Jinpan International Reports Second Quarter 2007 Results

- Company Reports 2Q07 Revenues of $32.1 Million; Diluted EPS of $0.50 -

- Raises 2007 Net Income Growth Expectations -

Aug 13, 2007, 01:00 ET from Jinpan International Ltd

    ENGLEWOOD CLIFFS, N.J., Aug. 13 /PRNewswire-FirstCall/ -- Jinpan
 International Ltd (Amex:   JST), a leading designer, manufacturer, and
 distributor of cast resin transformers for voltage distribution equipment,
 today announced consolidated financial results for the second quarter ended
 June 30, 2007. Comparison data with the second quarter of last year is not
 available as the company did not report quarterly results prior to June 30,
     Highlights for the Second Quarter Ended June 30, 2007
     -- Total sales for the second quarter were USD $ 32.1 million.  The sales
        contribution reflects orders for cast resin transformers in China as
        well as growing international sales, primarily to the U.S.
     -- Revenues derived from customers in China represented approximately 95%
        of revenues in the second quarter while shipments to U.S. customers
        generated the remaining 5% of the revenue total. Through the first six
        months of 2007, U.S. sales have already surpassed the Company's total
        U.S. sales for 2006.
     -- Gross profit in the second quarter was $10.7 million.  Gross margin as
        a percent of revenue was 33.3% Gross margin primarily reflects stable
        pricing and lower material costs associated with growing sales of the
        company's new electricity transformer model supplied to customers in
     -- Selling, general and administrative expenses in the second quarter were
        $5.4 million, or 17% of sales.  Second quarter operating profit was
        $5.2 million, or 16% of sales.
     -- Net income for the second quarter was $4.1 million, or $0.50 per
        diluted share.
     Mr. Zhiyuan Li, Chief Executive Officer of Jinpan commented, "We are
 very pleased with our second quarter performance which reflects strong
 customer demand in China as well as growing international revenues. The
 Chinese economy continues to grow at a healthy pace. As a result, there is
 increased development of power infrastructure projects in both urban and
 rural areas. As one of the largest manufacturers and distributors of cast
 resin transformers in China, we are well positioned to benefit from overall
     We are particularly proud of the sales and margin performance of our
 new cast resin transformer product, which is available to our customer base
 in China. This product contains non-conventional materials in the design
 which results in lower material cost, quality performance and improved
 margins for our business. This product highlights the strength of our
 engineering and design team and enhances our competitive position in the
     Financial Outlook for 2007
     For the full 2007 fiscal year, the Company anticipates revenue of
 approximately $115 million, a 40% increase compared to 2006 revenue of
 $82.3 million. Due to the seasonal nature of order shipments, the second
 half of the fiscal year is generally a stronger period for the company
 compared to the first half. The Company anticipates net income to be in the
 range of $12.4 to 12.8 million, or $1.53 to $1.58 per diluted share, which
 is a 65% to 70% increase compared to 2006 net income of $7.5 million, or
 $1.12 per diluted share. Updated 2007 net income growth of 65%-70% compares
 to prior net income growth of 55%-60% issued by the Company on April 2,
 2007. This increase is largely a result of greater than expected gross
 margin due to the sales mix of the Company's new designed transformers,
 which generally have lower material production costs.
     The Company's fiscal 2007 diluted EPS guidance is based on an estimated
 average diluted share count of 8.1 million shares for the full year, which
 is an increase of approximately 1.4 million shares from its fiscal 2006
 diluted share count of 6.7 million shares, due to its secondary offering
 completed in December 2006.
     Mr. Li continued, "As we look to the second half of 2007, we expect
 that overall demand for our cast resin transformers will remain strong due
 to continued economic growth and infrastructure development in China. We
 also anticipate further upside to our U.S. business as we generate
 additional interest for orders, which is a direct result of the UL product
 certification we received earlier this year. We are operating near full
 capacity and our current backlog is very healthy. In order to fulfill
 future product orders, we remain focused on the completion of our new Wuhan
 manufacturing facility which will allow us to increase our current capacity
 by nearly 50%. We expect to complete construction by the end of the year
 and believe this new, state- of-the-art facility will be fully operational
 by January 2008."
     "Our products are well suited to meet the growing demands for
 electricity in China and abroad due to their product quality and
 reliability, competitive pricing, energy efficiency and functionality, and
 environmental and safety characteristics. Overall, we are comfortable with
 our position in the market and feel very strongly that we will continue to
 maintain strong growth and improve profitability as electricity demand
 increases in our target markets, concluded Li."
     Financial Results for Six Months of 2007
     -- For the six month period ending June 30, 2007, total sales increased
        40% to $48.3 million compared to $34.6 million in the prior six month
        period last year.
     -- Gross profit increased to $15.4 million compared to $9.7 million in the
        prior year period.  Gross margin increased 390 basis points to 31.9%
        from 28.0% in the prior year period.
     -- Selling, general and administrative expenses in the for the first six
        months of 2007 were $8.4 million, or 17.4% of sales, compared to $5.7
        million, or 16.5% of sales, in the prior year period.  This increase
        was a result of hiring and training of additional manufacturing workers
        for the new Wuhan facility. Operating profit for the first six months
        of 2007 increased 75.3% to $7.0 million compared to $4.0 million in the
        prior year period.  Six month operating margin increased 290 basis
        points to 14.5% compared to 11.6% in the prior year period.
     -- Net income for the first six months of 2007 was $5.7 million, or $0.70
        per diluted share, compared to $2.7 million, or $0.40 per diluted share
        in the prior year period.
     About Jinpan International Ltd
     Jinpan International Ltd. (Amex:   JST) designs, manufactures, and
 distributes cast resin transformers for voltage distribution equipment in
 China and other various countries around the world. Jinpan's cast resin
 transformers allow high voltage transmissions of electricity to be
 distributed to various locations in lower, more usable voltages. The
 Company has obtained ISO9001 and ISO1401 certification of its cast resin
 transformers. Its principal executive offices are located in Hainan, China
 and its U.S. headquarters is based in Englewood Cliffs, New Jersey.
     Safe Harbor Provision
     Statements in this press release which are not historical data are
 forward-looking statements which involve known and unknown risks,
 uncertainties or other factors not under the company's control, which may
 cause actual results, performance or achievements of the company to be
 materially different from the results, performance or other expectations
 implied by these forward-looking statements. These factors include, but are
 not limited to, those detailed in the company's periodic filings with the
 Securities and Exchange Commission.
     Jinpan International Limited and Subsidiaries
     Consolidated Statements of Income (unaudited)
     For the Three and Six Month Periods Ended June 30, 2007
                                          Three months  Six months  Six months
                                              ended        ended       ended
                                             June 30      June 30     June 30
                                              2007         2007        2006
     (In thousands, except per share data)     US$          US$         US$
     Net sales                                32,056       48,289      34,580
     Cost of Goods Sold                      (21,386)     (32,869)    (24,881)
     Gross Margin                             10,670       15,420       9,699
     Operating Expenses
       Selling and administrative             (5,463)      (8,418)     (5,705)
     Operating income                          5,207        7,002       3,994
     Interest Expenses                          (188)        (246)       (156)
     Other Income                                  6          194           9
     Income before income taxes                5,025        6,950       3,847
     Income taxes                               (933)      (1,258)       (620)
     Income before minority interest           4,092        5,692       3,227
     Minority Interest                             -            -        (536)
     Net income                                4,092        5,692       2,691
     Earnings per share
       -Basic                                US$0.51      US$0.71     US$0.41
       -Diluted                              US$0.50      US$0.70     US$0.40
     Weighted average number of shares
       -Basic                              7,971,336    7,971,336   6,549,144
       -Diluted                            8,083,467    8,083,467   6,651,166
     Jinpan International Limited and Subsidiaries
     Consolidated Balance Sheets (unaudited)
     As of June 30, 2007
                                                      June 30        June 30
                                                         2007           2006
                                                          US$            US$
     Current assets:
       Cash and cash equivalents                       15,361          5,010
       Investment available for sales                     683            164
       Accounts receivable, net                        35,728         25,178
       Inventories                                     19,281         15,009
       Prepaid expenses                                 4,112          2,848
       Other receivables                                3,231            920
     Total current assets                              78,396         49,129
     Property, plant and equipment, net                 4,444          4,182
     Construction in progress                           3,408            714
     Deferred tax assets                                  102            104
     Total assets                                      86,350         54,129
     Liabilities and Shareholders' Equity
     Current liabilities:
       Short term bank loans                            6,355          2,448
       Accounts payable                                 3,535          2,072
       Income tax                                         953            356
       Advance from customers                           5,065          5,260
       Other Payable                                   13,381          8,598
     Total current liabilities                         29,289         18,734
     Minority interest                                      -            939
     Shareholders' equity:
       Common stock, US$0.009 par value:
         Authorized shares - 20,000,000
          Issued and outstanding shares -
          8,186,617 in 2007 and 6,791,246 in 2006          73             60
       Convertible preferred stock, US$0.009 par value:
         Authorized shares - 1,000,000
          Issued and outstanding shares -
          6,111 in 2007 and 2006                            -
       Additional paid-in capital                      23,556         10,767
       Reserves                                         3,595          2,647
       Retained earnings                               29,528         21,292
         Accumulated other comprehensive income         1,127            513
                                                       57,879         35,279
       Less: Treasure shares at cost, common stock -
        206,470 in 2007 and 208,470 in 2006             (818)          (823)
     Total shareholders' equity                        57,061         34,456
     Total liabilities and shareholders' equity        86,350         54,129
     Jinpan International Limited and Subsidiaries
     Consolidated Statements of Cash Flows
     For the Six Months Ended June 30, 2007(Unaudited)
                                                         Six months  Six months
                                                           ended       ended
                                                          June 30     June 30
                                                            2007        2006
     Operating activities
       Net income                                           5,692       2,692
       Adjustments to reconcile net income to
        net cash provided by/(used in) operating activities:
         Depreciation                                         545         401
         Provision for Doubtful Debt                           67           -
         Loss/(Gain) on disposal of fixed assets              (13)          -
         Minority interest                                      -         536
       Changes in operating assets and liabilities
         Accounts receivable                              (10,060)     (2,027)
         Notes receivable                                    (546)       (876)
         Inventories                                         (487)     (1,579)
         Prepaid expenses                                     578        (631)
         Other receivables                                   (991)         63
         Accounts payable                                  (2,718)       (920)
         Note Payable                                      (1,037)          -
         Income tax                                           360         355
         Advance from customers                             1,368       1,950
         Other liabilities                                  3,918       1,176
     Net cash provided by/(used in) operating activities   (3,324)      1,140
     Investing activities
       Purchases of property, plant and equipment            (815)       (619)
       Proceeds from sales of property, plant and equipment    40           -
       Payment for construction in progress                (1,675)       (368)
       Purchase of available-for -sales securities           (489)          -
     Net cash provided by (used in) investing activities   (2,939)       (987)
     Financing activities
       Proceeds from bank loan                              3,575       7,426
       Repayment of bank loan                              (3,274)     (9,500)
       Acquisition of treasury stock                            -           -
       Proceeds from exercise of stock options                 27         193
       Decrease in dividend payable to minority
        shareholders                                       (1,084)       (373)
       Acquired minority interest                         (11,000)          -
       Dividends paid                                        (964)       (794)
     Net cash provided by/(used in) financing activities  (12,720)     (3,048)
     Effect of exchange rate changes on cash                  229          48
     Net increase/(decrease) in cash and cash equivalents (18,754)     (2,847)
     Cash and cash equivalents at beginning of year        34,115       7,857
     Cash and cash equivalents at end of year              15,361       5,010
     Interest paid                                            193         144
     Income taxes paid                                        906         197

SOURCE Jinpan International Ltd