BEFUT Announces 77.9% Increase in Revenue and 113.9% Increase in Net Income for Fiscal 2011

News provided by

Sep 28, 2011, 07:00 ET

DALIAN CITY, China, Sept. 28, 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 fiscal year ended June 30, 2011.

Financial Highlights

Revenue increased 77.9% to $55.6 million for fiscal 2011 compared to $31.3 million for 2010
Gross profit increased 79.7% to $14.9 million for fiscal 2011 compared to $8.3 million for fiscal 2010
Net income increased 113.9% to $9.4 million, or $0.33 per share, for fiscal 2011 compared to $4.4 million, or $0.15 per share, for fiscal 2010

Mr. Hongbo Cao, Chairman and CEO, commented, "We are pleased to report strong growth in revenue and net income for fiscal 2011. Our product strategy, marketing strategy and strong R&D have been key drivers to our success. We continue to grow our traditional cable business, but are particularly focused on increasing sales of our higher margin products such as carbon fiber composite cable, submarine cable and certain "new energy" cables, including cable for wind and solar energy. We have been awarded a number of new patents and now have 17 approved patents and 45 pending, which provide us an important competitive advantage."

Mr. Cao continued, "We have established a first class customer base encompassing many of the largest conglomerates in China—spanning ship building, nuclear power, mining, petrochemical and other industries. Given our proven track record, established brand and premier customer base, we look forward to expanding our sales by aggressively adding new sales reps and new sales offices across China, in addition to new initiatives underway to grow our international sales."

Mr. Cao concluded, "In April 2011, we began construction on the second phase of our new Changxing Island facility, which we expect to complete in 2012. We plan to add nearly 90,000 square meters of additional floor space with production capacity of approximately 6,700 km of cable per year, which would allow a maximum output of approximately $235 million upon completion. We look forward to leveraging this capacity to satisfy the growing demand from our customers. We believe we have the customer base, technological, manufacturing and research and development capabilities to take advantage of the growing domestic and international cable and wire markets in the coming years."

Revenue for the fourth quarter ended June 30, 2011 was $15.4 million, compared to $11.9 million for the fourth quarter ended June 30, 2010. The increased revenue reflects growing demand across all product lines from new and existing customers and increased capacity to accommodate the demand. Gross profit was $4.2 million for the three months ended June 30, 2011, as compared to $3.1 million for the three months ended June 30, 2010. Operating income was $1.7 million for the three months ended June 30, 2011, as compared to $0.9 million for the three months ended June 30, 2010. Net income for the three months ended December 31, 2010 was $4.5 million, or $0.07 per diluted share, compared to net income of $2.1 million, or $0.03 per diluted share, for the same period last year.

Revenue for the twelve months ended June 30, 2011 was $55.6 million, compared to $31.3 million for the twelve months ended June 30, 2010. Gross profit was $14.9 million for the twelve months ended June 30, 2011, as compared to $8.3 million for the twelve months ended June 30, 2010. Operating income was $9.0 million for the twelve months ended June 30, 2011, as compared to $4.3 million for the twelve months ended June 30, 2010. Net income for the twelve months ended June 30, 2011 was $9.4 million, or $0.33 per diluted share, compared to net income of $4.4 million, or $0.15 per diluted share, for the same period last 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.

Contact:
Crescendo Communications, LLC
David Waldman, Vivian Huo or Klea Theoharis
Tel: (212) 671-1020
E-mail: [email protected]

(tables follow)

Consolidated Balance Sheets

Assets	June 30, 2011	June 30, 2010
Current assets:
Cash and cash equivalents	$2,724,146	$1,319,173
Restricted cash	3,565,859	1,181,095
Accounts receivable, net of allowance for doubtful accounts of $87,480	18,166,580	9,292,310
and $83,295 at June 30, 2011 and 2010, respectively
Due from factor	108,545	-
Inventory	4,607,431	2,543,789
Trade notes receivable	1,343,309	-
Loans to unrelated parties	4,495,767	1,054,090
Bank loan security deposits	1,226,771	1,031,100
Advance payments for inventory	2,024,943	399,868
Due from related party	-	472,838
Prepaid VAT taxes	200,006	-
Other current assets	1,729,758	521,739
Total current assets	40,193,115	17,816,002

Property and equipment, net	36,449,318	31,618,074

Other assets:
Advance payments for property and equipment	771,414	293,605
Advance payments – Research & Development	1,048,866	2,088,714
Intangibles, net	15,119,699	15,669,375
Total other assets	16,939,979	18,051,694

Total assets	$93,582,412	$67,485,770

Liabilities
Current liabilities:
Accounts payable and accrued expenses	$4,617,422	$3,119,646
Short-term bank loans	11,587,030	6,039,300
Current portion of long-term bank loan	1,082,900	294,600
Loans from unrelated party	3,364,992	370,000
Advances from customers	3,273,647	533,806
Income taxes payable	322,299	1,655,747
Trade notes payable	3,094,000	-
Other current liabilities	1,039,231	969,787
Total current liabilities	28,381,521	12,982,886
Long-term bank loan	13,768,300	14,435,400

Total liabilities	42,149,821	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
June 30, 2011 and 2010, respectively
Additional paid-in capital	21,838,047	21,838,047
Statutory reserves	1,215,273	1,181,189
Retained earnings	23,378,099	13,810,157
Accumulated other comprehensive income	4,390,669	2,166,533
Total stockholders' equity	50,851,804	39,025,642

Noncontrolling interest	580,787	1,041,842

Total equity	51,432,591	40,067,484

Total liabilities and equity	$93,582,412	$67,485,770

Consolidated Statements of Operations
	For the Years Ended June 30,
	2011	2010

Sales	$55,597,912	$31,258,662

Cost of sales	40,680,706	22,956,708

Gross profit	14,917,206	8,301,954

Operating expenses
Selling expenses	439,750	80,090
General and administrative expenses	5,481,562	3,881,655
Total operating expenses	5,921,312	3,961,745

Income from operations	8,995,894	4,340,209

Other income (expenses):
Government subsidy income	2,076,750	705,602
Interest income	15,233	110,608
Interest expense	(2,028,033)	(397,700)
Other income (expenses), net	749,134	545,008
Total other income	813,084	963,518

Income before provision for income taxes	9,808,978	5,303,727

Provision for income taxes	672,337	907,083

Income from continuing operations, net of taxes	9,136,641	4,396,644

Discontinued operations:
Income from operations of discontinued subsidiary (Including gain on disposal of $99,989 in 2011)	292,146	-
Provision for income taxes	24,787	-
Income from discontinued operations, net of taxes	267,359	-

Net income	9,404,000	4,396,644

Less: net loss attributable to noncontrolling interest	(198,026)	(115,532)

Net income attributable to BEFUT	$9,602,026	$4,512,176

Amounts attributable to BEFUT common shareholders:

Income from continuing operations, net of taxes	$9,334,667	$4,512,176

Discontinued operations:
Income from operations of discontinued subsidiary (including gain on disposal of $99,989 in 2011)	292,146	-
Provision for income tax	24,787	-
Income from discontinued operations, net of taxes	267,359	-

Net income	$9,602,026	$4,512,176

Earnings per share—Basic:
Income from continuing operations	$0.32	$0.15
Discontinued operations	$0.01	$0.00
Net income	$0.33	$0.15

Earnings per share—Diluted:
Income from continuing operations	$0.32	$0.15
Discontinued operations	$0.01	$0.00
Net income	$0.33	$0.15

Weighted average number of common shares
outstanding:
Basic	29,715,640	29,545,797
Diluted	29,761,290	30,110,241