Global-Tech Appliances Reports Third Quarter Results with Triple-Digit Increase in CCM Sales and Improved Operating Performance

Global-Tech Appliances Inc. (NYSE:GAI) today reported its operating results for the third quarter of fiscal 2008 ended December 31, 2007. Net sales for the third quarter of fiscal 2008 increased 65% to $26.2 million, when compared to the corresponding period in fiscal 2007. Net sales for the third quarter of fiscal 2008 included sales of approximately $12.2 million of complementary metal oxide semiconductor (CMOS) camera modules (CCMs), an increase of 269% when compared to the third quarter of fiscal 2007 and an increase of over 10% when compared to the second quarter of fiscal 2008. Net income for the third quarter of fiscal 2008 was $0.3 million, or $0.02 per share, compared to a net loss of $1.3 million, or $0.10 per share, for the third quarter of fiscal 2007. Net sales for the nine months ended December 31, 2007 increased 67% to $78.4 million, when compared to the prior corresponding nine-month period. Net sales for the first nine months of fiscal 2008 included sales of approximately $28.7 million of CCMs, which is more than triple the $8.7 million in sales of CCMs recognized in the first nine months of fiscal 2007. Net loss for the first nine months of fiscal 2008 was $3.2 million, or $0.26 per share, compared to a net income of $0.3 million, or $0.02 per share, for the first nine months of fiscal 2007. Net loss for the first nine months of fiscal 2008 included a non-recurring loss of approximately $2.8 million related to pending litigation. Net income for the first nine months of fiscal 2007 included a non-recurring gain of approximately $4.0 million, which was reflected in gain on disposal of subsidiaries resulting from a joint-venture project. Excluding these non-recurring items, the net loss in the first nine months of fiscal 2008 was $0.4 million, compared to a $3.7 million net loss in the corresponding period in fiscal 2007. John C.K. Sham, President and Chief Executive Officer, said: "While our sales momentum continues to be very positive, particularly in CCM sales, our challenge now is to improve and manage our efficiency, productivity, and material costs in our effort to improve unit profitability. We have started to realize some economies of scale in our electronic components business and some subsidence in commodity inflation. Gross profit margins in the third fiscal quarter were slightly higher than the previous quarter, but much improvement is still needed to achieve our goal.” Mr. Sham continued, "We do not expect much growth in the fourth quarter of fiscal 2008, particularly in the cellular phone market, due to the slowdown during the Chinese New Year period. However, our production capacity for CCMs has recently increased significantly to support anticipated growth in the coming months.” Mr. Sham concluded, "We are in the process of completing the installation of our electronic manufacturing services (EMS) equipment and are currently working with prospective customers so that we can further improve the profitability of our new businesses.” Global-Tech Appliances Inc. is a holding company, owning subsidiaries that manufacture and market floor care products and small household appliances. These products are marketed by customers under brand names such as DeLonghi®, Dirt Devil®, Electrolux®, Eureka® and Sunbeam®. Its subsidiaries also manufacture, market, sell, and distribute electronic components primarily to companies based in China and other products to the China market, which are marketed by customers under brand names such as BBK®, Konka® and TCL®. Except for historical information, certain statements contained herein are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "should,” "estimates," or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including but not limited to, the impact of competitive products and pricing, demand for new and existing products in our core business, the financial condition of the Company’s customers, product demand and market acceptance especially of our new products, the success of new product development especially in the area of cellular phone components and solutions, compact camera modules and other pending projects, reliance on material customers, suppliers and key strategic alliances, the terms and conditions of customer contracts and purchase orders, availability and cost of raw materials, the timely and proper execution of certain business plans, including the plan to diversify and transform a portion of manufacturing capacity to higher-value, technology-oriented products, currency fluctuations, including the revaluation of the Chinese Renminbi, the imposition by China’s trading partners of economic sanctions and/or protective tariffs on Chinese manufactured goods, uncertainties associated with investments, the regulatory environment, fluctuations in operating results, the impact of changing global, political and economic conditions and other risks detailed from time to time in the Company's filings with the U.S. Securities and Exchange Commission including its most recent Report on Form 20-F. The Company does not undertake to update its forward-looking information, or any other information contained or referenced in this press release to reflect future events or circumstances. GLOBAL-TECH APPLIANCES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS   (Amounts expressed in thousands of United States dollars, except per share data)     Three Months Ended December 31,   Nine Months Ended December 31,   2007       2006     2007       2006   (unaudited) (unaudited) (unaudited) (unaudited)   Net sales $ 26,195 $ 15,933 $ 78,400 $ 46,784 Cost of goods sold   (22,973 )   (14,702 )   (70,266 )   (42,770 ) Gross profit 3,222 1,231 8,134 4,014 Selling, general and administrative expenses (3,215 ) (2,996 ) (9,396 ) (9,389 ) Other operating expense   (57 )   -     (2,826 )   -   Operating loss (50 ) (1,765 ) (4,088 ) (5,375 ) Interest expense 40 - (3 ) - Interest income 289 292 1,373 1,307 Other income (expense), net 67 262 (110 ) 4,523 Share of loss of a jointly-controlled entity   (87 )   (55 )   (346 )   (169 ) Income (loss) from operation before income taxes 259 (1,266 ) (3,174 ) 286 Provision for income taxes   -     -     -     -   Net income (loss) before minority interests 259 (1,266 ) (3,174 ) 286 Minority interests   -     10     -     17   Net income (loss) $ 259   $ (1,256 ) $ (3,174 ) $ 303     Basic earnings (loss) per common share $ 0.02   $ (0.10 ) $ (0.26 ) $ 0.02     Basic weighted average number of shares outstanding   12,227     12,224     12,225     12,224   GLOBAL-TECH APPLIANCES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts expressed in thousands of United States dollars)     December 31,2007   March 31,2007 (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $ 31,556 $ 29,825 Time deposit - 68 Available-for-sale investments 5 14,870 Accounts and bills receivable, net 20,971 9,536 Inventories 16,535 9,086 Prepaid expenses 177 174 Deposits and other assets 2,895 2,380 Legal claims receivable 5,461 5,395 Amount due from a jointly controlled entity   101     41   Total current assets 77,701 71,375   Interests in jointly controlled entities - 307 Property, plant and equipment, net 23,826 20,747 Land use rights, net 2,586 2,442 Convertible note 5,373 5,242 Interest receivable   294     168   Total assets $ 109,780   $ 100,281     LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 12,364 6,279 Temporary receipts 1,042 623 Accrued salaries, allowances and employee benefits 2,823 2,069 Accrued expenses 3,099 2,162 Accrual for contingent losses 8,557 5,638 Amount due to a related party - 5 Income tax payable   4,045     4,006   Total current liabilities 31,930 20,782 Deferred tax liabilities   120     119   Total liabilities   32,050     20,901     Shareholders' equity:           Common stock, par value $0.01; 50,000,000 shares authorized; 12,908,255 shares issued and outstanding as of December 31, 2007 and March 31, 2007 129 129 Additional paid-in capital 84,274 84,154 Accumulated deficits (3,461 ) (287 ) Accumulated other comprehensive income (losses) 1,281 (123 ) Less: Treasury stock, at cost, 679,147 shares as of December 31, 2007 and March 31, 2007   (4,493 )   (4,493 ) Total shareholders’ equity   77,730     79,380   Total liabilities and shareholders’ equity $ 109,780   $ 100,281