Exhibit 1
Jinpan International Reports Third Quarter 2014 Financial Results
* Third quarter revenue decreased 10.2% year-over-year to $61.8 million
* Third quarter operating income decreased 32.7% to $5.2 million, or 8.4% of sales
* Third quarter net income decreased 38.8% year-over-year to $4.3 million, or $0.26 per share
* Full Year 2014 net income expected to be in the range of $16.5 million to $17.0 million, or $0.99 to $1.02 per share
Carlstadt, N.J., November 13, 2014 - Jinpan International Limited (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers, today reported unaudited consolidated financial results for the third quarter ending September 30, 2014.
Third Quarter 2014 Results
Net sales for the third quarter were $61.8 million, a 10.2% decrease from $68.7 million in the same period last year. The decline in sales during the quarter was due to delays in some of our customers’ projects along with decreased shipments to our OEM customers.
In the third quarter, China sales decreased 6.7% year-over-year to $54.7 million, or 88.5% of net sales, compared to $58.6 million, or 85.3% of net sales, in the same period last year. Sales outside of China for the quarter decreased 20.7% year-over-year to $7.1 million, or 11.5% of net sales, compared to $10.1 million, or 14.7% of net sales for the same period last year.
Sales to OEM customers decreased 24.8% year-over-year to $9.6 million, or 15.6% of net sales, compared to $12.8 million, or 18.6% of net sales in the same period last year.
Gross profit in the third quarter decreased 15.3% year over year to $20.2 million from $23.9 million in the same period last year. Third quarter 2014 gross profit margin was 32.8%, compared to 34.8% in the prior year period. Gross margin for the quarter remained within our expected range. The decrease from the same period last year was due to lower sales volume and a slightly more competitive pricing environment.
Selling and administrative expenses in the third quarter were $15.1 million, or 24.4% of net sales, compared to $16.2 million, or 23.5% of net sales in the same period last year. Selling and administrative expenses decreased from the same period last year primarily due to lower sales volume, which more than offset increases in research and development spending.
Operating income for the third quarter decreased 32.7% to $5.2 million, or 8.4% of net sales, from $7.7 million, or 11.2% of net sales, in the same period last year.
Net income for the third quarter decreased 38.8% to $4.3 million, or $0.26 per diluted share, compared to $7.0 million, or $0.42 per diluted share, in the same period last year. Third quarter net income, as a percentage of net sales, was 6.9% compared to 10.1% in the same period last year.
Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, “Our third quarter results reflect economic uncertainty within China’s economy which caused delays in some of our customers’ projects and impacted our shipments during the third quarter. Sales to our OEM customers also declined during the quarter, reflecting lumpy shipment patterns to our largest wind energy customer.”
“From a product standpoint, our sales continued to diversify. Sales of our cast resin transformers were impacted most heavily by the customer project delays, while sales of our VPI transformers and reactors increased year-over-year. Sales of switchgear and unit substations were roughly flat with the second quarter of 2014, but were down compared to very strong sales in the third quarter of last year.”
“Likewise, our OEM sales demonstrated diversification during the quarter. Our OEM sales declined compared to a very strong comparable period in the third quarter of last year. This decline was due to a decrease in shipments to our largest OEM customer, which operates in the wind energy market. We expect shipments to this customer will recover in the coming quarters. Sales to our other OEM customers increased during the third quarter of 2014, as we began to ramp up shipments to one of our newest customers.”
“China’s current economic environment presents some challenges, but it is one that we have anticipated and we believe our product quality, technology leadership, production capability, and sales reach position us to compete favorably. Customer orders for the third quarter and year-to-date reflect double-digit growth compared to the comparable periods in 2013. We expect our shipment cycle will normalize as economic uncertainty diminishes and our customers regain confidence to proceed with their projects.”
“At the end of September, our backlog equaled $127 million, up 21.0% from the same period last year and up 6.7% from the second quarter of 2014.”
Balance Sheet
As of September 30, 2014, the Company had $17.9 million in cash and cash equivalents, restricted cash, and short term investments, compared to $30.8 million as of December 31, 2013. The Company’s accounts receivable on September 30, 2014 totaled $147.5 million, compared to $144.6 million as of December 31, 2013. Total bank loans outstanding at September 30, 2014 were $29.6 million, compared to $43.1 million at December 31, 2013.
Financial Outlook
For the full year 2014, the Company projects revenue and earnings growth of approximately 0% to 3% compared to 2013. Net sales are expected to be in the range of $226 million and $233 million and net income is expected to be in the range of $16.5 million and $17.0 million, or $0.99 to $1.02 per share. This earnings guidance excludes expenses associated with the proposed going private transaction.
Recent Developments
On September 22, 2014, the Company announced that its Board of Directors has received a preliminary, non-binding proposal letter dated September 21, 2014 from Li Zhiyuan, the Company’s Chairman of the Board of Directors, President, and Chief Executive Officer and FNOF E&M Investment Limited (collectively, with Mr. Li, the “Buyer Parties”), to acquire all of the outstanding common shares of the Company not currently owned by the Buyer Parties in a going private transaction for $8.80 per common share, subject to certain conditions (the “Proposal”).
The Company’s Board of Directors formed a committee of independent directors (the “Special Committee”) on September 26, 2014 to evaluate the Proposal. The Special Committee has retained a legal counsel and a financial advisor. The Board of Directors cautions the Company’s shareholders and others considering trading in its securities that no decisions have been made by the Special Committee with respect to the Company’s response to the proposal. No assurance can be given that the Proposal, or any other transaction, will be consummated. The
Company does not intend to disclose developments regarding these matters unless and until its Board of Directors determines there is a need to update the market.
Conference Call Information
Jinpan’s management will hold a conference call on Thursday, November 13, 2014, at 8:30 a.m. ET. Listeners may access the call by dialing 1-888-417-8533 (toll free) or 1-719-325-2354 (international). A webcast of the conference call will also be available via http://public.viavid.com, with event ID: 111770. A replay of the call will be available through November 20, 2014 by dialing 1-877-870-5176, access code 1537527.
ABOUT JINPAN INTERNATIONAL
Jinpan International Limited (NASDAQ: JST) designs, manufactures, and markets electrical control and distribution equipment used in demanding industrial applications, utility projects, renewable energy installations, and infrastructure projects. Major products include cast resin transformers, VPI transformers and reactors, switchgears, and unit substations. Jinpan serves a wide range of customers in China and reaches international markets as a qualified supplier to leading global industrial electrical equipment manufacturers. Jinpan’s four manufacturing facilities in China are located in the cities of Haikou, Wuhan, Shanghai and Guilin. The Company was founded in 1993. Its principal executive offices are located in Haikou, Hainan, China and its United States office is based in Carlstadt, New Jersey. For more information, visit www.jinpaninternational.com.
Safe Harbor Regarding Forward Looking Statements
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, 2013 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.
Investor Contact Information:
|
At Jinpan International Ltd.:
Chief Financial Officer
|
|
At Tobin Tao & Company, Inc.:
Mark Tobin
|
FINANCIAL STATEMENTS FOLLOW:
Consolidated Statements of Comprehensive Income (unaudited)
| |
|
Three months ended
|
|
|
Nine months ended
|
|
| |
|
September 30
|
|
|
September 30
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
(In thousands, except number of shares and per share data)
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
61,762 |
|
|
|
68,743 |
|
|
|
168,789 |
|
|
|
162,579 |
|
|
Cost of Goods Sold
|
|
|
(41,524 |
) |
|
|
(44,853 |
) |
|
|
(113,747 |
) |
|
|
(106,572 |
) |
|
Gross Margin
|
|
|
20,238 |
|
|
|
23,890 |
|
|
|
55,042 |
|
|
|
56,007 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative
|
|
|
(15,055 |
) |
|
|
(16,187 |
) |
|
|
(41,484 |
) |
|
|
(41,541 |
) |
|
Operating income
|
|
|
5,183 |
|
|
|
7,703 |
|
|
|
13,558 |
|
|
|
14,466 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expenses
|
|
|
(607 |
) |
|
|
(579 |
) |
|
|
(1,826 |
) |
|
|
(1,341 |
) |
|
Other Income
|
|
|
658 |
|
|
|
1,209 |
|
|
|
1,621 |
|
|
|
1,856 |
|
|
Income before income taxes
|
|
|
5,234 |
|
|
|
8,333 |
|
|
|
13,354 |
|
|
|
14,981 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
(965 |
) |
|
|
(1,357 |
) |
|
|
(2,283 |
) |
|
|
(2,482 |
) |
|
Net income after taxes
|
|
|
4,269 |
|
|
|
6,976 |
|
|
|
11,070 |
|
|
|
12,499 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(7 |
) |
|
|
(12 |
) |
|
|
5 |
|
|
|
(13 |
) |
|
Total comprehensive income
|
|
|
4,262 |
|
|
|
6,964 |
|
|
|
11,075 |
|
|
|
12,486 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Basic
|
|
|
US$ 0.26 |
|
|
|
US$ 0.43 |
|
|
|
US$ 0.68 |
|
|
|
US$ 0.77 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Diluted
|
|
|
US$ 0.26 |
|
|
|
US$ 0.42 |
|
|
|
US$ 0.67 |
|
|
|
US$ 0.75 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Basic
|
|
|
16,232,178 |
|
|
|
16,216,704 |
|
|
|
16,232,178 |
|
|
|
16,216,704 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Diluted
|
|
|
16,630,653 |
|
|
|
16,609,978 |
|
|
|
16,640,885 |
|
|
|
16,603,938 |
|
Consolidated Balance Sheet
| |
|
(Unaudited)
|
|
|
(Audited)
|
|
| |
|
|
|
|
|
|
|
(In US$ thousands, except number of shares and per share data)
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
8,132 |
|
|
|
24,582 |
|
|
Restricted cash
|
|
|
1,147 |
|
|
|
1,316 |
|
|
Short-term investment
|
|
|
8,615 |
|
|
|
4,920 |
|
|
Notes receivable
|
|
|
11,630 |
|
|
|
15,802 |
|
|
Accounts receivable, net
|
|
|
147,492 |
|
|
|
144,606 |
|
|
Inventories, net
|
|
|
48,588 |
|
|
|
33,614 |
|
|
Prepaid expenses
|
|
|
9,677 |
|
|
|
4,204 |
|
|
Land use right
|
|
|
377 |
|
|
|
377 |
|
|
Deferred tax assets
|
|
|
2,415 |
|
|
|
2,119 |
|
|
Other receivables
|
|
|
8,064 |
|
|
|
6,891 |
|
|
Total current assets
|
|
|
246,137 |
|
|
|
238,431 |
|
| |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
73,557 |
|
|
|
75,601 |
|
|
Construction-in-progress
|
|
|
1,706 |
|
|
|
3,787 |
|
|
Land use right
|
|
|
14,491 |
|
|
|
14,840 |
|
|
Goodwill
|
|
|
13,693 |
|
|
|
13,818 |
|
|
Other assets
|
|
|
81 |
|
|
|
90 |
|
|
Deferred tax assets
|
|
|
34 |
|
|
|
34 |
|
|
Total assets
|
|
|
349,698 |
|
|
|
346,601 |
|
| |
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Short-term bank loans
|
|
|
3,529 |
|
|
|
11,101 |
|
|
Accounts payable
|
|
|
30,667 |
|
|
|
27,013 |
|
|
Notes Payable
|
|
|
14,222 |
|
|
|
10,498 |
|
|
Income tax payable
|
|
|
1,907 |
|
|
|
2,516 |
|
|
Advances from customers
|
|
|
17,951 |
|
|
|
14,207 |
|
|
Other liabilities
|
|
|
28,764 |
|
|
|
30,339 |
|
|
Total current liabilities
|
|
|
97,040 |
|
|
|
95,674 |
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Long term liability:
|
|
|
|
|
|
|
|
|
|
Deferred Income
|
|
|
4,932 |
|
|
|
4,785 |
|
|
Long Term bank loans
|
|
|
26,119 |
|
|
|
31,998 |
|
|
Total Liabilities
|
|
|
128,091 |
|
|
|
132,457 |
|
| |
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, US$0.0045 par value:
|
|
|
|
|
|
|
|
|
|
Authorized shares - 2,000,000
|
|
|
|
|
|
|
|
|
|
Issued and outstanding shares – none in 2014 and 2013
|
|
|
|
|
|
|
- |
|
|
Common stock, US$0.0045 par value:
|
|
|
|
|
|
|
|
|
|
Authorized shares – 40,000,000
|
|
|
|
|
|
|
|
|
|
Issued and outstanding shares –16,418,456 in 2014 and 2013
|
|
|
74 |
|
|
|
74 |
|
|
Common stock-warrants
|
|
|
- |
|
|
|
- |
|
|
Additional paid-in capital
|
|
|
37,997 |
|
|
|
37,693 |
|
|
Reserves
|
|
|
13,099 |
|
|
|
12,849 |
|
|
Retained earnings
|
|
|
145,742 |
|
|
|
136,874 |
|
|
Accumulated other comprehensive income
|
|
|
24,964 |
|
|
|
26,937 |
|
| |
|
|
221,876 |
|
|
|
214,427 |
|
|
Less: Treasury shares at cost,
|
|
|
|
|
|
|
|
|
|
Common stock –135,488 in 2014 and 138,306 in 2013
|
|
|
(268 |
) |
|
|
(283 |
) |
|
Total shareholders' equity
|
|
|
221,608 |
|
|
|
214,144 |
|
|
Total liabilities and shareholders' equity
|
|
|
349,699 |
|
|
|
346,601 |
|
Consolidated Statement of Cash Flows
| |
|
For the Nine Months Ended
|
|
| |
|
September 30
|
|
| |
|
2014
|
|
|
2013
|
|
|
(In thousands)
|
|
US$
|
|
|
US$
|
|
| |
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
Net Income
|
|
|
11,070 |
|
|
|
12,499 |
|
|
Adjustments to reconcile net income to
|
|
|
|
|
|
|
|
|
|
Net Cash provided by (used in ) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
5,301 |
|
|
|
4,759 |
|
|
Amortization of prepaid lease
|
|
|
212 |
|
|
|
278 |
|
|
Deferred Income Tax
|
|
|
(317 |
) |
|
|
(576 |
) |
|
Provision for doubtful debts
|
|
|
1,792 |
|
|
|
3,306 |
|
|
Loss/(gain) on disposal of fixed assets
|
|
|
- |
|
|
|
- |
|
|
Stock-based compensation Cost
|
|
|
304 |
|
|
|
105 |
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
Restricted Cash
|
|
|
158 |
|
|
|
(86 |
) |
|
Accounts Receivable
|
|
|
(6,004 |
) |
|
|
(26,769 |
) |
|
Notes Receivable
|
|
|
4,047 |
|
|
|
7,770 |
|
|
Inventories
|
|
|
(15,966 |
) |
|
|
(14,027 |
) |
|
Prepaid Expenses
|
|
|
(5,536 |
) |
|
|
(2,030 |
) |
|
Other Receivable
|
|
|
(1,233 |
) |
|
|
(1,455 |
) |
|
Accounts Payable
|
|
|
3,916 |
|
|
|
6,953 |
|
|
Notes Payable
|
|
|
3,837 |
|
|
|
2,519 |
|
|
Income Tax
|
|
|
(589 |
) |
|
|
1,029 |
|
|
Advance From customers
|
|
|
3,890 |
|
|
|
418 |
|
|
Other liabilities
|
|
|
(1,312 |
) |
|
|
2,903 |
|
|
Net Cash provided by ( used in ) operating activities
|
|
|
4,189 |
|
|
|
(2,404 |
) |
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(1,257 |
) |
|
|
(5,492 |
) |
|
Proceeds from sales of property, plant and equipment
|
|
|
- |
|
|
|
- |
|
|
Payment for construction in progress
|
|
|
(620 |
) |
|
|
(6,590 |
) |
|
Sell of short term investment
|
|
|
54,533 |
|
|
|
42,159 |
|
|
Increase in short term investment
|
|
|
(58,289 |
) |
|
|
(36,851 |
) |
|
Receipt of government grant for new plant construction
|
|
|
191 |
|
|
|
885 |
|
|
Net Cash provided by ( used in ) investing activities
|
|
|
(5,442 |
) |
|
|
(5,889 |
) |
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from bank loan
|
|
|
9,860 |
|
|
|
23,633 |
|
|
Repayment of bank loan
|
|
|
(22,980 |
) |
|
|
(20,673 |
) |
|
Proceeds from exercised stock option
|
|
|
16 |
|
|
|
215 |
|
|
Dividend paid
|
|
|
(1,954 |
) |
|
|
(1,461 |
) |
|
Net Cash provided by ( used in ) financing activities
|
|
|
(15,058 |
) |
|
|
1,714 |
|
|
Effect of exchange rate changes on cash
|
|
|
(139 |
) |
|
|
301 |
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
(16,450 |
) |
|
|
(6,278 |
) |
|
Cash and Cash equivalents at beginning of year
|
|
|
24,582 |
|
|
|
18,510 |
|
|
Cash and Cash equivalents at end of year
|
|
|
8,132 |
|
|
|
12,232 |
|
| |
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
1,292 |
|
|
|
1,849 |
|
|
Income Tax paid
|
|
|
3,187 |
|
|
|
1,587 |
|
