Jinpan International Reports Fourth Quarter and Full Year 2010 Financial Results

Mar 14, 2011, 07:30 ET from Jinpan International

CARLSTADT, N.J., March 14, 2011 /PRNewswire/ -- Jinpan International Ltd (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers for voltage distribution equipment, today announced unaudited consolidated financial results for the fourth quarter and full year ended December 31, 2010.  

Fourth Quarter 2010 Results

Net sales for the fourth quarter were $43.2 million, a 3.6% increase from $41.7 million in the same period last year.  The increase in sales was the result of higher international sales and higher volume transformer sales in the Company's domestic business.  In the fourth quarter, domestic sales accounted for $40.3 million, or 93.3% of net sales, compared to $39.7 million, or 95.2% of net sales in the same period last year. Net sales outside of China were $2.9 million, or 6.7% of net sales, compared to $2.0 million, or 4.8% of net sales in the same period last year.

Cast resin transformers (excluding those for wind power applications), switch gears and unit substations represented $39.8 million, or 92.1% of net sales in the fourth quarter, while wind energy products represented $3.4 million, or 7.9% of net sales in the fourth quarter.

Gross profit in the fourth quarter decreased 1.8% year over year to $16.9 million from $17.2 million.  Fourth quarter 2010 gross profit margin was 39.2% compared to 41.3% in the prior year period and 35.9% in the 2010 third quarter.  Fourth quarter 2010 gross margin improved sequentially primarily due to a higher level of international sales and higher level of customized product orders.

Selling and administrative expenses in the fourth quarter were $11.2 million, or 25.9% of net sales, compared to $11.4 million, or 27.3% of net sales in the same period last year.  This decrease was primarily a result of lower R&D expense related to new product development.

Operating income decreased 1.8% to $5.8 million, or 13.3% of net sales, from $5.9 million, or 14.1% of net sales in the same period last year.

Net income for the fourth quarter decreased 7% to $5.8 million, or $0.35 per diluted share, from $6.2 million, or $0.39 per diluted share, in the same period last year.  Fourth quarter net income as a percentage of net sales was 13.4%.

Balance Sheet

As of December 31, 2010, the Company had $27.5 million in cash and cash equivalents, compared to $23.7 million at December 31, 2009. The Company's accounts receivable on December 31, 2010 totaled $76.0 million, compared to $64.2 million at December 31, 2009.  Notes payable in the 2010 fourth quarter increased to $27.1 million compared to $5.0 million at the end of December 31, 2009.  Total bank loans outstanding at December 31, 2010 increase to $13.7 million as compared to $1.6 million at December 31, 2009.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented, "Overall we had a solid fourth quarter and believe our growth trends will continue in 2011.  We were pleased to see a sizeable sequential improvement to our gross profit margin due to improved customized orders and international sales shipments.  While the price for silicon steel remains at historic lows, we increased our volume for cast resin transformers at a healthy pace in the fourth quarter.  Our engineering capabilities and high quality transformer products give us an edge over our competitors and allows us to maintain pricing discipline.  International purchase orders have climbed at a steady rate in recent months and we finished the month of February with our highest level of international orders since August 2009. We are hopeful that our international and domestic product demand will continue to rise throughout 2011."

"Looking at our opportunities for the remainder of this year, we believe we will benefit from the rollout of new products developed in recent quarters, such as our gas insulated switch gear products.   We also plan on selling a larger number of cast resin transformers domestically in China which are utilized for big industrial infrastructure projects.  We also believe we can benefit from improving sales in our wind energy business.  As the economic environment further improves, we continue to capitalize on new market opportunities that will further solidify our position in the power distribution and wind energy market."  

Financial Outlook

For the first quarter of 2011, the Company currently anticipates net sales in the range of $25-$27 million, net income of approximately $1.5-$1.7 million and diluted EPS of approximately $0.10.  For the full year 2011, the Company currently anticipates net sales growth of 20-25% to $173-$180 million, gross profit margin of 36%-38%, net income growth of approximately 43-50% to $19.0-$20.0 million.  

Fiscal 2010 Results

For the full year, total sales decreased 9.3% to $144.1 million from $158.9 million in the prior year.  

Gross profit in 2010 decreased 16.5% year-over-year to $56.1 million from $67.2 million and gross profit margin decreased by 7.9% year over year to 38.9% from 42.3%.

Selling and administrative expenses in 2010 were $40.7 million or 28.2% of net sales, compared to $36 million, or 22.7% of net sales, in the prior year.  

Operating profit in 2010 decreased 50.5% to $15.4 million, or 10.7% of net sales, compared to $31.1 million, or 19.6% of net sales, in the prior year.  

Net income in 2010 decreased 54.1% to $13.3 million, or $0.81 per diluted share, compared to $29.0 million, or $1.78 per diluted share, in the prior year.

Conference Call Information

Jinpan's management will host an earnings conference call on March 14, 2011 at 8:30 a.m. U.S. Eastern Time.  Listeners may access the call by dialing #1-719-325-2423.  A webcast will also be available via www.viavid.net.  A replay of the call will be available through March 28, 2011.  Listeners may access the replay by dialing #1-858-384-5517, access code: 9159718.

About Jinpan International Ltd

Jinpan International Ltd. (Nasdaq: JST) designs, manufactures, and markets cast resin transformers for power distribution and wind energy products. 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 ISO14001 certifications for 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 are 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, 2009 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)

For the Three and Twelve Month Periods Ended December 31, 2010

Three months  

ended

Dec 31

Three months  

ended

Dec 31

Twelve

months  

ended

Dec 31

Twelve

months  

ended

Dec 31

2010

2009

2010

2009

(In thousands, except per share data)

US$

US$

US$

US$

Net sales

43,152

41,689

144,061

158,879

Cost of Goods Sold

(26,229)

(24,455)

(87,971)

(91,699)

Gross Margin

16,923

17,234

56,090

67,180

Operating Expenses

Selling and administrative

(11,169)

(11,373)

(40,673)

(36,039)

Operating income

5,754

5,861

15,417

31,141

Interest Expenses

(149)

-

(309)

(212)

Other Income

1,173

636

2,443

1,036

Income before income taxes

6.778

6,497

17,551

31,965

Income taxes

(     979)

(     252)

(4,240)

(2,993)

Net Income

5,799

6,245

13,311

28,972

Earnings per share

-Basic

US$0.36

US$0.39

US$0.82

US$1.81

-Diluted

US$0.35

US$0.39

US$0.81

US$1.78

Weighted average number of shares

-Basic

16,159,893

16,028,152

16,159,893

16,028,152

-Diluted

16,338,491

16,385,509

16,457,462

16,276,121

Jinpan International Limited and Subsidiaries

Consolidated Balance Sheets

Unaudited

Audited

December 31,

December 31,

2010

2009

US$

US$

Assets

Current assets:

Cash and cash equivalents

27,527

23,664

Restricted Cash

1,079

2,085

Accounts receivable, net

75,960

64,173

Inventories

29,532

25,618

Prepaid expenses

28,939

9,780

Other receivables

9,833

9,732

Total current assets

172,870

135,052

Property, plant and equipment, net

32,138

26,716

Construction in progress

1,861

1,811

Land use right

6,374

5,991

Intangible asset-Goodwill

12,721

12,340

Other assets

69

Deferred tax assets

448

351

Total assets

226,481

182,261

Liabilities and Shareholders' Equity

Current liabilities:

Short term bank loans

12,080

-

Accounts payable

13,269

10,385

Notes Payable

27,111

5,009

Tax Payable

1,582

1,837

Advance from customers

5,319

3,996

Other Payable

14,105

23,453

Total current liabilities

73,466

44,680

Long Term Loan

1,597

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 2010

and 2009

-

-

Additional paid-in capital

35,738

35,525

Reserves

9,514

3,906

Retained earnings

92,760

87,325

Accumulated other comprehensive income

12,957

8,764

151,897

136,448

 Less: Treasure shares at cost, common stock-202,470 in 2010 and 206,470 in 2009

(479)

(510)

Total shareholders' equity

151,418

135,938

Total liabilities and shareholders' equity

226,481

182,261

Jinpan International Limited and Subsidiaries

Consolidated Statements of Cash Flows

For the Twelve Months Ended December 31, 2010 (Unaudited)

Year ended

December

31

Year ended

December

31

2010

2009

(In thousands)

US$

US$

Operating activities

Net income

13,311

28,972

Adjustments to reconcile net income to

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

Depreciation

3,636

3,738

Provision for Doubtful Debt

257

339

Loss/(Gain) on disposal of fixed assets

(67)

(4)

Deferred Income Tax

(84)

(51)

    Stock-based compensation cost

213

908

    (Gain) from sales of available-for –sales securities

-

Changes in operating assets and liabilities

Restricted Cash

1,006

(754)

Accounts receivable

(9,915)

(5,759)

Notes receivable

2,129

(2,426)

Inventories

(3,076)

6,231

Prepaid expenses

(18,571)

(5,072)

Other receivables

(1,972)

6

Accounts payable

2,524

(908)

Note Payable

21,614

5,011

Income tax

(318)

(1,833)

Advance from customers

1,182

(3,829)

Other liabilities

(9,986)

2,766

Net cash provided by operating activities

1,883

27,335

Investing activities

Purchases of property, plant and equipment

(8,202)

(8,017)

Proceeds from sales of property, plant and equipment

111

109

Payment for construction in progress

-

-

Long term prepaid Lease

(195)

Payment for investment in minority interest

(30)

Net cash  (used in) investing activities

(8,316)

(7,908)

Financing activities

Proceeds from bank loan

19,565

6,495

Repayment of bank loan

(7,764)

(16,574)

Issued shares from treasury stock

557

Proceeds from exercise of stock options

30

306

Dividends paid

(2,333)

(1,942)

Net cash (used in)/provided by financing activities

9,498

(11,158)

Effect of exchange rate changes on cash

798

(13)

Net increase/(decrease) in cash and cash equivalents

3,863

8,256

Cash and cash equivalents at beginning of year

23,664

15,408

Cash and cash equivalents at end of the period

27,527

23,664

Interest paid

250

257

Income taxes paid

4,665

4,316

SOURCE Jinpan International



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