NEW YORK & SHOUGUANG,
China, Nov.
14, 2011 /PRNewswire-Asia-FirstCall/ -- Gulf Resources,
Inc. (NASDAQ: GURE) ("Gulf Resources" or the "Company"), a
leading manufacturer of bromine, crude salt and specialty chemical
products in China, today announced
its financial results for the three and nine months ended
September 30, 2011.
Third Quarter 2011 Highlights
- Revenue was $37.8 million, a
decrease of 16% comparing to the corresponding period last
year;
- Gross profit was $13.9 million, a
decrease of 36% comparing to the corresponding period last
year;
- Income from operations was $8.7
million, a decrease of 56% comparing to the corresponding
period last year;
- Net income was $5.6 million, or
$0.16 per basic and diluted share,
compared with $14.9 million, or
$0.43 per basic and diluted share a
year ago;
- Adjusted for non-cash expenses related to cancellation of all
non-vested stock options of $4.3
million, net income was $9.9
million, or $0.28 per
share;
- Cash totaled $85.8 million as of
September 30, 2011;
- In September 2011, the Company
provided verifications from three local government agencies that
validate the Company's market leadership, number of facilities, and
2010 production volume;
- In August 2011, the Company's
subsidiary Shouguang City Haoyuan Chemical Ltd. Co. signed a
compensation agreement with the local government of Yangkou Town,
Shouguang City, PRC for costs related to the relocation of the
Company's Factory No. 4. The compensation amount totaled to
RMB 8,599,835 (approximately
$1.3 million).
Third Quarter 2011
Results
"Due to a tighter credit environment following the attempts of
the Chinese government to slow down the economy, sales volume of
our bromine and crude salt operations decreased during the third
quarter despite more factories and crude salt fields available for
production. While our average selling price of bromine was higher
compared to last year, thereby partially offsetting the negative
impact of lower sales volume, bromine prices decreased from last
quarter," said Xiaobin Liu, Chief
Executive Officer of Gulf Resources. "Crude salt sales were
significantly lower compared to the third quarter last year as a
direct result of the decline in sales volume of bromine, as the
wastewater available for the production of crude salt was reduced.
The average selling price of crude salt has also trended down,
decreasing by 11% year-over-year. Moreover, the reduced demand for
oil and gas exploration additives and paper manufacturing additives
adversely affect our chemical product segment."
Mr. Liu continued: "In the third quarter 2011, we incurred
further exploration costs related to exploring the brine water
resources in Sichuan province. We
also incurred several other cost items under general selling and
administration cost, including demolition and re-installation
expenses for factory relocation and depreciation for the period, as
well as non-cash stock compensation expenses for non-vested stock
options, which significantly impacted our profitability for the
quarter. Given the non-cash nature of some of these expenses, we
still have a sizeable cash balance at the end of the quarter and
have retained strong operating cash flow."
Gulf Resources' revenue was $37.8
million for the third quarter of 2011, a decrease of 16%
from $44.8 million for the third
quarter of 2010. The decrease in net revenue was primarily
attributable to a decline in sales volume across the Company's
business segments.
Revenue from the bromine segment was $24.8 million, or 66% of total revenue, a
decrease of 12% from $28.2 million in
the corresponding period last year. The decrease in revenue from
the Company's bromine segment was mainly due to a decrease in sales
volume of bromine, offset by an increase in the average selling
price.
Revenue from the crude salt segment was $2.5 million, or 6% of total revenue, a decrease
of 46% from $4.6 million in the
corresponding period last year. The decrease in revenue from the
Company's crude salt segment was mainly due to a decrease in the
sales volume and average selling price of crude salt.
Revenue from the chemical products segment was $10.5 million, or 28% of total revenue, for the
third quarter of 2011, an decrease of 13% from $12.0 million in the corresponding period last
year. The decrease in revenue from the Company's chemical product
segment was mainly due to a reduction in demand for oil and gas
exploration additives and paper manufacturing additives.
Gross profit for the third quarter of 2011 was $13.9million, an decrease of 36% from
$21.8 million for the third quarter
of 2010 and gross profit margin for the three months ended
September 30, 2011 was 36.8% compared
to 48.7% for corresponding three-month period last year. The
decline in gross profit margin was mainly due higher share of
depreciation and amortization costs due to enhancements to
property, plants and equipment and the change in estimated useful
life of certain protective shell and transmission channels and
ducts from 8 years to 5 years, a decrease in selling prices of
crude salt, the rise in electricity and labor costs, and the higher
portion of fixed costs in light of decreased sales.
Research and development expenses were $33,565 for the third quarter of 2011 compared
with $891,509 for the corresponding
period last year which represents a decrease of 96%. The current
period research and development cost represented raw materials used
by SYCI for testing the manufacturing process and samples from the
new production lines for wastewater treatment additives and
pharmaceutical and agricultural chemical intermediates.
In the third quarter 2010, the Company incurred research and
development costs related to the Co-Op Research and Development
Center set up jointly with East China University of Science and
Technology in June 2007 to develop
new bromine-based chemical compounds and products to be utilized in
the pharmaceutical industry.
For the third quarter ended September 30,
2011, the Company incurred exploration costs of $1,047,110. These costs consisted of the drilling
of exploratory wells and associated facilities in order to confirm
and measure brine water resources in Sichuan province. As there is no guarantee
that there will be a return on the investment of these exploration
costs, the Company charged the exploration costs to the income
statement as incurred. The exploratory wells are still under
construction and expected to be completed by the end of 2011.
General and administrative expenses for the third quarter of
2011 were $5.4 million, compared to
$1 million for the same period last
year. The increase was mainly due to (i) demolition and
re-installation expenses in the amount of $63,116 for relocating Factory No. 4 due to the
Chinese government taking the leased land, where our original
Factory No. 4 was situated, for civil redevelopment; (ii) inclusion
of $229,052 of depreciation of
property, plant and equipment for Factory No. 4 which temporarily
suspended operations due to the relocation; and (iii) a non-cash
expense of $4,298,000 related to
cancellation of all non-vested stock options in late September 2011.
As a result, income from operations for the third quarter of
2011 was $8.7 million, a decrease of
approximately 56% over income from operations for the same period
in 2010. Operating margin was 23% for the quarter ended
Sept 2011, compared to 44.5% for the
third quarter of 2010.
For the third quarter of 2011, the Company incurred bank
interest income of $69,641and capital
lease interest expenses of $51,994.
The decrease in other income was primarily due to the charge of
capital lease interest expense since January
2011 for the acquisition of fixed assets.
Income taxes were $3.2 million for
the third quarter of 2011, a decrease of 37.2% from $5.1 million for the same period 2010. The
Company's effective income tax rate in the third quarter of 2011
was 36%.
Net income was $5.6 million for
the third quarter of 2011, a decrease of 62% from $14.9 million for the third quarter of 2010.
Basic and diluted earnings per share in the third quarter of 2011
were $0.16, compared to $0.43 per fully diluted share in the third
quarter of 2010. Excluding the aforementioned non-cash expenses
related to cancellation of all non-vested stock options, net income
for the third quarter 2011 was $9.9
million, or $0.28 per basic
and diluted share. Weighted average number of diluted shares for
the three months ended September 30,
2011 was 34,620,004 compared with 34,742,327 for the three
months ended September 30, 2010.
Nine Months Ended September 30,
2011
Revenues for the nine months ended September 30, 2011 were $134.4 million, up 11% from revenues of
$121.2 million for the nine months
ended September 30, 2010. Gross
profit for the nine months ended September
30, 2011 was $65.0 million, up
11% from gross profit of $58.5
million for the corresponding period of 2010. Gross margin
were the same at 48.3%, for both the nine months of 2011 and 2010.
Operating income was $42.4 million, a
decrease of 20% from $52.9 million
for the nine months of 2010. Net income was $30.0million, or $0.86 per basic and diluted share, respectively,
compared to $39.3 million, or
$1.14 and $1.13 per basic and diluted share, respectively,
for the same period a year ago. Excluding the aforementioned
non-cash stock compensation expenses and non-cash expenses related
to write/off impairment on property, plant and equipment, net
income for the first to third quarter 2011 was $45.0 million, or $1.29 per basic and diluted share. Weighted
average number of diluted shares for the nine months ended
September 30, 2011 was 34,695,664
compared with 34,744,914 for the nine months ended September 30, 2010.
Financial Condition
As of September 30, 2011, Gulf
Resources had cash of $85.8 million,
current liabilities of $17.1 million,
and shareholders' equity of $238.6
million. As of September 30,
2011, the Company had working capital of $97.6 million and a current ratio of 6.7:1. For
the nine months ended September 30,
2011, the Company generated $53.5
million in cash flow from operations, primarily attributable
to net income, and used $38.7 million
in investing activities to enhance bromine and crude salt
production facilities.
During the nine months ended September
30, 2011, the Company invested approximately $12 million for renovation and reconstruction of
crude salt fields at Factory No. 1, 5 to 9 and approximately
$19 million for extraction wells and
transmission channels at Factory No. 1 to 9. The Company also used
approximately $5.2 million cash for
the construction of a new Factory No. 4 due to the resumption of
leased land by the local government for central redevelopment. The
Company estimates further capital expenditure required to complete
the construction of Factory No. 4 at approximately $1 million. The Company also used approximately
$0.2 million cash for the setup and
construction of a chemical production line for bromopropane during
the nine months ended September 30,
2011.
Non-GAAP Financial Measures
To supplement the Company's condensed consolidated financial
statements for the three and nine months ended September 30, 2011 and September 30, 2010 presented on a GAAP basis, the
Company provided adjusted financial information in this release
that excludes the impact of non-cash expenses related to
cancellation of all non-vested stock options, options granted to
employees and a warrant issued to its investor relations firm
resulting from the service agreement and non-cash expenses related
to write/off impairment on property. The Company's management
believes that these adjusted measures, adjusted net income and
adjusted 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 adjusted information is
not meant to be considered in isolation or as a substitute for GAAP
financials. The adjusted financial information that the Company
provides also may differ from the adjusted information provided by
other companies. Management believes that these adjusted 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 adjusted measures reflect the essential operating
activities of the Company. Adjusted 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 adjusted
financial measure. However, the Company's management compensates
for these limitations by providing the relevant disclosure of the
items excluded. A reconciliation of each adjusted measure to the
nearest GAAP measure follows:
|
|
|
Three Months
ended September 30,
|
Nine Months
ended September 30,
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Net Income
|
5,584,346
|
14,865,102
|
29,972,600
|
39,283,683
|
|
Write-off / Impairment
Charge
|
-
|
-
|
7,570,566
|
-
|
|
Stock Compensation
Expense
|
4,298,000
|
-
|
7,467,000
|
1,188,966
|
|
Adjusted Net Income
|
9,882,346
|
14,865,102
|
45,010,166
|
40,472,649
|
|
|
|
|
|
|
|
Earnings Per Share -
Diluted
|
0.16
|
0.43
|
0.86
|
1.13
|
|
Write-off / Impairment Charge -
Per Diluted Share
|
-
|
-
|
0.22
|
-
|
|
Stock Compensation Expense - Per
Diluted Share
|
0.12
|
-
|
0.22
|
0.03
|
|
Adjusted Earnings Per Share -
Diluted
|
0.28
|
0.43
|
1.29
|
1.16
|
|
|
|
|
|
|
|
|
Subsequent Events
- In October 2011, the Company
uploaded videos of its production facilities on its corporate
website www.gulfresourcesinc.cn. The videos are in English and
Chinese.
- In October 2011, we engaged a
professional appraisal firm, Grant Sherman Appraisal Limited, to
reassess the optimal annual production capacity of all of our
factory facilities following the decrease in the bromine
concentration of the brine water being extracted at our production
facilities. According to the finalized assessment, Grant Sherman
Appraisal Limited determined that our optimal annual production
capacity of bromine and crude salt are 41,547 tons and 861,143
tons, respectively.
Business Outlook
"As we approach the slow season for bromine production we expect
bromine prices to stabilize around current market levels of
approximately $3500 per tonne as the
limited bromine supply in China
supports price development once demand returns," said Mr. Liu.
"However, due to persistent macro-economic uncertainty, we expect
near term performance to be moderate. Bromine prices have decreased
more than we initially expected, while the tightened credit
environment impacted sales. In addition to higher depreciation and
amortization expenses due to a change in the estimated useful life
of our assets, rising labor and utility costs may further compress
our gross profit margin."
As a result, the Company reaffirms revenue guidance of between
$156 million and $158 million, but
revises net income guidance to between $33.5
million and $35.0 million for 2011 from between $48 million and $49.5 million. These projections
include the aforementioned non-cash expense related to cancellation
of stock options, options and warrants granted and the non-cash
write-off, or impairment loss on property, plant and equipment that
we booked in the first to third quarter this year, and potential
additional non-cash adjustments.
Conference Call
Gulf Resources' management will host a conference call on
Tuesday, November 15, 2011 at
7:00 AM Eastern Time to discuss its
financial results for the third quarter 2011 ended September 30, 2011.
Hosting the call will be Mr. Xiaobin
Liu, CEO of Gulf Resources and Mr. Crocker Coulson,
President of CCG Investor Relations. The Company's management team
will be available for investor questions following the prepared
remarks.
To participate in this live conference call, please dial +1
(877) 275-8968 five to ten minutes prior to the scheduled
conference call time. International callers should call +1 (706)
643-1666. The conference participant pass code is 23745083.
A replay of the conference call will be available for 14 days
starting from 10:00 AM ET on
Tuesday, November 15, 2011. To access
the replay, call +1 (855) 859-2056. International callers should
call +1 (404) 537-3406. The pass code is 23745083.
This conference call will be broadcast live over the Internet
and can be accessed by all interested parties by clicking on
http://www.gulfresourcesinc.cn/events.html. Please access the link
at least fifteen minutes prior to the start of the call to
register, download, and install any necessary audio software. For
those unable to participate during the live broadcast, a 90-day
replay will be available shortly after the call by accessing the
same link.
About Gulf Resources, Inc.
Gulf Resources, Inc. operates through two wholly-owned
subsidiaries, Shouguang City Haoyuan Chemical Company Limited
("SCHC") and Shouguang Yuxin Chemical Industry Co., Limited
("SYCI"). The Company believes that it is one of the largest
producers of bromine in China.
Elemental Bromine is used to manufacture a wide variety of
compounds utilized in industry and agriculture. Through SYCI, the
Company manufactures chemical products utilized in a variety of
applications, including oil & gas field explorations and as
papermaking chemical agents. For more information, visit
www.gulfresourcesinc.cn.
Forward-Looking Statements
Certain statements in this news release contain
forward-looking information about Gulf Resources and its
subsidiaries business and products within the meaning of Rule 175
under the Securities Act of 1933 and Rule 3b-6 under the Securities
Exchange Act of 1934, and are subject to the safe harbor created by
those rules. The actual results may differ materially depending on
a number of risk factors including, but not limited to, the general
economic and business conditions in the PRC, future product
development and production capabilities, shipments to end
customers, market acceptance of new and existing products,
additional competition from existing and new competitors for
bromine and other oilfield and power production chemicals, changes
in technology, the ability to make future bromine asset purchases,
and various other factors beyond its control. All forward-looking
statements are expressly qualified in their entirety by this
Cautionary Statement and the risks factors detailed in the
Company's reports filed with the Securities and
Exchange Commission. Gulf Resources undertakes no duty to revise or
update any forward-looking statements to reflect events or
circumstances after the date of this release.
|
|
Gulf Resources,
Inc.
|
CCG Investor
Relations
|
|
|
|
|
Helen Xu
|
Ms. Linda Salo, Account
Manager
|
|
E-mail: beishengrong@vip.163.com
|
Phone:
+1-646-922-0894
|
|
Website: http://www.gulfresourcesinc.cn/
|
E-mail: linda.salo@ccgir.com
|
|
|
|
|
|
Mr. Crocker Coulson,
President
|
|
|
Phone:
+1-646-213-1915
|
|
|
E-mail: crocker.coulson@ccgir.com
|
|
|
|
|
|
Website: http://www.ccgirasia.com/
|
|
|
|
|
|
- Financial tables to
follow-
GULF
RESOURCES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME AND COMPREHENSIVE INCOME
(Expressed in U.S.
dollars)
(UNAUDITED)
|
|
|
|
|
Three-Month
Period Ended
September 30,
|
|
Nine-Month
Period Ended
September 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
NET REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES/INCOME
|
$
|
37,761,975
|
|
$
|
44,758,294
|
|
$
|
134,441,319
|
|
$
|
121,203,521
|
|
Cost of net
revenue
|
|
(23,823,944)
|
|
|
(23,002,703)
|
|
|
(69,410,031)
|
|
|
(62,709,174)
|
|
Sales, marketing and other
operating expenses
|
|
(20,116)
|
|
|
(18,789)
|
|
|
(67,861)
|
|
|
(115,174)
|
|
Research and development
cost
|
|
(33,565)
|
|
|
(891,509)
|
|
|
(347,421)
|
|
|
(1,612,862)
|
|
Exploration
costs
|
|
(1,047,110)
|
|
|
-
|
|
|
(4,914,396)
|
|
|
-
|
|
Write-off / Impairment on
property,
plant and
equipment
|
|
-
|
|
|
-
|
|
|
(7,570,566)
|
|
|
-
|
|
General and administrative
expenses
|
|
(5,459,069)
|
|
|
(1,003,129)
|
|
|
(11,515,054)
|
|
|
(3,991,515)
|
|
Other operating
income
|
|
1,368,074
|
|
|
66,555
|
|
|
1,783,157
|
|
|
88,553
|
|
|
|
(29,015,730)
|
|
|
(24,849,575)
|
|
|
(92,042,172)
|
|
|
(68,340,172)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
8,746,245
|
|
|
19,908,719
|
|
|
42,399,147
|
|
|
52,863,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(51,994)
|
|
|
(394)
|
|
|
(159,950)
|
|
|
(620)
|
|
Interest income
|
|
69,641
|
|
|
67,083
|
|
|
198,416
|
|
|
180,667
|
|
INCOME BEFORE TAXES
|
|
8,763,892
|
|
|
19,975,408
|
|
|
42,437,613
|
|
|
53,043,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAXES
|
|
(3,179,546)
|
|
|
(5,110,306)
|
|
|
(12,465,013)
|
|
|
(13,759,713)
|
|
NET INCOME
|
$
|
5,584,346
|
|
$
|
14,865,102
|
|
$
|
29,972,600
|
|
$
|
39,283,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
5,584,346
|
|
$
|
14,865,102
|
|
$
|
29,972,600
|
|
$
|
39,283,683
|
|
OTHER COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
- Foreign currency
translation adjustments
|
|
4,168,644
|
|
|
2,818,766
|
|
|
9,006,445
|
|
|
3,481,428
|
|
COMPREHENSIVE INCOME
|
$
|
9,752,990
|
|
$
|
17,683,868
|
|
$
|
38,979,045
|
|
$
|
42,765,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
|
$
|
0.16
|
|
$
|
0.43
|
|
$
|
0.86
|
|
$
|
1.14
|
|
DILUTED
|
$
|
0.16
|
|
$
|
0.43
|
|
$
|
0.86
|
|
$
|
1.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF
SHARES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
|
|
34,620,004
|
|
|
34,640,007
|
|
|
34,694,607
|
|
|
34,596,825
|
|
DILUTED
|
|
34,620,004
|
|
|
34,742,327
|
|
|
34,695,664
|
|
|
34,744,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GULF
RESOURCES, INC.
|
|
AND
SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(Expressed
in U.S. dollars)
|
|
(UNAUDITED)
|
|
|
|
|
|
September 30,
2011
|
|
December 31,
2010
|
|
Current
Assets
|
|
|
|
|
|
Cash
|
|
$
|
85,821,856
|
|
$
|
68,494,480
|
|
Accounts receivable
|
|
|
24,283,055
|
|
|
21,542,229
|
|
Inventories
|
|
|
3,150,965
|
|
|
2,679,899
|
|
Prepayments and
deposits
|
|
|
970,403
|
|
|
939,940
|
|
Prepaid land
leases
|
|
|
203,466
|
|
|
42,761
|
|
Deferred tax
assets
|
|
|
1,744
|
|
|
99,694
|
|
Other
receivable
|
|
|
300,000
|
|
|
-
|
|
Total Current
Assets
|
|
|
114,731,489
|
|
|
93,799,003
|
|
Non-Current Assets
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
138,917,025
|
|
|
112,178,999
|
|
Property, plant and
equipment under capital leases, net
|
|
|
2,402,643
|
|
|
-
|
|
Prepaid land leases, net
of current portion
|
|
|
761,567
|
|
|
743,022
|
|
Deferred tax
assets
|
|
|
1,966,760
|
|
|
-
|
|
Total non-current
assets
|
|
|
144,047,995
|
|
|
112,922,021
|
|
Total Assets
|
|
$
|
258,779,484
|
|
$
|
206,721,024
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
10,195,667
|
|
$
|
6,419,735
|
|
Retention
payable
|
|
|
1,668,517
|
|
|
453,000
|
|
Capital lease obligation,
current portion
|
|
|
136,249
|
|
|
-
|
|
Taxes payable
|
|
|
5,137,084
|
|
|
7,163,095
|
|
Total Current
Liabilities
|
|
|
17,137,517
|
|
|
14,035,830
|
|
Non-Current
Liabilities
|
|
|
|
|
|
|
|
Capital lease obligation,
net of current portion
|
|
|
3,010,728
|
|
|
-
|
|
Total
Liabilities
|
|
$
|
20,148,245
|
|
$
|
14,035,830
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
PREFERRED STOCK ; $0.001 par
value; 1,000,000 shares authorized; none outstanding
|
|
$
|
-
|
|
$
|
-
|
|
COMMON STOCK; $0.0005 par value;
100,000,000 shares authorized; 34,745,342 and 34,735,912 shares
issued; and 34,560,743 and
34,735,912 shares outstanding as of September 30, 2011 and
December 31, 2010, respectively
|
|
|
17,373
|
|
|
17,368
|
|
Treasury
stock; 184,599 shares as of September
30, 2011 at cost
|
|
|
(500,000)
|
|
|
-
|
|
Additional paid-in
capital
|
|
|
74,093,579
|
|
|
66,626,584
|
|
Retained earnings
unappropriated
|
|
|
136,472,685
|
|
|
106,500,085
|
|
Retained earnings
appropriated
|
|
|
10,271,293
|
|
10,271,293
|
|
Cumulative translation
adjustment
|
|
|
18,276,309
|
|
|
9,269,864
|
|
Total Stockholders'
Equity
|
|
|
238,631,239
|
|
|
192,685,194
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
258,779,484
|
|
$
|
206,721,024
|
|
|
|
|
|
|
|
|
|
|
|
|
GULF
RESOURCES, INC.
|
|
AND
SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Expressed
in U.S. dollars)
|
|
(UNAUDITED)
|
|
|
|
|
|
Nine-Month
Period Ended September 30,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
|
Net income
|
|
$
|
29,972,600
|
|
$
|
39,283,683
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
|
Interest on capital lease
obligation
|
|
|
159,950
|
|
|
-
|
|
Amortization of prepaid
land leases
|
|
|
262,567
|
|
|
75,436
|
|
Depreciation and
amortization
|
|
|
12,543,179
|
|
|
7,867,568
|
|
Write-off / Impairment
loss on property, plant and equipment
|
|
|
7,570,566
|
|
|
-
|
|
Compensation income from
local government for demolition of factory
|
|
|
(1,340,026)
|
|
|
-
|
|
Stock-based compensation
expense
|
|
|
7,467,000
|
|
|
1,188,966
|
|
Deferred tax
asset
|
|
|
(1,823,019)
|
|
(18,331)
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(1,792,588)
|
|
|
1,719,870
|
|
Inventories
|
|
|
(350,201)
|
|
|
(581,346)
|
|
Prepayments and
deposits
|
|
|
3,005
|
|
|
(290,968)
|
|
Other
receivables
|
|
|
(300,000)
|
|
|
2,296
|
|
Accounts payable and
accrued expenses
|
|
|
3,444,367
|
|
|
1,182,100
|
|
Taxes payable
|
|
|
(2,275,794)
|
|
|
2,015,614
|
|
Net cash provided by operating
activities
|
|
|
53,541,606
|
|
|
52,444,888
|
|
|
|
|
|
|
|
|
CASH FLOWS USED IN INVESTING
ACTIVITIES
|
|
|
|
|
|
|
Additions of prepaid land
leases
|
|
|
(403,834)
|
|
|
(99,733)
|
|
Compensation received for
demolition of factory
|
|
|
1,340,026
|
|
|
-
|
|
Purchase of property, plant and
equipment
|
|
|
(34,457,775)
|
|
|
(28,096,333)
|
|
Increase in construction in
progress
|
|
|
(5,230,232)
|
|
|
-
|
|
Net cash used in investing
activities
|
|
|
(38,751,815)
|
|
|
(28,196,066)
|
|
|
|
|
|
|
|
|
CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES
|
|
|
|
|
|
|
Proceeds from exercising stock
options
|
|
|
-
|
|
|
18,000
|
|
Proceeds from private
placement
|
|
|
-
|
|
2,192,919
|
|
Repurchase of common
stock
|
|
|
(500,000)
|
|
-
|
|
Repayment of capital lease
obligation
|
|
|
(288,739)
|
|
-
|
|
Repayment to a related
party
|
|
|
-
|
|
(1,190)
|
|
Net cash (used in)/provided by
financing activities
|
|
|
(788,739)
|
|
|
2,209,729
|
|
|
|
|
|
|
|
|
EFFECTS OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
|
|
|
3,326,324
|
|
|
1,403,085
|
|
NET INCREASE IN CASH AND CASH
EQUIVALENTS
|
|
|
17,327,376
|
|
|
27,861,636
|
|
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD
|
|
|
68,494,480
|
|
|
45,536,735
|
|
CASH AND CASH EQUIVALENTS - END
OF PERIOD
|
|
$
|
85,821,856
|
|
$
|
73,398,371
|
|
|
|
|
|
|
|
|
|
|
SOURCE Gulf Resources, Inc.