personal electronic devices such as PDAs, MP3 players and Bluetooth devices, were $4.9 million in the fourth quarter of FY09, up 46.1% from last quarter, and down 39.2% from the same quarter of last year.

Gross profit for the fourth quarter of FY09 was $8.1 million, up 60.3% from $5.0 million last quarter and down 29.6% from $11.5 million in the same quarter of last year. Gross margin was 14.1%, compared to 11.3% last quarter and 15.8% in the same quarter of last year.

Operating expenses totaled $9.0 million or 15.7% of revenues in the fourth quarter of FY09, as compared to $8.6 million or 19.3% of revenues last quarter and $8.4 million or 11.6% of revenues in the same quarter of last year. Research and development expenses were $1.6 million or 2.8% of revenues, as compared to $1.5 million or 3.3% of revenues last quarter and $1.7 million or 2.3% of revenues in the same quarter of last year. Sales and marketing expenses were $1.8 million or 3.2% of revenues, as compared to $1.6 million, or 3.5% of revenues last quarter and $1.5 million or 2.2% of revenues in the fourth quarter of last year. General and administrative expenses were $5.6 million or 9.7% of revenues, as compared to $5.5 million or 12.4% of revenues last quarter and $5.2 million or 7.1% of revenues in the same quarter of last year.

Operating loss for the fourth quarter of FY09 was $0.9 million, as compared to operating loss of $3.6 million last quarter and operating income of $3.0 million in the same quarter of last year.

Net loss was $1.4 million in the fourth quarter of FY09, as compared to net loss of $5.2 million last quarter and net income of $1.5 million in the same quarter of last year. Diluted earnings per share were negative $0.02 compared with negative $0.09 per diluted share last quarter and $0.03 per diluted share in the same quarter of last year.

For the fourth quarter of FY09, Days Sales Outstanding ("DSO") decreased to 120 from 145 last quarter, and Days Sales of Inventory decreased to 116 from 136 last quarter.

FY09 Financial Results

For FY09, net revenues were $211.1 million, down 13.9% from $245.3 million in FY08, gross profit was $26.8 million or 12.7% of net revenues, down 13.4% from $30.9 million or 12.6% of net revenues for FY08, and net loss was $14.0 million as compared to net loss of $7.9 million for FY08.

Financial Condition

On September 30, 2009 China BAK had $30.7 million in cash and cash equivalents and negative $46.3 million in working capital, reflecting a current ratio of 0.83:1. Short-term bank loans and long-term bank loans totaled $194.8 million as compared to $191.4 million on June 30, 2009. Shareholders' equity totaled $156.6 million. China BAK had $49.6 million available for borrowing under its credit facilities.

Business Outlook

"In FY09, we have weathered the economic crisis relatively well and grown our business by starting shipments to a tier 1 OEM notebook computer customer. We've also made in-roads in the New Energy/Clean Tech sector by providing samples of power cells to auto manufacturers and received favorable comments. We believe we will continue to grow in FY10 and be one of the few winners in this industry," commented Mr. Xiangqian Li, CEO of China BAK.

"We are pleased to see steady increase in revenue, gross margin and operating cash flow since Q2FY09 amid economic recession. Operating measures such as DSO, inventory turns have also rebounded in Q4FY09 to near pre-downturn levels. We will continue to exercise prudence and drive for operating excellence," commented Tony Shen, CFO of China BAK.

China BAK expects that FY10 revenue will fall in the range of $270 million to $310 million, which, at the low point of the range, will represent a 28% growth from FY09, and that bottom line of FY10 will be break-even to slightly profitable.

Conference Call

China BAK will host a conference call at 8:00 a.m. ET on Wednesday, December 2, 2009 to discuss results for the fourth quarter of FY09 ended September 30, 2009. Joining Xiangqian Li, China BAK's President and Chief Executive Officer on the call will be Tony Shen, Chief Financial Officer. To participate in the conference call, please dial the following number approximately fifteen minutes prior to the scheduled conference call time: 800-688-0796. International callers should dial (617) 614-4070. The pass code for the call is 976-118-60. If you are unable to participate in the call at this time, a replay will be available from 10:00 a.m. ET on Wednesday, Dec. 2, 2009 through 10:00 a.m. ET, Wednesday, Dec. 16, 2009. To access the replay, please dial 888-286-8010. International callers should dial (617) 801-6888. The pass code for the replay is 699-49-859. The conference call will be broadcast live over the Internet and can be accessed by all interested parties on the China BAK website at http://www.bak.com.cn/ . To listen to the live webcast, please go to the China BAK's website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live broadcast, shortly after the call a replay will be made available on China BAK's website for 90 days.

About China BAK Battery Inc.

China BAK Battery, Inc. is one of the largest manufacturers of lithium-based battery cells in the world, as measured by production output. It produces battery cells that are the principal component of rechargeable batteries commonly used in cellular phones, notebook computers and portable consumer electronics, such as digital media devices, portable media players, portable audio players, portable gaming devices, and PDAs. China BAK Battery, Inc.'s 3.0-million-square-foot facilities are located in Shenzhen and Tianjin, PRC, and have been recently expanded to produce new products.

Safe Harbor Statement

This press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All "forward-looking statements" relating to the business of China BAK Battery, Inc. and its subsidiary companies, which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to: risks related to China BAK's business and risks related to operating in China. Please refer to China BAK's Annual Reports on Form 10-K for the fiscal years ended September 30, 2008, as well as China BAK's Quarterly Reports on Form 10-Q for FY09, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. China BAK's actual results could differ materially from those contained in the forward-looking statements. China BAK undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

                         -Financial Tables Follow-



                 China BAK Battery, Inc. and Subsidiaries
     Consolidated Statements of Operations and Comprehensive Income/(Loss)
     For the Three Months and Fiscal Years Ended September 30, 2009 and 2008
               (Amounts in thousands, except per share data)

                               Three Months Ended            Years Ended
                                  September 30,             September 30,
                                2009          2008        2009         2008
                            (Unaudited)   (Unaudited)

    Net Revenues              $57,551       $72,738    $211,144     $245,348
    Cost of revenues          (49,457)      (61,257)   (184,388)    (214,442)
    Gross profit                8,094        11,481      26,756       30,906

    Operating expenses:
      Research and
       development costs       (1,629)       (1,688)     (5,643)      (6,252)
      Sales and marketing
       expenses                (1,842)       (1,568)     (6,176)      (5,803)
      General and
       administrative
       expenses                (5,563)       (5,185)    (21,990)     (19,348)
        Total operating
         expenses              (9,034)       (8,441)    (33,809)     (31,403)

    Operating income /
     (loss)                      (940)        3,040      (7,053)        (497)

    Finance costs, net         (2,255)       (3,643)     (9,356)     (11,021)
    Government grant
     income                       244           397         637        1,775
    Other income                  717           683         528          757
    Income / (loss) before
     income taxes              (2,234)          477     (15,244)      (8,986)

    Income tax benefit            874           995       1,253        1,045
    Net (loss) / income       $(1,360)       $1,472    $(13,991)     $(7,941)

    Other comprehensive
     income / (loss)
      - Foreign currency
        translation
        adjustment               (112)        1,241        (355)      15,262
    Comprehensive income /
     (loss)                   $(1,472)       $2,713    $(14,346)      $7,321

    Net income / (loss)
     per share:
        -Basic                 $(0.02)        $0.03      $(0.25)      $(0.15)
        -Diluted               $(0.02)        $0.03      $(0.25)      $(0.15)

    Weighted average
     shares outstanding:
        -Basic                 56,971        54,511      56,964       52,314
        -Diluted               56,971        54,971      56,964       52,314



                     China BAK Battery, Inc. and Subsidiaries
                            Consolidated Balance Sheets
                         As of September 30, 2009 and 2008
                               (Amounts in thousands)

                                                      As of September 30,
                                                     2009              2008
    Assets
    Current assets
      Cash and cash equivalents                    $30,678           $35,707
      Pledged deposits                              31,115             4,449
      Trade accounts receivable, net                83,292            82,740
      Inventories                                   65,535            67,583
      Prepayments and other receivables              4,632             4,463
      Deferred tax assets                            3,895             1,720
      Property, plant and equipment held
       for sale                                        804                --
        Total current assets                       219,951           196,662

      Property, plant and equipment, net           219,685           195,435
      Lease prepayments, net                        32,166            31,782
      Intangible assets, net                           239               161
      Deferred tax assets                               43                 7
    Total assets                                  $472,084          $424,047

    Liabilities
    Current liabilities
      Short-term bank loans                       $139,159          $105,598
      Current maturities of long-term bank
       loans                                        16,114             8,800
      Accounts and bills payable                    92,572            57,487
      Accrued expenses and other payables           18,425            21,581
        Total current liabilities                  266,270           193,466

      Long-term bank loans, less current
       maturities                                   39,553            55,732
      Deferred revenue                               7,442             7,685
      Other long-term payables                       1,940                --
      Deferred tax liabilities                         278                92
    Total liabilities                              315,483           256,975

    Commitments and contingencies

    Shareholders' equity:
      Ordinary shares US$ 0.001 par value;
       100,000,000 authorized; 57,676,481
       and 57,737,481 issued and outstanding
       as of September 30, 2008 and September
       30, 2009, respectively                           58                58
      Donation Shares                               14,102            14,102
      Additional paid-in-capital                   101,161            97,286
      Statutory reserves                             7,227             6,918
      Retained earnings                             13,328            27,629
      Accumulated other comprehensive income        24,791            25,146
        Less: Treasury shares                       (4,066)           (4,067)
          Total shareholders' equity               156,601           167,072
    Total liabilities and shareholders'
     equity                                       $472,084          $424,047



                      China BAK Battery, Inc. and Subsidiaries
                        Consolidated Statements of Cash Flows
      For the Three Months and Fiscal Years Ended September 30, 2009 and 2008
                                (Amounts in thousands)

                                 Three Months Ended          Years Ended
                                    September 30,           September 30,
                                   2009        2008       2009         2008
                               (Unaudited) (Unaudited)
    Cash flow from operating
     activities
    Net (loss) / income         $(1,360)     $1,472    $(13,991)     $(7,941)
    Adjustments to reconcile
     net (loss) / income to
     net cash provided by
     operating activities:
      Depreciation and
       amortization               1,328       4,014      12,832       13,376
      Provision for / (recovery
       of) doubtful debts         1,864        (244)      7,725        1,943
      Provision for obsolete
       inventories                1,059         496         929          610
      Share-based compensation    1,622       1,246       3,725        3,780
      Deferred income taxes      (1,020)       (951)     (2,024)      (1,152)
      Deferred revenue              (58)       (282)       (234)        (282)
      Exchange loss / (gain)       (458)       (182)        (48)       1,326
      Loss on disposal of
       Property, plant and
       equipment                      6           5           6          195
    Changes in operating
     assets and liabilities:
        Trade accounts
         receivable             (15,306)      2,502      (8,375)     (14,600)
        Inventories              (4,705)        376       1,043       (2,223)
        Prepayments and other
         receivables              5,509       3,823         394       (2,565)
        Accounts and bills
         payable                 19,460      (1,805)     36,331        6,934
        Accrued expenses and
         other payables          (2,162)      1,518          78        3,430
    Net cash provided by
     operating activities        $5,779     $11,988     $38,391       $2,831

    Cash flow from investing
     activities
      Purchases of property,
       plant and equipment       (6,807)    (16,672)    (40,431)     (47,575)
      Payment in lease
       prepayment                    --      (1,779)     (1,077)      (5,454)
      Purchases of intangible
       assets                       (13)         (7)       (140)        (109)
      Proceeds from disposal of
       property, plant
       and equipment                 10         465          10          786
      Net cash used in
       investing activities     $(6,810)   $(17,993)   $(41,638)    $(52,352)

    Cash flow from financing
     activities
      Proceeds from borrowings    3,309      40,216     176,316      159,913
      Repayment of borrowings       (22)    (46,026)   (151,448)    (122,577)
      Decrease / (increase) in
       pledged deposits          (1,488)      1,829     (26,641)         588
      Proceeds from issuance of
       capital stock, net           150      15,233         150       29,240
      Net cash provided by /
       (used in) financing
       activities                $1,949     $11,252     $(1,623)     $67,164

    Effect of exchange rate
     changes on cash and
     cash equivalents               121         216        (158)       3,867
    Net increase / (decrease)
     in cash and cash
     equivalents                  1,039       5,463      (5,028)      21,510
    Cash and cash equivalents
     at the beginning
     of the period               29,639      30,244      35,706       14,197
    Cash and cash equivalents
     at the end of the period   $30,678     $35,707     $30,678      $35,707

SOURCE China BAK Battery, Inc.

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