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China Automotive Systems Reports Higher Net Sales for the Fourth Quarter and Fiscal Year 2012.

WUHAN
 , city (1994 est. pop. 3,519,600), capital of Hubei prov., central China, at the junction of the Han and Chang rivers.
, China, March 27, 2013 /PRNewswire-FirstCall/ — China

Automotive Systems

, Inc. (”
CAAS

” or the
“Company”)(
NASDAQ

: CAAS), a leading
power steering

n.
A device driven by the engine of a vehicle that facilitates the turning of the steering wheel by the driver.


Noun
 components
and systems supplier in China, today announced its financial results for
the fourth quarter and the fiscal year ended
December
 see month.
 31, 2012.

Fourth Quarter 2012 Highlights

*
Net sales

 increased by 7.5% to $101.5 million, compared to $94.4
million in the fourth quarter of 2011.

* Gross profit was $17.2 million, compared to $18.3 million in the
fourth quarter of 2011; gross margin was 16.9%, compared to 19.4% in the
fourth quarter of 2011.

* Research and development (“R&D”) expenses were $4.8
million, compared to $3.0 million in the fourth quarter of 2011.

* Income from operations was $7.4 million, compared to $7.6 million
in the fourth quarter of 2011, and the
operating margin

 was 7.3%,
compared to 8.1% in the fourth quarter of 2011.

* Net income
attributable

 to parent company’s common
shareholders was $5.1 million, or
diluted earnings per share

An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of
 of $0.18,
compared to the net income attributable to parent company’s common
shareholders of $6.0 million, or diluted earnings per share of $0.19, in
the fourth quarter of 2011.

Fiscal Year 2012 Highlights

* Net sales were $336.0 million, compared to $329.8 million in
2011.

* Gross profit was $60.8 million, compared to $63.4 million in 2011;
gross margin was 18.1%, compared to 19.2% in 2011.

*
Operating income

 was $27.8 million, compared to $31.1 million in
2011; operating margin was 8.3%, compared to 9.4% in 2011.

* R&D expenses were $14.9 million, compared to $9.0 million in
2011.

* Net income attributable to parent company’s common
shareholders was $19.8 million, or diluted earnings per share of $0.70,
compared to net income attributable to parent company’s common
shareholders of $36.3 million, or diluted earnings per share of $0.69,
in 2011.

* Net
cash flow from operations

 was $16.2 million, compared to $34.1
million in 2011.

* Cash and cash equivalents were $87.6 million at December 31, 2012,
an increase from $73.0 million at December 31, 2011.

Mr. Qizhou Wu, chief executive officer of CAAS, commented: “The
overall
Chinese
 subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock.
 automotive market showed slight improvement during 2012
although the growth was not steady, because the sales of passenger
vehicles grew while the sales of commercial vehicles generally decreased
in 2012. We maintained our market leadership through an increase in
sales volume. Our exports to
North America
 third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere.
 significantly contributed to
our growth in 2012. We will continue to expand our
international
operations

 in the future. We also expect that the demand of the local
Chinese market will continue to rise based on recent market
performance.”

Mr.
Jie Li

, chief financial officer, commented, “We have
continued to generate positive cash flow and
redeemed
  
tr.v. re·deemed, re·deem·ing, re·deems
1. To recover ownership of by paying a specified sum.

2. To pay off (a promissory note, for example).

3.
 all our
convertible notes in 2012 prior to their maturity date to enhance our
financial flexibility. We will use our financial strength to support our
growth locally and internationally, as we continue to launch new
advanced products through innovations in our research and development
activities. CAAS is well positioned to be a major
participant

 in any
future automotive market
rebound
,
n/v 1. a recovery from illness.
n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus


 adjective
 in China, as we will continue to
develop new advanced products and increase our global presence through
international sales.”

Fourth Quarter of 2012

In the fourth quarter of 2012, net sales increased by 7.5% to $101.5
million, compared to $94.4 million in the same quarter of 2011. The net
sales increase was mainly due to an increase of international sales to a
customer in North America, a sales increase of new products in China, an
increase in sales volume encouraged by the Chinese government’s
incentive policy
relating to
 relate prep

 relate prep → ,  
 the purchase of lower-emission and more

fuel-efficient

adj.
Operable using comparatively little fuel:


fu
 cars (the “Government Incentive Policy”) which
was implemented in May 2012, and the appreciation of the Renminbi
(”
RMB

RMB Rolf Maier Bode
RMB Ren Min Bi  
“) versus the U.S. dollar, which were only slightly
offset by the lower average selling prices of the products sold in
China.

Gross profit was $17.2 million in the fourth quarter of 2012,
compared to $18.3 million in the same quarter of 2011. The gross margin
was 16.9% in the fourth quarter of 2012, versus 19.4% in the same
quarter of 2011. The decrease in gross profit was primarily due to lower
selling prices and greater sales volume of lower-margin products in the
China market.

Selling expenses rose by 11.5% to $2.9 million in the fourth quarter
of 2012, compared to $2.6 million in the fourth quarter of 2011. Selling
expenses represented 2.9% of net sales in the fourth quarter of 2012,
which was
approximately
  
adj.
1. Almost exact or correct:

2.
 the same as 2.8% in the fourth quarter of
2011.

General and administrative expenses (“G&A expenses”)
declined by 25.0% to $3.9 million in the fourth quarter of 2012,
compared to $5.2 million in the same quarter of 2011. The decrease was
mainly due to the reduction in the amount of staff compensation, which
was primarily due to the payment of lower performance bonuses to
management. G&A expenses represented 3.8% of net sales in the fourth
quarter of 2012, compared to 5.5% in the fourth quarter of 2011.

R&D expenses rose by 60.0% to $4.8 million in the fourth quarter
of 2012, compared to $3.0 million in the same quarter of 2011. The
increase in R&D expenses was mainly due to the Company’s
spending on the improvement of machinery molds, and the increased
personnel-related expenses and costs for the further development of the
Company’s
electric power steering

 products. R&D expenses
represented 4.7% of net sales in the fourth quarter of 2012, which was
an increase from 3.2% in the fourth quarter of 2011.

Income from operations was $7.4 million in the fourth quarter of
2012, compared to $7.6 million in the fourth quarter of 2011. As a
percentage of net sales, the operating margin was 7.3% in the fourth
quarter of 2012, compared to 8.1% in the fourth quarter of 2011.

Net financial expenses declined by 72.7% to $0.3 million, compared
to $1.1 million in the fourth quarter of 2011. This decrease was
primarily due to a decrease in the average debt level as a result of the

redemption

 of the convertible notes by the Company on May 25, 2012 (the
“Redemption”).

There was no gain on change in fair value of
derivative
 see calculus.


derivative

In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function.
 in the
fourth quarter of 2012 as all the convertible notes had been redeemed in
the second quarter of 2012, compared to a non-cash gain of $1.6 million
in the fourth quarter of 2011 due to movements in the Company’s
stock prices during such quarter.

Income before income tax expenses and equity in earnings of

affiliated companies

 was $7.2 million in the fourth quarter of 2012,
compared to $8.1 million in the same quarter of 2011. The decrease in
income before income tax expenses and equity in earnings of affiliated
companies in the fourth quarter of 2012 was mainly due to a decrease in
financial expenses, an increase in other net income in the fourth
quarter of 2012, and a gain in the fair value of
derivatives

 of $1.6
million in the fourth quarter of 2011, while there was no such gain in
the fourth quarter of 2012.

Net income attributable to parent company’s common shareholders
was $5.1 million in the fourth quarter of 2012, compared to net income
attributable to parent company’s common shareholders of $6.0
million, including $0.5 million from
discontinued operations

, in the
corresponding quarter of 2011. Diluted earnings per share were $0.18 in
the fourth quarter of 2012, compared to diluted earnings per share of
$0.19 in the fourth quarter of 2011. The weighted average number of

diluted
  
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.

2. To lessen the force, strength, purity, or brilliance of, especially by admixture.
 common shares outstanding was 28,076,879 in the fourth quarter
of 2012, compared to 31,511,685 in the fourth quarter of 2011.

Fiscal Year 2012

Annual net sales increased by $6.2 million to $336.0 million in
2012, compared to $329.8 million in 2011. Higher sales in 2012 were
mainly due to growth in new product export sales to a customer in North
America, growth in sales volume which was encouraged by the Government
Incentive Policy, and the effect of RMB appreciation against the U.S.
dollar, which were slightly offset by the lower average selling prices
of products sold in China.

Gross profit in 2012 decreased to $60.8 million from $63.4 million
in 2011. Gross margin was 18.1%, compared to 19.2% in 2011, primarily
due to lower selling prices and greater sales of lower-margin products
in the China market.

Selling expenses in 2012 increased by 4.3% to $9.6 million in 2012
from $9.2 million in 2011, mainly due to higher office costs, increased
staff compensation and increased traveling expenses. Selling expenses
represented 2.9% and 2.8% of net sales in 2012 and 2011,
respectively.

G&A expenses decreased by $2.6 million, or 16.8%, to $12.9
million in 2012 from $15.5 million in 2011. Lower G&A expenses were
primarily due to reduced staff compensation as a result of the payment
of lower performance bonuses to management, decreased maintenance
expenses and reduced office expenses. G&A expenses represented 3.8%
of net sales in 2012 compared to 4.7% in 2011.

R&D expenses increased by 65.6% or $5.9 million, to $14.9
million in 2012 from $9.0 million in 2011, primarily due to costs
incurred related to the Company’s further development of its
EPS

 technology with the improvement of machinery molds, and higher staff
compensation costs. R&D expenses represented 4.4% of net sales in
2012, which was an increase from 2.7% in 2011.

Operating income decreased to $27.8 million in 2012 from $31.1
million in 2011, due to lower gross profit and higher
operating
expenses

, which were partially offset by a greater gain on other sales
for material scraps and
fixed assets
 npl

 npl

 fix npl
. The operating margin represented
8.3% of net sales in 2012 compared to 9.4% in 2011.

Financial expenses decreased by 45.0% to $2.2 million in 2012 from
$4.0 million in 2011, as interest expenses were reduced after the
Redemption, which was slightly offset by higher interest income for
higher cash balances in 2012.

There was no convertible notes conversion or any gain resulting from
any conversion in 2012, compared to a gain on convertible notes
conversion of $1.6 million in 2011.

The loss on change in fair value of the derivative
embedded

 in the
convertible notes was $0.4 million in 2012, compared with a $21.0
million gain in 2011. The loss in 2012 was due to the increase in the
Company’s stock prices during the period from the beginning of 2012
to the date of the Redemption. The loss was non-cash in nature.

The Company recorded a gain of $1.4 million on the redemption of the
convertible notes in 2012. There was no redemption or any gain resulting
from any redemption in 2011.

Income before income tax expenses and equity in earnings of
affiliated companies was $27.1 million in 2012. Compared to $49.8
million in 2011, there was a decrease of $22.7 million, or 45.6%, mainly
due to lower
operating profit

See operating income.
 and a decrease in gain on change in fair
value of derivative of $21.4 million. Income before taxes represented
8.1% of net sales in 2012 compared to 15.1% in 2011.

Income tax expense was $4.4 million in 2012, compared to $4.1
million in 2011. The income tax increase was mainly due to a higher
effective tax rate of 16.2% for the year ended December 31, 2012 from
8.3% for the year ended December 31, 2011. The lower tax rate in 2011
was primarily because the gain on changes in fair value of derivatives
of $21.0 million, which was recognized in 2011, was not taxable.

Net income attributable to parent company’s common shareholders
was $19.8 million in 2012, compared to $36.3 million in 2011. Diluted
earnings per share were $0.70 in 2012, compared to $0.69 in 2011. The
weighted average number of diluted common shares outstanding was
28,215,367 in 2012, compared to 31,511,685 in 2011.

As of December 31, 2012, total cash and cash equivalents were $87.6
million, compared to $73.0 million as of December 31, 2011. Working
capital was $138.7 million as of December 31, 2012, compared to $147.8
million as of December 31, 2011. Net cash flows from operations were
$16.2 million in 2012, compared to $34.1 million in 2011. Cash used to
acquire properties, plants and equipment was $19.0 million in 2012,
compared to $14.9 million in 2011.

Business Outlook

Management’s revenue guidance is for 10% year-over-year growth
for the full year 2013. This target is based on the Company’s
current views on operating and market conditions, which are subject to
change.

Conference Call

Management will conduct a conference call on March 27 at 8:00 A.M.
EDT/8:00 P.M.
Beijing
  or  , city (1994 est. urban pop. 6,093,300; 1994 est. total pop. 7,240,700), capital of the People’s Republic of China. It is in central Hebei prov.
 Time to discuss these results. A question and
answer session will follow management’s presentation. To
participate, please call the following numbers 10 minutes before the
call start time and ask to be connected to the “China Automotive
Systems” conference call:

Phone Number: +1-877-407-8031 (North America) Phone Number:
+1-201-689-8031 (International)

In addition, the conference call will be broadcast live over the

Internet

 at http://www.caasauto.com. Please go to the web site at least
15 minutes early to register,
download

 and install any necessary
software.

A telephone replay of the call will be available after the
conclusion of the conference call through 11:59 P.M.
EDT

abbr.
Eastern Daylight Time


 Eastern Daylight Time

 n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York

 
 on June 27,
2013. The dial-in details for the replay are:

U.S. Toll Free Number +1-877-660-6853 International dial-in number
+1-201-612-7415

Use Account “286” and Conference ID ” 410530″ to
access the replay.

About China Automotive Systems, Inc.

Based in
Hubei
 or  , province (1994 est. pop. 56,560,000), c.72,000 sq mi (186,480 sq km), central China.
 Province, the People’s Republic of China, China
Automotive Systems, Inc. is a leading supplier of power steering
components and systems to the Chinese
automotive industry

, operating
through ten Sino-foreign joint ventures. The Company offers a full range
of
steering system
 in automobiles, steering wheel, gears, linkages, and other components used to control the direction of a vehicle’s motion. Because of friction between the front tires and the road, especially in parking, effort is required to turn the steering wheel.
 parts for passenger
automobiles

 and commercial
vehicles. The Company currently offers four separate series of power
steering with an annual production capacity of over 3.5 million sets,

steering

 columns, steering oil pumps and steering hoses. Its customer
base is comprised of leading Chinese auto manufacturers, such as China

FAW

FAW First Aid at Work
FAW Fleet Air Wing
FAW Fire At Will
 Group, Corp.,
Dongfeng

 Auto Group Co., Ltd.,
BYD Auto

 Company
Limited, Beiqi
Foton

 Motor Co., Ltd.,
Chery Automobile

 Co., Ltd. and

Chrysler
   , Walter Percy 1875-1940.

American automobile manufacturer who founded the Chrysler Corporation (1925).
 North America. For more information, please visit:
http://www.caasauto.com.

Forward Looking Statements

This press release contains statements that are
“forward-looking statements” as defined under the
Private
Securities Litigation Reform Act

 of 1995. Forward-looking statements
represent our estimates and assumptions only as of the date of this
press release. These forward-looking statements include statements
regarding the
qualitative
 /qual·i·ta·tive/ () pertaining to quality. Cf. quantitative.


qualitative

pertaining to observations of a categorical nature, e.g. breed, sex.
 and
quantitative
 /quan·ti·ta·tive/ ()
1. denoting or expressing a quantity.

2. relating to the proportionate quantities or to the amount of the constituents of a compound.
 effects of the accounting
errors, the periods involved, the nature of the Company’s review
and any anticipated conclusions of the Company or its management and
other statements that are not historical facts. Our actual results may
differ materially from the results described in or anticipated by our
forward-looking statements due to certain risks and uncertainties. As a
result, the Company’s actual results could differ materially from
those contained in these forward-looking statements due to a number of
factors, including those described under the heading “Risk
Factors” in the Company’s Form 10-K annual report filed with
the Securities and Exchange Commission on March 27, 2013, and in
documents subsequently filed by the Company from time to time with the
Securities and Exchange Commission. We expressly
disclaim
  
v. dis·claimed, dis·claim·ing, dis·claims

v.tr.
1. To deny or renounce any claim to or connection with; disown.

2. To deny the validity of; repudiate.

3.
 any duty to
provide updates to any forward-looking statements made in this press
release, whether as a result of new information, future events or
otherwise.

For further information, please contact:

Jie Li Chief Financial Officer China Automotive Systems, Inc. Email:
jieli@chl.com.cn

Kevin
 
 
Theiss
 river: see Tisza.
 
Investor Relations

 
Grayling
 common name for a brilliantly colored fish belonging to the genus Thymallus, of the family Salmonidae (salmon family), and closely allied to the smelt. Graylings are found chiefly in clear, cold, fresh waters of the Northern Hemisphere.
 Tel: +1-646-284-9409 Email:
kevin.theiss@grayling.com

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SOURCE China Automotive Systems, Inc.