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BEIJING, Feb. 15, 2013 /PRNewswire/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), one of China's leading non-state-owned producers of steel products and aggregators of domestic steel companies, today announced that it has filed its Annual Report on Form 10-K for the year ended December 31, 2011 with the U.S. Securities and Exchange Commission (the "SEC"). The Company's independent registered public accounting firm, Friedman LLP has expressed an unqualified audit opinion on the Company's annual financial statement for the 12 months ended December 31, 2011.
With the filing of this Annual Report on Form 10-K, the Company believes it has met the New York Stock Exchange's ("NYSE") extended deadline and expects to regain compliance with the NYSE's continued listing requirement for annual report filings under Section 802.01E of the NYSE Listed Company Manual.
"The filing of our 2011 Annual Report demonstrates our commitment to proper financial reporting, and is the result of a concerted effort by our finance team and audit firm partners. Although the review and audit process for our 2011 financial statements took much longer than originally anticipated, we are pleased that we will regain compliance with the NYSE's Annual Report listing requirements," said Henry Yu, Chairman and Chief Executive Officer of General Steel. "Moving ahead, we will continue to focus on our business while we work diligently to prepare our 2012 financial statements and bring General Steel fully current in its SEC filing obligations. Again, I would like to thank our team for their tremendous work and dedication to completing this process, as well as our shareholders for their ongoing support of the Company."
Full Year 2011 Financial Review
Total crude steel production capacity under management was 7.0 million metric tons per annum as of December 31, 2011.
Total sales increased 89.4% year-over-year to $3.6 billion, from $1.9 billion in 2010. The increase was attributable to both higher sales volume and increased average selling prices.
Sales volume for the year totaled 6.2 million metric tons, an increase of 2.3 million metric tons, or 58.1%, compared to 3.9 million metric tons in 2010, with an average selling price for rebar of $635 per ton in 2011, compared to $526 per ton in 2010.
Gross loss was $(88.2) million, representing a gross margin of (2.5)%, compared with gross profit of $31.4 million, or a gross margin of 1.7% in 2010. The gross loss in 2011 was mainly attributable to a sharp increase in the cost of iron ore and coke, the Company's primary raw materials, in the fourth quarter.
Selling, general and administrative expenses totaled $91.8 million, compared with $52.6 million in 2010. This increase was mainly related to operational expansion and an increase in production and shipping volume, which led to an increase in transportation and sales agent charges.
Loss from operations totaled $(180.0) million, compared with a loss from operations of $(21.2) million in 2010.
Finance expenses for the year ended December 31, 2011 increased to $115.0 million, compared with $51.3 million in the year-ago period. The increase was primarily due to $27.7 million of non-cash capital financing costs, and a $36.0 million increase in interest expense from increased bank borrowings.
Net loss attributable to the Company was $(177.2) million, or $(3.24) per diluted share, compared with a net loss of $(30.0) million, or $(0.56) per diluted share in 2010. The year-over-year increase in net loss was primarily related to the negative gross margin resulting from the fourth quarter raw material price increases, an increase of $36.4 million in inventory impairment, an increase of $39.3 million in operating expenses from expanded operations and higher production and shipping volume, as well as an increase of $63.7 million in finance expenses from increased capital lease and interest expense on bank borrowings. In addition, the Company determined that the net operating loss carryforward may not have been fully realizable in the second quarter of 2011 and provided 100% allowance charges of $15.4 of deferred tax assets carried over from 2010.
Fourth Quarter 2011 Financial Review
Total sales increased 69.9% year-over-year to $793.5 million, compared with $467.2 million in the fourth quarter of 2010. The increase was attributable to both higher sales volume and increased average selling prices.
Sales volume for the fourth quarter of 2011 totaled 1.6 million metric tons, an increase of 0.7 million metric tons, or 77.8%, compared to 0.9 million metric tons in the fourth quarter of 2010.
Gross loss was $(150.7) million, representing a gross margin loss of (19.0)%, compared with gross profit of $4.7 million, or a gross margin of 1.0% in the fourth quarter of 2010. The gross loss in the fourth quarter of 2011 was mainly attributable to a year-over-year increase in the cost of iron ore and coke, the Company's primary raw materials, that exceeded the increase in the average selling price of the Company's products.
Selling, general and administrative expenses totaled $26.0 million, compared with $17.2 million in the fourth quarter of 2010. This increase was mainly related to operational expansion and increased production and shipping volume, which led to an increase in transportation and sales agent charges.
Loss from operations totaled $(176.6) million, compared with a loss from operations of $(12.5) million in the fourth quarter of 2010.
Finance expenses for the quarter ended December 31, 2011 increased to $42.6 million, compared with $13.7 million in the year-ago period. The increase was primarily related to $18.6 million of non-cash capital financing costs, and a $10.4 million increase in interest expense from increased bank borrowings.
Net loss attributable to the Company was $(131.5) million, or $(2.38) per diluted share, compared with a net loss of $(18.6) million, or $(0.34) per diluted share in the fourth quarter of 2010. The year-over-year increase in net loss was primarily related to the negative gross margin resulting from raw material price increases, as well as an increase of $36.4 million in inventory impairment, an increase of $8.8 million in operating expenses from expanded operations and higher production and shipping volume and an increase of $29.0 million in finance expenses from increased capital lease and interest expense on bank borrowings.
Balance Sheet
As of December 31, 2011, General Steel had cash and restricted cash of approximately $518.2 million, compared to $263.1 million as of December 31, 2010. The Company had an inventory balance of approximately $297.7 million as of December 31, 2011, compared to $453.6 million as of December 31, 2010. As of December 31, 2011, the Company had total liabilities of approximately $3.2 billion, compared to $1.7 billion as of December 31, 2010.
About General Steel Holdings, Inc.
General Steel Holdings, Inc., (NYSE: GSI), headquartered in Beijing, China, operates a diverse portfolio of Chinese steel companies. With 7 million metric tons of crude steel production capacity under management, its subsidiaries serve various industries and produce a variety of steel products including rebar, high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality. For more information, please visit www.gshi-steel.com.
To be added to the General Steel email list to receive Company news, or to request a hard copy of the Company's Annual Report on Form 10-K, please send your request to generalsteel@tpg-ir.com.
Forward-Looking Statements
This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, and include: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether the Company is able to manage its planned growth efficiently and operate profitable operations, including whether its management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether the Company is able to generate sufficient revenues or obtain financing to sustain and grow its operations; (d) whether the Company is able to successfully fulfill its primary requirements for cash; and (e) other risks, including those disclosed in the Company's Form 10-K, filed with the SEC. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.
Intangible assets, net of accumulated amortization
25,143
23,672
TOTAL OTHER ASSETS
49,034
57,465
TOTAL ASSETS
$
3,054,121
$
1,799,380
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short term notes payable
$
1,113,504
$
480,152
Accounts payable
413,345
241,367
Accounts payable - related parties
121,828
79,694
Short term loans - bank
253,954
285,198
Short term loans - others
246,657
127,712
Short term loans - related parties
15,710
14,548
Other payables and accrued liabilities
49,538
30,087
Other payable - related parties
28,873
18,214
Customer deposit
90,556
133,464
Customer deposit - related parties
68,277
54,922
Deposit due to sales representatives
22,890
51,624
Deposit due to sales representatives - related parties
943
455
Taxes payable
11,374
6,237
Deferred lease income, current
2,099
1,971
Capital lease obligations, current
25,607
-
TOTAL CURRENT LIABILITIES
2,465,155
1,525,645
NON-CURRENT LIABILITIES:
Long-term loans - related party
92,035
91,020
Deferred lease income, noncurrent
76,425
55,620
Capital lease obligations, noncurrent
280,743
-
Profit sharing liability, noncurrent
303,233
-
TOTAL NON-CURRENT LIABILITIES
752,436
146,640
DERIVATIVE LIABILITIES
10
5,573
TOTAL LIABILITIES
3,217,601
1,677,858
COMMITMENT AND CONTINGENCIES
EQUITY:
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 shares issued and outstanding as of December 31, 2011 and 2010
3
3
Common Stock, $0.001 par value, 200,000,000 shares authorized, 56,601,988 and 54,678,083 issued, 55,511,010 and 54,522,973 outstanding as of December 31, 2011 and 2010, respectively
56
55
Treasury stock, at cost, 1,090,978 and 316,760 shares as of
December 31, 2011 and 2010, respectively
(2,795)
(871)
Paid-in-capital
107,940
104,970
Statutory reserves
6,388
6,202
Accumulated deficits
(229,083)
(51,793)
Accumulated other comprehensive income
10,200
10,987
TOTAL GENERAL STEEL HOLDINGS, INC. EQUITY
(107,291)
69,553
NONCONTROLLING INTERESTS
(56,189)
51,969
TOTAL EQUITY
(163,480)
121,522
TOTAL LIABILITIES AND EQUITY
$
3,054,121
$
1,799,380
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In thousands, except per share data)
For the Year Ended
December 31,
2011
2010
SALES
$
2,452,127
$
1,392,770
SALES - RELATED PARTIES
1,111,769
489,370
TOTAL SALES
3,563,896
1,882,140
COST OF GOODS SOLD
2,519,183
1,369,523
COST OF GOODS SOLD - RELATED PARTIES
1,132,927
481,202
TOTAL COST OF GOODS SOLD
3,652,110
1,850,725
GROSS PROFIT (LOSS)
(88,214)
31,415
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
91,827
52,577
INCOME (LOSS) FROM OPERATIONS
(180,041)
(21,162)
OTHER INCOME (EXPENSE)
Interest income
7,892
6,154
Finance/interest expense
(114,949)
(51,283)
Change in fair value of derivative liabilities
5,563
15,055
Gain on debt settlement
3,430
-
Gain (loss) on disposal of equipment
693
(9,447)
Realized income from future contracts
415
1,424
Income from equity investments
5,302
6,383
Foreign currency transaction gain
3,424
-
Lease income
2,008
943
Other non-operating income (expense), net
(1,442)
(3,120)
Other expense, net
(87,664)
(33,891)
LOSS BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST
(267,705)
(55,053)
PROVISION FOR INCOME TAXES
Current
175
1,267
Deferred
15,419
(10,049)
Provision (benefit) for income taxes
15,594
(8,782)
NET LOSS
(283,299)
(46,271)
Less: Net loss attributable to noncontrolling interest
(106,112)
(16,265)
NET LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.
$
(177,187)
$
(30,006)
NET LOSS
$
(283,299)
$
(46,271)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustments
(587)
4,623
COMPREHENSIVE LOSS
(283,886)
(41,648)
Less: Comprehensive loss attributable to noncontrolling interest
(105,912)
(14,511)
COMPREHENSIVE LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.
$
(177,974)
$
(27,137)
WEIGHTED AVERAGE NUMBER OF SHARES
Basic and Diluted
54,750
53,113
LOSS PER SHARE
Basic and Diluted
$
(3.24)
$
(0.56)
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010
(UNAUDITED)
(In thousands, except per share data)
For the Three Months Ended
December 31,
2011
2010
SALES
$
473,612
$
351,266
SALES - RELATED PARTIES
319,928
115,895
TOTAL SALES
793,540
467,161
COST OF GOODS SOLD
588,731
347,671
COST OF GOODS SOLD - RELATED PARTIES
355,462
114,774
TOTAL COST OF GOODS SOLD
944,193
462,445
GROSS PROFIT (LOSS)
(150,653)
4,716
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
25,984
17,204
LOSS FROM OPERATIONS
(176,637)
(12,488)
OTHER INCOME (EXPENSE)
Interest income
4,812
2,678
Finance/interest expense
(42,632)
(13,666)
Change in fair value of derivative liabilities
37
1,476
Gain on debt settlement
-
-
Gain (loss) on disposal of equipment
14
(6,323)
Realized income from future contracts
415
1,424
Income from equity investments
1,001
2,316
Foreign currency transaction gain
504
-
Lease income
519
345
Other non-operating expense, net
(245)
(6,655)
Other expense, net
(35,575)
(18,405)
LOSS BEFORE PROVISION FOR INCOME TAXES
AND NONCONTROLLING INTEREST
(212,212)
(30,893)
PROVISION FOR INCOME TAXES
Current
(442)
407
Deferred
35
(4,105)
Provision (benefit) for income taxes
(407)
(3,698)
NET LOSS
(211,805)
(27,195)
Less: Net loss attributable to noncontrolling interest
(80,280)
(8,589)
NET LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.
$
(131,525)
$
(18,606)
NET LOSS
$
(211,805)
$
(27,195)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustments
(2,986)
1,177
COMPREHENSIVE LOSS
(214,791)
(26,018)
Less: Comprehensive loss attributable to noncontrolling interest
(80,395)
(8,032)
COMPREHENSIVE LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.
$
(134,396)
$
(17,986)
WEIGHTED AVERAGE NUMBER OF SHARES
Basic and Diluted
55,352
54,698
LOSS PER SHARE
Basic and Diluted
$
(2.38)
$
(0.34)
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In thousands)
For the Year Ended December 31,
2011
2,010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(283,299)
$
(46,271)
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
Depreciation, amortization and depletion
58,331
41,153
Impairment of plant and equipment
5,424
1,747
Change in fair value of derivative liabilities
(5,563)
(15,055)
Gain on debt settlement
(3,430)
-
(Gain) loss on disposal of equipment
(693)
8,257
Bad debt allowance
3,529
326
Inventory written-off
37,512
1,061
Stock issued for services and compensation
1,530
2,479
Income from compensation
-
(1,377)
Make whole shares interest expense on notes conversion
-
1,130
Amortization of deferred note issuance cost and discount on convertible notes
-
17
Amortization of deferred financing cost on capital lease
27,704
-
Income from equity investments
(5,302)
(6,383)
Deferred tax assets
15,419
(10,058)
Deferred lease income
4,782
5,549
Foreign currency transaction gain
(3,424)
-
Changes in operating assets and liabilities
Notes receivable
(41,318)
(18,498)
Notes receivable - restricted
(329,839)
(234,342)
Accounts receivable
4,761
(8,647)
Accounts receivable - related parties
(16,015)
14,065
Other receivables
(12,638)
(3,210)
Other receivables - related parties
(50,562)
(2,968)
Inventories
131,695
(270,046)
Advances on inventory purchases
(37,674)
4,681
Advances on inventory purchases - related parties
(13,608)
13,782
Prepaid expense
4,753
-
Long-term deferred expense
845
-
Prepaid value added tax
14,223
-
Accounts payable
160,657
76,003
Accounts payable - related parties
38,647
45,480
Other payables and accrued liabilities
18,076
(1,527)
Other payables - related parties
9,845
30,618
Customer deposits
(46,870)
(24,433)
Customer deposits - related parties
11,211
18,855
Taxes payable
4,834
(19,543)
Net cash used in operating activities
(296,457)
(397,155)
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash
(190,178)
741
Acquired long term investment
-
(2,021)
Cash proceeds from disposal of long-term investment
-
8,137
Cash made to short term investment
(2,858)
-
Cash proceeds from sales of equipment
1,306
1,828
Advance on equipment purchases
-
(7,106)
Equipment purchase and intangible assets
(110,939)
(89,916)
Net cash used in investing activities
(302,669)
(88,337)
CASH FLOWS FINANCING ACTIVITIES:
Payments made to dividend distribution
-
(2,855)
Payments made for treasury stock acquired
(1,923)
(870)
Capital contributed by noncontrolling interest
-
1,184
Borrowings on short term loans - bank
563,007
327,807
Payments on short term loans - bank
(600,294)
(199,905)
Borrowings on short term loan - others
330,037
152,517
Payments on short term loans - others
(212,661)
(174,913)
Borrowings on short term loan - related parties
15,450
71,714
Payments on short term loans - related parties
(14,817)
(11,850)
Borrowings on short term notes payable
1,655,741
905,124
Payments on short term notes payable
(1,049,680)
(693,633)
Deposits due to sales representatives
(30,066)
987
Deposit due to sales representatives - related parties
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