Shengkai Innovations, Inc. (Nasdaq:VALV)
(the "Company", "Shengkai", "we", or "our"), a
leading ceramic valve manufacturer in the People's Republic of
China (the "PRC"), today announced results for its fourth quarter
and fiscal year ended June 30, 2012 ("FY2012").
FY2012 Fourth Quarter Highlights
- Revenues were approximately $5.3 million compared with
approximately $27.3 million in the fourth quarter of fiscal year
ended June 30, 2011 ("FY2011");
- Revenues from the electric power segment were approximately
$1.2 million compared with approximately $14.9 million in the
fourth quarter of FY2011;
- Revenues from the petrochemical and chemical segment were
approximately $2.4 million compared with approximately $8.4 million
in the fourth quarter of FY2011; and
- Gross profit was approximately $2.2 million with a gross margin
of 41.5%, compared with approximately $14.7 million and 54.0% in
the fourth quarter of FY2011.
FY2012 Full Year Highlights
- Revenues were approximately $32.3 million compared with
approximately $93.5 million in FY2011;
- Revenues from the electric power segment were approximately
$8.6 million compared with approximately $57.7 million in
FY2011;
- Revenues from the petrochemical and chemical segment were
approximately $20.1 million compared with approximately $27.5
million in FY2011;
- Gross profit was approximately $14.0 million with a gross
margin of 43.2%, compared with approximately $53.1 million and
56.8% in FY2011;
- GAAP net income was approximately $2.4 million, or $0.13
earnings per diluted share, compared with approximately $93.5
million, or $5.34 earnings per diluted share in FY2011;
- Non-GAAP net income was approximately $5.1 million, or $0.28
non-GAAP earnings per diluted share after adjusting for non-cash
share-based compensation and changes in the fair value of
instruments; and
- Annual ceramic valves output achieved 5,461 sets compared with
23,298 sets a year ago.
Note: The earnings (loss) per share data for
all periods in this press release have been retroactively restated
to reflect the 1-for-2 reverse stock split effected on March 9,
2012.
Fourth Quarter FY2012 Results
Revenues in the fourth quarter were approximately $5.3 million
as compared to approximately $27.3 million in the fourth quarter of
FY2011. Quarterly ceramic valves output was 794 sets as compared to
6,741 sets a year ago. Facing the general economic slowdown in the
PRC, Shengkai continues the transition of target market segment
from the electric power industry to domestic and international
petrochemical and chemical industry.
During the fourth quarter of FY2012, electric power industry,
petrochemical and chemical industry, and other industries accounted
for 22.1%, 44.6% and 33.3% of the quarterly revenues, respectively,
compared with 54.8%, 30.7% and 14.5% in the fourth quarter of
FY2011.
Specifically, revenues from the electric power industry were
approximately $1.2 million compared with approximately $14.9
million in the fourth quarter of FY2011. The decrease was primarily
due to the general slowdown in economy and the increase in the
sales price of our products, as well as the ongoing marketing
transition into the petrochemical and chemical industry.
During the fourth quarter, revenues from the petrochemical and
chemical industry were approximately $2.4 million compared with
approximately $8.4 million in the fourth quarter of FY2011. The
decrease was primarily due to the general slowdown in economy and
the increase in the sales price of our products.
Revenues from other industries, including the aluminum and
metallurgy industries were approximately $1.8 million compared with
approximately $3.9 million in the fourth quarter of FY2011. Due to
its limited market potential, other industries will continue to
remain peripheral to the Company's core priorities. Orders related
to new blast furnace gas cleaning systems which led to temporary
increase in revenues in past periods have been completed by the end
of FY2011.
In the fourth quarter, cost of sales decreased 75.1%
year-over-year to approximately $3.1 million from approximately
$12.5 million in the fourth quarter of FY2011. Cost of sales as a
percentage of revenues was 58.5% compared with 46.0% in the
comparable period a year ago due to both decrease in revenues and
increase in certain costs.
Gross profit in the fourth quarter was approximately $2.2
million compared with approximately $14.7 million for the fourth
quarter of FY2011. This decrease was primarily attributable to
decrease in revenue and increase in depreciation expense. Gross
margin was 41.5%, compared with 54.0% for the fourth quarter of
FY2011. The decrease in gross margin was primarily due to: 1)
approximately $0.2 million increase in depreciation expenses
resulting from an addition of approximately $53.7 million to
property, plant and equipment during the past two fiscal years; 2)
an approximately 9% year-over-year price increase in steel raw
materials and steel die-casting components; and 3) costs spread
over a smaller revenue base, despite the increase in product sales
price.
Selling expenses in the fourth quarter decreased by 61.1%
year-over-year to approximately $0.9 million from approximately
$2.4 million for the comparable period in FY2011. Commissions paid
to agents for introducing new sales decreased year-over-year to
approximately $0.4 million from approximately $2.2 million in the
fourth quarter of FY2011. Selling expenses as a percentage of
quarterly sales increased to 17.7% from 8.9% in the fourth quarter
of FY2011, since certain minor components of selling expenses such
as sales staff's salaries and after-sale service expenses are
flat-rate and did not diminish proportionally to revenue decrease,
and also because we incurred higher marketing expenses in the
fourth quarter of FY2012.
General and administrative ("G&A") expenses in the fourth
quarter were approximately $1.9 million, down from approximately
$5.4 million for the comparable period in FY2011. Excluding the
non-cash share-based compensation, G&A expenses in the fourth
quarter were approximately $1.2 million, compared with
approximately $2.0 million for the comparable period of FY2011. The
decrease in G&A (excluding the non-cash items) expenses over
the comparable periods of fiscal 2011 and 2012 was primarily
attributable to decrease in expenses and professional fees incurred
for our U.S. capital market-related activities and in R&D
expense.
Total operating expenses in the fourth quarter of FY2012 were
approximately $2.8 million compared with approximately $7.8 million
for the comparable period in FY2011. Operating loss in the fourth
quarter of FY2012 was approximately $0.6 million compared with an
operation income of approximately $6.9 million for the comparable
period in FY2011.
Excluding the non-cash share-based compensation, non-GAAP
operating income was approximately $0.1 million, compared with
non-GAAP operating income of approximately $10.3 million for the
comparable period in FY2011.
Provision for income taxes in the fourth quarter was
approximately $0.2 million compared with approximately $1.8 million
in the fourth quarter of FY2011. The income tax provision is
calculated based on the actual income before taxes and applicable
income tax rate of each of our PRC subsidiary and affiliate,
according to the generally accepted accounting principles of
PRC.
GAAP net loss was approximately $0.2 million compared with net
income of approximately $24.4 million in the fourth quarter of
FY2011. Diluted losses per share were $0.01 compared to diluted
earnings per share of $1.42 in the fourth quarter of FY2011.
Excluding the non-cash items of share-based compensation and
changes in fair value of instruments, non-GAAP net income was
approximately $0.1 million in the fourth quarter compared with
approximately $8.7 million in the fourth quarter of FY2011. The
decrease was primarily due to the decline in revenues resulting
from slowdown in economy, increase in product sales price and
marketing transition, coupled with higher costs associated with
depreciation and raw material prices, and relatively high operating
expenses. Non-GAAP earnings were $0.01 per diluted share compared
with $0.51 per diluted share in the fourth quarter of FY2011.
FY2012 Full Year Results
Revenues for the fiscal year ended June 30, 2012 were
approximately $32.3 million as compared to approximately $93.5
million for FY2011. Total annual ceramic valves output was 5,461
sets as compared to 23,298 sets for FY2011. The decline in sales
was primarily attributable to the business disruptions, general
economic slowdown in the PRC, and the strategic transition of our
target market from the electric power industry to domestic and
international petrochemical and chemical industry.
During FY2012, electric power industry, petrochemical and
chemical industry, and other industries accounted for 26.7%, 62.3%
and 10.9% of total revenues, respectively, compared with 61.7%,
29.4% and 8.9% in FY2011.
Specifically, in FY2012, revenues from the electric power
industry were approximately $8.6 million compared with
approximately $57.7 million in FY2011. Unlike previously, the
electric power industry contributed significantly less to our
revenue. The decrease was primarily due to the general slowdown in
PRC's economy, particularly the poor operating performance and
financial pressure experienced by most of our major customers in
this sector, and the increase in the sales price of our products,
as well as the ongoing marketing transition into the petrochemical
and chemical industry.
Revenues from the petrochemical and chemical industry were
approximately $20.1 million compared with approximately $27.5
million in FY2011. The decrease was primarily due to the general
slowdown in economy in the PRC and the increase in the sales price
of our products.
Revenues from other industries, including the aluminum and
metallurgy industries were approximately $3.5 million compared with
approximately $8.3 million in FY2011. Due to its limited market
potential, other industries will continue to remain peripheral to
the Company's core priorities. Orders related to new blast furnace
gas cleaning systems which led to temporary increase in revenues in
past periods have been completed by the end of FY2011.
In FY2012, cost of sales decreased 54.5% year-over-year to
approximately $18.3 million from approximately $40.3 million in
FY2011. Cost of sales as a percentage of revenues was 56.8%
compared with 43.2% in FY2011 due to both decrease in revenues and
increase in certain costs.
Gross profit in FY2012 was approximately $14.0 million compared
with approximately $53.1 million in FY2011. This decrease was
primarily attributable to decrease in revenue and increase in
depreciation expense. Gross margin was 43.2%, compared with 56.8%
for FY2011. The decrease in gross margin was primarily due to: 1)
approximately $1.8 million increase in depreciation expenses
resulting from an addition of approximately $53.7 million to
property, plant and equipment during the past two fiscal years; 2)
an approximately 11.6% year-over-year price increase on average in
steel raw materials and steel die-casting components; and 3) costs
spread over a smaller revenue base, despite the increase in product
sales price.
Selling expenses in FY2012 decreased by 55.1% year-over-year to
approximately $3.7 million from approximately $8.3 million for
FY2011. Commissions paid to agents for introducing new sales
decreased year-over-year to approximately $2.6 million from
approximately $7.5 million in FY2011. Selling expenses as a
percentage of sales increased to 11.6% from 8.9% in FY2011, since
certain minor components of selling expenses such as sales staff's
salaries and after-sale service expenses are flat-rate and did not
diminish proportionally to revenue decrease, and also because we
attended more trade shows and incurred more marketing expenses in
FY2012 as a result of our efforts to develop new markets.
G&A expenses in FY2012 were approximately $9.5 million, down
from approximately $15.2 million in FY2011. Excluding the non-cash
share-based compensation, G&A expenses in FY2012 were
approximately $4.6 million, compared with approximately $5.5
million in FY2011. The decrease in G&A (excluding the non-cash
items) expenses over the comparable periods of FY2011 and FY2012
was primarily attributable to decrease in expenses and professional
fees incurred for our U.S. capital market-related activities of
$412,913; decrease in other miscellaneous G&A expenses
including moving expenses of $531,574; as well as decrease in
salary and welfare costs of $87,466 attributed to reduced number of
employees, offset by the increase in depreciation costs of $160,241
as a result of the new headquarters building.
Total operating expenses in FY2012 were approximately $13.2
million compared with approximately $23.5 million in FY2011.
Operating income in FY2012 was approximately $0.7 million compared
with approximately $29.6 million in FY2011.
Excluding the non-cash share-based compensation, non-GAAP
operating income was approximately $5.6 million, compared with
non-GAAP operating income of approximately $39.3 million in
FY2011.
Provision for income taxes in FY2012 was approximately $1.6
million compared with approximately $6.4 million in FY2011. The
income tax provision is calculated based on the actual income
before taxes and applicable income tax rate of each of our PRC
subsidiary and affiliate, according to the generally accepted
accounting principles of PRC.
GAAP net income in FY2012 was approximately $2.4 million
compared with approximately $93.5 million in FY2011. Diluted
earnings per share were $0.13 compared to $5.34 in FY2011.
Excluding the non-cash items of share-based compensation and
changes in fair value of instruments, non-GAAP net income was
approximately $5.1 million in FY2012 compared with approximately
$33.5 million in FY2011. The decrease was primarily due to the
decline in revenues resulting from slowdown in economy, increase in
product sales price and marketing transition, coupled with higher
costs associated with depreciation and raw material prices, and
relatively high operating expenses. Non-GAAP earnings were $0.28
per diluted share compared with $1.91 per diluted share in
FY2011.
GAAP to Non-GAAP Reconciliation Table
(Unaudited) |
|
|
(in U.S. Dollars) |
|
|
|
For the Twelve Months Ended
June 30, |
|
2012 |
2011 |
GAAP Net Income |
$ 2,421,921 |
$ 93,470,759 |
Add back/(Subtract): |
|
|
Share-based compensation – employee options
and stock awards |
4,864,530 |
9,674,402 |
Changes in fair value of instruments |
(2,207,377) |
(69,692,778) |
Non-GAAP Net Income |
$ 5,079,074 |
$ 33,452,383 |
GAAP Earnings per share (diluted)* |
$ 0.13 |
$ 5.34 |
Non-GAAP Earnings per share (diluted)* |
$ 0.28 |
$ 1.91 |
Recent Developments
On June 11, 2012, the Company received the certificates of ISO
14001:2004 (No.115335-2012-AE-RGC-RvA) and OHSAS 18001:2007
(No.115336-2012-HSO-RGC-DNV), issued by Det Norske Veritas
Certification B.V. of the Netherlands. Both certificates will
expire on June 11, 2015.
ISO 14001:2004 specifies requirements for an environmental
management system to enable an organization to develop and
implement a policy and objectives which take into account legal
requirements and other requirements to which the organization
subscribes, and information about significant environmental
aspects. OHSAS 18001:2007 is an occupational health and safety
(OH&S) standard. The Company believes that the award of these
certificates is a pre-requisite to gain access to the overseas
market, especially the North America market.
The Certificate of Authority to use the Official API Monogram
(No.6D-0460) issued by the American Petroleum Institute ("API") to
Tianjin Shengkai, the Company's operating entity in the PRC,
expired on June 09, 2012. The Company has gone through the
procedures necessary to renew the qualification during the third
quarter of calendar year 2012. Currently the Company is awaiting
the final approval on the extension of the valid term for the
certificate, which is expected in October, 2012. The Company
believes that the award of API certificate will greatly help the
Company establish recognition and gain quick access to the North
America oil and gas market.
From April 30 till May 3, 2012, the Company participated in the
Offshore Technology Conference (OTC) 2012 in Houston, Texas.
Founded in 1969, OTC is the world's foremost event for the
development of offshore resources in the fields of drilling,
exploration, production, and environmental protection. Through
participating the OTC Conference, the Company expects to gain name
recognition and business opportunities in the oil and gas industry
in both North and South Americas, where we believe there are good
potentials for application of our ceramic valves.
The Company plans to participate in the MINExpo INTERNATIONAL®
2012 Conference from September 24 to September 26, 2012 in Las
Vegas, NV. MINExpo is the world's largest complete expo devoted to
mining industry. Through participating the MINExpo Conference, the
Company expects to gain name recognition and business opportunities
in the mining industry in both North and South Americas, where we
feel there would be good potentials for application of our ceramic
valves in future.
Financial Condition
As of June 30, 2012, the Company had cash and cash equivalents
of approximately $64.8 million and accounts receivable of
approximately $9.4 million compared to approximately $59.9 million
cash and cash equivalents and approximately $12.6 million of
accounts receivable as of June 30, 2011. Total current liabilities
as of June 30, 2012 were approximately $3.5 million, compared with
approximately $9.6 million as of June 30, 2011. Additionally, the
Company has no short-term or long-term debts.
Net cash flow provided by operating activities decreased to
approximately $3.9 million during FY2012 from approximately $28.6
million for FY2011. The decrease was primarily attributable to the
decrease in net income between the two fiscal years.
As of June 30, 2012, the Company had made payments in total of
approximately $35.6 million under the executed construction
contracts for the new manufacturing facility with remaining
approximately $0.9 million to be substantially settled after
completion of inspection and final acceptance of the construction
project by relevant government authorities, with certain amount to
be held from payment as warranty deposit for approximately one
year. Regarding equipment and machinery contracts for the new
facility, the Company made payments in total of approximately $16.6
million as of June 30, 2012 with the remaining approximately $1.0
million primarily held as warranty deposit till approximately one
year after installation.
Business Outlook
In response to the business disruptions and changes in the
global ceramic valves industry as well as in PRC's economic
conditions, management of the Company has decided to gradually
phase out its less profitable domestic market segments including
the electric power market and focus on expanding its presence in
the more profitable domestic and foreign oil and chemical
industries where ceramic valve products typically command higher
prices. The Company has increased its product sales price to match
industry levels and to reflect its superior product quality. The
Company has also been making efforts to streamline operations
through headcount reduction and other cost-saving measures to
conserve capital and reduce the impact of revenue loss.
Additionally, the Company will continue to leverage its
self-developed ceramic material technologies to continue in-house
and joint research and development of innovative and
superior-performance products for the international oil and
chemical markets and commit its resources to expanding the
acceptance of its products overseas.
As such, we expect that in the immediately following quarter
ended September 30, 2012, total revenues would remain flat, and
major contribution to our sales would be from the petrochemical and
chemical industry. Such situation may persist until our marketing
and sales efforts on some new customers and projects pay off, and
the expansion in the international market picks up meaningfully.
Successful penetration into international oil and chemical markets
would also require the Company to obtain various certifications,
including but not limited to different class API certification,
such as API 6A which covers higher pressure valve products, and
other firm-specific supplier qualifications, which will take time
to go through various application procedures, develop new products
and invest in additional or different equipment.
Non GAAP Financial Measures
To supplement the Company's consolidated financial statements
for the three and twelve months ended June 30, 2012 and 2011
presented on a GAAP basis, the Company provided non-GAAP financial
information in this release that excludes the impact of non-cash
items of i) share-based compensation costs related to the stock
options and stock awards granted to advisors, independent directors
and management staff, and ii) changes in the fair value of
instruments as a result of adoption on July 1, 2009 of FASB ASC
Topic 815, "Derivative and Hedging" ("ASC 815"). The Company's
management believes that these non-GAAP measures, namely non-GAAP
operating and net income and non-GAAP diluted earnings per share,
provide investors with a better understanding of how the results
relate to the Company's current and historical performance. The
additional non-GAAP information is not meant to be considered in
isolation or as a substitute for GAAP financials. The non-GAAP
financial information that the Company provides also may differ
from the non-GAAP information provided by other companies.
Management believes that these non-GAAP financial measures are
useful to investors because they exclude non-cash expenses that
management excludes when it internally evaluates the performance of
the Company's business and makes operating decisions, including
internal budgeting, and performance measurement, because these
measures provide a consistent method of comparison to historical
periods. Moreover, management believes that these non-GAAP measures
reflect the essential operating activities of the Company. In
addition, the provision of these non-GAAP measures allows investors
to evaluate the Company's performance using the same methodology
and information as that used by the Company's management. Non-GAAP
measures are subject to inherent limitations because they do not
include all of the expenses included under GAAP and because they
involve the exercise of judgment of which charges are excluded from
the non-GAAP financial measure. However, the Company's management
compensates for these limitations by providing the relevant
disclosure of the items excluded.
About Shengkai Innovations, Inc.
Shengkai Innovations is primarily engaged in the design,
manufacture and sale of ceramic valves, high-tech ceramic materials
and the provision of technical consultation and related services.
The Company's industrial valve products are used by companies in
the electric power, petrochemical and chemical, metallurgy and
other industries as high-performance, more durable alternatives to
traditional metal valves. The Company was founded in 1994 and is
headquartered in Tianjin, PRC.
The Company is one of the few ceramic valve manufacturers in the
world with research and development, engineering, and production
capacity for structural ceramics and is able to produce large-sized
ceramic valves with calibers of 6" (150mm) or more. The Company's
product portfolio includes a broad range of valves that are sold
throughout the PRC, to Europe, North America, United Arab Emirates,
and other countries in the Asia-Pacific region. The Company has
over 150 customers, and is the only ceramic valve supplier
qualified to supply SINOPEC. The Company joined the supply network
of China National Petroleum Corporation ("CNPC") in 2006 and
subsequently received a CNPC Certificate of Material Supplier for
valve products in 2011.
Safe Harbor
Statements
Under the Private Securities Litigation Reform Act of 1995: Any
statements set forth above that are not historical facts are
forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from those in
the forward-looking statements. Such factors include, but are not
limited to, the effect of political, economic, and market
conditions and geopolitical events, legislative and regulatory
changes, the Company's ability to expand and upgrade its production
capacity, the actions and initiatives of current and potential
competitors, and other factors detailed from time to time in the
Company's filings with the United States Securities and Exchange
Commission and other regulatory authorities. All forward-looking
statements attributable to the Company or to persons acting on its
behalf are expressly qualified in their entirety by these factors
other than as required under the securities laws. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
|
|
SHENGKAI INNOVATIONS,
INC. |
(F/K/A SOUTHERN SAUCE
COMPANY, INC.) AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(Stated in US
Dollars) |
|
|
|
|
June
30, |
|
2012 |
2011 |
|
|
|
ASSETS |
|
|
Current Assets |
|
|
Cash and cash equivalents |
$ 64,819,870 |
$ 59,870,108 |
Restricted cash |
124,433 |
1,386,873 |
Accounts receivable, net |
9,388,820 |
12,623,359 |
Notes receivable |
167,873 |
217,502 |
Other receivables |
2,879,422 |
2,722,300 |
Advances to suppliers |
2,339,362 |
274,814 |
Inventories |
2,750,907 |
2,532,485 |
Total Current Assets |
82,470,687 |
79,627,441 |
Plant and equipment, net |
54,068,143 |
53,921,084 |
Land use rights, net |
2,533,684 |
2,534,059 |
Other intangible assets, net |
4,524,058 |
5,370,148 |
TOTAL ASSETS |
$ 143,596,572 |
$ 141,452,732 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current Liabilities |
|
|
Notes payable |
124,433 |
1,386,873 |
Accounts payable |
1,942,262 |
3,829,491 |
Advances from customers |
316,020 |
227,451 |
Other payables and accrued expenses |
899,491 |
2,350,144 |
Income tax payable |
240,438 |
1,816,995 |
Total Current
Liabilities |
3,522,644 |
9,610,954 |
Warrant liabilities |
1,761 |
168,442 |
Preferred (conversion option)
liabilities |
481,128 |
5,782,014 |
TOTAL LIABILITIES |
$ 4,005,533 |
$ 15,561,410 |
|
|
|
Commitments and
Contingencies |
$ -- |
$ -- |
|
|
|
SHENGKAI INNOVATIONS,
INC. |
(F/K/A SOUTHERN SAUCE
COMPANY, INC.) AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS (Continued) |
(Stated in US
Dollars) |
|
|
|
|
June 30, |
|
2012 |
2011 |
|
|
|
STOCKHOLDERS' EQUITY |
|
|
Preferred stock – $0.001 par value 15,000,000
share authorized; 1,971,842 and 5,987,368 issued and outstanding as
of June 30, 2012 and 2011 respectively. |
$ 1,971 |
$ 5,987 |
Common stock – $0.001 par value 100,000,000
shares authorized; 17,196,071 and 14,888,306 shares issued and
outstanding as of June 30, 2012 and 2011 respectively. * |
17,197 |
14,889 |
Additional paid-in capital |
71,695,567 |
63,569,139 |
Statutory reserves |
11,196,604 |
11,196,604 |
Retained earnings |
45,091,511 |
42,669,590 |
Accumulated other comprehensive income |
11,588,189 |
8,435,113 |
TOTAL
STOCKHOLDER'S
EQUITY |
139,591,039 |
125,891,322 |
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY |
$ 143,596,572 |
$ 141,452,732 |
*The number of shares of common stock has been retroactively
restated to reflect the Reverse Stock Split effected on March 9,
2012.
|
|
SHENGKAI INNOVATIONS,
INC. |
(F/K/A SOUTHERN SAUCE
COMPANY, INC.) AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) |
(Stated in US
Dollars) |
|
|
|
|
Year Ended June 30, |
|
2012 |
2011 |
|
|
|
Revenues |
$ 32,317,525 |
$ 93,451,373 |
Cost of sales |
(18,341,149) |
(40,327,502) |
Gross profit |
13,976,376 |
53,123,871 |
Operating expenses: |
|
|
Selling expenses |
(3,746,972) |
(8,340,307) |
General and administrative expenses |
(9,497,603) |
(15,197,301) |
Total operating
expenses |
(13,244,575) |
(23,537,608) |
Income from operations |
731,801 |
29,586,263 |
Other income, net |
227,887 |
318,701 |
Interest income, net |
852,549 |
259,871 |
Changes in fair value of instruments -
gain |
2,207,377 |
69,692,778 |
Income before income
taxes |
4,019,614 |
99,857,613 |
Income taxes |
(1,597,693) |
(6,386,854) |
Net income |
2,421,921 |
93,470,759 |
Foreign currency translation adjustment |
3,153,076 |
5,401,210 |
Comprehensive income |
5,574,997 |
98,871,969 |
|
|
|
Basic earnings per share* |
$ 0.15 |
$ 7.31 |
|
|
|
Diluted earnings per share* |
$ 0.13 |
$ 5.34 |
|
|
|
Basic weighted average shares
outstanding* |
16,695,852 |
12,793,547 |
|
|
|
Diluted weighted average shares
outstanding* |
18,149,457 |
17,515,037 |
* The earnings per share data and the weighted average shares
outstanding for all periods have been retroactively restated to
reflect the 1-for-2 reverse stock split effected on March 9,
2012.
|
|
SHENGKAI INNOVATIONS,
INC. |
(F/K/A SOUTHERN SAUCE
COMPANY, INC.) AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF CASH FLOWS |
(Stated in US
Dollars) |
|
|
|
|
Year Ended June 30, |
|
2012 |
2011 |
Cash flows from operating
activities |
|
|
Net income |
$ 2,421,921 |
$ 93,470,759 |
Adjustments to reconcile net income
to net cash provided by operating activities: |
|
|
Depreciation |
3,836,758 |
1,870,404 |
Amortization |
1,027,739 |
1,005,537 |
Provision for doubtful accounts |
245,224 |
171,298 |
(Gain)/loss on disposal of property, plant
and equipment |
(10,616) |
(2,807) |
Changes in fair value of instruments –
(gain) |
(2,207,377) |
(69,692,778) |
Stock based compensation |
4,864,530 |
9,674,402 |
Changes in operating assets and
liabilities: |
|
|
(Increase) decrease in
assets: |
|
|
Accounts receivable |
3,267,672 |
(5,808,002) |
Notes receivable |
54,461 |
(136,504) |
Other receivables |
(52,674) |
(2,317,873) |
Advances to suppliers |
(2,046,251) |
150,479 |
Inventories |
(157,444) |
155,791 |
Increase (decrease) in
liabilities: |
|
|
Notes payable |
(1,287,653) |
(1,370,014) |
Accounts payable |
(3,020,258) |
807,463 |
Advances from customers |
82,684 |
(1,067,806) |
Other payables |
(1,379,861) |
749,210 |
Accruals |
(117,589) |
241,823 |
Income tax payable |
(1,610,046) |
680,434 |
Net cash provided by operating
activities |
3,911,220 |
28,581,816 |
Cash flows from investing
activities |
|
|
Proceeds from disposition of property, plant
and equipment |
(489) |
821 |
Purchase of property, plant and
equipment |
(51,927) |
(63,816) |
Payment of construction in progress |
(1,634,527) |
(10,173,965) |
Purchase of intangible assets |
-- |
(2,009) |
Decrease/(increase) in advances to suppliers
for purchase of equipment and construction |
-- |
401,562 |
Decrease/(increase) in restricted cash |
1,287,653 |
547,095 |
Net cash used in investing
activities |
(399,290) |
(9,290,312) |
Cash flows from financing
activities |
|
|
Proceeds from stock issued, net of
transaction costs of $1,868,264 |
-- |
17,466,689 |
Net cash provided by financing
activities |
$ -- |
$ 17,466,689 |
|
|
|
SHENGKAI INNOVATIONS,
INC. |
(F/K/A SOUTHERN SAUCE
COMPANY, INC.) AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF CASH FLOWS (Continued) |
(Stated in US
Dollars) |
|
|
|
|
Year Ended June 30, |
|
2012 |
2011 |
|
|
|
Net increase (decrease) in cash and
cash equivalents |
$ 3,511,930 |
$ 36,758,193 |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
1,437,832 |
2,116,733 |
|
|
|
Cash and cash equivalents–beginning of
year |
59,870,108 |
20,995,182 |
|
|
|
Cash and cash equivalents–end of
year |
$ 64,819,870 |
$ 59,870,108 |
|
|
|
Supplementary cash flow
information: |
|
|
|
|
|
Interest received |
$ 852,549 |
$ 259,873 |
|
|
|
Taxes paid |
$ 3,207,739 |
$ 5,706,420 |
|
|
|
Non-cash transaction: |
|
|
Preferred stock conversion to common
stock |
$ 4,016 |
$ 1,000 |
CONTACT: Shengkai Innovations, Inc.
Linbin Zhang, Interim CFO
+86-22-5883-8509
ir@shengkai.com
http://www.shengkaiinnovations.com
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