Jinpan International Reports First Quarter 2010 Financial Results

-- Company Reiterates Comfort with FY10 Financial Forecast --

May 12, 2010, 16:01 ET from Jinpan International Ltd

CARLSTADT, N.J., May 12 /PRNewswire-FirstCall/ -- Jinpan International Ltd (Nasdaq: JST), a leading designer, manufacturer and distributor of cast resin transformers for high voltage distribution equipment, today announced unaudited consolidated financial results for the first quarter ended March 31, 2010.  

Net sales for the first quarter were $19.6 million, a 39.5% decrease from $32.4 million in the same period last year.  The decrease in sales was the result of lower domestic sales and fewer shipments made.  In the first quarter, domestic sales accounted for $17.3 million, or 88.3% of net sales, compared to $24.4 million, or 75.3% of net sales in the same period last year. Net sales outside of China decreased 71.3% to $2.3 million, or 11.7% of net sales, compared to $8.0 million, or 24.7% of net sales in the same period last year. The decrease in international sales was primarily the result of fewer shipments compared to relatively strong international sales in the same period last year.  

Cast resin transformers (excluding those for wind power applications), switch gears and unit substations represented $15.8 million, or 80.6% of net sales in the first quarter, while wind energy products represented $3.8 million, or 19.4% of net sales in the first quarter.

Gross profit in the first quarter decreased 39.0% year over year to $7.2 million from $11.7 million, and gross profit margin increased 30 basis points year over year to 36.5% from 36.2%. In spite of lower unit sales pricing, the Company benefited from a lower cost of sales on an absolute basis and maintained favorable profit margins.

Selling and administrative expenses in the first quarter were $6.4 million, or 32.7% of net sales, compared to $6.2 million, or 19.2% of net sales in the same period last year.  Selling and administrative expenses increased primarily due to additional overhead costs at the Company's Shanghai facility, which was not operational in the first half of 2009.  

Operating income decreased 86.3% to $0.8 million, or 3.9% of net sales, from $5.5 million, or 16.9% of net sales in the same period last year.

Net income for the first quarter decreased 75.5% to $1.1 million, or $0.07 per diluted share, from $4.7 million, or $0.29 per diluted share in the same period last year.  First quarter net income as a percentage of net sales was 5.8%, compared to 14.4% in the same period last year.

As of May 7, 2010, the Company had a backlog of approximately $52 million, a 30% increase from December 31, 2009.  

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented, "The first quarter has traditionally been the slowest quarter of the year for Jinpan and we faced difficult year over year comparisons. Although financial performance for the quarter was below expectations, we remain confident about our business prospects for the year.

"Domestically we faced a more competitive environment in China which enabled smaller manufacturers to compete aggressively with Jinpan on price. To meet this competition, we recently adjusted our sales and marketing strategies to better suit the current price environment.

"Internationally, we made fewer shipments in the first quarter of 2010 compared to relatively strong shipments in the first quarter of 2009.  However, at this time, we do not expect full year 2010 demand to decline when compared to same period last year.  The framework supply agreements we signed with a large OEM customer indicates a slight increase in demand for 2010. Furthermore, we recently advanced our goal of diversifying our OEM customer base by successfully qualifying with two large international OEMs to supply cast resin transformers, which we expect will beneficially impact our business this year. As we move forward this year, we expect to make further inroads into the OEM market."

Balance Sheet

As of March 31, 2010, the Company had $25.7 million in cash and cash equivalents, approximately equal to $25.7 million at December 31, 2009. The Company's accounts receivable on March 31, 2010 totaled $60.0 million, compared to $64.2 million at December 31, 2009. Notes payable in the first quarter of 2010 was flat at $5.0 million.  Total bank loans outstanding at March 31, 2010 remained flat at $1.6 million as compared to December 31, 2009

Financial Outlook

For the full year 2010, the Company currently anticipates a net sales increase of approximately 10%-15% over 2009 sales, gross profit to range from 34%-37% and net income growth of approximately 2% to 5% over 2009 net income results.  

Mr. Li continued, "We had backlog of approximately $52 million at May 7, a 30% increase from the end of 2009 and are comfortable with our projected sales and profit trends for the remainder of the year based on anticipated order patterns from new and existing customers. Consequently, we maintain our previously announced full year 2010 guidance."

Foreign Currency Translation

Our assets and liabilities are translated into United States dollars at the period-end exchange rate which is RMB 6.826 to 1 US dollar as of March 31, 2010. Revenues and expenses are translated into United Stated dollars at weighted average exchange rates which was RMB 6.826 to 1 US dollar for the period from January 1, 2010 to March 31, 2010. Equity transactions are translated using historical rates.  

Conference Call Information

Jinpan's management will host an earnings conference call on May 12, 2010 at 5:00 p.m. U.S. Eastern Time.  Listeners may access the call by dialing #1-719-457-2656. A webcast will also be available via the Company's website at http://www.jstusa.net or at www.viavid.net.  A replay of the call will be available through May 26, 2010.  Listeners may access the replay by dialing #1-719-457-0820, access code: 8817471.

About Jinpan International Ltd

Jinpan International Ltd. (Nasdaq: JST) designs, manufactures and distributes cast resin transformers for voltage distribution equipment in China and other countries around the world. Jinpan's cast resin transformers allow high voltage transmissions of electricity to be distributed to various locations at lower, more usable voltage levels. The Company has obtained ISO9001 and ISO1401 certification of its cast resin transformers. Its principal executive offices are located in Hainan, China and its U.S. headquarters is based in Carlstadt, New Jersey.

Safe Harbor Provision

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations and involve known and unknown risks, and uncertainties or other factors not under the Company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, but are not limited to, the following:

  • our ability to successfully implement our business strategy;
  • the impact of existing and new competitors in the markets in which we compete, including competitors that may offer less expensive products and services, more desirable or innovative products or technological substitutes, or have more extensive resources or better financing;
  • the effects of rapid technological changes and vigorous competition in the markets in which we operate;
  • uncertainties about the future growth in electricity consumption and infrastructure;
  • development in the markets in which we operate;
  • uncertainties about the degree of growth in the number of consumers in the markets in which we operate using mobile personal communications services and the growth in the population in those areas;
  • other factors or trends affecting the industry generally and our financial condition in particular;
  • the effects of the higher degree of regulation in the markets in which we operate;
  • general economic and political conditions in the countries in which we operate or other countries which have an impact on our business activities or investments;
  • the monetary and interest rate policies of the countries in which we operate;
  • changes in competition and the pricing environments in the countries in which we operate;
  • exchange rates; and
  • other factors listed from time-to-time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 20-F for the period ended December 31, 2008 and our subsequent reports on Form 6-K.

Except as required by law, we are not under any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

Jinpan International Limited and Subsidiaries

Consolidated Statements of Income (unaudited)

Three

months

ended

March 31

2010

2009

(In thousands, except per share data)

US$

US$

Net sales

19,582

32,387

Cost of Goods Sold

(12,432)

(20,672)

Gross Margin

7,150

11,715

Operating Expenses

Selling and administrative

(6,396)

(6,230)

Operating income

754

5,485

Interest Expenses

(42)

(105)

Other Income

592

51

Income before income taxes

1,304

5,431

Income taxes

(159)

(753)

Net income after taxes

1,145

4,678

Earnings per share

-Basic

US$0.07

US$0.29

-Diluted

US$0.07

US$0.29

Weighted average number of shares

-Basic

16,155,696

15,996,650

-Diluted

16,566,947

16,035,056

Jinpan International Limited and Subsidiaries

Consolidated Balance Sheets (unaudited)

March 31,

December 31,

2010

2009

US$

US$

Assets

Current assets:

Cash and cash equivalents

25,746

25,749

Accounts receivable, net

59,981

64,173

Inventories

29,013

25,618

Prepaid expenses

12,229

9,780

Other receivables

6,663

9,732

Total current assets

133,632

135,052

Property, plant and equipment, net

26,163

26,716

Construction in progress

2,233

1,811

Land use right

6,416

5,991

Intangible asset-Goodwill

12,342

12,340

Other assets

89

-

Deferred tax assets

331

351

Total assets

181,206

182,261

Liabilities and Shareholders' Equity

Current liabilities:

Short term bank loans

-

-

Accounts payable

11,752

10,385

Notes Payable

5,010

5,009

Income tax

1,617

1,837

Advance from customers

5,147

3,996

Other Payable

20,149

23,453

Total current liabilities

43,675

44,680

Long Term Loan

1,632

1,643

Shareholders' equity:

Common stock, US$0.0045 par value:

Authorized shares - 40,000,000

Issued and outstanding shares - 16,425,456 in 2010 and 2009

74

74

Common Stock, Warrants

854

854

Convertible preferred stock, US$0.0045 par value:

Authorized shares – 2,000,000

Issued and outstanding shares – none in 20010

and 2009

-

-

Additional paid-in capital

35,578

35,525

Reserves

8,011

3,906

Retained earnings

83,234

87,325

Accumulated other comprehensive income

8,658

8,764

136,409

136,448

 Less: Treasure shares at cost, common stock-263,306 in 2010 and  2009

(510)

(510)

Total shareholders' equity

135,899

135,938

Total liabilities and shareholders' equity

181,206

182,261

Jinpan International Limited and Subsidiaries

Consolidated Statements of Cash Flows(Unaudited)

Three months ended March 31,

2010

2009

US$

US$

Operating activities

Net income

1,145

4,678

Adjustments to reconcile net income to

net cash provided by/(used in) operating activities:

Depreciation

794

874

Provision for Doubtful Debt

(117)

(4)

Deferred Income Tax

21

7

Stock-based compensation cost

53

102

Changes in operating assets and liabilities

Accounts receivable

4,319

(2,576)

Notes receivable

3,544

1,551

Inventories

(3,391)

1,776

Prepaid expenses

(2,447)

(2,298)

Other receivables

(520)

532

Accounts payable

1,365

(231)

Income tax

(231)

(831)

Advance from customers

1,151

313

Other liabilities

(3,425)

(2,769)

Net cash provided by/(used in) operating activities

2,261

1,124

Investing activities

Purchases of property, plant and equipment

(236)

(1,113)

Payment for construction in progress

(422)

(280)

Long Term Prepaid Lease

(423)

-

    Investment in Beijing Jinpan Huineng Electronics Co

(44)

-

Net cash provided by (used in) investing activities

(1,125)

(1,393)

Financing activities

Proceeds from bank loan

-

2,380

Repayment of bank loan

(12)

(2,929)

Proceeds from exercise of stock options

-

27

Dividends paid

(1,131)

(970)

Net cash provided by/(used in) financing activities

(1,143)

(1,492)

Effect of exchange rate changes on cash

4

(56)

Net increase/(decrease) in cash and cash equivalents

(3)

(1,817)

Cash and cash equivalents at beginning of year

25,749

16,739

Cash and cash equivalents at end of year

25,746

14,922

Interest paid

42

112

Income taxes paid

474

1,522

SOURCE Jinpan International Ltd



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