BEFUT Announces 40.8% Increase in Revenue for the Third Quarter of Fiscal 2011

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May 13, 2011, 07:51 ET

DALIAN CITY, China, May 13, 2011/PRNewswire-Asia-FirstCall/ -- BEFUT International Co., Ltd. (the "Company" or "BEFUT") (OTCBB: BFTI), a developer, manufacturer and distributor of wire and cable products in China, today announced its financial results for the third quarter of fiscal 2011 and nine months ended March 31, 2011.

Financial Highlights (year-over-year):

Revenue increased 40.8% to $9.4 million for the third quarter of fiscal 2011 and 108.3% to $40.2 million for the nine months ended March 31, 2011
Gross profit increased 46.4% to $2.5 million for the third quarter of fiscal 2011 and 104.6% to $10.7 million for the nine months ended March 31, 2011
Net income increased 24.1% to $0.8 million, or $0.03 per share, for the third quarter of fiscal 2011 and 111.4% to $4.9 million, or $0.17 per share for the nine months ended March 31, 2011

Mr. Hongbo Cao, Chairman and CEO, commented, "With China's large and increasing demand for cable and wire products, we are rapidly gaining domestic market share as evidenced by a 41% increase in year-over-year sales this quarter. In order to accommodate this growing demand, we recently added new production facilities, which significantly expand our capacity. We are currently operating at just 60% of total capacity, which should allow us to gain operating leverage and significantly increase our profitability as we continue to grow."

"In addition to our traditional cable, we are focusing on growing our high margin specialty cable products. We have a very strong R&D team and continue to introduce new products to the market based on our customers' needs. We now have 7 approved patents and 25 pending patents. In particular, our carbon fiber and other specialty cables incorporate unique technology that makes them lighter with better electrical conductivity. We will continue to strengthen our research team and develop new hi-tech cables. We believe this approach will help further differentiate us from competitors and enable us to capture additional market share in China."

"Looking ahead, we have aggressive sales and marketing initiatives underway. Demand within China is driven by increased construction and infrastructure development. We are adding new sales reps and sales offices across China. We are also expanding into new domestic markets such as submarine and 'new energy' cables."

Revenue for the third quarter ended March 31, 2011 was $9.4 million, compared to $6.7 million for the third quarter ended March 31, 2010. Gross profit was $2.5 million for the three months ended March 31, 2011, as compared to $1.7 million for the three months ended March 31, 2010. Operating income was $1.4 million for the three months ended March 31, 2011, as compared to $1.0 million for the three months ended March 31, 2010. Net income for the three months ended March 31, 2011 was $0.8 million, or $0.03 per diluted share, compared to net income of $0.6 million, or $0.02 per diluted share, for the same period the previous year.

Revenue for the nine months ended March 31, 2011 was $40.2 million, compared to $19.3 million for the nine months ended March 31, 2010. Gross profit was $10.7 million for the nine months ended March 31, 2011, as compared to $5.2 million for the nine months ended March 31, 2010. Operating income was $7.3 million for the nine months ended March 31, 2011, as compared to $3.4 million for the nine months ended March 31, 2010. Net income for the nine months ended March 31, 2011 was $4.9 million, or $0.17 per diluted share, compared to net income of $2.3 million, or $0.08 per diluted share, for the same period the previous year.

About BEFUT International Co., Ltd.

BEFUT is a manufacturer of specialty cables in northeastern China for sale to industries, including, ship building, nuclear power plants, mining and petrochemical. The Company's cable products consist of (i) traditional electric power system cable and (ii) an assortment of specialty cable, including marine cable, mining specialty cable and petrochemical cable. BEFUT has recently begun to develop carbon fiber composite cable products. The Company has also developed the capability to produce other types of special cables such as submarine cable and certain "new energy" cable, including cable for wind and solar energy. BEFUT's switch application business mainly includes high and low voltage distribution cabinet switches and crane electronic control switches, which complement the cable product offerings.

Safe Harbor Statement

This press release contains forward-looking statements concerning the Company's business, products and financial results. The Company's actual results may differ materially from those anticipated in the forward-looking statements depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, shipment, market acceptance, additional competition from existing and new competitors, changes in technology, and various other factors beyond the Company's control. All forward-looking statements are expressly qualified in their entirety by this Safe Harbor Statement and the risk factors detailed in the Company's reports filed with the SEC. BEFUT undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release, except as required by applicable law or regulation.

(tables follow)

Consolidated Balance Sheets


	March 31,	June 30,
	2011	2010
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$ 446,658	$ 1,319,173
Restricted cash	1,991,245	1,181,095
Accounts receivable, net of allowance for doubtful accounts of $86,349	16,279,594	9,292,310
and $83,295 at March 31, 2011, and June 30, 2010, respectively
Inventory	5,799,198	2,543,789
Trade notes receivable	669,290	-
Loans to unrelated parties	5,668,683	1,054,090
Bank loan security deposits	1,210,911	1,031,100
Advance payments for inventory	1,132,694	399,868
Due from related party	-	472,838
Other current assets	1,037,503	521,739
Total current assets	34,235,776	17,816,002

Property and equipment, net	32,250,107	31,618,074

Other assets:
Intangibles, net	15,255,499	15,669,375
Advance payments for property and equipment	274,690	293,605
Advance payments – Research & Development	2,165,286	2,088,714
Total other assets	17,695,475	18,051,694

Total assets	$84,181,358	$67,485,770

Liabilities
Current liabilities:
Accounts payable and accrued expenses	$ 2,827,356	$ 3,119,646
Short-term bank loans	11,437,230	6,039,300
Current portion of long-term bank loans	763,500	294,600
Loans from unrelated parties	1,591,600	370,000
Advances from customers	2,460,833	533,806
Income taxes payable	3,502,071	1,655,747
Other current liabilities	1,185,812	969,787
Total current liabilities	23,768,402	12,982,886

Long-term bank loan	14,201,100	14,435,400

Total liabilities	37,969,502	27,418,286

Equity
Stockholders' equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized,	-	-
no shares issued or outstanding
Common stock, $0.001 par value, 200,000,000 shares authorized,	29,716	29,716
29,715,640 and 29,715,666 shares issued and outstanding at
December 31, 2010 and June 30, 2010, respectively
Additional paid-in capital	21,838,047	21,838,047
Statutory reserves	1,181,189	1,181,189
Retained earnings	18,818,441	13,810,157
Accumulated other comprehensive income	3,727,290	2,166,533
Total stockholders' equity	45,594,683	39,025,642

Noncontrolling interest	617,173	1,041,842

Total equity	46,211,856	40,067,484

Total liabilities and equity	$84,181,358	$67,485,770

Consolidated Statements of Operations

(Unaudited)


	For the Three Months Ended		For the Nine Months Ended
	March 31,		March 31,
	2011	2010	2011	2010

Sales	$9,443,346	$ 6,708,410	$40,245,320	$19,318,113

Cost of sales	6,945,831	5,002,973	29,570,863	14,101,070

Gross profit	2,497,515	1,705,437	10,674,457	5,217,043

Operating expenses:
Selling expenses	146,144	11,300	334,393	48,001
General and administrative expenses	983,787	731,346	2,999,048	1,761,895
Total operating expenses	1,129,931	742,646	3,333,441	1,809,896

Income from operations	1,367,584	962,791	7,341,016	3,407,147

Other income (expenses):
Government subsidy income	84,352	331,138	251,834	685,796
Interest income	1,585	2,113	11,532	5,841
Interest expense	(434,063)	(361,680)	(1,159,430)	(502,912)
Other income (expenses)	(19,152)	2,930	(45,334)	(394,511)
Total other income (expenses)	(367,278)	(25,499)	(941,398)	(205,786)

Income from continuing operations before provision for income tax	1,000,306	937,292	6,399,618	3,201,361

Provision for income tax	364,396	306,698	1,786,426	892,421

Income from continuing operations, net of tax	635,910	630,594	4,613,192	2,308,940

Discontinued operations:
Income from operations of discontinued subsidiary (including gain on disposal of $99,148 in 2011)	171,644	-	292,146	-
Provision for income tax	24,787	-	24,787	-
Income from discontinued operations, net of tax	146,857	-	267,359	-

Net income	782,767	630,594	4,880,551	2,308,940

Less: net loss attributable to noncontrolling
interest	(24,547)	(61,016)	(127,732)	(67,137)

Net income attributable to BEFUT	$ 807,314	$ 691,610	$5,008,283	$2,376,077

Consolidated Statements of Operations (continued)

(Unaudited)


	For the Three Months Ended		For the Nine Months Ended
	March 31,		March 31,
	2011	2010	2011	2010
Amounts attributable to BEFUT common shareholders:

Income from continuing operations, net of tax	$ 686,318	$ 691,610	$4,766,785	$2,376,077

Discontinued operations:
Income from operations of discontinued subsidiary (including gain on disposal of $99,148 in 2011)	145,783	-	266,285	-
Provision for income tax	24,787	-	24,787	-
Income from discontinued operations, net of tax	120,996	-	241,498	-

Net income	$ 807,314	$ 691,610	$5,008,283	$2,376,077

Earnings per share—Basic:
Income from continuing operations	$ 0.02	$ 0.03	$ 0.16	$ 0.08
Discontinued operations	$ 0.01	$ 0.00	$ 0.01	$ 0.00
Net income	$ 0.03	$ 0.03	$ 0.17	$ 0.08

Earnings per share—Diluted:
Income from continuing operations	$ 0.02	$ 0.02	$ 0.16	$ 0.08
Discontinued operations	$ 0.01	$ 0.00	$ 0.01	$ 0.00
Net income	$ 0.03	$ 0.02	$ 0.17	$ 0.08

Weighted average number of common shares
outstanding:
Basic	29,715,640	29,512,784	29,715,640	29,512,784
Diluted	29,778,814	30,155,539	29,774,190	30,240,336

Statements of Consolidated Comprehensive Income

(Unaudited)


	For the Three Months Ended		For the Nine Months Ended
	March 31,		March 31,
	2011	2010	2011	2010

Net income	$ 782,767	$ 630,594	$ 4,880,551	$ 2,308,940

Other comprehensive income
Foreign currency translation adjustment	279,458	107	1,561,447	48,178

Total comprehensive income	1,062,225	630,701	6,441,998	2,357,118

Less: comprehensive income attributable to noncontrolling interest	(24,414)	(61,004)	(127,042)	(67,124)

Comprehensive income attributable to BEFUT	$ 1,086,639	$ 691,705	$6,569,040	$ 2,424,242

Consolidated Statements of Cash Flows

(Unaudited)


	For the Nine Months Ended
	March 31,
	2011	2010
Cash flows from operating activities:
Net Income	$4,880,551	$ 2,308,940
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization	2,373,398	1,087,427
Changes in current assets and current liabilities:
Accounts receivable	(6,831,456)	(4,510,985)
Inventory	(3,113,702)	(743,916)
Trade notes receivable	(647,603)	-
Advance payments for inventory	(664,108)	(7,726,696)
Advance payment - R&D	-	155,438
Other current assets	(3,327,626)	(815,103)
Accounts payable and accrued expenses	(203,318)	5,871,576
Trade notes payable	-	(1,173,120)
Advances from customers	1,875,604	290,209
Income taxes payable	1,755,806	892,421
Other taxes payable	(183,770)	(37,983)
Other current liabilities	587,314	59,082
Total adjustments	(8,379,461)	(6,651,650)

Net cash provided by (used in) operating activities	(3,498,910)	(4,342,710)

Cash flows from investing activities:
Loans to unrelated parties	(4,499,535)	1,234,288
Due from related party	481,987	-
Advance payments for property and equipment	29,183	(642,672)
Additions to property and equipment	(866,358)	(2,016,175)
Additions to construction in progress	(40,072)	(2,450,795)
Acquisition of intangible assets	(6,004)	(6,453)
Gain on disposal of a subsidiary – Dalian Marine, net of cash	2,465,957	-
Long-term investment	-	2,933

Net cash used in investing activities	(2,434,842)	(3,878,874)

Cash flows from financing activities:
Restricted cash	(754,045)	586,000
Bank loan security deposits	(139,640)	(681,876)
Proceeds (repayment) of short-term bank loans	5,115,585	(2,786,160)
Convertible notes payable		(370,000)
Loans from unrelated parties	1,201,200	2,708,908
Proceeds (repayment) of long-term bank loans	(300,300)	9,188,462
Contributed from minority shareholder	-	777,192

Net cash provided by financing activities	5,122,800	9,422,526

Effect of foreign currency translation on cash	(61,563)	4,314

Net increase (decrease) in cash and cash equivalents	(872,515)	1,205,256

Cash and cash equivalents – beginning	1,319,173	210,301

Cash and cash equivalents – ending	$ 446,658	$ 1,415,557