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EXHIBIT 1
5
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Wednesday November 15, 7:33 am Eastern Time
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Press Release
Global-Tech Appliances Reports Improved Second Quarter Results and Expects
Positive Sales Trend to Continue for Fiscal Year
HONG KONG--(BUSINESS WIRE)--Nov. 15, 2000--Global-Tech Appliances Inc. (NYSE:
GAI - news) announced today improved net sales and earnings for the second
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quarter of fiscal 2001 ended September 30, 2000.
Net sales for the second quarter of fiscal 2001 increased 15% to $32.4 million
compared to $28.2 million for the second quarter of fiscal 2000. Net income rose
14% for the second quarter of fiscal 2001 to $4.0 million, or $0.33 per share,
compared to $3.5 million, or $0.29 per share, for the corresponding period in
fiscal 2000. Net sales for the six months ended September 30, 2000 increased 17%
to $55.1 million compared to $47.0 million in the prior year. Net income in the
six months also increased 26% to $5.8 million, or $0.48 per share, compared to
$4.6 million, or $0.38 per share, in the prior year. Net income in the first
half of fiscal 2000 was impacted by an unusual expense of $500,000 relating to
professional expenses for exploratory acquisition-related activities.
John C.K. Sham, President and Chief Executive Officer, said: "Business trends in
the second quarter continued those of the first with increases in sales
primarily from floor care products. Gross margins improved slightly from the
first quarter due to higher volume, though we expect price pressures and higher
costs in plastic resins, packaging and energy to have a continuing adverse
impact for the balance of fiscal 2001. The Company plans to continue introducing
new products in an effort to offset part of the anticipated lower gross
margins."
Mr. Sham continued, "Our sales, being denominated in U.S. dollars, are affecting
our European customers as the Euro continues to decline against the U.S. dollar.
We expect the inflationary pressures in the system to be relieved in the near
future by higher consumer prices, but we are working closely with those
customers to take costs out of the system until the Euro stabilizes."
Mr. Sham concluded, "While we expect to be able to maintain double-digit top-
line growth for the balance of the year, we will need to concentrate on further
cost reductions in our traditional business while the Company continues to
diversify and transform our business. We are prepared and more determined than
ever to accelerate our strategy of transforming a portion of our manufacturing
each year from low-value, commodity-type products to more advanced, higher-value
products and new product categories. In addition, we plan to continue pursuing
acquisition opportunities and other alliances that are accretive and remain
focused on opportunities that could enhance shareholder value."
Global-Tech is an original designer, manufacturer, and marketer of a wide range
of small household appliances in six primary product categories: kitchen
appliances; personal, beauty and health care products; garment care products;
travel products and accessories; floor care products; and environmental care
products. The Company's products are marketed by its customers under
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brand names such as Black & Decker(R), DeLonghi(R), Dirt Devil(R), Hamilton
Beach(R), Krups(R), Morphy Richards(R), Moulinex(R), Mr. Coffee(R), Proctor-
Silex(R), Remington(R), Sunbeam(R), Vidal Sassoon(R), and West Bend(R).
Except for historical information, certain statements contained herein are
forward-looking statements that are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
or variations of such words and similar expressions are intended to identify
such forward looking statements. These forward looking statements are subject to
risks and uncertainties, including but not limited to, the impact of competitive
products and pricing, product demand and market acceptance, new product
development, reliance on key strategic alliances, availability and cost of raw
materials, the regulatory environment, fluctuations in operating results and
other risks detailed from time to time in the Company's filings with the
Securities and Exchange Commission including its most recent Report on Form 20-
F.
GLOBAL-TECH APPLIANCES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts expressed in United States dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
2000 1999 2000 1999
(unaudited) (unaudited) (unaudited) (unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales $ 32,414 $ 28,229 $ 55,126 $ 46,958
Cost of goods sold (25,065) (21,460) (42,952) (35,694)
-------- -------- -------- --------
Gross profit 7,349 6,769 12,174 11,264
Selling, general and
administrative expenses (3,869) (4,061) (7,817) (7,621)
Unusual item -- -- -- (500)
-------- -------- -------- --------
Operating income 3,480 2,708 4,357 3,143
Other income, net 776 916 1,734 1,628
-------- -------- -------- --------
Income before income
taxes 4,256 3,624 6,091 4,771
Provision for income
taxes (225) (119) (321) (188)
-------- -------- -------- --------
Net income $ 4,001 $ 3,505 $ 5,770 $ 4,583
Net income per share $ 0.33 $ 0.29 $ 0.48 $ 0.38
Weighted average number
of shares outstanding 12,133 12,095 12,133 12,095
</TABLE>
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GLOBAL-TECH APPLIANCES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts expressed in United States dollars)
<TABLE>
<CAPTION>
September 30, March 31,
2000 2000
(unaudited) (audited)
(in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 31,561 $ 53,647
Investment in U.S. marketable securities 22,335 20,278
Accounts receivable, net 13,433 7,167
Deposits prepayments & other assets 9,054 3,364
Inventories, net 22,939 18,160
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Total current assets 99,322 102,616
Property, plant and equipment 32,137 29,305
Construction-in-progress 4,743 7,320
Patents 14 14
Loan to a director 461 461
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Total assets $ 136,677 $ 139,716
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings $ -- $ 2
Current portion of long-term bank loans 483 1,063
Accounts payable 15,922 8,734
Advance payments from customers 171 71
Accrued expenses 3,498 3,029
Income tax provision 2,826 2,505
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Total current liabilities 22,900 15,404
Long-term bank loans 1,407 1,407
Deferred income taxes -- --
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Total liabilities 24,307 16,811
Shareholders' equity:
Preferred stock, par value $0.01; 1,000,000
shares authorized, no shares issued -- --
Common stock, par value $0.01; 50,000,000
shares authorized; 12,830,000 shares issued;
12,136,103 shares outstanding as of
September 30, 2000; 12,126,101 shares
outstanding as of March 31, 2000 128 128
Additional paid-in capital 81,662 81,662
Retained earnings 35,577 46,237
Accumulated other comprehensive deficit (346) (346)
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117,021 127,663
Less: Treasury stock, at cost, 693,897 shares
as of September 30, 2000; 703,899 shares as
of March 31, 2000 (4,651) (4,758)
</TABLE>
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<TABLE>
<S> <C> <C>
Total shareholders' equity 112,370 122,905
Total liabilities and shareholders'
equity $ 136,677 $ 139,716
</TABLE>
Contact:
Global-Tech USA, Inc.
Brian Yuen
Tel.: 212-683-3320
Web Page: http://www.businesswire.com/cnn/gai.shtml
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