Glas-Aire Industries Group Ltd. Announces Record Earnings
3 May 1999
Glas-Aire Industries Group Ltd. Announces Record Earnings for the Year Ended January 31, 1999
VANCOUVER, B.C.--May 3, 1999--Glas-Aire Industries Group Ltd. ("Glas-Aire" or the "Company") , a leading designer, developer, manufacturer and marketer of original equipment automotive wind deflector accessories to automobile manufacturers world-wide, announced a record 47.8% increase in per share earnings for the year ended January 31, 1999. Sales and earnings have broken records in each of the last two years and the Company expects to attain a new record in the first quarter ended April 30, 1999.Alex Ding, President of Glas-Aire stated, "Fiscal 1999 brought significant improvements in revenues and earnings from our expanded operations capability. Senior management including Omer Esen, Linda Kwan and the entire staff have done an outstanding job for the shareholders and I commend them. We have a new chairman of the Board of Directors who believes in being proactive rather than reactive. Our industry group and the investment community are taking more interest in the Company. Omer Esen has recently been interviewed and Glas-Aire featured in a leading magazine article. We have built a strong infrastructure to continue to provide superior quality products cost effectively while we continue to grow our customer base both in North America and over seas. Through acquisition and merger opportunities, we continue to seek new distribution channels for our automotive products and additional products to manufacture and distribute."
Mr. Ding continued, "E-commerce is becoming an important focus for distribution of the Company's automotive products. We feel that consumers would prefer to buy parts that offer the same quality as original equipment, directly via the Internet, rather than secondary market products of mass marketers supplied by the Company's competitors and we are currently working to develop this distribution channel."
Sales. The Company's sales increased by 3.58% from $6,409,954 for the year ended January 31, 1998, to $6,639,219 for the year ended January 31, 1999. This increase resulted primarily from (1) the addition of new customers, (2) sales of new parts, and (3) additional orders from existing customers. Revenues from the Company's four major automobile companies accounted for approximately 88% of the Company's sales during the year ended January 31, 1999.
Gross Profit. Gross profit margins, expressed as a percentage of sales, increased slightly from 29.7% for the year ended January 31, 1998 to 32.26% for the year ended January 31, 1999. This net increase of 2.56% was due primarily to (i) an increase in the value of Canadian dollar which diminished the exchange rate benefit reflected in the gross profit margin of the Company for the prior fiscal year, (ii) decline in material cost due to the usage of raw materials remaining from the previous year, (iii) an increase in depreciation due to the placement of new equipment service, and (iv) an increase in direct labor and overhead cost.
Research and Development. Expenses for research and development increased by 5.74% from $393,182 for the year ended January 31, 1998, to $415,751 for the year ended January 31, 1999. This increase was primarily due to (i) an increased in the number of engineering personnel conducting in-house activities, (ii) an increase in usage of outside contractors to accommodate an increase in research and development activities, (iii) an increase in travel expenses to customers to provide extra services related to new design.
Selling and Distribution. Selling and distribution expenses increased by 4.48%, from $386,098 for the year ended January 31, 1998, to $403,382 for the year ended January 31, 1999. This increase was primarily due to (i) the increase of $12,274 aftermarket research, (ii) the increase of $10,317 warranty claim due to major design change requested by the Company's largest customer, (iii) the increase of $11,303 commission expenses from volume increase in sales, (iv) a decrease of $16,610 in travel & promotion expenses related to the Company's marketing efforts deferred to February & March 1999.
General and administrative. General and administrative expenses decreased by 2.69% from $527,552 for the year ended January 31, 1998, to $513,384 for the year ended January 31, 1999, as a result of (i) an increase of $12,830 in consulting fees and travel expenses related to the Company's evaluation, (ii) an increase of $8,000 in director's fees, (iii) a decrease of $5,916 in consulting, legal fees relating to the preparation of annual reports to investors. Excluding these expenses the general and administrative expenses were actually lower by $29,082 from the same period in 1998, a result of (i) an increase of $13,832 due to additional maintenance support fees paid to the EDI program as required by our major customers. (ii) a decrease in the number of persons employed in administration of $22,285, (iii) a decrease in consulting fees of $11,980 relating to the QS9000 (Quality Control Certification) (iv) a gain on foreign exchange of 4,380 (v) an increase in cash discount, and a decrease in other administration cost of $4,269.
Provision for Profit Sharing. Provision for profit sharing increased by 30.64% from $68,504 for the year ended January 31, 1998 and to $89,496 for the year ended January 31, 1999. This increase was a result of the higher profitability of the Company.
Interest. Interest income (net of interest expense) increased from $74,256 for the year ended January 31, 1998, to $79,903 for the year ended January 31, 1999, primarily as a result of interest earned on cash deposits obtained from the public offering.
Income before Income Taxes. Before income taxes, the Company's income increased from $602,985 for the year ended January 31, 1998, to $799,829 for the year ended January 31, 1999.
Income Taxes. The Company provided for income taxes of $299,061 for the year ended January 31, 1999. The Company's effective tax rate in 1999 was 37.4%
Net Income. Net income increased from $346,328 for the year ended January 31, 1998, to $500,768 for the year ended January 1999. For more information on Glas-Aire Industries Group Ltd., look up the company's web sight at www.glasaire.com or call 303-380-2177.
Certain statements and information included in this release constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations is contained in the Company's SEC filings.
Glas-Aire Industries Group, Ltd.
Consolidated Balance Sheet
(Stated in US Dollars)
Years Ended
January 31, January 31,
1999 1998
---------------------------
---------------------------
ASSETS:
Current
Cash and equivalents $2,110,535 $1,645,953
Accounts receivable - -
Note receivable 506,806 1,200,451
Inventories 673,688 772,780
Prepaid expenses 33,460 19,095
---------------------------
4,277,778 3,638,279
Fixed Assets, Net 1,607,557 1,408,816
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$5,885,335 $5,047,095
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness - -
Accounts payable and accrued
liabilities 733,512 $460,680
Income taxes payable 94,712 91,464
Current portion of long term debt 49,055 -
Current portion of obligation under
capital lease 49,055 -
----------------------------
877,279 552,144
Obligation under capital lease 68,722 -
Deferred income taxes 358,504 281,327
----------------------------
1,304,505 833,471
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SHAREHOLDERS' EQUITY
Common Stock 15,935 15,875
Additional paid-in capital 3,475,695 3,462,334
Retained earnings 1,546,730 1,045,962
Treasury stock (339,573) (236,163)
Accumulated other comprehensive income (117,957) (75,384)
----------------------------
4,580,830 4,212,624
----------------------------
$5,885,335 $5,046,095
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Glas-Aire Industries Group, Ltd.
Consolidated Statement of Income
(Stated in US Dollars)
Years Ended January 31,
1999 1998 1997
------------------------------------
Sales $6,639,219 $6,409,954 $4,316,372
Cost of Sales 4,497,280 4,505,889 3,027,968
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Gross Profit 2,141,939 1,904,065 1,288,404
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Expenses
Research and Development 415,751 393,182 395,099
Selling and Distribution 403,381 386,096 281,669
General and Administrative 513,385 527,552 414,174
Provision for Profit Sharing 89,496 68,504 23,498
Interest (79,903) (74,256) (61,354)
------------------------------------
1,342,110 1,301,080 1,053,086
------------------------------------
Income Before Taxes 799,829 602,985 235,318
Income Taxes 299,061 256,657 125,518
------------------------------------
Net Income for the Year $500,768 $346,328 $109,800
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Net Income Per Share of Common
Stock $0.34 $0.23 $0.08
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Weight Average Number of Shares
Outstanding 1,470,129 1,519,405 1,426,038
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