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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 2, 2009
CHINA BAK BATTERY, INC.
Nevada | 001-32898 | 86-0442833 |
(State or other jurisdiction | (Commission File No.) | (IRS Employer |
of incorporation) | Identification No.) |
BAK Industrial Park, No. 1 BAK Street
Kuichong Town, Longgang District
Shenzhen, 518119
People's Republic of China
(Address, including zip code, of principal executive offices)
(86-755) 8977-0093
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02
Results of Operations and Financial Condition.
On December 2, 2009, China BAK Battery, Inc. (the "Company") issued a press release announcing its financial results for the fiscal quarter and fiscal year ended September 30, 2009. A copy of the press release is furnished as Exhibit 99.1 hereto.
The press release furnished as Exhibit 99.1 hereto contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements, other than statements of historical fact, are "forward-looking statements," including statements regarding the Company's business strategy, plans and objective and statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "should," "believes," "expects," "anticipates" or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of their respective dates. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
In accordance with General Instruction B.2 of Form 8-K, the information in this Report, including Exhibit 99.1 hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
Exhibit | Description | ||
99.1 | Press Release dated December 2, 2009 |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CHINA BAK BATTERY, INC. | |
Date: December 2, 2009 | By: /s/ Tony Shen |
Tony Shen | |
Chief Financial Officer |
3
EXHIBITS
Exhibit | Description | ||
99.1 | Press Release dated December 2, 2009 |
4
Exhibit 99.1
PRESS RELEASE
China BAK Reports Fourth Quarter and Fiscal Year 2009 Financial Results
Shenzhen, China December 2, 2009 China BAK Battery, Inc. (China BAK, the Company, or we) (Nasdaq: CBAK), one of the largest lithium-ion battery cell manufacturers in the world, as measured by production output, today announced its financial results for the fourth quarter (Q409) and fiscal year ended September 30, 2009 (FY09).
Recent Achievements and Highlights
We saw strong recovery from the downturn with sequential growth in revenue
($57.6M) and operating cash flow ($5.8M) in Q409 as compared to Q309;
Profitability further improved with higher gross margin (14.1%,) and
smaller loss ($1.4M) than Q309;
We have successfully established ourselves as a major competitor in the
cylindrical cell market; revenues from cylindrical cells in FY09 increased to
$55.3 million, up 30.0% from FY08;.
Revenues from prismatic battery packs increased to $8.9 million or 15.5%
of revenues in Q409, becoming our third largest revenue source, in response to
customer needs;
In November 2009, BAK Tianjin signed Letters of Intent with Tianjin
Qingyuan Electric Vehicle Co., Ltd., Dongfeng Electric Vehicle Co., Ltd. and
Brilliance Auto Engineering Research Institute for providing high-power
batteries for use in electric cars, and with Suzhou NOAHtek Electric Bicycles
Co., Ltd. for providing high-power batteries for use in electric bicycles;
We raised $20.6 million in a Registered Direct Offering in October 2009, which will further strengthen our financial position and improve the operating flexibility.
Fourth Quarter FY09 Financial Results
Net revenues for the fourth quarter of FY09 were $57.6 million, up 28.8% from $44.7 million last quarter and down 20.9% from $72.7 million in the same quarter of last year.
Revenues from cylindrical cells used in notebook computers were $15.0 million, up 18.6% from $12.7 million last quarter and down 23.4% from $19.7 million in the same quarter of last year.
Revenues from prismatic cells, including aluminum-case cells, steel-case cells and battery packs, which are used in mobile phones and certain personal electronic devices, were $37.5 million, up 31.4% from $28.6 million last quarter and down 16.6% from $45.0 million in the same quarter of last year. Revenues from aluminum-case cells were $28.6 million, up 27.1% from $22.5 million last quarter and down 20.6% from $36.0 million in the same quarter of last year. Revenues from battery packs were $8.9 million, up 55.3% from $5.7 million last quarter and up 64.4% from $5.4 million in the same quarter of last year. Revenues from steel-case cells were minimal as we ended production in January 2009.
Revenues from lithium polymer cells, used in personal electronic devices such as PDAs, MP3 players and Bluetooth devices, were $4.9 million in the fourth quarter of FY09, up 46.1% from last quarter, and down 39.2% from the same quarter of last year.
China BAK Battery Inc. | Page 1 of 6 |
Gross profit for the fourth quarter of FY09 was $8.1 million, up 60.3% from $5.0 million last quarter and down 29.6% from $11.5 million in the same quarter of last year. Gross margin was 14.1%, compared to 11.3% last quarter and 15.8% in the same quarter of last year.
Operating expenses totaled $9.0 million or 15.7% of revenues in the fourth quarter of FY09, as compared to $8.6 million or 19.3% of revenues last quarter and $8.4 million or 11.6% of revenues in the same quarter of last year. Research and development expenses were $1.6 million or 2.8% of revenues, as compared to $1.5 million or 3.3% of revenues last quarter and $1.7 million or 2.3% of revenues in the same quarter of last year. Sales and marketing expenses were $1.8 million or 3.2% of revenues, as compared to $1.6 million, or 3.5% of revenues last quarter and $1.5 million or 2.2% of revenues in the fourth quarter of last year. General and administrative expenses were $5.6 million or 9.7% of revenues, as compared to $5.5 million or 12.4% of revenues last quarter and $5.2 million or 7.1% of revenues in the same quarter of last year.
Operating loss for the fourth quarter of FY09 was $0.9 million, as compared to operating loss of $3.6 million last quarter and operating income of $3.0 million in the same quarter of last year.
Net loss was $1.4 million in the fourth quarter of FY09, as compared to net loss of $5.2 million last quarter and net income of $1.5 million in the same quarter of last year. Diluted earnings per share were negative $0.02 compared with negative $0.09 per diluted share last quarter and $0.03 per diluted share in the same quarter of last year.
For the fourth quarter of FY09, Days Sales Outstanding (DSO) decreased to 120 from 145 last quarter, and Days Sales of Inventory decreased to 116 from 136 last quarter.
FY09 Financial Results
For FY09, net revenues were $211.1 million, down 13.9% from $245.3 million in FY08, gross profit was $26.8 million or 12.7% of net revenues, down 13.4% from $30.9 million or 12.6% of net revenues for FY08, and net loss was $14.0 million as compared to net loss of $7.9 million for FY08.
Financial Condition
On September 30, 2009 China BAK had $30.7 million in cash and cash equivalents and negative $46.3 million in working capital, reflecting a current ratio of 0.83:1. Short-term bank loans and long-term bank loans totaled $194.8 million as compared to $191.4 million on June 30, 2009. Shareholders equity totaled $156.6 million. China BAK had $49.6 million available for borrowing under its credit facilities.
Business Outlook
In FY09, we have weathered the economic crisis relatively well and grown our business by starting shipments to a tier 1 OEM notebook computer customer. Weve also made in-roads in the New Energy/Clean Tech sector by providing samples of power cells to auto manufacturers and received favorable comments. We believe we will continue to grow in FY10 and be one of the few winners in this industry, commented Mr. Xiangqian Li, CEO of China BAK.
We are pleased to see steady increase in revenue, gross margin and operating cash flow since Q2FY09 amid economic recession. Operating measures such as DSO, inventory turns have also rebounded in Q4FY09 to near pre-downturn levels. We will continue to exercise prudence and drive for operating excellence, commented Tony Shen, CFO of China BAK.
China BAK Battery Inc. | Page 2 of 6 |
China BAK expects that FY10 revenue will fall in the range of $270 million to $310 million, which, at the low point of the range, will represent a 28% growth from FY09, and that bottom line of FY10 will be break-even to slightly profitable.
Conference Call
China BAK will host a conference call at 8:00 a.m. ET on Wednesday, December 2, 2009 to discuss results for the fourth quarter of FY09ended September 30, 2009. Joining Xiangqian Li, China BAK's President and Chief Executive Officer on the call will be Tony Shen, Chief Financial Officer. To participate in the conference call, please dial the following number approximately fifteen minutes prior to the scheduled conference call time: 800-688-0796. International callers should dial (617) 614-4070. The pass code for the call is 976-118-60. If you are unable to participate in the call at this time, a replay will be available from 10:00 a.m. ET on Wednesday, Dec 2, 2009 through 10:00 a.m. ET, Wednesday, Dec 16, 2009. To access the replay, please dial 888-286-8010. International callers should dial (617) 801-6888. The pass code for the replay is 699-49-859. The conference call will be broadcast live over the Internet and can be accessed by all interested parties on the China BAK website at http://www.bak.com.cn/. To listen to the live webcast, please go to the China BAKs website 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, shortly after the call a replay will be made available on China BAKs website for 90 days.
About China BAK Battery Inc.
China BAK Battery, Inc. is one of the largest manufacturers of lithium-based battery cells in the world, as measured by production output. It produces battery cells that are the principal component of rechargeable batteries commonly used in cellular phones, notebook computers and portable consumer electronics, such as digital media devices, portable media players, portable audio players, portable gaming devices, and PDAs. China BAK Battery, Inc.s 3.0 -million-square-foot facilities are located in Shenzhen and Tianjin, PRC, and have been recently expanded to produce new products.
Safe Harbor Statement
This press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements relating to the business of China BAK Battery, Inc. and its subsidiary companies, which can be identified by the use of forward-looking terminology such as believes, expects or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to: risks related to China BAKs business and risks related to operating in China. Please refer to China BAKs Annual Reports on Form 10-K for the fiscal years ended September 30, 2008, as well as China BAK's Quarterly Reports on Form 10-Q for FY09, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. China BAKs actual results could differ materially from those contained in the forward-looking statements. China BAK undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
-Financial Tables Follow-
China BAK Battery Inc. | Page 3 of 6 |
China BAK Battery, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive
Income/(Loss)
For the Three Months and Fiscal Years Ended September
30, 2009 and 2008
(Amounts in thousands, except per share data)
Three Months Ended September 30, | Years Ended September 30, | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
(Unaudited) | (Unaudited) | |||||||||||
Net Revenues | $ | 57,551 | $ | 72,738 | $ | 211,144 | $ | 245,348 | ||||
Cost of revenues | (49,457 | ) | (61,257 | ) | (184,388 | ) | (214,442 | ) | ||||
Gross profit | 8,094 | 11,481 | 26,756 | 30,906 | ||||||||
Operating expenses: | ||||||||||||
Research and development costs | (1,629 | ) | (1,688 | ) | (5,643 | ) | (6,252 | ) | ||||
Sales and marketing expenses | (1,842 | ) | (1,568 | ) | (6,176 | ) | (5,803 | ) | ||||
General and administrative expenses | (5,563 | ) | (5,185 | ) | (21,990 | ) | (19,348 | ) | ||||
Total operating expenses | (9,034 | ) | (8,441 | ) | (33,809 | ) | (31,403 | ) | ||||
Operating income / (loss) | (940 | ) | 3,040 | (7,053 | ) | (497 | ) | |||||
Finance costs, net | (2,255 | ) | (3,643 | ) | (9,356 | ) | (11,021 | ) | ||||
Government grant income | 244 | 397 | 637 | 1,775 | ||||||||
Other income | 717 | 683 | 528 | 757 | ||||||||
Income / (loss) before income taxes | (2,234 | ) | 477 | (15,244 | ) | (8,986 | ) | |||||
Income tax benefit | 874 | 995 | 1,253 | 1,045 | ||||||||
Net (loss) / income | $ | (1,360 | ) | $ | 1,472 | $ | (13,991 | ) | $ | (7,941 | ) | |
Other comprehensive income / (loss) | ||||||||||||
- Foreign currency translation adjustment | (112 | ) | 1,241 | (355 | ) | 15,262 | ||||||
Comprehensive income / (loss) | $ | (1,472 | ) | $ | 2,713 | $ | (14,346 | ) | $ | 7,321 | ||
Net income / (loss) per share: | ||||||||||||
-Basic | $ | (0.02 | ) | $ | 0.03 | $ | (0.25 | ) | $ | (0.15 | ) | |
-Diluted | $ | (0.02 | ) | $ | 0.03 | $ | (0.25 | ) | $ | (0.15 | ) | |
Weighted average shares outstanding: | ||||||||||||
-Basic | 56,971 | 54,511 | 56,964 | 52,314 | ||||||||
-Diluted | 56,971 | 54,971 | 56,964 | 52,314 |
China BAK Battery Inc. | Page 4 of 6 |
China BAK Battery, Inc. and Subsidiaries
Consolidated
Balance Sheets
As of September 30, 2009 and 2008
(Amounts
in thousands)
As of September 30, | ||||||
2009 | 2008 | |||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 30,678 | $ | 35,707 | ||
Pledged deposits | 31,115 | 4,449 | ||||
Trade accounts receivable, net | 83,292 | 82,740 | ||||
Inventories | 65,535 | 67,583 | ||||
Prepayments and other receivables | 4,632 | 4,463 | ||||
Deferred tax assets | 3,895 | 1,720 | ||||
Property, plant and equipment held for sale | 804 | - | ||||
Total current assets | 219,951 | 196,662 | ||||
Property, plant and equipment, net | 219,685 | 195,435 | ||||
Lease prepayments, net | 32,166 | 31,782 | ||||
Intangible assets, net | 239 | 161 | ||||
Deferred tax assets | 43 | 7 | ||||
Total assets | $ | 472,084 | $ | 424,047 | ||
Liabilities | ||||||
Current liabilities | ||||||
Short-term bank loans | $ | 139,159 | $ | 105,598 | ||
Current maturities of long-term bank loans | 16,114 | 8,800 | ||||
Accounts and bills payable | 92,572 | 57,487 | ||||
Accrued expenses and other payables | 18,425 | 21,581 | ||||
Total current liabilities | 266,270 | 193,466 | ||||
Long-term bank loans, less current maturities | 39,553 | 55,732 | ||||
Deferred revenue | 7,442 | 7,685 | ||||
Other long-term payables | 1,940 | - | ||||
Deferred tax liabilities | 278 | 92 | ||||
Total liabilities | 315,483 | 256,975 | ||||
Commitments and contingencies | ||||||
Shareholders equity: | ||||||
Ordinary shares US$ 0.001 par value; 100,000,000 authorized; | ||||||
57,676,481 and 57,737,481 issued and outstanding as of | ||||||
September 30, 2008 and September 30, 2009, respectively | 58 | 58 | ||||
Donation Shares | 14,102 | 14,102 | ||||
Additional paid-in-capital | 101,161 | 97,286 | ||||
Statutory reserves | 7,227 | 6,918 | ||||
Retained earnings | 13,328 | 27,629 | ||||
Accumulated other comprehensive income | 24,791 | 25,146 | ||||
Less: Treasury shares | (4,066 | ) | (4,067 | ) | ||
Total shareholders equity | 156,601 | 167,072 | ||||
Total liabilities and shareholders equity | $ | 472,084 | $ | 424,047 |
China BAK Battery Inc. | Page 5 of 6 |
China BAK Battery, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the
Three Months and Fiscal Years Ended September 30, 2009 and 2008
(Amounts in thousands)
Three Months Ended September 30, | Years Ended September 30, | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
(Unaudited) | (Unaudited) | |||||||||||
Cash flow from operating activities | ||||||||||||
Net (loss) / income | $ | (1,360 | ) | $ | 1,472 | $ | (13,991 | ) | $ | (7,941 | ) | |
Adjustments to reconcile net (loss) / income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 1,328 | 4,014 | 12,832 | 13,376 | ||||||||
Provision for / (recovery of) doubtful debts | 1,864 | (244 | ) | 7,725 | 1,943 | |||||||
Provision for obsolete inventories | 1,059 | 496 | 929 | 610 | ||||||||
Share-based compensation | 1,622 | 1,246 | 3,725 | 3,780 | ||||||||
Deferred income taxes | (1,020 | ) | (951 | ) | (2,024 | ) | (1,152 | ) | ||||
Deferred revenue | (58 | ) | (282 | ) | (234 | ) | (282 | ) | ||||
Exchange loss / (gain) | (458 | ) | (182 | ) | (48 | ) | 1,326 | |||||
Loss on disposal of Property, plant and equipment | 6 | 5 | 6 | 195 | ||||||||
Changes in operating assets and liabilities: | ||||||||||||
Trade accounts receivable | (15,306 | ) | 2,502 | (8,375 | ) | (14,600 | ) | |||||
Inventories | (4,705 | ) | 376 | 1,043 | (2,223 | ) | ||||||
Prepayments and other receivables | 5,509 | 3,823 | 394 | (2,565 | ) | |||||||
Accounts and bills payable | 19,460 | (1,805 | ) | 36,331 | 6,934 | |||||||
Accrued expenses and other payables | (2,162 | ) | 1,518 | 78 | 3,430 | |||||||
Net cash provided by operating activities | $ | 5,779 | $ | 11,988 | $ | 38,391 | $ | 2,831 | ||||
Cash flow from investing activities | ||||||||||||
Purchases of property, plant and equipment | (6,807 | ) | (16,672 | ) | (40,431 | ) | (47,575 | ) | ||||
Payment in lease prepayment | - | (1,779 | ) | (1,077 | ) | (5,454 | ) | |||||
Purchases of intangible assets | (13 | ) | (7 | ) | (140 | ) | (109 | ) | ||||
Proceeds from disposal of property, plant and equipment | 10 | 465 | 10 | 786 | ||||||||
Net cash used in investing activities | $ | (6,810 | ) | $ | (17,993 | ) | $ | (41,638 | ) | $ | (52,352 | ) |
Cash flow from financing activities | ||||||||||||
Proceeds from borrowings | 3,309 | 40,216 | 176,316 | 159,913 | ||||||||
Repayment of borrowings | (22 | ) | (46,026 | ) | (151,448 | ) | (122,577 | ) | ||||
Decrease / (increase) in pledged deposits | (1,488 | ) | 1,829 | (26,641 | ) | 588 | ||||||
Proceeds from issuance of capital stock, net | 150 | 15,233 | 150 | 29,240 | ||||||||
Net cash provided by / (used in) financing activities | $ | 1,949 | $ | 11,252 | $ | (1,623 | ) | $ | 67,164 | |||
Effect of exchange rate changes on cash and cash equivalents | 121 | 216 | (158 | ) | 3,867 | |||||||
Net increase / (decrease) in cash and cash equivalents | 1,039 | 5,463 | (5,028 | ) | 21,510 | |||||||
Cash and cash equivalents at the beginning of the period | 29,639 | 30,244 | 35,706 | 14,197 | ||||||||
Cash and cash equivalents at the end of the period | $ | 30,678 | $ | 35,707 | $ | 30,678 | $ | 35,707 |
China BAK Battery Inc. | Page 6 of 6 |