China Automotive Systems, Inc. Reports First Quarter Results
SHANGHAI, China--May 23, 2003--China Automotive Systems, Inc. (OTCBB:CAAS), today announced financial and operating results for the quarter ended March 31, 2003.The Company's sino-foreign joint ventures are presented on a consolidated basis for the three months ended March 31, 2003, as compared to the equity method of accounting for the three months ended March 31, 2002. Accordingly, the results of operations for the three months ended March 31, 2003 are not comparable to the three months ended March 31, 2002.
Net sales for the three months ended March 31, 2003 were $11,131,000.
Gross profit for the three months ended March 31, 2003 was $4,981,000 or 44.7% of net sales.
Administrative, selling and general expenses were $1,649,000 for the three months ended March 31, 2003.
Stock Compensation. During March 2003, in connection with the reverse acquisition completed in March, 2003, the Company issued common stock purchase warrants to three consultants to acquire an aggregate of 550,375 shares of common stock, exercisable for a period of one year at $1.20 per share. The aggregate fair value of these warrants, calculated pursuant to the Black-Scholes option pricing model, was $1,300,000, which was charged to operations at March 31, 2003.
Profit from operations was $2,032,000 for the three months ended March 31, 2003. Excluding the non-cash charge of $1,300,000 related to the issuance of warrants in March 2003, profit from operations would have been $3,332,000 for the three months ended March 31, 2003.
Profit Before Minority Interest. Profit before Minority Interest was $1,651,000 for the three months ended March 31, 2003. Excluding the non-cash charge of $1,300,000 relating to the issuance of warrants in March 2003, profit before minority interest would have been $2,951,000 for the three months ended March 31, 2003.
Minority Interest. The Company recorded the minority interest's share in each sino-foreign joint venture's earnings aggregating $1,459,000 for the three months ended March 31, 2003.
Net profit was $192,000 for the three months ended March 31, 2003.
Liquidity and Capital Resources:
At March 31, 2003, cash and cash equivalents were $9,638,000 and working capital was $24,332,000 reflecting a current ratio of 1.66:1.
At March 31, 2003, the Company's total assets were $78,780,000 and its shareholders' equity was $25,179,000.
China Automotive Systems, Inc., a Delaware Corporation, through its wholly owned subsidiary, owns joint-venture interests in four entities in China that manufacture power steering systems and other products for different segments of the automobile industry in China.
CHINA AUTOMOTIVE SYSTEMS, INC.
Consolidated Balance Sheets
March 31, 2003 (Unaudited) and December 31, 2002
(Expressed in Thousands of US Dollars)
March 31, December 31,
2003 2002
$ $
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents 9,638 --
Accounts receivable 23,345 --
Deposits, prepayments and other
receivables 15,012 --
Inventories 10,256 --
Amounts due from shareholders/directors 3,197 --
------------ -------------
61,448 --
EQUITY IN INVESTMENTS IN JOINT VENTURES -- 20,329
PROPERTY, PLANT AND EQUIPMENT, NET 14,833 --
INTANGIBLE ASSETS 774 --
OTHER FINANCIAL ASSETS 1,725 --
------------ -------------
78,780 20,329
============ =============
CHINA AUTOMOTIVE SYSTEMS, INC.
Consolidated Balance Sheets
March 31, 2003 (Unaudited) and December 31, 2002
(Expressed in Thousands of US Dollars)
March 31, December 31,
2003 2002
$ $
(Unaudited)
LIABILITIES
CURRENT LIABILITIES
Short-term borrowings 4,832 --
Accounts payable and accrued expenses 21,267 --
Other payables 5,650 --
Taxation payable 5,367 --
Amounts due to shareholders/directors -- 14,826
------------- -------------
37,116 14,826
LONG-TERM BORROWINGS 199 --
------------- -------------
37,315 14,826
------------- -------------
MINORITY INTERESTS 16,286 --
------------- -------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK - Authorized, issued and
fully paid 1 1
ADDITIONAL PAID-IN CAPITAL 19,716 194
ACCUMULATED OTHER COMPREHENSION LOSS (3) --
RETAINED EARNINGS (DEFICIT) - appropriated 6,942 5,308
- unappropriated (1,477) --
------------- -------------
5,465 5,308
------------- -------------
25,179 5,503
------------- -------------
78,780 20,329
============= =============
CHINA AUTOMOTIVE SYSTEMS, INC.
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended March 31, 2003 and 2002
(Expressed in Thousands of US Dollars)
2003 2002
$ $
NET SALES 11,131 --
Cost of sales 6,150 --
------------- -------------
GROSS PROFIT 4,981 --
EXPENSES
Administrative, selling and general
expenses 1,649 --
Stock compensation 1,300 --
------------- -------------
2,949 --
------------- -------------
PROFIT FROM OPERATIONS 2,032 --
OTHER INCOME
Equity in income of joint ventures -- 478
Other non-operating income 125 --
Financial expenses (59) --
------------- -------------
66 478
------------- -------------
PROFIT BEFORE INCOME TAX 2,098 478
INCOME TAXES 447 --
------------- -------------
PROFIT BEFORE MINORITY INTEREST 1,651 478
MINORITY INTEREST 1,459 --
------------- -------------
NET PROFIT 192 478
============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING,
BASIC (in exact number) 21,244,475 20,914,250
============= =============
BASIC EARNINGS PER SHARE (in exact number) 0.009 0.023
============= =============
DILUTED EARNINGS PER SHARE (in exact
number) 0.009 0.009
============= =============
CHINA AUTOMOTIVE SYSTEMS, INC.
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2003 and 2002
(Expressed in Thousands of US Dollars)
2003 2002
$ $
OPERATING ACTIVITIES
Net profit 192 478
Equity in income of joint ventures -- (478)
Minority shareholders' interests 1,459 --
Issuance of warrants to consultants 1,300 --
Depreciation of fixed assets 297 --
Amortization of intangible assets 22 --
Gain on disposal of fixed assets, intangible
assets and other long-term assets (11) --
Increase in inventories (908) --
Decrease (Increase) in operating
receivables (166) 216
Increase in operating payables and accrued
expenses 1,621 --
--------- --------
Net cash provided by operating activities 3,806 216
--------- --------
INVESTING ACTIVITIES
Net cash received from disposal of fixed
assets, intangible assets and other long-term
assets 26 --
Cash paid to acquire fixed assets, intangible
assets and other long term assets (663) --
Cash paid for investment -- (2,470)
--------- --------
Net cash used in investing activities (637) (2,470)
--------- --------
FINANCING ACTIVITIES
Proceeds from borrowings 1,200 --
Cash payments for interest and dividends (366) --
Increase in due from
directors/shareholders -- 2,254
--------- --------
Net cash provided by financing activities 834 2,254
--------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,003 --
Cash and cash equivalents at the beginning of
period, as a result of change from equity
accounting to consolidation accounting as at
January 1, 2003 5,635 --
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 9,638 --
========= ========
The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements to the future financial performance of the Company. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development and acceptance, the impact of competitive services and pricing, or general economic risks and uncertainties.