Trina Solar Limited (NYSE: TSL)
("Trina Solar" or the "Company"), a leading integrated
manufacturer of solar photovoltaic products from the production of ingots,
wafers and cells to the assembly of PV modules, announced today its financial
results for the second quarter of 2011.
Second Quarter 2011 Financial and Operating Highlights
·
Solar module shipments were approximately 396 MW for
the second quarter of 2011, representing an increase of 23.7% sequentially
and an increase of 77.9% year-over-year
·
Net revenues were $579.5 million, an increase
of 5.2% sequentially and 56.3% year-over-year
·
Gross profit was $98.3 million, a decrease of
35.0% sequentially and 17.3% year-over-year
·
Gross margin was 17.0%, compared to 27.5% in the
first quarter of 2011 and 32.1% in the second quarter of 2010
·
Gross margin relating to the Company's in-house
wafer production to module production was 20.4%
·
Operating income was $32.8 million, compared to $84.5
million in the first quarter of 2011 and $83.3 million in the
second quarter of 2010
·
Operating margin was 5.7%, compared to 15.3% in the
first quarter of 2011 and 22.5% in the second quarter of 2010
·
Net income was $11.8 million, compared to net
income of $47.7 million in the first quarter of 2011 and$38.7
million in the second quarter of 2010
·
Earnings per fully diluted American Depositary Share
("ADS") were $0.17, compared to $0.63 in the first
quarterof 2011 and $0.52 in the second quarter of 2010
"Amidst
continuing demand environment challenges, we achieved record shipment volumes
in the second quarter," said Mr. Jifan Gao, Chairman and CEO of
Trina Solar. "Despite this increase, our sales were affected by
end-market financing and high industry inventory due in part to
recently-issued regulatory revisions and reduction of solar subsidies in Italy.
"In
the third quarter, we expect a significant reduction in our manufacturing
costs due in large part to recently completed renegotiation of the majority
of our long term polysilicon feedstock and wafer agreements. We have seen
substantial improvement in order pipeline from our distributors and large
commercial and utility segment customers across Europe and North
America. In addition to recently concluded agreements, we are also advancing
discussions with new and existing customers to secure a growing number of
sales agreements that extend through the second half of the year and early
2012.
"We
are very encouraged by China's solar feed-in-tariff updates announced on August
1, which we believe reflect the improved economics and efficiency of solar
energy. Since our recently announced agreements to supply two large-scale
solar projects in Qinghai, we have seen increased opportunities to
expand our domestic shipment allocations as the market expands.
"We
remain focused on quality performance, product innovation and improved
manufacturing efficiency, with the ultimate goal of improving total PV system
performance, reliability and cost factors to further differentiate our
product offerings. To support these goals, we recently announced our
collaboration with Australia National University to develop high
efficiency n-type monocrystalline solar cells with conversion efficiencies of
20%, and the launch of our innovative Trinamount mounting solutions to reduce
overall system costs through systems-level innovation and product design.
"Lastly, we are excited to
announce an improved warranty program that extends our product workmanship
warranty from five to ten years and offers a 25-year linear performance
warranty that positions Trina Solar's modules as one of the safest
investments in the renewable energy marketplace."
Recent Business Highlights
During the second quarter of 2011,
the Company:
·
Announced that it was ranked No. 2 globally for
environmental and social performance in the 2011 Solar Company Scorecard, an
award system established by the Silicon Valley Toxics Coalition;
·
Announced that its subsidiary, Trina Solar (U.S.)
Inc., signed a sales agreement with US-based FRV AE Solar, LLC, a subsidiary
of Fotowatio Renewable Ventures, Inc., to supply approximately 35 MW of the
Company's powerful utility-scale solar modules for one of the largest PV
projects in the United States;
·
Announced through its subsidiary, Changzhou Trina
Solar Energy Co. Ltd., the extension of its national distribution agreement
with Australia's leading renewable energy distributor, RF Industries Pty
Ltd. ("RFI") through December 31, 2012. Under the terms of the
agreement, Trina Solar is expected to supply RFI with up to 40 MW of PV
modules during 2011;
·
Announced through its subsidiary, Changzhou Trina
Solar Energy Co. Ltd., the signing of a three year research agreement with
the Australian National University ("ANU"). Under the
terms of the agreement, Trina Solar will collaborate with ANU to develop high
efficiency n-type silicon solar cells with conversion efficiencies of 20% for
mass production by leveraging existing and proven processing tools currently
used for p-type cells;
·
Announced the opening of its new sales and business
development office in Sydney, Australia, to support its growing base of
customers and to seek out business development opportunities in the region;
·
Announced through its subsidiary, Trina Solar (Germany)
GmbH, the signing of a sales agreement to supply 130 MW of module products to
Mohring Energie GmbH, a well-established German-based project developer and
engineering, procurement and construction services company, with deliveries
commencing in the second quarter of 2011;
·
The appointment of Mr. Mark Kingsley to
the new position of Chief Commercial Officer. His joining is expected to
enhance the Company's first class customer service and product management in
an increasing number of end-markets and distribution channels worldwide as
well as help the Company to realize its anticipated market share increases in
2011 and beyond:
·
Announced the introduction of an improved warranty
program, which extends its product workmanship warranty to ten years,
improving on the industry standard of five years. Additionally, the Company
has replaced its two-step performance warranty with a linear performance
warranty that guarantees module power output will not decrease by more than
approximately 0.7% per year after the initial year of service. The Company
does not expect that there will be a significant increase in its warranty
cost as a result of this improved warranty program;
·
Announced that Trinamount mounting solutions are
ready for shipment to the North American market. These innovative mounting
solutions are expected to considerably reduce overall system costs and
increase the pricing competitiveness of solar energy compared to traditional
energy sources. Trinamount hardware will be compatible with a wide variety of
roof types, from tile to commercial flat roofs; and
·
Announced that through its subsidiary, Trina
Solar (Spain) S.L.U., it has signed a sales agreement with Gestamp Asetym
Solar, S.L. ("Gestamp Solar"), a well-established Spanish-based
developer of large-scale solar energy projects, to power Renault's manufacturing
plants in France. Under the terms of the agreement, Trina Solar is
expected to supply Gestamp Solar with 55 MW of the Company's solar modules
which are expected to be installed on Renault's manufacturing sites in France,
including Douai, Maubeuge, Flins, Batilly and Sandouville.
Subsequent Events
Subsequent to the second quarter
of 2011, the Company:
·
Announced changes to its board and board committees,
including its audit and corporate governance and nominating committees. In
light of Peter Mak's departure from the Company's board of directors,
Mr.Jerome Corcoran, an independent director of the Company, has been
appointed as chairman of the audit committee of the board to replace Mr. Mak.
Dr. Yeung Kwok On, an independent director of the Company, has been
appointed as chairman of the corporate governance and nominating committee of
the board. Mr. Qian Zhao, an independent director of the Company, has
been appointed to the corporate governance and nominating committee of the
board.
·
Announced that its subsidiary, Changzhou Trina Solar
Energy Co. Ltd, has signed supply agreements with Huanghe Hydropower
Development Co., Ltd, a subsidiary of China Power Investment Corporation, for
two ground-mounted solar projects in China for a total of 30 MW of
PV modules;
·
Announced that the right of the holders of the
Company's 4.00% Convertible Senior Notes due 2013 to surrender their
Securities for purchase (the "Option") by the Company expired at 5:00
p.m., New York City time, on August 9, 2011. Securities with an
aggregate principal amount of $320,000 were validly surrendered
prior to the expiration of the Option. After this purchase, $137,680,000 principal
amount of the Securities remains outstanding;
·
Announced that its Mono and Multi Module Series have
successfully received the ammonia gas resistance certificate from TUV
Rheinland ("TUV") and its Multi Module Series has already received
salt mist certificate from Intertek Testing Services ("Intertek");
and
·
Announced that through its subsidiary, Trina Solar
Australia Pty Ltd, it has signed a strategic partnership with Origin Energy
Australia ("Origin"), the leading Australian integrated energy
company. Under the terms of the agreement, Trina Solar is expected to supply
Origin with approximately 22 MW of PV modules over the next twelve months
starting from the third quarter of 2011.
Second Quarter 2011 Results
Net Revenues
Net
revenues in the second quarter of 2011 were $579.5 million, an increase
of 5.2% sequentially and 56.3% year-over-year. Total shipments were 396.4 MW,
compared to 320.4 MW in the first quarter of 2011 and 222.8 MW in the second
quarter of 2010. The sequential increase in total shipments was primarily due
to the Company's increased sales in Germany and the United
States, which were supported by recent increases in manufacturing capacity.
Gross Profit and Margin
Gross
profit in the second quarter of 2011 was $98.3 million, compared to $151.3
million in the first quarter of 2011 and $118.9 million in the
second quarter of 2010.
Gross margin was 17.0% in the
second quarter of 2011, compared to 27.5% in the first quarter of 2011 and
32.1% in the second quarter of 2010.
Gross margin relating to the
Company's in-house wafer production to module production was 20.4% in the
second quarter of 2011, compared to 32.1% in the first quarter of 2011. The
sequential decline was primarily due to lower average module selling price.
Operating Expense, Income and Margin
Operating
expenses in the second quarter of 2011 were $65.5 million, a decrease of
2.0% sequentially and an increase of 83.6% year-over-year. The Company's
operating expenses represented 11.3% of its second quarter net revenues, a
decrease from 12.1% in the first quarter of 2011 and an increase from 9.6% in
the second quarter of 2010. The sequential percentage decrease was primarily
due to a decrease in general and administrative expenses. The year-to-year
percentage increase was primarily due to the continued expansion of the
Company's global management structure to meet its strategic growth objectives
and increased investment in research and development initiatives, partially
offset by expense control measures implemented starting from 2010. Operating
expenses in the second quarter of 2011 also included $2.3 million in
share-based compensation expenses, compared to $1.6 million in the
first quarter of 2011 and $1.7 million in the second quarter of
2010.
As a
result of the foregoing, operating income in the second quarter of 2011 was $32.8
million, compared to $84.5 million in the first quarter of 2011 and $83.3
million in the second quarter of 2010. Operating margin was 5.7% in the
second quarter of 2011, compared to 15.3% in the first quarter of 2011 and
22.5% in the second quarter of 2010.
Net Interest Expense
Net
interest expense in the second quarter of 2011 was $7.2 million,
compared to $6.7 million in the first quarter of 2011 and $8.2
million in the second quarter of 2010. The sequential increase in net
interest expense was primarily due to a reduction in interest income in the
second quarter of 2011.
Foreign Currency Exchange
The
Company had a foreign currency exchange loss of $10.8 million in
the second quarter of 2011, which was net of changes in fair value of
derivative instruments, compared to a net loss of $24.1 millionin the
first quarter of 2011 and a net loss of $29.2 million in the second
quarter of 2010. This net loss was primarily due to the loss from foreign
currency forward contracts used by the Company to hedge its foreign currency
risk exposure, which was partially offset by gains from the appreciation of
the Euro against the U.S. dollar.
The Company continued to hedge for
foreign exchange rate volatility during the second quarter of 2011 using
forward contracts involving the Euro, Renminbi, and U.S. dollar currencies.
Income Tax
The
Company's effective tax rate during the second quarter of 2011 period was
20.54%, compared to 20.54% in the first quarter of 2011 and 15.00% in the
second quarter of 2010. The year-on-year increase is due to the fact that its
major subsidiary, Changzhou Trina Solar Energy Co., Ltd., ("Changzhou
Trina") in China is currently in the process of renewing its
preferential tax rate from the local tax authority. In 2010, Changzhou Trina
benefited from the preferential tax rate for High and New Technology
Enterprises.
Net Income and EPS
Net income
was $11.8 million in the second quarter of 2011, a decrease from $47.7
million in the first quarter of 2011 and $38.7 million in the
second quarter of 2010. Net foreign currency exchange loss included in net
income was $10.8 million in the second quarter of 2011, compared to $24.1
million in the first quarter of 2011 and $29.2 million in the
second quarter of 2010.
Net margin was 2.0% in the second
quarter of 2011, compared to 8.7% in the first quarter of 2011 and 10.4% in
the second quarter of 2010.
Earnings
per fully diluted ADS were $0.17 in the second quarter of 2011. The
effects of the net second quarter foreign currency exchange net loss was
approximately $0.15 per fully diluted ADS.
Financial Condition
As of June
30, 2011, the Company had $684.2 million in cash and cash equivalents
and restricted cash and a working capital balance of $758.1 million.
Total bank borrowings were $725.6 million, of which$382.6 million were
long-term borrowings. The Company increased its short-term borrowings by $189.7
million to approximately $343.0 million as of June 30,
2011.
Shareholders'
equity was $1.24 billion as of June 30, 2011, an increase from $1.22
billion at the end of the first quarter of 2011.
Third Quarter and Fiscal Year 2011 Guidance
For the third quarter of 2011, the
Company expects to ship between 480 MW to 520 MW of PV modules.
The
Company expects its gross margin relating to its in-house wafer production to
module production to be in the high teens in percentage terms during the
third quarter of 2011. The Company believes its overall gross margin, taking
into account wafer and cell requirements outsourced to third party suppliers
to meet demand in excess of its internal capacity, for the third quarter will
be in the mid to high teens in percentage terms. Such guidance is based on an
exchange rate between the Euro and U.S. dollar of approximately $1.40.
For the full year 2011, the Company expects total PV module shipments to be
between 1.75 GW to 1.8 GW, representing an increase of 65.6% to 70.3% from
2010.
Operations and Business Outlook
Non-Silicon Cost
In the
second quarter of 2011, the Company's non-silicon manufacturing cost for its
core raw materials to module production was approximately $0.73 per
watt, unchanged from the previous quarter. By the end of 2011, the Company expects
its non-silicon manufacturing cost to decline to below $0.70 through
the continuation of technology and manufacturing process improvements
involving proprietary processes for ingot, wafer, cell and module
manufacturing, higher cell conversion efficiencies, and supply chain and
logistics management initiatives currently under testing or development.
Silicon Procurement
Through its diversified range of
short, medium, and long-term supply agreements, the Company will continue to
maintain competitive silicon costs relative to the current market price.
As a result of renegotiation of a
significant portion of its long-term silicon supply agreements, the Company
expects a sequential reduction in its manufacturing costs in the third
quarter of 2011.
2011 Capacity Expansion
As of July
31, 2011, the Company's annualized in-house ingot and wafer production
capacity was approximately 1.0 GW and its PV cell and module production
capacity was approximately 1.9 GW.
To meet expected demand for its PV
solar modules, the Company expects to raise its annualized in-house ingot and
wafer production capacity to approximately 1.2 GW in the second half of 2011,
based on actual manufacturing yield.
Conference Call
The
Company will host a conference call at 8:00 a.m. ET on August
23, 2011, to discuss the results for the quarter ended June 30, 2011.
Joining Jifan Gao, Chairman and CEO of Trina Solar, will be Terry
Wang, Chief Financial Officer, Mark Kingsley, Chief Commercial Officer, Gary
Yu, Senior Vice President, Operations, and Thomas Young, Senior
Director, Investor Relations. Supplemental information will be made available
on the Investors Section of the Trina Solar's website at http://www.trinasolar.com. To
participate in the conference call, please dial the following number five to
ten minutes prior to the scheduled conference call time: 1
(800) 884-2382 . International callers
should dial +1
(660) 422-4933 . The conference ID for the
call is 8623-9064.
If you are
unable to participate in the call at this time, a replay will be available on August
23 at 10:00 a.m. ET, through September 6, at 11:59 p.m.
ET. To access the replay, dial 1
(855) 859-2056 , international callers
should dial +1
(404) 537-3406 , and enter the conference
ID 8623-9064.
This
conference call will be broadcast live over the Internet and can be accessed
by all interested parties on Trina Solar's website at http://www.trinasolar.com. To
listen to the live webcast, please go to Trina Solar's website at least
fifteen minutes prior to the start of the call to register, download, and
install any necessary audio software. For those unable to participate during
the live broadcast, a replay will be available shortly after the call on
Trina Solar's website for 90 days.
About Trina Solar Limited
Trina
Solar Limited (NYSE: TSL) is a leading manufacturer of high quality modules and
has a long history as a solar PV pioneer since it was founded in 1997 as a
system installation company. Trina Solar is one of the few PV manufacturers
that have developed a vertically integrated business model from the
production of monocrystalline and multicrystalline ingots, wafers and cells
to the assembly of high quality modules. Trina Solar's products provide
reliable and environmentally-friendly electric power for a growing variety of
end-user applications worldwide. For further information, please visit Trina
Solar's website at http://www.trinasolar.com.
Safe Harbor Statement
This announcement contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. All statements other than statements of historical fact
in this announcement are forward-looking statements, including but not
limited to, the Company's ability to raise additional capital to finance the
Company's activities; the effectiveness, profitability, and marketability of
its products; the future trading of the securities of the Company; the
ability of the Company to operate as a public company; the period of time for
which its current liquidity will enable the Company to fund its operations;
the Company's ability to protect its proprietary information; general
economic and business conditions; the volatility of the Company's operating
results and financial condition; the Company's ability to attract or retain
qualified senior management personnel and research and development staff; and
other risks detailed in the Company's filings with the Securities and
Exchange Commission. These forward-looking statements involve known and
unknown risks and uncertainties and are based on current expectations,
assumptions, estimates and projections about the Company and the industry.
The Company undertakes no obligation to update forward-looking statements to
reflect subsequent occurring events or circumstances, or to changes in its
expectations, except as may be required by law. Although the Company believes
that the expectations expressed in these forward looking statements are
reasonable, they cannot assure you that their expectations will turn out to
be correct, and investors are cautioned that actual results may differ
materially from the anticipated results.
Trina Solar Limited
|
|
Unaudited
Consolidated Statement of Operations
|
|
(US
dollars in thousands, except ADS and share data)
|
|
|
|
|
For the
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2011
|
|
March 31,
2011
|
|
June 30,
2010
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$ 579,459
|
|
$ 550,853
|
|
$ 370,762
|
|
|
Cost of revenues
|
|
481,138
|
|
399,573
|
|
251,838
|
|
|
Gross profit
|
|
98,321
|
|
151,280
|
|
118,924
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
25,573
|
|
22,867
|
|
17,466
|
|
|
General
and administrative expenses
|
|
28,179
|
|
31,936
|
|
15,461
|
|
|
Research
and development expenses
|
|
11,727
|
|
11,983
|
|
2,744
|
|
|
Total operating expenses
|
|
65,479
|
|
66,786
|
|
35,671
|
|
|
Operating income
|
|
32,842
|
|
84,494
|
|
83,253
|
|
|
Foreign exchange gain (loss)
|
|
6,817
|
|
15,613
|
|
(42,835)
|
|
|
Interest expenses
|
|
(7,690)
|
|
(8,095)
|
|
(8,591)
|
|
|
Interest income
|
|
477
|
|
1,386
|
|
362
|
|
|
(Loss) gain on change in fair value of derivative
|
|
(17,583)
|
|
(39,698)
|
|
13,644
|
|
|
Other (expenses) income, net
|
|
(63)
|
|
6,273
|
|
(285)
|
|
|
Income before income taxes
|
|
14,800
|
|
59,973
|
|
45,548
|
|
|
Income tax expenses
|
|
(3,040)
|
|
(12,320)
|
|
(6,835)
|
|
|
Net income
|
|
$ 11,760
|
|
$ 47,653
|
|
$ 38,713
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ADS
|
|
|
|
|
|
|
|
|
Basic
|
|
0.17
|
|
0.68
|
|
0.55
|
|
|
Diluted
|
|
0.17
|
|
0.63
|
|
0.52
|
|
|
Weighted average ADS outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
70,318,629
|
|
70,226,257
|
|
69,925,214
|
|
|
Diluted
|
|
70,789,716
|
|
79,041,486
|
|
78,537,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trina Solar Limited
|
|
Unaudited Consolidated Balance Sheet
|
|
(US dollars in thousands)
|
|
|
|
|
|
|
June 30
|
|
March 31
|
|
June 30
|
|
|
|
|
2011
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
$ 630,978
|
|
$ 489,820
|
|
$ 639,517
|
|
Restricted
cash
|
|
|
53,260
|
|
64,813
|
|
45,758
|
|
Marketable
Securities
|
|
|
315
|
|
426
|
|
443
|
|
Inventories
|
|
|
226,303
|
|
179,780
|
|
96,395
|
|
Project
assets
|
|
|
43,472
|
|
42,110
|
|
23,877
|
|
Accounts
receivable, net
|
|
|
584,046
|
|
542,967
|
|
313,042
|
|
Current
portion of advances to suppliers
|
|
|
64,049
|
|
82,370
|
|
42,895
|
|
Prepaid
expenses and other current assets, net
|
|
101,948
|
|
90,297
|
|
53,256
|
|
Total current assets
|
|
|
1,704,371
|
|
1,492,583
|
|
1,215,183
|
|
Property, plant and equipment
|
|
|
751,480
|
|
663,851
|
|
533,795
|
|
Project assets- long term
|
|
|
2,614
|
|
-
|
|
-
|
|
Prepaid land use right
|
|
|
36,661
|
|
36,854
|
|
27,139
|
|
Advances to suppliers -
long-term
|
|
|
129,138
|
|
94,807
|
|
87,205
|
|
Investment in affiliates
|
|
|
320
|
|
319
|
|
-
|
|
Deferred tax assets
|
|
|
14,667
|
|
15,405
|
|
10,481
|
|
Other noncurrent assets
|
|
|
28
|
|
196
|
|
1,352
|
|
TOTAL ASSETS
|
|
|
$ 2,639,279
|
|
$ 2,304,015
|
|
$ 1,875,155
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Short-term
borrowings, including current portion of long-term debt
|
|
|
$ 342,953
|
|
$ 153,286
|
|
$ 161,557
|
|
Accounts
payable
|
|
|
315,004
|
|
253,223
|
|
197,789
|
|
Convertible
note payable
|
|
|
137,870
|
|
137,065
|
|
|
|
Income
tax payable
|
|
|
20,139
|
|
46,656
|
|
9,436
|
|
Accrued
expenses and other current liabilities
|
|
130,305
|
|
132,487
|
|
60,220
|
|
Total current liabilities
|
|
|
946,271
|
|
722,717
|
|
429,002
|
|
Long-term bank borrowings
|
|
|
382,631
|
|
295,652
|
|
331,152
|
|
Convertible note payable
|
|
|
-
|
|
-
|
|
134,644
|
|
Accrued warranty costs
|
|
|
50,205
|
|
44,194
|
|
27,508
|
|
Other noncurrent liabilities
|
|
|
17,223
|
|
18,454
|
|
14,740
|
|
Total liabilities
|
|
|
1,396,330
|
|
1,081,017
|
|
937,046
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
40
|
|
40
|
|
40
|
|
Additional paid-in capital
|
|
|
646,925
|
|
644,628
|
|
638,457
|
|
Retained earnings
|
|
|
579,183
|
|
567,423
|
|
291,572
|
|
Other comprehensive income
|
|
|
16,601
|
|
10,707
|
|
8,040
|
|
Total shareholders' equity
|
|
|
1,242,749
|
|
1,222,798
|
|
938,109
|
|
Non-controlling interest
|
|
|
200
|
|
200
|
|
-
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
|
$ 2,639,279
|
|
$ 2,304,015
|
|
$ 1,875,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Notes to unaudited consolidated
financial statements:
In July 2010 the Company
was made aware of a contingent liability in the form of legal action brought
against its Hong Kong subsidiary, Top Energy International Limited
("TEI"). The action stems from a 2008 transaction involving the
exchange of silicon materials and subsequent claims involving material
qualities. Given the claims were made outside contractual time limitations
and upon disputed testing methodology, the Company believes the claimant
would be unlikely to prevail. If, however, the claimant proved successful in
such legal actions, the Company may incur damages of up to approximately $4.0
million.
|