SHENZHEN, China, Nov. 16 /PRNewswire-Asia-FirstCall/ -- Diguang
International Development Co., Ltd. (OTC:DGNG) (BULLETIN BOARD:
DGNG) ("Diguang" or the "Company") today announced financial
results for the third quarter ended September 30, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20070830/CNTH005LOGO ) "In the
third quarter, we saw improvement in order volume as the worldwide
economy and market demand continued to recover. Revenue approached
year ago levels and rose 32% from the second quarter of 2009. More
importantly, gross margin improved due to our cost control efforts.
We maintained our sales, research and development activities in
support of our strategy to keep abreast with long-term market
trends," said Mr. Song Yi, the President and Chief Executive
Officer of Diguang. "Our product mix demonstrates the popularity of
our new, value-added product lines. Sales of liquid crystal modules
(LCM) nearly doubled to $3.7 million, two thirds of which were sold
to new customers. This was offset by a decline in LED BLUs due to
the loss of two mid size LED customers during the quarter. We
continue cooperating with large Taiwan TFT manufacturers to
assemble LCD modules with our backlights for TV manufacturers in
China. As LED penetration gains further momentum in the LCD TV and
notebook sectors, we are confident we are strategically positioned
to capitalize on long term growth,' continued Mr. Song. "We believe
the worst period for the industry is over and we are well
positioned to benefit from the recovery in demand. As global and
domestic TV and monitor makers aggressively push products with LED
backlights, we anticipate high demand for our LED BLUs, TVs and
monitors. As we continue to streamline our operations, we are
optimistic that our financial performance will further improve in
the fourth quarter of 2009 and into 2010," added Mr. Song.
Highlights for the three months Ended September 30, 2009 Net
revenue totaled approximately $13.5 million for the three months
ended September 30, 2009, a slight decline of 1.1%, compared to
$13.6 million for the three months ended September 30, 2008. On a
sequential basis revenue increased 31.8% from $10.2 million in the
second quarter of 2009 as a result of economic recovery driving
overall market demand. Gross profit for the three months ended
September 30, 2009 totaled $0.9 million, or 7.0% of net sales,
compared with gross profit of $0.9 million, or 6.5% of net sales,
for the same period of 2008. The increase in gross margin was
largely attributable to the Company's ability to control and
efficiently manage labor costs. Labor costs accounted for 7% of
total net revenue for the third quarter of 2009, compared with 12%
for the same period in 2008. On a sequential basis, gross margin
increased 3.1 percentage points during the third quarter from 3.9%
in the second quarter of 2009. During the quarter, the Company
recorded a net inventory provision of $412,000, or 3.3% of the cost
of sales. Operating expenses totaled approximately $2.2 million for
the third quarter of 2009, up 3.3% from $2.1 million in the third
quarter of 2008. As a percentage of net revenue, third-quarter 2009
total operating expenses amounted to 16.2%, compared to
third-quarter 2008 operating expenses at 15.6% of net revenue. This
was largely attributable to increase in selling and R&D
expenses which outpaced the decline in general and administrative
expenses. Third-quarter selling expenses increased by 48% year over
year to $0.7 million due to product promotions and new market
development. In support of new product initiatives, research and
development expenses increased by approximately 41% to $0.5
million. General and administrative expenses declined 23% year over
year to $1.0 million as a result of increased cost control and
efficiency measures employed by management. The Company's net loss
attributable to common shares during the three months ended
September 30, 2009 was $1.2 million, down from net loss
attributable to common shares of $1.3 million for the three months
ended September 30, 2008. The loss per basic and diluted share was
($0.06) for the three months ended September 30, 2009, unchanged
from loss per basic and diluted share for the three months ended
September 30, 2008. Excluding non-cash items, net loss for the
third quarter of fiscal 2009 on a non-GAAP basis would have been
$0.5 million, or ($0.02) per basic and diluted share. Excluding
non-cash items, net loss for the third quarter of 2008 on a
non-GAAP basis would have been $0.5 million, or ($0.02) per basic
and diluted share. Please see the reconciliation table below.
Reconciliation of GAAP Net Income and Earnings per Share to
Non-GAAP Net Income and Earnings per Share Nine Months Ended Three
Months Ended September 30, September 30, 2008 2009 2008 2009 GAAP
net income (loss) (728,103) (4,513,752) (1,221,572) (1,283,093)
Non-cash items: Non controlling interest 269,932 (248,609) 79,981
(65,543) Depreciation 1,417,240 1,219,618 452,261 362,126 Inventory
provision 55,884 568,265 563 411,651 Loss on disposal of assets 0
30,487 0 10,308 Share-based compensation 427,378 301,480 144,126
101,300 Deferred tax assets 0 28,485 0 0 Non GAAP net income (loss)
1,442,331 (2,614,026) (544,641) (463,251) GAAP net income (loss)
(0.04) (0.19) (0.06) (0.06) Non-cash items: Non controlling
interest 0.01 (0.01) 0.00 (0.00) Depreciation 0.06 0.06 0.02 0.02
Inventory provision 0.00 0.03 0.00 0.02 Loss on disposal of assets
0.00 0.00 0.00 0.00 Share-based compensation 0.02 0.01 0.01 0.00
Deferred tax assets 0.00 0.00 0.00 0.00 Non GAAP net income (loss)
0.06 (0.12) (0.02) (0.02) Weighted average shares outstanding -
basic and diluted 22,245,762 22,072,000 22,137,326 22,072,000 Nine
Months Results Ended September 30, 2009 Total revenue for the first
nine months of 2009 was approximately $29.7 million, down 36.5%
from the first nine months of 2008. Gross profit for the first nine
months of 2009 was $2.0 million, down 65.6% from gross profit of
$5.7 million in the comparable period a year ago. Gross margin was
6.6% for the first nine months of 2009, down from 12.2% for the
same period in 2008. The Company recorded an operating loss of $4.4
million, compared with operating loss of $0.3 million in the first
nine months of 2008. Net loss attributable to common shares for the
first nine months of 2009 was $4.3 million, compared with net loss
attributable to common shares of $1.0 million in the first nine
months of 2008. Basic and diluted loss per share were ($0.19) for
the first nine months of 2009 compared to ($0.04) in the first nine
months of 2008. Excluding non-cash items, net loss for the first
nine months of 2009 on a non-GAAP basis would have been $2.6
million, or ($0.12) per share. Excluding non-cash items, net income
for the first nine months of 2008 on a non-GAAP basis would have
been $1.4 million, or $0.06 per share. Please see the
reconciliation table above. Financial Condition As of September 30,
2009, Diguang had $9.4 million in cash and cash equivalents, $4.3
million in restricted cash and approximately $4.9 million in
working capital. As of September 30, 2009, shareholders' equity was
$20.7 million. Recent Events On October 15, 2009, Diguang announced
that the Company will hold its annual meeting of stockholders on
Wednesday, November 25, 2009 in Shenzhen for stockholders of record
as of the close of business on October 9, 2009. On October 28,
2009, Diguang announced in a press release that the Company will
participate in the upcoming Hong Kong International Lighting Fair
from October 27-30, 2009 at the Hong Kong Convention and Exhibition
Centre. On November 13, 2009, Diguang announced that the Company
will participate in the upcoming China Hi-Tech Fair from November
16-21, 2009 at the Shenzhen Convention & Exhibition Center.
Business Outlook Diguang maintains a positive industry outlook, and
anticipates the strongest growth drivers over the next two years to
be LED TVs, and general lighting products. In addition to strong
marketing campaigns by manufacturers, the Chinese government is
promoting these energy efficient applications. According to
research from Bank of America Merrill Lynch (BofA ML), worldwide
shipments of LED TVs are expect to grow at a compound annual growth
rate of more than 200% over the next two years, reaching 44 million
units in 2011. In the same report, BofA ML notes that the worldwide
market penetration of general LED lighting is expected to grow from
its current level of 4% to more than 10% by 2010 or 2011.
Manufacturers continue to transition to mid and large sized LED
products from CCFL due to their energy efficient and
environmentally friendly characteristics. As a result, Diguang
anticipates a significant increase in sales orders for large sized
LED BLUs and while sales small and mid sized LED BLUs will remain
stable. To support future market expansion and demand growth,
Diguang plans to break ground at its new facility in Shenzhen by
the end of 2009 and commence production in the third quarter of
2010. "We are excited about the growing adoption of LEDs in LCD TVs
and notebooks. In particular, large sized LED TVs offer the most
growth potential as all of the major TV manufacturers have now
introduced LED TVs, and the price gap between LED and LCD TVs of
similar size has narrowed from 60% in the first half of 2009 to
8%," commented Mr. Song. 'We are already supplying our 32" LED BLUs
and plan to develop 42' and 52' in 2010. We are confident that our
years of experience, technological expertise, and established
industry relationships provide us a strong competitive advantage to
effectively capitalize on the growing market opportunity." Use of
Non-GAAP Financial Measures To supplement Diguang's condensed
consolidated financial statements presented on a GAAP basis,
Diguang is providing certain income statement information that is
not calculated according to GAAP, non-GAAP net income and non-GAAP
basic and diluted earnings per share. Diguang believes that its
non-GAAP disclosures are useful in evaluating its operating results
as this information supplies the user with another view of the
matching of costs and expenses by excluding the impact of non-cash
expenses such as depreciation, share based compensation, inventory
provisions, loss on the disposal of assets and deferred tax assets.
A reconciliation of the adjustments to GAAP results for the three
and nine month periods ended September 30, 2009 and September 30,
2008 is included above. The non-GAAP information presented is
supplemental and is not purported to be a substitute for
information prepared in accordance with GAAP. Teleconference and
Webcast Information Management will conduct a conference call and
webcast to discuss financial results for the fiscal 2009 third
quarter, ended September 30, 2009 of its 2009 fiscal year. The
conference call will take place at 9:00 a.m. Eastern Time on
Tuesday November 17, 2009. Anyone interested in participating
should call +1-888-419-5570 if calling from within the United
States, or +1-617-896-9871 if calling internationally; the passcode
is 450 817 31. There will be a replay available until December 1,
2009. To listen to the playback, please call +1-888-286-8010 if
calling within the United States, or +1-617-801-6888 if calling
internationally. Please use passcode 104 261 45 for the replay.
About Diguang International Development Co., Ltd. Through its
subsidiaries, Diguang develops and produces CCFL and LED backlights
for a wide range of TFT-LCD products. A backlight is the typical
light source of a liquid crystal display (LCD), with applications
spanning televisions, computer monitors, cellular phones, digital
cameras, DVDs and other home appliances. Leveraging its LED
expertise, the Company also creates and markets energy-saving
technologies and solutions for rapidly growing markets such as LED
backlight monitors and LED general lighting. For more information,
contact CCG Investor Relations directly or go to Diguang's website
at http://www.diguangintl.com/ . Safe Harbor Statements This press
release contains forward-looking statements made under the "safe
harbor" provisions of the U.S. Private Securities Litigation Reform
Act of 1995. Forward looking statements are based upon the current
plans, estimates and projections of Diguang's management and are
subject to risks and uncertainties, which could cause actual
results to differ from the forward looking statements. Therefore,
you should not place undue reliance on these forward-looking
statements. The following factors, among others, could cause actual
results to differ from those set forth in the forward-looking
statements: business conditions in China, weather and natural
disasters, changing interpretations of generally accepted
accounting principles; outcomes of government reviews; inquiries
and investigations and related litigation; continued compliance
with government regulations; legislation or regulatory
environments, requirements or changes adversely affecting the
businesses in which Diguang is engaged; fluctuations in customer
demand; management of rapid growth; intensity of competition from
other providers of backlights; timing approval and market
acceptance of new product introductions; general economic
conditions; geopolitical events and regulatory changes, as well as
other relevant risks, including but not limited to risks outlined
in the Company's periodic filings with the U.S. Securities and
Exchange Commission. Diguang does not assume any obligation to
update the information contained in this press release. For more
information, please contact: Company Contact: Viola Tse Diguang
International Development Co., Ltd. Tel: +1-626-593-5486 Investor
Relations Contact: Ed Job, Partner CCG Investor Relations Tel:
+1-646-213-1914 Web: http://www.ccgirasia.com/ (financial tables
follow) DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD. CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION (In U.S. Dollars) December 31,
September 30, 2008 2009 ASSETS (Adjusted) (Unaudited) Current
assets: Cash and cash equivalents $15,024,363 $9,447,864 Restricted
cash -- 4,340,769 Accounts receivable, net of allowance for
doubtful accounts $655,893 and $655,671 9,944,208 13,238,497
Inventories, net of provision $2,081,334 and $2,649,290 7,285,860
9,668,601 Other receivables, net of provision $101,020 and $100,002
535,493 424,701 VAT recoverable 112,842 369,811 Advance to
suppliers 602,017 973,688 Deferred tax asset 28,485 -- Total
current assets 33,533,268 38,463,931 Investment, net of impairment
$779,302 and $779,302 720,698 720,698 Property, plants and
equipment, net 19,369,200 17,983,687 Total assets $53,623,166
$57,168,316 LIABILITIES AND EQUITY Current liabilities: Bank loans
$4,397,215 $13,143,314 Accounts payable 15,643,476 15,687,458
Advance from customers 561,282 549,832 Accruals and other payables
2,337,800 2,238,520 Accrued payroll and related expense 626,277
660,845 Income tax payable 401,260 383,759 Amount due to related
parties 674,548 -- Amount due to stockholders 1,005,480 935,853
Total current liabilities 25,647,338 33,599,581 Research funding
advanced 644,925 644,575 Total liabilities 26,292,263 34,244,156
Equity: Common stock, par value $0.001 per share, 50 million shares
authorized, 22,593,000 and 22,593,000 shares issued, 22,072,000 and
22,072,000 shares outstanding 22,593 22,593 Additional paid-in
capital 20,600,460 20,901,940 Treasury stock at cost (674,455)
(674,455) Appropriated earnings 802,408 795,740 Accumulated deficit
(443,829) (4,702,304) Translation adjustment 4,503,022 4,309,975
Total shareholders' equity 24,810,199 20,653,489 Non-controlling
interest 2,520,704 2,270,671 Total equity 27,330,903 22,924,160
Total liabilities and equity $53,623,166 $57,168,316 DIGUANG
INTERNATIONAL DEVELOPMENT CO., LTD. CONSOLIDATED STATEMENTS OF
INCOME AND COMPREHENSIVE INCOME (In U.S. Dollars) Nine Months Ended
Three Months Ended September 30, September 30, 2008 2009 2008 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues: Revenues,
net $46,696,057 $29,659,356 $13,599,288 $13,456,366 Cost of sales
40,994,317 27,699,850 12,718,211 12,518,206 Gross profit 5,701,740
1,959,506 881,077 938,160 Selling expense 1,264,818 1,653,102
481,837 714,206 Research and development costs 978,377 1,486,377
326,774 460,946 General and administrative expenses 3,766,713
3,185,343 1,305,495 997,932 Loss on disposing assets -- 30,487 --
10,308 Loss from operations (308,168) (4,395,803) (1,233,029)
(1,245,232) Interest income (expense), net (170,604) (285,759)
(48,150) (126,251) Investment income (loss) 66,052 800 36,873 --
Other income (expense) (189,730) 197,937 23,619 87,744 Loss before
income tax (602,450) (4,482,825) (1,220,687) (1,283,739) Income tax
provision 125,653 30,927 885 (646) Net income (loss) (728,103)
(4,513,752) (1,221,572) (1,283,093) Net income (loss) attributable
to non-controlling interest 269,932 (248,609) 79,981 (65,543) Net
income (loss) Attributable to common shares $(998,035) $(4,265,143)
$(1,301,553) $(1,217,550) Weighted average common shares
outstanding - basic 22,245,762 22,072,000 22,137,326 22,072,000
Losses per share - basic (0.04) (0.19) (0.06) (0.06) Weighted
average common shares outstanding - diluted 22,245,762 22,072,000
22,137,326 22,072,000 Losses per shares - diluted (0.04) (0.19)
(0.06) (0.06) Other comprehensive income: Translation adjustment
2,232,841 (194,471) 270,344 8,346 Comprehensive income (loss)
1,504,738 (4,708,223) (951,228) (1,274,747) Comprehensive income
(loss) attributable to non-controlling interest 397,073 (250,033)
103,996 (64,179) Comprehensive income attributable to common shares
$1,107,665 $(4,458,190) $(1,055,224 $(1,210,568 DIGUANG
INTERNATIONAL DEVELOPMENT CO., LTD. CONSOLIDATED STATEMENTS OF CASH
FLOWS Increase (Decrease) in Cash and Cash Equivalents) (In U.S.
Dollars) Nine Months Ended September 30, 2008 2009 (Unaudited)
(Unaudited) Cash flows from operating activities: Net income
$(728,103) $(4,513,752) Adjustments to reconcile net income to net
cash provided by (used in) operating activities: Depreciation
1,417,240 1,219,618 Inventory provision 55,884 568,265 Loss on
disposing assets -- 30,487 Share-based compensation 427,378 301,480
Deferred tax asset -- 28,485 Changes in operating assets and
liabilities: Accounts receivable (4,963,204) (3,294,841) Inventory
(2,045,807) (2,953,544) Other receivables 69,051 110,788 VAT
recoverable 403,225 (256,989) Prepayments and other assets
(443,110) (371,720) Accounts payable 209,445 238,456 Accruals and
other payable (1,411,569) (64,672) Advance from customers 244,442
(11,404) Accrued interest payable to related parties -- 57,103
Taxes payable 3,355 (17,492) Net cash used in operating activities
(6,761,773) (8,929,732) Cash flows from investing activities:
Purchase of fixed assets (3,336,543) (87,631) Purchase of
marketable securities (41,126) -- Due to related parties (101,478)
-- Proceeds form disposal of fixed assets -- 29,152 Net cash used
in investing activities (3,479,147) (58,479 Cash flows from
financing activities: Stock repurchase (242,870) -- Due to related
parties (1,108,264) (800,912) Capital infused by minority interest
in North Diamond 737,500 -- Proceeds from short-term bank
facilities 4,292,521 8,741,354 Restricted cash pledged for import
facilities -- (4,340,769) Research funding advanced 72,995 -- Net
cash received from financing activities 3,751,882 3,599,673 Effect
of changes in foreign exchange rates 1,608,514 (187,961) Net
increase (decrease) in cash and cash equivalents (4,880,524)
(5,576,499) Cash and cash equivalents, beginning of the period
16,250,727 15,024,363 Cash and cash equivalents, end of the period
$11,370,203 $9,447,864
http://www.newscom.com/cgi-bin/prnh/20070830/CNTH005LOGODATASOURCE:
Diguang International Development Co., Ltd. CONTACT: Company
Contact: Viola Tse of Diguang International Development Co., Ltd.,
+1-626-593-5486; Or Investor Relations Contact: Ed Job, Partner of
CCG Investor Relations, +1-646-213-1914 Web site:
http://www.diguangintl.com/ http://www.ccgirasia.com/
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