HUBEI, China, April 19, 2004 (PRIMEZONE) -- China Automotive Systems, Inc. (OTCBB:CAAS) today announced financial results for the fourth quarter and year ended December 31, 2003, reflecting approximately a 60 percent increase in production volume of automotive steering systems and components over 2002 for the first full year of consolidated results for its Sino-foreign joint ventures.
Net sales for the fourth quarter of 2003 were $18.6 million. Results for the prior-year period were based on the equity method of accounting and thus are not comparable. Gross profit as a percentage of sales was 45 percent. Income from operations for the fourth quarter was $2.3 million. Income before minority interest was $1.484 million. Minority interest for the fourth quarter was $848,000. Net income for the fourth quarter was $636,000, or $0.03 per basic and diluted share.
Net sales for the full-year 2003 were $55.3 million. Results for the prior-year were based on the equity method of accounting and are thus not comparable. Gross profit as a percentage of sales was 45 percent. Income from operations for the year was $10.8 million. Income before minority interest was $9.2 million. Minority interest for the year was $5.3 million. Net income for the year was $3.9 million, or $0.18 per basic and diluted share, which includes a $1.3 million non-cash charge for the issuance of warrants related to the company's March 2003 recapitalization and reverse merger.
"Results for 2003 reflect particularly strong sales strength in the fourth quarter, as the impact of SARS throughout China subsided and retail activities greatly increased. In anticipation of this retail sales upturn and a pent-up demand for automobiles, Chinese vehicle manufacturers increased inventory levels, which, in turn, produced a 50 percent increase in our sales for the fourth quarter alone over the company's nine-month period," said Hanlin Chen, chairman and chief executive officer of China Automotive Systems.
He added that the company is beginning to benefit from strategic initiatives implemented over the past few years to develop additional OEM and other auto-parts supplier opportunities outside the Chinese automotive market.
"We are working diligently to secure further OEM verification and certification of our products, which we expect will greatly enhance demand for our products by both domestic customers in China, as well as international customers," Chen said.
As an example, he noted that a global supplier of automotive systems to vehicle manufacturers and the automotive aftermarket recently completed certification of one of the company's subsidiaries, providing China Automotive with the potential for being a supplier of rack and pinion power steering systems for a major international automotive manufacturer.
"Electronic-controlled power steering systems also represent a significant new market opportunity for China Automotive. These systems are attractive for a variety of reasons, including lower vehicle fuel consumption and the fact that they are more environmentally friendly over hydraulic platforms," Chen said. The company has established a research center dedicated to the development of automotive electronic-controlled power systems in cooperation with Tsinghua University, a world-renowned engineering institution in China, and expects to commence production of the first of these systems in 2005.
For 2004, he emphasized China Automotive's commitment to increase investment in advanced production equipment, expand capacity to 850,000 units and improve manufacturing efficiency throughout the company's operations. Chen added that he expects the company will increase its annual output production by 50 percent in 2004 over 2003 to approximately 600,000 units, comprised of integral ball and nut power steering gears and rack and pinion steering units.
At December 31, 2003, the company's cash and cash equivalents were $10.7 million and working capital was $19.9 million, with a current ratio of 1.39:1. Total assets at December 31, 2003 were $95.8 million and stockholders' equity was $26.0 million.
ABOUT THE COMPANY
Based in Hubei Province, People's Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering systems to the Chinese automotive industry, operating through five Sino-foreign joint ventures.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward- looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the company's operations and financial performance and condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products, pricing and new technology; changes in consumer preferences and tastes; and effectiveness of marketing; changes in laws and regulations; fluctuations in costs of production, and other factors as those discussed in the Company's reports filed with the Securities and Exchange Commission from time to time.
(Financial table follows)
China Automotive Systems, Inc.
Consolidated Statement of Operations
Year Ended December 31, 2003
Net sales, including $3,268,978
To related parties $55,327,174
Cost of sales, including $2,016,814
purchases from related parties 30,400,201
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Gross profit 24,926,973
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Costs and expenses:
Selling 2,733,425
General and administrative 7,722,505
Research and development 1,017,031
Depreciation and amortization 1,367,170
Stock-based compensation 1,300,000
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Total costs and expenses 14,140,131
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Income from operations 10,786,842
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Other income (expense):
Other non-operating income 534,047
Financial expenses 344,723
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Other income, net 189,324
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Income before income taxes 10,976,166
Income tax expense 1,750,940
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Income before minority interest 9,225,226
Minority interest 5,353,957
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Net income $ 3,871,269
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Net income per common share --
Basic and diluted $0.18
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Weighted average common
shares outstanding --
Basic and diluted 21,846,034
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