General Steel Files 2011 Annual Report on Form 10-K

Company Expects to Regain Compliance with NYSE Annual Report Listing Requirements

Receives Unqualified Opinion from Auditor

15 Feb, 2013, 16:53 ET from General Steel Holdings, Inc.

BEIJING, Feb. 15, 2013 /PRNewswire/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), one of China's leading non-state-owned producers of steel products and aggregators of domestic steel companies, today announced that it has filed its Annual Report on Form 10-K for the year ended December 31, 2011 with the U.S. Securities and Exchange Commission (the "SEC"). The Company's independent registered public accounting firm, Friedman LLP has expressed an unqualified audit opinion on the Company's annual financial statement for the 12 months ended December 31, 2011.

With the filing of this Annual Report on Form 10-K, the Company believes it has met the New York Stock Exchange's ("NYSE") extended deadline and expects to regain compliance with the NYSE's continued listing requirement for annual report filings under Section 802.01E of the NYSE Listed Company Manual.

"The filing of our 2011 Annual Report demonstrates our commitment to proper financial reporting, and is the result of a concerted effort by our finance team and audit firm partners. Although the review and audit process for our 2011 financial statements took much longer than originally anticipated, we are pleased that we will regain compliance with the NYSE's Annual Report listing requirements," said Henry Yu, Chairman and Chief Executive Officer of General Steel. "Moving ahead, we will continue to focus on our business while we work diligently to prepare our 2012 financial statements and bring General Steel fully current in its SEC filing obligations. Again, I would like to thank our team for their tremendous work and dedication to completing this process, as well as our shareholders for their ongoing support of the Company."

Full Year 2011 Financial Review

  • Total crude steel production capacity under management was 7.0 million metric tons per annum as of December 31, 2011.
  • Total sales increased 89.4% year-over-year to $3.6 billion, from $1.9 billion in 2010. The increase was attributable to both higher sales volume and increased average selling prices.
  • Sales volume for the year totaled 6.2 million metric tons, an increase of 2.3 million metric tons, or 58.1%, compared to 3.9 million metric tons in 2010, with an average selling price for rebar of $635 per ton in 2011, compared to $526 per ton in 2010.
  • Gross loss was $(88.2) million, representing a gross margin of (2.5)%, compared with gross profit of $31.4 million, or a gross margin of 1.7% in 2010. The gross loss in 2011 was mainly attributable to a sharp increase in the cost of iron ore and coke, the Company's primary raw materials, in the fourth quarter.
  • Selling, general and administrative expenses totaled $91.8 million, compared with $52.6 million in 2010. This increase was mainly related to operational expansion and an increase in production and shipping volume, which led to an increase in transportation and sales agent charges.
  • Loss from operations totaled $(180.0) million, compared with a loss from operations of $(21.2) million in 2010.
  • Finance expenses for the year ended December 31, 2011 increased to $115.0 million, compared with $51.3 million in the year-ago period. The increase was primarily due to $27.7 million of non-cash capital financing costs, and a $36.0 million increase in interest expense from increased bank borrowings.
  • Net loss attributable to the Company was $(177.2) million, or $(3.24) per diluted share, compared with a net loss of $(30.0) million, or $(0.56) per diluted share in 2010. The year-over-year increase in net loss was primarily related to the negative gross margin resulting from the fourth quarter raw material price increases, an increase of $36.4 million in inventory impairment, an increase of $39.3 million in operating expenses from expanded operations and higher production and shipping volume, as well as an increase of $63.7 million in finance expenses from increased capital lease and interest expense on bank borrowings.  In addition, the Company determined that the net operating loss carryforward may not have been fully realizable in the second quarter of 2011 and provided 100% allowance charges of $15.4 of deferred tax assets carried over from 2010.

Fourth Quarter 2011 Financial Review

  • Total sales increased 69.9% year-over-year to $793.5 million, compared with $467.2 million in the fourth quarter of 2010. The increase was attributable to both higher sales volume and increased average selling prices.
  • Sales volume for the fourth quarter of 2011 totaled 1.6 million metric tons, an increase of 0.7 million metric tons, or 77.8%, compared to 0.9 million metric tons in the fourth quarter of 2010.
  • Gross loss was $(150.7) million, representing a gross margin loss of (19.0)%, compared with gross profit of $4.7 million, or a gross margin of 1.0% in the fourth quarter of 2010. The gross loss in the fourth quarter of 2011 was mainly attributable to a year-over-year increase in the cost of iron ore and coke, the Company's primary raw materials, that exceeded the increase in the average selling price of the Company's products.
  • Selling, general and administrative expenses totaled $26.0 million, compared with $17.2 million in the fourth quarter of 2010. This increase was mainly related to operational expansion and increased production and shipping volume, which led to an increase in transportation and sales agent charges.
  • Loss from operations totaled $(176.6) million, compared with a loss from operations of $(12.5) million in the fourth quarter of 2010.
  • Finance expenses for the quarter ended December 31, 2011 increased to $42.6 million, compared with $13.7 million in the year-ago period. The increase was primarily related to $18.6 million of non-cash capital financing costs, and a $10.4 million increase in interest expense from increased bank borrowings.
  • Net loss attributable to the Company was $(131.5) million, or $(2.38) per diluted share, compared with a net loss of $(18.6) million, or $(0.34) per diluted share in the fourth quarter of 2010. The year-over-year increase in net loss was primarily related to the negative gross margin resulting from raw material price increases, as well as an increase of $36.4 million in inventory impairment, an increase of $8.8 million in operating expenses from expanded operations and higher production and shipping volume and an increase of $29.0 million in finance expenses from increased capital lease and interest expense on bank borrowings.

Balance Sheet

As of December 31, 2011, General Steel had cash and restricted cash of approximately $518.2 million, compared to $263.1 million as of December 31, 2010. The Company had an inventory balance of approximately $297.7 million as of December 31, 2011, compared to $453.6 million as of December 31, 2010. As of December 31, 2011, the Company had total liabilities of approximately $3.2 billion, compared to $1.7 billion as of December 31, 2010.

About General Steel Holdings, Inc.

General Steel Holdings, Inc., (NYSE: GSI), headquartered in Beijing, China, operates a diverse portfolio of Chinese steel companies. With 7 million metric tons of crude steel production capacity under management, its subsidiaries serve various industries and produce a variety of steel products including rebar, high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality. For more information, please visit www.gshi-steel.com.

To be added to the General Steel email list to receive Company news, or to request a hard copy of the Company's Annual Report on Form 10-K, please send your request to generalsteel@tpg-ir.com.

Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, and include: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether the Company is able to manage its planned growth efficiently and operate profitable operations, including whether its management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether the Company is able to generate sufficient revenues or obtain financing to sustain and grow its operations; (d) whether the Company is able to successfully fulfill its primary requirements for cash; and (e) other risks, including those disclosed in the Company's Form 10-K, filed with the SEC. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

Contact Us

General Steel Holdings, Inc.

In China:

In the US:

Jenny Wang

Joyce Sung

Tel: +86-10-5775-7691

Tel: +1-347-534-1435

Email: jenny.wang@gshi-steel.com 

Email:  joyce.sung@gshi-steel.com

The Piacente Group, Inc.

Investor Relations

Brandi Floberg or Lee Roth

Tel: +1-212-481-2050

Email: generalsteel@tpg-ir.com

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

ASSETS

 

As of December 31,

2011

2010

CURRENT ASSETS:

 Cash

$

120,016

$

65,271

 Restricted cash

398,216

197,797

 Notes receivable

92,910

49,147

 Restricted notes receivable

584,241

240,298

 Accounts receivable, net

12,601

18,500

 Accounts receivable - related parties

20,593

4,160

 Other receivables, net

22,411

11,150

 Other receivables - related parties

87,679

10,938

 Inventories

297,729

453,636

 Advances on inventory purchase

63,585

24,577

 Advances on inventory purchase - related parties

20,244

6,187

 Prepaid expense

364

5,018

 Prepaid value added tax

24,189

37,323

 Short-term investment

2,906

-

 Deferred tax assets

167

15,301

 TOTAL CURRENT ASSETS

1,747,851

1,139,303

 PLANT AND EQUIPMENT, net

1,257,236

602,612

 OTHER ASSETS:

 Advances on equipment purchase

10,420

14,898

 Investment in unconsolidated entities

12,840

17,456

 Long-term deferred expense

631

1,439

 Intangible assets, net of accumulated amortization

25,143

23,672

 TOTAL OTHER ASSETS

49,034

57,465

 TOTAL ASSETS

$

3,054,121

$

1,799,380

 LIABILITIES AND EQUITY

 CURRENT LIABILITIES:

 Short term notes payable

$

1,113,504

$

480,152

 Accounts payable

413,345

241,367

 Accounts payable - related parties

121,828

79,694

 Short term loans - bank

253,954

285,198

 Short term loans - others

246,657

127,712

 Short term loans - related parties

15,710

14,548

 Other payables and accrued liabilities

49,538

30,087

 Other payable - related parties

28,873

18,214

 Customer deposit

90,556

133,464

 Customer deposit - related parties

68,277

54,922

 Deposit due to sales representatives

22,890

51,624

 Deposit due to sales representatives - related parties

943

455

 Taxes payable

11,374

6,237

 Deferred lease income, current

2,099

1,971

 Capital lease obligations, current

25,607

-

 TOTAL CURRENT LIABILITIES

2,465,155

1,525,645

 NON-CURRENT LIABILITIES:

 Long-term loans - related party

92,035

91,020

 Deferred lease income, noncurrent

76,425

55,620

 Capital lease obligations, noncurrent

280,743

-

 Profit sharing liability, noncurrent

303,233

-

 TOTAL NON-CURRENT LIABILITIES

752,436

146,640

 DERIVATIVE LIABILITIES

10

5,573

 TOTAL LIABILITIES

3,217,601

1,677,858

 COMMITMENT AND CONTINGENCIES

 EQUITY:                                                                                                                                         

Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 shares issued and outstanding as of December 31, 2011 and 2010

3

3

Common Stock, $0.001 par value, 200,000,000 shares authorized, 56,601,988 and 54,678,083 issued, 55,511,010 and 54,522,973 outstanding as of December 31, 2011 and 2010, respectively

56

55

Treasury stock, at cost, 1,090,978 and 316,760 shares as of

December 31, 2011 and 2010, respectively

(2,795)

(871)

 Paid-in-capital

107,940

104,970

 Statutory reserves

6,388

6,202

 Accumulated deficits

(229,083)

(51,793)

 Accumulated other comprehensive income

10,200

10,987

 TOTAL GENERAL STEEL HOLDINGS, INC. EQUITY

(107,291)

69,553

 NONCONTROLLING INTERESTS

(56,189)

51,969

 TOTAL EQUITY

(163,480)

121,522

 TOTAL LIABILITIES AND EQUITY

$

3,054,121

$

1,799,380

 

 

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(In thousands, except per share data)

 

For the Year Ended

December 31,

2011

2010

SALES

$

2,452,127

$

1,392,770

SALES - RELATED PARTIES

1,111,769

489,370

    TOTAL SALES

3,563,896

1,882,140

COST OF GOODS SOLD

2,519,183

1,369,523

COST OF GOODS SOLD - RELATED PARTIES

1,132,927

481,202

    TOTAL COST OF GOODS SOLD

3,652,110

1,850,725

GROSS PROFIT (LOSS)

(88,214)

31,415

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

91,827

52,577

INCOME (LOSS) FROM OPERATIONS

(180,041)

(21,162)

OTHER INCOME (EXPENSE)

    Interest income

7,892

6,154

    Finance/interest expense

(114,949)

(51,283)

    Change in fair value of derivative liabilities

5,563

15,055

    Gain on debt settlement

3,430

-

    Gain (loss) on disposal of equipment

693

(9,447)

    Realized income from future contracts

415

1,424

    Income from equity investments

5,302

6,383

    Foreign currency transaction gain

3,424

-

    Lease income

2,008

943

    Other non-operating income (expense), net

(1,442)

(3,120)

         Other expense, net

(87,664)

(33,891)

   LOSS BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST

(267,705)

(55,053)

PROVISION FOR INCOME TAXES

    Current

175

1,267

    Deferred

15,419

(10,049)

           Provision (benefit) for income taxes

15,594

(8,782)

NET LOSS

(283,299)

(46,271)

Less: Net loss attributable to noncontrolling interest

(106,112)

(16,265)

NET LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.

$

(177,187)

$

(30,006)

NET LOSS

$

(283,299)

$

(46,271)

OTHER COMPREHENSIVE LOSS

Foreign currency translation adjustments

(587)

4,623

COMPREHENSIVE LOSS

(283,886)

(41,648)

Less: Comprehensive loss attributable to noncontrolling interest

(105,912)

(14,511)

COMPREHENSIVE LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.

$

(177,974)

$

(27,137)

WEIGHTED AVERAGE NUMBER OF SHARES

    Basic and Diluted

54,750

53,113

LOSS PER SHARE

    Basic and Diluted

$

(3.24)

$

(0.56)

 

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(UNAUDITED)

(In thousands, except per share data)

For the Three Months Ended

December 31,

2011

2010

SALES

$

473,612

$

351,266

SALES - RELATED PARTIES

319,928

115,895

    TOTAL SALES

793,540

467,161

COST OF GOODS SOLD

588,731

347,671

COST OF GOODS SOLD - RELATED PARTIES

355,462

114,774

    TOTAL COST OF GOODS SOLD

944,193

462,445

GROSS PROFIT (LOSS)

(150,653)

4,716

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES        

25,984

17,204

LOSS FROM OPERATIONS

(176,637)

(12,488)

OTHER INCOME (EXPENSE)

    Interest income

4,812

2,678

    Finance/interest expense

(42,632)

(13,666)

    Change in fair value of derivative liabilities

37

1,476

    Gain on debt settlement

-

-

    Gain (loss) on disposal of equipment

14

(6,323)

    Realized income from future contracts

415

1,424

    Income from equity investments

1,001

2,316

    Foreign currency transaction gain

504

-

    Lease income

519

345

    Other non-operating expense, net

(245)

(6,655)

         Other expense, net

(35,575)

(18,405)

LOSS BEFORE PROVISION FOR INCOME TAXES

    AND NONCONTROLLING INTEREST

(212,212)

(30,893)

PROVISION FOR INCOME TAXES

    Current

(442)

407

    Deferred

35

(4,105)

           Provision (benefit) for income taxes

(407)

(3,698)

NET LOSS

(211,805)

(27,195)

Less: Net loss attributable to noncontrolling interest

(80,280)

(8,589)

NET LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.

$

(131,525)

$

(18,606)

NET LOSS

$

(211,805)

$

(27,195)

OTHER COMPREHENSIVE LOSS

    Foreign currency translation adjustments

(2,986)

1,177

COMPREHENSIVE LOSS

(214,791)

(26,018)

Less: Comprehensive loss attributable to noncontrolling interest

(80,395)

(8,032)

COMPREHENSIVE LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.

$

(134,396)

$

(17,986)

WEIGHTED AVERAGE NUMBER OF SHARES

    Basic and Diluted

55,352

54,698

LOSS PER SHARE

    Basic and Diluted

$

(2.38)

$

(0.34)

 

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(In thousands)

 For the Year Ended December 31,

2011

2,010

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(283,299)

$

(46,271)

Adjustments to reconcile net loss to cash provided by (used in)

operating activities:

Depreciation, amortization and depletion

58,331

41,153

Impairment of plant and equipment

5,424

1,747

Change in fair value of derivative liabilities

(5,563)

(15,055)

Gain on debt settlement

(3,430)

-

(Gain) loss on disposal of equipment

(693)

8,257

Bad debt allowance

3,529

326

Inventory written-off

37,512

1,061

Stock issued for services and compensation

1,530

2,479

Income from compensation

-

(1,377)

Make whole shares interest expense on notes conversion

-

1,130

Amortization of deferred note issuance cost and discount on convertible notes

-

17

Amortization of deferred financing cost on capital lease

27,704

-

Income from equity investments

(5,302)

(6,383)

Deferred tax assets

15,419

(10,058)

Deferred lease income

4,782

5,549

Foreign currency transaction gain

(3,424)

-

Changes in operating assets and liabilities

Notes receivable

(41,318)

(18,498)

Notes receivable - restricted

(329,839)

(234,342)

Accounts receivable

4,761

(8,647)

Accounts receivable - related parties

(16,015)

14,065

Other receivables

(12,638)

(3,210)

Other receivables - related parties

(50,562)

(2,968)

Inventories

131,695

(270,046)

Advances on inventory purchases

(37,674)

4,681

Advances on inventory purchases - related parties

(13,608)

13,782

Prepaid expense

4,753

-

Long-term deferred expense

845

-

Prepaid value added tax

14,223

-

Accounts payable

160,657

76,003

Accounts payable - related parties

38,647

45,480

Other payables and accrued liabilities

18,076

(1,527)

Other payables - related parties

9,845

30,618

Customer deposits

(46,870)

(24,433)

Customer deposits - related parties

11,211

18,855

Taxes payable

4,834

(19,543)

Net cash used in operating activities

(296,457)

(397,155)

CASH FLOWS FROM INVESTING ACTIVITIES:

Restricted cash

(190,178)

741

Acquired long term investment

-

(2,021)

Cash proceeds from disposal of long-term investment

-

8,137

Cash made to short term investment

(2,858)

-

Cash proceeds from sales of equipment

1,306

1,828

Advance on equipment purchases

-

(7,106)

Equipment purchase and intangible assets

(110,939)

(89,916)

Net cash used in investing activities

(302,669)

(88,337)

CASH FLOWS FINANCING ACTIVITIES:

Payments made to dividend distribution

-

(2,855)

Payments made for treasury stock acquired

(1,923)

(870)

Capital contributed by noncontrolling interest

-

1,184

Borrowings on short term loans - bank

563,007

327,807

Payments on short term loans - bank

(600,294)

(199,905)

Borrowings on short term loan - others

330,037

152,517

Payments on short term loans - others

(212,661)

(174,913)

Borrowings on short term loan - related parties

15,450

71,714

Payments on short term loans - related parties

(14,817)

(11,850)

Borrowings on short term notes payable

1,655,741

905,124

Payments on short term notes payable

(1,049,680)

(693,633)

Deposits due to sales representatives

(30,066)

987

Deposit due to sales representatives - related parties

464

444

Borrowings on long term loan - related parties

14,677

91,020

Payments on long term loan - related parties

(16,865)

-

Net cash provided by financing activities

653,070

466,771

EFFECTS OF EXCHANGE RATE CHANGE IN CASH

801

1,874

INCREASE (DECREASE) IN CASH

54,745

(16,847)

CASH, beginning of year

65,271

82,118

CASH, end of year

$

120,016

$

65,271

 

SOURCE General Steel Holdings, Inc.



RELATED LINKS

http://www.gshi-steel.com