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China Architectural Engineering Updates Outlook in Response to Global Recession

Post Time:Mar 19,2009Classify:Company NewsView:386

China Architectural Engineering, Inc. (CAE) (NASDAQ:CAEI), a leader in the design, engineering, fabrication and installation of high-end building envelope systems, today provided an update on its business outlook and financial reporting schedule in light of certain corporate developments and the global economic recession. 
In brief, the Company indicated that:

-- It has delayed the filing of its annual report on Form 10K for its Fiscal Year ending December 31, 2008. It expects to release the report on or before March 31, 2009.

-- Due to weaknesses identified in the Company's internal controls, unforeseen costs related to its acquisition of Techwell, project cost overruns, further provisions on account receivables and the sharp global downturn, which has severely reduced construction spending, CAE's prior revenue guidance can no longer be relied upon. The Company expects profitability in 2009. Please see 12b-25 filing.

-- The Company has asked a third party consultant to assist with improving its internal control.

Delay in Filing of its Form 10-K

CAE said it was delaying the filing of its Form 10-K Annual Report for fiscal 2008 in order to address accounting issues related to its overseas projects managed through its subsidiary Techwell Engineering Limited. It now expects to file its Form 10-K on or before March 31, 2009. The Company has filed a 12b-25 with the SEC.

Impact of Global Downturn

The Company reported that the global recession has affected its activities in all markets, including China, the U.S., Southeast Asia and the Middle East, where it is active in Dubai and Qatar. It has reduced its projected scope of contracted work to reflect a substantially more severe downturn than expected when it last revised its revenue and net income guidance on December 15, 2008.

CEO Cites Challenges, Progress

China Architectural Engineering Chairman and CEO Ken Yi Luo commented, "As everyone knows, the current global economic environment is the most difficult since the Great Depression. And because the downturn stems from a near collapse of the world banking system, conditions are particularly unfavorable for industries, such as construction, that depend heavily on bank lending. At times such as these, only the strong and conservatively financed firms survive. Others fall by the wayside. I am confident that CAE is among the former, and that we will not only survive but be in a strong position to gain market share when weaker firms have vanished and demand returns for our engineering services and expertise."

On the subject of the delay in the Form 10-K filing, Mr. Luo said, "During this period of stress, we are rigorously scrutinizing all aspects of our business, including core operations and recent acquisitions, for any signs of financial weakness or management under-performance. As part of this process, we are re-examining financial results reported for acquired business and are correcting any errors we find. This process makes it necessary to delay the filing of our annual report for 2008, but it also will enable us to meet the highest accounting standards going forward."

To be added to China Architectural Engineering's investor lists, please contact Haris Tajyar at

Source: China Architectural Engineering, Inc. Author: shangyi

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