JST Jinpan International Limited

-- 4Q08 Revenue Increases 7% to $44.9 Million Compared to 4Q07 -- -- Full Year Revenue Increases 28.7% to $154.0 Million - -- Full Year Net Income Increases 20.5% to $19.8 Million - ENGLEWOOD CLIFFS, N.J., March 30 /PRNewswire-FirstCall/ -- Jinpan International Ltd (NASDAQ:JST), a leading designer, manufacturer and distributor of cast resin transformers for voltage distribution equipment, today announced consolidated financial results for the fourth quarter and full year ended December 31, 2008. Highlights for the 2008 Fourth Quarter Total sales for the fourth quarter were $44.9 million, a 7% increase from $41.9 million over the same period last year. Growth in total sales primarily resulted from an increase in the sale of the Company's wind energy products, which include the cast resin transformers and reactors for wind power applications. In the fourth quarter, sales outside of China increased 137% to $7.1 million, or 15.8% of total sales, compared to $3.0 million, or 7% of total sales in the same period last year. Growth in international sales is mostly due to the increase in the Company's sales of wind energy products. Cast resin transformers (excluding those for wind power applications), switch gears and unit substations represented $38.8 million, or 86.6% of total sales in the fourth quarter, while wind energy products represented $6.0 million, or 13.4% of total sales in the fourth quarter. Gross profit in the fourth quarter was $13.5 million, a 13.5% decrease from $15.7 million, in the same period last year. Fourth quarter gross margin decreased to 30.2% compared to 37.4% in the same period last year. The price of raw materials declined significantly in the fourth quarter which put downward pressure on the market price of transformers. Additionally, in the fourth quarter, the Company's cost of sales continued to reflect the higher price of materials procured prior to the price decline. The combination of the downward pressure on the market price of transformers and cost of sales that reflects higher cost of raw materials procured at the end of third quarter primarily caused the decline in gross margin. The Company expects lower materials prices to be reflected in its cost of sales in the first quarter of 2009, which should have a positive effect on gross margin. Selling, general and administrative expenses in the fourth quarter were $8.0 million, or 17.8% of total sales, versus $8.8 million, or 21% of total sales in the same period last year. SG&A decreased primarily due to strict cost controls implemented within key operating units. Operating income increased to $5.5 million, or 12.4% of total sales, compared to $6.8 million, or 16.3% of total sales in the same period last year. Net income for the fourth quarter was $6.2 million, or $0.75 per diluted share, versus $6.6 million, or $0.81 per diluted share, in the same period last year. Fourth quarter net income as a percentage of revenue was 13.8% as compared to 15.7% in the same period last year. Fiscal 2008 Results For the full year, total sales increased 28.7% to $154.0 million compared to $119.6 million in the prior year. Gross profit for the full year increased to $48.9 million compared to $41.6 million in the prior year. Gross margin for the full year decreased 3.1% to 31.7% from 34.8% in the prior year. Selling, general and administrative expenses for the full year were $26.2 million, or 17.0% of total sales, compared to $23.0 million, or 19.2% of sales in the prior year. Operating profit for the full year increased 21.4% to $22.7 million compared to $18.7 million in the prior year. Full year operating margin decreased to 14.7% compared to 15.6% in the prior year. Net income for the full year increased 20.5% to $19.8 million, or $2.42 per diluted share, compared to $16.4 million, or $2.03 per diluted share in the prior year. Mr. Zhiyuan Li, Chief Executive Officer of Jinpan commented, "2008 was a solid year for Jinpan and we were pleased with our overall financial results. Our revenue growth in the fourth quarter moderated compared to prior quarters as the decline in raw material prices prompted some of our customers to pare back or delay product orders. We also implemented a more conservative customer credit policy due to the global financial crisis, which impacted the strength of our revenue growth. We experienced a sharp decline in raw materials prices in the fourth quarter, but do not expect margins to improve until the first quarter of 2009 as the lower materials prices are reflected in our cost of sales. In spite of the global economic slowdown, we believe our relationships with our top customers remain stable and that our products will continue to gain wider acceptance among major electrical equipment original equipment manufacturers ("OEMs") in China and around the world. "We were pleased to see steady improvement to our balance sheet in 2008. We finished the year with $15.0 million in cash even after taking into account an $18.5 million increase in fixed asset expenditures associated with our Wuhan and Shanghai manufacturing facilities. We also managed to reduce our short-term bank loans by approximately $12.0 million since the third quarter. "Our accounts receivables increased largely due to strong international sales. We also implemented new credit policies that improved the quality of our accounts receivables as evidenced by our lower bad debt reserves. We continue to increase our cash flow from operations and believe that the new policies implemented for inventories and accounts receivable will benefit our operating cash flow. Overall, our financial structure at the end of 2008 is much improved over the prior year despite substantial growth in the size and structure of our operations." 2009 Financial Outlook For the full year 2009, the Company currently anticipates revenues of approximately $176 million to $182 million, a 14% to 18% increase over 2008 sales of $154 million. The Company anticipates net income of approximately $22.5 million to $23.3 million, a 14% to 18% increase over 2008 net income of $19.8 million. The Company anticipates diluted earning per share for 2009 to be $2.75 to $2.85 per share. Mr. Li continued, "We are encouraged by our continued success. We are also aware of the challenges facing us in the current economic environment. Thus, we are taking a more cautious approach. Our growth plan for 2009 continues to focus on penetrating the power generation equipment market with our high-quality transformer and wind energy products. We believe that 2009 will be a solid year for Jinpan as we continue to meet the needs of our customers, which includes OEMs, electric utilities, industries, and commercial property developers. Our Wuhan facility is fully operational and we expect to operate the Wuhan facility at full capacity by the end of 2009. We are focused on product customization at competitive prices and expansion of international sales. Global demand for efficient, reliable, customized power generation equipment continues to be robust and Jinpan is emerging as a major player in this high growth area. We are optimistic that Jinpan's strong and flexible balance sheet, innovative products and persistent work ethic will continue to drive our company forward to achieve even greater success." Conference Call Information Jinpan's management will host an earnings conference call today, March 30, 2009 at 8:30 a.m. U.S. Eastern Standard Time. Listeners may access the call by dialing 1-913-981-5595. A webcast will also be available via the Company's website at http://www.jstusa.net/. A replay of the call will be available through April 13, 2009. Listeners may access the replay by dialing 1-719-457-0820, access code: 4867406. About Jinpan International Ltd Jinpan International Ltd. (NASDAQ:JST) designs, manufactures and distributes cast resin transformers for voltage distribution equipment in China and other countries around the world. Jinpan's cast resin transformers allow high voltage transmissions of electricity to be distributed to various locations at lower, more usable voltage levels. The Company has obtained ISO9001 and ISO1401 certification of its cast resin transformers. Its principal executive offices are located in Hainan, China and its U.S. headquarters is based in Englewood Cliffs, New Jersey. Safe Harbor Provision 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, 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 include, but are not limited to, the following: -- our ability to successfully implement our business strategy; -- the impact of existing and new competitors in the markets in which we compete, including competitors that may offer less expensive products and services, more desirable or innovative products or technological substitutes, or have more extensive resources or better financing; -- the effects of rapid technological changes and vigorous competition in the markets in which we operate; -- uncertainties about the future growth in electricity consumption and infrastructure development in the markets in which we operate; -- uncertainties about the degree of growth in the number of consumers in the markets in which we operate using mobile personal communications services and the growth in the population in those areas; -- other factors or trends affecting the industry generally and our financial condition in particular; -- the effects of the higher degree of regulation in the markets in which we operate; -- general economic and political conditions in the countries in which we operate or other countries which have an impact on our business activities or investments; -- the monetary and interest rate policies of the countries in which we operate; -- changes in competition and the pricing environments in the countries in which we operate; -- exchange rates; and -- other factors 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, 2007 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. Jinpan International Limited and Subsidiaries Consolidated Statements of Income (unaudited) For the Three and Twelve Month Periods Ended December 31, 2008 Three months ended Twelve months ended Dec 31, Dec 31, 2008 2007 2008 2007 -------------------------------------------- (In thousands, except per US$ US$ US$ US$ share data) Net sales $44,853 $41,868 $153,979 $119,623 Cost of Goods Sold (31,315) (26,211) (105,104) (77,988) -------------------------------------------- Gross Margin 13,538 15,657 48,875 41,635 Operating Expenses Selling and administrative (7,989) (8,813) (26,217) (22,966) -------------------------------------------- Operating income 5,549 6,844 22,658 18,669 Interest Expenses (274) (23) (1,195) (465) Other Income 1,103 63 1,659 414 -------------------------------------------- Income before income taxes 6,378 6,884 23,122 18,618 Income taxes (207) (316) (3,363) (2,226) Income before minority -------------------------------------------- interest 6,171 6,568 19,759 16,392 Minority Interest - - - - -------------------------------------------- Net income $6,171 $6,568 $19,759 $16,392 ============================================ Earnings per share -Basic $0.77 $0.82 $2.47 $2.05 ============================================ -Diluted $0.75 $0.81 $2.42 $2.03 ============================================ Weighted average number of shares -Basic 7,986,828 7,976,755 7,986,828 7,976,755 -Diluted 8,132,346 8,090,630 8,132,346 8,090,630 Jinpan International Limited and Subsidiaries Consolidated Balance Sheets (unaudited) As of December 31, 2008 Dec 31 ------ 2008 2007 ---- ---- US$ US$ Assets Current assets: Cash and cash equivalents $15,393 $15,705 Restricted Cash 1,331 1,417 Investment available for sales 15 193 Accounts receivable, net 58,793 43,026 Inventories 31,868 25,743 Prepaid expenses 4,713 7,943 Other receivables 7,317 2,969 ------ ------ Total current assets 119,430 96,996 Property, plant and equipment, net 18,213 9,031 Construction in progress 6,055 2,889 Intangible assets 12,348 11,549 Prepaid Land used Right 6,098 - Deferred tax assets 301 807 ------ ------ Total assets $162,445 $121,272 Liabilities and Shareholders' Equity Current liabilities: Short term bank loans $11,726 $9,874 Accounts payable 11,300 6,372 Income tax 3,671 2,353 Advance from customers 7,828 4,638 Other Payable 20,733 15,292 ------ ------ Total current liabilities $55,258 $38,529 Shareholders' equity: Common stock, US$0.009 par value: Authorized shares - 20,000,000 Issued and outstanding shares - 8,195,434 in 2008 and 8,186,617 in 2007 $73 $73 Common Stock, Warrants 854 854 Convertible preferred stock, US$0.009 par value: Authorized shares - 1,000,000 Issued and outstanding shares - 3,055 in 2008 6,111 2007 1 1 Additional paid-in capital 34,035 33,938 Reserves 3,905 3,905 Retained earnings 60,266 39,659 Accumulated other comprehensive income 8,842 5,102 ------ ------ 107,976 83,532 Less: Treasury shares at cost, common stock - 206,470 in 2008 and 206,470 in 2007 (789) (789) ------ ------ Total shareholders' equity $107,187 $82,743 ------ ------ Total liabilities and shareholders' equity $162,445 $121,272 ====== ====== Jinpan International Limited and Subsidiaries Consolidated Statements of Cash Flows For the Twelve Months Ended December 31, 2008(Unaudited) Twelve months ended Dec 31 2008 2007 ---- ---- Operating activities Net income 19,759 16,392 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 1,661 1,273 Provision for Doubtful Debt (484) 811 Loss (Gain) on disposal of fixed assets 10 49 Deferred Income Tax 543 (675) Stock-based compensation cost 93 209 Loss(Gain) from sales of available-for-sales 2 securities Changes in operating assets and liabilities Restricted Cash 178 (34) Accounts receivable (11,879) (16,038) Notes receivable (3,061) (564) Inventories (4,198) (5,645) Prepaid expenses 3,654 (2,877) Other receivables (943) (558) Accounts payable 4,337 (237) Income tax 1,117 1,666 Advance from customers 2,773 697 Other liabilities 4,236 5,129 ------ ------ Net cash provided by (used in) operating activities 17,798 (402) Investing activities Purchases of property, plant and equipment (9,944) (5,777) Proceeds from sales of property, plant and equipment 2 29 Payment for construction in progress (2,868) (1,015) Purchase of available-for-sales securities - (489) Proceeds from sales of available-for-sales securities 183 - Land used right (5,894) - Acquired minority interest - (12,624) ------ ------ Net cash provided by (used in) investing activities (18,521) (19,387) Financing activities Notes Payable - (1,098) Proceeds from bank loan 41,698 13,961 Repayment of bank loan (40,569) (10,616) Issued shares from treasury stock 28 Proceeds from exercise of stock options - 19 Decrease in Dividend payable to minority shareholders - 362 Dividends paid (1,940) (1,931) ------ ------ Net cash provided by/(used in) financing activities (811) 725 Effect of exchange rate changes on cash 1,222 1,944 ------ ------ Net increase/(decrease) in cash and cash equivalents (312) (17,120) Cash and cash equivalents at beginning of year 15,705 32,825 ------ ------ Cash and cash equivalents at end of the period 15,393 15,705 ====== ====== Interest paid 1,204 274 Income taxes paid 108 1,282 DATASOURCE: Jinpan International Ltd. CONTACT: Mark Du, Chief Financial Officer of Jinpan International Ltd., +1-201-227-0680; China: William Zima, +86-10-6599-7969, U.S.: Brian M. Prenoveau, CFA, +1-203-682-8200, both of ICR, Inc., for Jinpan International Ltd. Web Site: http://www.jstusa.net/

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