General Steel Files 2011 Annual Report on Form 10-K

By: General Steel Holdings, Inc. via PR Newswire

Posted on February 15, 2013 at 16:53 PM EST

Company Expects to Regain Compliance with NYSE Annual Report Listing Requirements

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.

Contact Us

General Steel Holdings, Inc.
In China:	In the US:
Jenny Wang	Joyce Sung
Tel: +86-10-5775-7691	Tel: +1-347-534-1435
Email: jenny.wang@gshi-steel.com	Email: joyce.sung@gshi-steel.com

	The Piacente Group, Inc.
	Investor Relations
	Brandi Floberg or Lee Roth
	Tel: +1-212-481-2050
	Email: generalsteel@tpg-ir.com



GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(In thousands)

ASSETS					As of December 31,
					2011		2010
CURRENT ASSETS:
	Cash			$	120,016	$	65,271
	Restricted cash				398,216		197,797
	Notes receivable				92,910		49,147
	Restricted notes receivable				584,241		240,298
	Accounts receivable, net				12,601		18,500
	Accounts receivable - related parties				20,593		4,160
	Other receivables, net				22,411		11,150
	Other receivables - related parties				87,679		10,938
	Inventories				297,729		453,636
	Advances on inventory purchase				63,585		24,577
	Advances on inventory purchase - related parties				20,244		6,187
	Prepaid expense				364		5,018
	Prepaid value added tax				24,189		37,323
	Short-term investment				2,906		-
	Deferred tax assets				167		15,301
		TOTAL CURRENT ASSETS			1,747,851		1,139,303

PLANT AND EQUIPMENT, net					1,257,236		602,612

OTHER ASSETS:
	Advances on equipment purchase				10,420		14,898
	Investment in unconsolidated entities				12,840		17,456
	Long-term deferred expense				631		1,439
	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			464		444
	Borrowings on long term loan - related parties			14,677		91,020
	Payments on long term loan - related parties			(16,865)		-
Net cash provided by financing activities				653,070		466,771

EFFECTS OF EXCHANGE RATE CHANGE IN CASH				801		1,874

INCREASE (DECREASE) IN CASH				54,745		(16,847)

CASH, beginning of year				65,271		82,118

CASH, end of year			$	120,016	$	65,271

SOURCE General Steel Holdings, Inc.

Related Stocks:

General Steel Holdings, Inc.

Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Telekurs USA
Postage Rates