AUTOCHINA INTERNATIONAL LIMITED 
By SHIJIAZHUANG, CHINA -- (Marketwired) -- 04/30/13 -- AutoChina International Limited ("AutoChina" or the "Company") (OTCBB: AUTCF), China's largest commercial vehicle sales, servicing, leasing, and support network, today reported financial results for the third quarter ended September 30, 2012, and for the fourth quarter and year ended December 31, 2012.
- Total revenues of $73.3 million, compared to $168.6 million
- Adjusted Net Income of $4.5 million, compared to $11.9 million
- Adjusted EBITDA of $11.9 million, compared to $21.8 million
- Total revenues of $51.9 million, compared to $107.4 million
- Adjusted Net Income of $2.6 million, compared to $6.9 million
- Adjusted EBITDA of $6.8 million, compared to $16.2 million
- Total revenues of $333.1 million, compared to $598.1 million
- Gross profit of $88.8 million, compared to $107.5 million
- Net income of $23.5 million, compared to $25.2 million (which included loss on change in fair value of earn-out obligation of $17.3 million)
- Adjusted Net Income of $23.5 million, compared to $43.5 million
- Adjusted EBITDA of $50.3 million, compared to $80.0 million
- 1,154 commercial vehicles leased in the third quarter of 2012, and 816 in the fourth quarter of 2012
- 5,385 commercial vehicles leased in 2012
- AutoChina opened nine new commercial vehicle financing and service centers in the third quarter of 2012 and 11 new centers in the fourth quarter of 2012. As of December 31, 2012, the Company operated 534 financing and service centers, compared to 506 at December 31, 2011.
- AutoChina expects continued margin expansion as finance and insurance income grows as a percentage of revenue
- Construction of the Company's new office space in the Kai Yuan Center building in Shijiazhuang was completed in April 2013, and AutoChina has moved its headquarters into the new space.
Operational and Market Review
Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, "During the second half of 2012, we were pleased to announce the launch of AutoChina's new website, which now serves as a 24/7-accessible information portal for our customers with new offerings such as logistics services, consulting on and access to various types of insurance, and an online used truck marketplace. We expect the new website to be a key channel by which we expand and diversify our business via an asset-light model that will complement our existing heavy truck leasing business and allow AutoChina to better serve its customers. As China's heavy truck market continues to be impacted by weakened demand, we have taken the opportunity to strengthen the Company by building upon our existing heavy-truck leasing business with these new service offerings, while continuing to expand our geographic presence through our leasing and finance center network. We remain optimistic about the long-term prospects of China's heavy truck industry, which recently welcomed another large manufacturer in January when Sweden's Volvo announced its heavy-truck joint venture with Dongfeng Motor Group Co. Given concerns with pollution and measures to meet more stringent emission standards, demand for liquefied natural gas-fueled heavy trucks is expected to increase over the next few years. We will continue to focus on serving our customers, adapting and growing our business to address their needs."
Heavy Truck Sales
The Company leased 1,154 commercial vehicles in the third quarter of 2012, compared to 3,126 in the third quarter of 2011, and 816 commercial vehicles in the fourth quarter of 2012, compared to 1,804 in the fourth quarter of 2011. The decrease in commercial vehicle sales and servicing and leasing was primarily due to a general slowdown in the economy that led to unfavorable investment sentiment for purchasers of commercial vehicles. Additionally, the Company adopted a stricter leasing policy, which caused it to repossess more vehicles for late payment and reject a higher number of new applicants.
Since launching its commercial vehicle sales and leasing business in March 2008, the Company has leased over 37,000 trucks, as of December 31, 2012. The Company repossessed 789 vehicles whose lessees had defaulted on installment payments, sold 611 of these vehicles, and recorded 18 vehicles as total losses during the year ended December 31, 2012. There were 160 vehicles repossessed, 118 vehicles sold and 15 loss vehicles recorded in the year ended December 31, 2011. Additionally in 2012, the Company adopted a stricter leasing policy, which caused it to repossess more vehicles for late payment and reject a higher number of new applicants.
Used Vehicle Leasing
Under the Company's used commercial vehicle sale-leaseback program, 824 used trucks were leased in the year ended December 31, 2012.
Insurance Agency Services
The Company launched its own insurance agency business in December 2011 and has signed agreements with four major insurance companies in China to sell insurance: China United Property Insurance Company Limited, Sinosafe General Insurance Co. Ltd. (Hua An Insurance), Ping An Insurance (Group) Company of China, Ltd., and China Life Property and Casualty Insurance Company Limited. AutoChina's 534 store locations are each licensed to sell insurance from these carrier partners, and, as of December 31, 2012, the Company also operated 23 new insurance agency branch offices in appropriate markets that are solely dedicated to this service.
Expansion of Specialty Finance Store Network
During the 2012 third quarter, AutoChina opened nine new commercial vehicle financing and service centers and 11 during the 2012 fourth quarter. As of December 31, 2012, the Company operated 534 financing and service centers, compared to 506 centers at December 31, 2011. The Company operates commercial vehicle financing and service centers in the Anhui, Beijing, Chongqing, Fujian, Gansu, Guangdong, Guangxi, Guizhou, Hebei, Henan, Hubei, Hunan, Inner Mongolia, Jiangsu, Jiangxi, Jilin, Liaoning, Ningxia, Shaanxi, Shandong, Shanghai, Shanxi, Sichuan, Tianjin, Yunnan, and Zhejiang areas of China.
New Headquarters
During the second half of 2012, AutoChina closed on a transaction to purchase 23 floors of newly constructed office space in the Kai Yuan Center building, which was built by the Company's Chairman and CEO Mr. Li and is the tallest building in Shijiazhuang at 245 meters in height. The new office space was purchased for approximately $56.4 million, and the Company also assumed approximately $102.9 million in debt as part of the acquisition, resulting in a total transaction value of approximately $159.3 million.
Construction of the Kai Yuan Center has been completed, and, in April 2013, AutoChina moved its headquarters into the new building, which now serves as the control center for each of the Company's 534 commercial vehicle financing and service centers located throughout China. The Company does not anticipate that it will occupy the entire office space purchased, and expects to lease out the unoccupied space, the proceeds from which will be reported as rental income.
Note:As part of the transaction to purchase the Kai Yuan Center office space, AutoChina, through its wholly owned subsidiary AutoChina Group Inc., acquired 100% of the equity of Heat Planet Holdings Limited ("Heat Planet") and its subsidiaries, which was controlled by Mr. Li. Heat Planet's primary asset consists of the 23 floors, or over 60,000 square meters, of newly constructed office space in the Kai Yuan Center building. The acquisition closed on September 11, 2012. As both AutoChina and the acquired companies were under the common control of Mr. Li immediately before and after the merger, the transaction was accounted for as common control merger, and using merger accounting as if the merger had been consummated at the beginning of the earliest period presented, and no gain or loss is recognized. The Company has adjusted its financial statements for the years ended December 31, 2011, and December 31, 2010, to account for operating results of Heat Planet and its subsidiaries to reflect the merger under common control.
-
Revenues for the third quarter ended September 30, 2012, were $73.3 million, compared to $168.6 million in the third quarter of 2011. The decrease in revenues primarily resulted from lower demand for heavy trucks, which was partially offset by higher finance and insurance income during the period. The Company reported $52.5 million in commercial vehicle revenues, and $20.8 million, or 28.4% of total revenues, in revenues related to finance and insurance.
-
Cost of sales during the period totaled $51.5 million, with an average cost per commercial vehicle of $44,000. Gross margin increased to 29.7% for the three months ended September 30, 2012, from 17.1% for the prior-year period, primarily due to a higher contribution to revenues from finance and insurance versus direct sales of commercial vehicles.
-
Net income in the three months ended September 30, 2012, was $4.5 million, or $0.19 per share based on 23.5 million diluted weighted average shares outstanding, compared to $48.6 million, or $2.07 per share based on 23.5 million diluted weighted average shares outstanding, in the three months ended September 30, 2011. The year-over-year decrease primarily resulted from the absence of a gain on change ($36.3 million) in fair value of an earn-out obligation, which was cancelled.
-
Adjusted Net Income, which is net income excluding the gain/loss on change in fair value of the earn-out obligation and income/loss from discontinued operations, was $4.5 million, compared to $11.9 million for the third quarter of 2011.
- Adjusted EBITDA, which is EBITDA excluding the gain/loss on change in fair value of the earn-out obligation, income/loss from discontinued operations, stock-based compensation, and accretion of stock repurchase obligation, was $11.9 million for the quarter ended September 30, 2012, compared to $21.8 million in the prior-year quarter.
See "Non-GAAP Financial Measures" below for a description of Adjusted Net Income and Adjusted EBITDA.
-
Revenues for the fourth quarter ended December 31, 2012, were $51.9 million, compared to $107.4 million in the fourth quarter of 2011. As with the prior quarter, the decrease in revenues primarily resulted from lower demand for heavy trucks, which was partially offset by higher finance and insurance income during the period. The Company reported $34.8 million in commercial vehicle revenues, and $17.1 million, or 32.9% of total revenues, in revenues related to finance and insurance.
-
Cost of sales during the period totaled $34.7 million, with an average cost per commercial vehicle of $45,000. Gross margin increased to 33.1% for the three months ended December 31, 2012, from 24.7% for the prior-year period, primarily due to a higher contribution to revenues from finance and insurance versus direct sales of commercial vehicles.
-
Net income in the three months ended December 31, 2012, was $2.6 million, or $0.19 per share based on 23.5 million diluted weighted average shares outstanding, compared to $9.0 million, or $0.39 per share based on 23.5 million diluted weighted average shares outstanding, in the three months ended December 31, 2011.
-
Adjusted Net Income was $2.6 million, compared to $6.9 million for the fourth quarter of 2011. There was no gain/loss on change in fair value of the earn-out obligation for either period; however, there was $2.1 million in income from discontinued operations for the fourth quarter of 2011.
- Adjusted EBITDA, which is EBITDA excluding the gain/loss on change in fair value of the earn-out obligation, income/loss from discontinued operations, stock-based compensation, and accretion of stock repurchase obligation, was $6.8 million for the quarter ended December 31, 2012, compared to $16.2 million in the prior-year quarter.
See "Non-GAAP Financial Measures" below for a description of Adjusted Net Income and Adjusted EBITDA.
-
Revenues for the year ended December 31, 2012, were $333.1 million, compared to $598.1 million in the prior-year period. The decrease in revenues primarily resulted from a general slowdown in the economy, which led to lower demand for heavy trucks. The Company reported $249.0 million in commercial vehicle revenues, and $84.1 million, or 25.2% of total revenues, in revenues related to finance and insurance.
-
Gross profit for 2012 was $88.8 million, compared to $107.5 million in the prior-year period. Gross margin increased to 26.7% for the year ended December 31, 2012, from 18.0% for the prior-year period, primarily due to a higher contribution to revenues from finance and insurance versus direct sales of commercial vehicles.
-
Net income for year ended December 31, 2012, was $23.5 million, or $0.99 per share based on 23.8 million diluted weighted average shares outstanding, compared to $25.2 million, or $1.07 per share based on 23.6 million diluted weighted average shares outstanding, in the prior-year period, which included a loss on change in fair value of the earn-out obligation of $17.3 million.
-
Adjusted Net Income was $23.5 million, compared to $43.5 million in 2011.
- Adjusted EBITDA for the year ended December 31, 2012, was $50.3 million, compared to $80.0 million in the prior year.
See "Non-GAAP Financial Measures" below for a description of Adjusted Net Income and Adjusted EBITDA.
Balance Sheet Highlights
At December 31, 2012, AutoChina's cash and cash equivalents (not including restricted cash) were $75.8 million, working capital was $105.4 million, total debt was $170.3 million (including due to affiliates and accounts payable, related parties), and stockholders' equity was $228.4 million, compared to $43.0 million, $171.6 million, $237.1 million, and $291.2 million, respectively, at December 31, 2011.
About AutoChina International Limited
AutoChina International Limited is China's largest commercial vehicle sales, servicing, leasing, and support network. AutoChina's operating subsidiary was founded in 2005 by nationally recognized Chairman and CEO, Yong Hui Li. As of December 31, 2012, the Company owned and operated 534 commercial vehicle financing centers across China, and primarily provides sales-type leasing and support services for local customers. The Company's website is http://www.autochinaintl.com.
Safe Harbor Statement
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about the Company. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of the Company's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. The following factors, among others, could cause actual results to meaningfully differ from those set forth in the forward-looking statements:
- Continued compliance with government regulations;
- Changing legislation or regulatory environments;
- Requirements or changes affecting the businesses in which the Company is engaged;
- Industry trends, including factors affecting supply and demand;
- Labor and personnel relations;
- Credit risks affecting the Company's revenue and profitability;
- Changes in the commercial vehicle industry;
- The Company's ability to effectively manage its growth, including implementing effective controls and procedures and attracting and retaining key management and personnel;
- Changing interpretations of generally accepted accounting principles;
- General economic conditions; and
- Other relevant risks detailed in the Company's filings with the Securities and Exchange Commission.
The information set forth herein should be read in light of such risks. The Company does not assume any obligation to update the information contained in this press release.
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
(in thousands except share and per share data)
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
As Adjusted As Adjusted
Revenues
Commercial vehicles $ 52,485 $ 143,711 $ 214,221 $ 422,196
Finance 16,381 22,565 56,659 62,330
Insurance 4,448 2,358 10,323 6,148
----------- ----------- ----------- -----------
Total revenues 73,314 168,634 281,203 490,674
----------- ----------- ----------- -----------
Cost of sales
Commercial vehicles 1,508 24,229 6,082 85,417
Commercial vehicles,
related parties 49,233 115,630 202,212 324,330
Insurance 794 -- 1,265 --
----------- ----------- ----------- -----------
Total cost of sales 51,535 139,859 209,559 409,747
----------- ----------- ----------- -----------
Gross profit 21,779 28,775 71,644 80,927
----------- ----------- ----------- -----------
Operating expenses
Selling and marketing 2,660 2,170 7,511 5,702
General and
administrative 13,689 6,704 30,634 17,153
Interest expense 2,011 4,468 8,782 11,763
Interest expense,
related parties 174 647 685 1,971
Other income, net (4,044) (755) (4,934) (2,819)
----------- ----------- ----------- -----------
Total operating
expenses 14,490 13,234 42,678 33,770
----------- ----------- ----------- -----------
Income from operations 7,289 15,541 28,966 47,157
----------- ----------- ----------- -----------
Other income (expense)
Gain (loss) on change
in fair value of
earn-out obligation -- 36,300 -- (17,300)
Interest income 74 38 226 95
----------- ----------- ----------- -----------
Total other income
(expense) 74 36,338 226 (17,205)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 7,363 51,879 29,192 29,952
Income tax provision (2,837) (3,663) (8,240) (10,693)
----------- ----------- ----------- -----------
Income from continuing
operations 4,526 48,216 20,952 19,259
Income (loss) from
discontinued operations -- 477 -- (4,149)
Income tax benefit
(provision) -- (120) -- 1,037
Net loss attributable
to non-controlling
interests -- -- -- 30
----------- ----------- ----------- -----------
Income (loss) from
discontinued
operations, net of
taxes -- 357 -- (3,082)
----------- ----------- ----------- -----------
Net income $ 4,526 $ 48,573 $ 20,952 $ 16,177
Foreign currency
translation adjustment (1,651) 6,913 (2,082) 11,510
----------- ----------- ----------- -----------
Comprehensive income $ 2,875 $ 55,486 $ 18,870 $ 27,687
=========== =========== =========== ===========
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
- Continued
(in thousands except share and per share data)
Three months ended Nine months ended
September 30, September 30,
------------------------- ------------------------
2012 2011 2012 2011
------------ ------------ ------------ -----------
As Adjusted As Adjusted
Earnings per share
Basic
Continuing
operations $ 0.19 $ 2.05 $ 0.89 $ 0.82
Discontinued
operations -- 0.02 -- (0.13)
------------ ------------ ------------ -----------
$ 0.19 $ 2.07 $ 0.89 $ 0.69
============ ============ ============ ===========
Diluted
Continuing
operations $ 0.19 $ 2.05 $ 0.89 $ 0.81
Discontinued
operations -- 0.02 -- (0.13)
------------ ------------ ------------ -----------
$ 0.19 $ 2.07 $ 0.89 $ 0.68
============ ============ ============ ===========
Dividend declared per
share $ -- $ -- $ 0.25 $ --
============ ============ ============ ===========
Weighted average shares
outstanding
Basic 23,538,919 23,538,919 23,538,919 23,538,919
============ ============ ============ ===========
Diluted 23,538,919 23,538,919 23,658,660 23,640,196
============ ============ ============ ===========
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands except share and per share data)
Three months ended
December 31, Year ended December 31,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
As Adjusted As Adjusted
(unaudited) (unaudited) (audited) (audited)
Revenues
Commercial vehicles $ 34,819 $ 83,422 $ 249,040 $ 505,618
Finance 13,145 21,770 69,804 84,100
Insurance 3,945 2,228 14,268 8,376
----------- ----------- ----------- -----------
Total revenues 51,909 107,420 333,112 598,094
----------- ----------- ----------- -----------
Cost of sales
Commercial vehicles 1,268 638 7,350 86,055
Commercial vehicles,
related parties 32,569 80,242 234,781 404,572
Insurance 894 -- 2,159 --
----------- ----------- ----------- -----------
Total cost of sales 34,731 80,880 244,290 490,627
----------- ----------- ----------- -----------
Gross profit 17,178 26,540 88,822 107,467
----------- ----------- ----------- -----------
Operating expenses
Selling and marketing 2,615 2,353 10,126 8,055
General and
administrative 11,317 10,051 41,951 27,204
Interest expense 1,839 4,157 10,621 15,920
Interest expense,
related parties 184 1,049 869 3,020
Other income, net (2,167) (596) (7,101) (3,415)
----------- ----------- ----------- -----------
Total operating
expenses 13,788 17,014 56,466 50,784
----------- ----------- ----------- -----------
Income from operations 3,390 9,526 32,356 56,683
----------- ----------- ----------- -----------
Other income (expense)
Loss on change in fair
value of earn-out
obligation -- -- -- (17,300)
Interest income 82 65 308 160
----------- ----------- ----------- -----------
Total other income
(expense) 82 65 308 (17,140)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 3,472 9,591 32,664 39,543
Income tax provision (875) (2,726) (9,115) (13,419)
----------- ----------- ----------- -----------
Income from continuing
operations 2,597 6,865 23,549 26,124
Income (loss) from
discontinued operations -- 2,819 -- (1,330)
Income tax benefit
(provision) -- (704) -- 333
Net loss attributable
to non-controlling
interests -- (6) -- 24
----------- ----------- ----------- -----------
Income (loss) from
discontinued
operations, net of
taxes -- 2,109 -- (973)
----------- ----------- ----------- -----------
Net income $ 2,597 $ 8,974 $ 23,549 $ 25,151
Foreign currency
translation adjustment 2,484 3,797 402 15,307
----------- ----------- ----------- -----------
Comprehensive income $ 5,081 $ 12,771 $ 23,951 $ 40,458
=========== =========== =========== ===========
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - Continued
(in thousands except share and per share data)
Three months ended
December 31, Year ended December 31,
------------------------- ------------------------
2012 2011 2012 2011
------------ ------------ ------------ -----------
As Adjusted As Adjusted
(unaudited) (unaudited) (audited) (audited)
Earnings (loss) per
share
Basic
Continuing
operations $ 0.11 $ 0.29 $ 1.00 $ 1.11
Discontinued
operations -- 0.09 -- (0.04)
------------ ------------ ------------ -----------
$ 0.11 $ 0.38 $ 1.00 $ 1.07
============ ============ ============ ===========
Diluted
Continuing
operations $ 0.11 $ 0.29 $ 0.99 $ 1.11
Discontinued
operations -- 0.09 -- (0.04)
------------ ------------ ------------ -----------
$ 0.11 $ 0.38 $ 0.99 $ 1.07
============ ============ ============ ===========
Weighted average shares
outstanding
Basic 23,538,919 23,538,919 23,538,919 23,538,919
============ ============ ============ ===========
Diluted 23,876,548 23,538,919 23,762,378 23,612,398
============ ============ ============ ===========
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
December 31,
---------------------------
2012 2011
------------- -------------
As Adjusted
ASSETS
Current assets
Cash and cash equivalents $ 75,777 $ 43,048
Restricted cash 160 159
Accounts receivable, net of provision for
doubtful accounts of $12,041 and $4,830,
respectively 32,956 25,357
Inventories 6,728 2,529
Deposits for inventories 20 105
Deposits for inventories, related party -- 14,539
Due from an affiliate -- 7,904
Prepaid expenses and other current assets 4,512 12,100
Current maturities of net investment in direct
financing and sales-type leases, net of
provision for doubtful accounts of $296 and
$714, respectively 196,213 329,111
------------- -------------
Total current assets 316,366 434,852
Construction-in-progress 76,669 --
Property, equipment and leasehold improvements,
net 4,985 3,356
Deferred income tax assets 2,547 1,811
Net investment in direct financing and sales-
type leases, net of current maturities 38,739 114,447
------------- -------------
Total assets $ 439,306 $ 554,466
============= =============
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings (including short-term
borrowings of the consolidated VIEs without
recourse to AutoChina of $75,412 and $111,095
as of December 31, 2012 and 2011, respectively) $ 102,458 $ 149,979
Long-term borrowings, current (including long-
term borrowings, current of the consolidated
VIEs without recourse to AutoChina of nil and
$44,438 as of December 31, 2012 and 2011,
respectively) -- 44,438
Accounts payable (including accounts payable of
the consolidated VIEs without recourse to
AutoChina of $68 and $112 as of December 31,
2012 and 2011, respectively) 16,392 404
Accounts payable, related parties (including
accounts payable, related parties of the
consolidated VIEs without recourse to AutoChina
of $706 and nil as of December 31, 2012 and
2011, respectively) 2,228 --
Other payables and accrued liabilities
(including other payables and accrued
liabilities of the consolidated VIEs without
recourse to AutoChina of $4,857 and $4,415 as
of December 31, 2012 and 2011, respectively) 15,049 13,653
Due to affiliates (including due to affiliates
of the consolidated VIEs without recourse to
AutoChina of $86 and $3,244 as of December 31,
2012 and 2011, respectively) 65,595 42,696
Customer deposits (including customer deposits
of the consolidated VIEs without recourse to
AutoChina of $161 and $508 as of December 31,
2012 and 2011, respectively) 1,956 1,152
Income tax payable (including income tax payable
of the consolidated VIEs without recourse to
AutoChina of $1,931 and $1,548 as of December
31, 2012 and 2011, respectively) 2,551 2,799
Deferred income tax liabilities (including
deferred income tax liabilities of the
consolidated VIEs without recourse to AutoChina
of nil and $4,764 as of December 31, 2012 and
2011, respectively) 4,717 8,162
------------- -------------
Total current liabilities 210,946 263,283
------------- -------------
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
(in thousands except share and per share data)
December 31,
--------------------------
2012 2011
------------ ------------
As Adjusted
Commitment and Contingencies
Equity
Preferred shares, $0.001 par value authorized -
1,000,000 shares; issued - none -- --
Ordinary shares - $0.001 par value authorized -
100,000,000 shares; issued and outstanding -
23,538,919 shares at December 31, 2012,
respectively; and $0.001 par value authorized -
50,000,000 shares; issued and outstanding -
23,538,919 shares at December 31, 2011,
respectively 24 24
Additional paid-in capital 323,856 404,745
Statutory reserves 16,997 13,016
Accumulated losses (135,487) (149,170)
Accumulated other comprehensive income 22,970 22,568
Total equity 228,360 291,183
------------ ------------
Total liabilities and equity $ 439,306 $ 554,466
============ ============
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
December 31,
----------------------------------
2012 2011 2010
---------- ---------- ----------
As As
Adjusted Adjusted
Cash flow from continuing operating
activities:
Net income (loss) $ 23,549 $ 25,151 $ (62,300)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Net loss (income) from discontinued
operations -- 973 (604)
Loss on change in fair value of earn-out
obligation -- 17,300 100,400
Depreciation and amortization 1,902 1,420 952
Provision for bad debts 14,550 4,271 1,447
Deferred income taxes (4,180) 6,261 (959)
Stock-based compensation expenses 4,553 2,914 3,281
Changes in operating assets and
liabilities, net of acquisitions and
divestitures:
Accounts receivable (22,331) (5,997) (20,263)
Notes receivable -- -- 222
Net investment in direct financing and
sales-type leases 209,063 2,175 (194,490)
Inventories (4,176) (1,024) (1,255)
Deposits for inventories 85 923 16,567
Deposits for inventories, related party 14,515 (14,177) --
Prepaid expense and other current assets 7,586 (3,511) (1,828)
Trade notes payable -- -- (12,561)
Accounts payable 15,922 (536) (2,756)
Accounts payable, related parties -- -- 16,104
Other payable and accrued liabilities 1,356 5,729 4,229
Customers deposits 798 (100) (182)
Income tax payable (254) (4,568) 4,912
---------- ---------- ----------
Net cash provided by (used in)
continuing operating activities 262,938 37,204 (149,084)
---------- ---------- ----------
Cash flow from continuing investing
activities:
Capital expenditure on construction in
progress (76,353) -- --
Purchase of property, equipment and
leasehold improvements (3,516) (1,967) (1,427)
Cash received from sales of subsidiaries -- 7,589 --
(Increase) decrease) in restricted cash -- (155) 12,561
Decrease (increase) in due from an
affiliate 7,891 9,000 (9,000)
---------- ---------- ----------
Net cash (used in) provided by
continuing investing activities (71,978) 14,467 2,134
---------- ---------- ----------
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(in thousands)
December 31,
-----------------------------------
2012 2011 2010
---------- ---------- -----------
As
Adjusted As Adjusted
Cash flow from continuing financing
activities:
Proceeds from borrowings 102,036 189,850 220,028
Repayments of borrowings (194,093) (163,567) (73,269)
Proceeds from affiliates 137,052 320,641 403,384
Repayment to affiliates (170,520) (372,259) (366,169)
Increase in accounts payable, related
parties 234,781 404,492 394,578
Repayment to accounts payable, related
parties (232,562) (421,036) (513,690)
Dividend paid (5,885) -- --
Capital distribution (29,274) -- --
Issue of shares on exercise of warrants -- -- 10,296
Issue of shares for cash, net of
offering costs of $3,758 -- -- 66,242
Shares repurchase -- -- (1,630)
---------- ---------- -----------
Net cash (used in) provided by
continuing financing activities (158,465) (41,879) 139,770
---------- ---------- -----------
Net cash provided by (used in)
continuing operating, financing and
investing activities 32,495 9,792 (7,180)
---------- ---------- -----------
Cash flow of discontinued operations:
Cash provided by (used in) provided by
operating activities -- 48,537 (84,184)
Cash provided by (used in) investing
activities -- 172,922 (59,454)
Cash (used in) provided by financing
activities -- (222,289) 144,087
---------- ---------- -----------
Net cash flow (used in) provided by
discontinued operations -- (830) 449
---------- ---------- -----------
Effect of exchange rate fluctuation on
cash and cash equivalents 234 3,138 894
---------- ---------- -----------
Net increase (decrease) in cash and cash
equivalents 32,729 12,100 (5,837)
Cash and cash equivalents, beginning of
the year 43,048 30,948 36,785
---------- ---------- -----------
Cash and cash equivalents, end of the
year $ 75,777 $ 43,048 $ 30,948
========== ========== ===========
Analysis of balances of cash and cash
equivalents
Included in cash and cash equivalents
per consolidated balance sheet 75,777 43,048 30,100
Included in assets of discontinued
operations -- -- 848
---------- ---------- -----------
75,777 43,048 30,948
========== ========== ===========
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(in thousands)
December 31,
-----------------------------------
2012 2011 2010
----------- ----------- -----------
As Adjusted As Adjusted
Supplemental disclosure of cash flow
information:
Continuing Operations
Interest paid $ 15,194 $ 14,607 $ 15,619
=========== =========== ===========
Income taxes paid $ 13,544 $ 11,348 $ 6,189
=========== =========== ===========
Discontinued Operations
Interest paid $ -- $ 3,943 $ 986
=========== =========== ===========
Income taxes paid $ -- $ 8 $ 351
=========== =========== ===========
Supplemental disclosure on non-cash
continuing financing activities
Reclassification from liability of the
obligation to issue shares for the
amendments of earn-out provision to
equity $ -- $ 90,400 $ 84,600
=========== =========== ===========
Non-GAAP Financial Measures ($ in thousands)
A reconciliation of Adjusted Net Income to net income (loss) is provided
below:
Three Months Three Months
Ended Ended Year Ended
September 30, December 31, December 31,
2012 2011 2012 2011 2012 2011
-------- -------- -------- ------- -------- --------
Net income (loss) $ 4,526 $ 48,573 $ 2,597 $ 8,974 $ 23,549 $ 25,151
(Income) loss from
discontinued
operations -- (357) -- (2,109) -- 973
(Gain) loss on change
in fair value of
earn-out obligation -- (36,300) -- -- -- 17,300
-------- -------- -------- ------- -------- --------
Adjusted Net Income $ 4,526 $ 11,916 $ 2,597 $ 6,865 $ 23,549 $ 43,451
======== ======== ======== ======= ======== ========
A reconciliation of Adjusted EBITDA to net income is provided below:
Three Months Three Months
Ended Ended Year Ended
September 30, December 31, December 31,
2012 2011 2012 2011 2012 2011
------- -------- ------- ------- ------- -------
Net income (loss) $ 4,526 $ 48,573 $ 2,597 $ 8,974 $23,549 $25,151
(Income) loss from
discontinued
operations -- (357) -- (2,109) -- 973
Interest expenses 2,185 5,115 2,023 5,206 11,490 18,940
Interest income (74) (38) (82) (65) (308) (160)
Income tax provision 2,837 3,663 875 2,726 9,115 13,419
(Gain) loss on change
in fair value of
earn-out obligation -- (36,300) -- -- -- 17,300
Stock-based
compensation 1,979 901 926 936 4,553 2,914
Depreciation &
Amortization 492 256 491 539 1,902 1,420
------- -------- ------- ------- ------- -------
Adjusted EBITDA $11,945 $ 21,813 $ 6,830 $16,207 $50,301 $79,957
======= ======== ======= ======= ======= =======
USE OF NON-GAAP MEASURES
AutoChina defines Adjusted Net Income as net income (loss) before gain (loss) on change in fair value of earn-out obligation and before income/loss from discontinued operations, and Adjusted EBITDA as net income before interest expense (income), income taxes, depreciation and amortization, as well as the exclusion of Loss (gain) on change in fair value of earn-out obligation, (income) loss from discontinued operations, stock-based compensation and accretion of stock repurchase obligations. Adjusted Net Income and Adjusted EBITDA exclude certain financial information that would be included in net income (loss), the most directly comparable GAAP financial measure. Users of this financial information should consider the type of material events and transactions that are excluded from Adjusted Net Income and Adjusted EBITDA, and the material limitations of therein. For example, Adjusted EBITDA does not include net interest expense, but because AutoChina has borrowed money to finance its operations, interest expense is a necessary and ongoing part of its costs and has assisted AutoChina in generating revenue; Adjusted EBITDA does not include taxes, although payment of taxes is a necessary and ongoing part of AutoChina's operations; and Adjusted EBITDA does not include depreciation and amortization expense, but because AutoChina uses capital assets to generate revenue, depreciation and amortization expense is a necessary element of its cost structure. Therefore, Adjusted Net Income and Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income, as determined in accordance with GAAP, since it omits the impact of these expenses incurred by AutoChina.
AutoChina believes that the presentation of these non-GAAP financial measures is warranted and useful to its shareholders because it provides an additional analytical tool for understanding the Company's financial performance by excluding certain items that may obscure trends in the core operating performance of the Company's business. Using Adjusted Net Income and Adjusted EBITDA also facilitates management's internal comparisons to AutoChina's historical performance and liquidity. AutoChina computes Adjusted Net Income and Adjusted EBITDA using the same consistent method from quarter to quarter. The table above has more details on the reconciliations between GAAP financial measures that are most directly comparable to Non-GAAP financial measures.
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