SHENZHEN, China, March 31 /PRNewswire-Asia-FirstCall/ -- Diguang
International Development Co., Ltd. (OTC Bulletin Board: DGNG)
("Diguang" or the "Company") today announced financial results for
the fourth quarter and the year ended December 31, 2009.
Fourth Quarter Highlights
-- Net revenue increased 65.0% year-over-year to $14.4 million
-- Gross profit totaled $1.6 million, or 11.0% of sales, compared to gross
loss of $1.0 million a year ago
-- Net loss improved to $2.9 million, or $0.13 cents per diluted share,
compared to a loss of $3.7 million, or $0.17 per diluted share, a year
ago
-- Non-GAAP net income was $0.4 million, or $0.02 per share, compared to a
non-GAAP net loss of $1.6 million, or $0.07 per diluted share, a year
ago
-- In December 2009, Diguang commenced construction of its new production
facility in Shenzhen to manufacture large sized LED back light products
and LED TVs
-- In October 2009, Diguang featured its LED lighting products at the Hong
Kong International Lighting Fair
-- In November 2009, Diguang featured its LED products at the China
Hi-Tech Fair in Shenzhen
"Demand for our LED backlights continued to increase in the
fourth quarter of 2009. As a result, revenue increased 7.1% over
the third quarter of 2009 and jumped 65.0% on a year-over-year
basis," said Mr. Song Yi, the
President and Chief Executive Officer of Diguang. "In 2009, our
product mix reflects our focus on the rapidly growing market for
LED products. For the first time, sales of our LED products,
including LED backlights, LED LCM, mini-notebooks, LED general
lighting products and LED monitors, represented a majority of our
total sales. We successfully introduced our LED TV backlight and
LCM to major TV manufacturers and added 10 new customers, which
accounted for approximately 19.0% of our total revenue for fiscal
year 2009. During the year, we also delivered our 19" LED energy
saving monitors, along with several LED general lighting products.
While margin improved across LED product lines, most notably, large
sized LED backlights recorded higher revenue and gross margin.
"We believe our LED TVs and TV assembly offerings will continue
to gain momentum as consumers seek environmentally friendly,
power-saving and superior quality products at affordable prices.
This is especially true for the domestic market, and we are working
to expand our network of agents within China," added Mr. Song
Highlights for the Three Months Ended December 31, 2009
Net revenue totaled approximately $14.4
million for the three months ended December 31, 2009, a significant increase of
65.0%, compared to $8.7 million for
the three months ended December 31,
2008. On a sequential basis revenue increased 6.0% from
$13.6 million in the third quarter of
2009 as a result of growing market demand for the Company's LED TV
backlights and CCFL backlights. The fourth quarter of 2009
represents second consecutive quarter of expanded sales for the
Company's traditional CCFL products and newly developed large size
LED backlights and LED monitors, which benefited from continued
economic recovery.
Gross profit for the fourth quarter of 2009 totaled $1.6 million, or 11.0% of net sales, compared
with gross loss of $1.0 million for
the same period of 2008. The turnaround in gross profit was largely
attributable to upgrades to its small and mid size LED backlight
products which generated negative margins in the year ago period,
combined with the ability to generate high gross margin from sales
of its large sized LED products. On a sequential basis, gross
margin increased 4.0 percentage points from 7.0% in the third
quarter of 2009.
Operating expenses totaled approximately $4.2 million for the fourth quarter of 2009, up
56.6% from $2.8 million in the fourth
quarter of 2008. As a percentage of net revenue, fourth quarter
2009 total operating expenses amounted to 29.1%, compared to fourth
quarter 2008 operating expenses at 56.6% of net revenue. This was
largely attributable to a significant increase in R&D expenses
as the Company aggressively upgraded its existing products and
invested into product development initiatives and increase in
selling expenses due to promotion activities for new products,
which were partially offset by decline in general and
administrative expenses as a result of management's disciplined
efforts to control costs.
The Company's net loss attributable to common shares during the
three months ended December 31, 2009
was $2.9 million, down from net loss
attributable to common shares of $3.7
million for the three months ended December 31, 2008.
The loss per basic and diluted share was ($0.13) for the three months ended December 31, 2009, improving from loss per basic
and diluted share of ($0.17) for the
three months ended December 31,
2008.
Excluding non-cash items, net income for the fourth quarter of
fiscal 2009 on a non-GAAP basis would have been $0.4 million, or $0.02 per basic and diluted share. Excluding
non-cash items, net loss for the fourth quarter of 2008 on a
non-GAAP basis would have been $1.6
million, or ($0.07) 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
Three Months Ended Years Ended
December 31, December 31,
2009 2008 2009 2008
GAAP net income (loss) (2,935,282) (3,730,896) (7,200,452) (4,718,370)
Non-cash items:
Non controlling interest 202,927 (74,007) (45,682) 195,925
Depreciation 381,998 415,979 1,601,616 1,833,219
Bad debt allowance 869,079 220,720 869,079 220,720
Inventory provision 1,181,258 1,183,932 1,749,523 1,239,816
Impairment of long-term
investments 720,698 157,108 720,698 157,108
Loss on disposal of
assets 2 3,726 30,489 3,726
Share-based
compensation (20,305) 144,127 281,175 571,505
Deferred tax assets -- 53,522 28,485 53,522
Non GAAP net income
(loss) 400,375 (1,625,789) (1,965,069) (442,869)
GAAP net income (loss) (0.13) (0.17) (0.33) (0.21)
Non-cash items:
Non controlling interest 0.01 (0.00) (0.00) 0.01
Depreciation 0.02 0.02 0.07 0.08
Bad debt allowance 0.04 0.01 0.04 0.01
Inventory provision 0.05 0.05 0.08 0.06
Impairment of long-term
investments 0.03 0.01 0.03 0.01
Loss on disposal of
assets 0.00 0.00 0.00 0.00
Share-based
compensation (0.00) 0.01 0.01 0.03
Deferred tax assets 0.00 0.00 0.00 0.00
Non GAAP net income
(loss) 0.02 (0.07) (0.09) (0.02)
Weighted average shares
outstanding -
basic and diluted 22,200,822 22,072,000 22,072,000 22,155,882
Fiscal Year 2009 Results
Total revenue for 2009 was approximately $44.1 million, down 20.5% from $55.4 million in fiscal year 2008. Gross profit
for 2009 was $3.6 million, down 25.1%
from gross profit of $4.7 million a
year ago. Gross margin was 8.1% for 2009, down from 8.6% for 2008.
The Company recorded an operating loss of $7.0 million, compared with operating loss of
$3.9 million in 2008. Net loss
attributable to common shares for 2009 was $7.2 million, compared with net loss attributable
to common shares of $4.7 million in
2008. Basic and diluted loss per share were ($0.33) for 2009 compared to ($0.21) in 2008.
Excluding non-cash items, net loss for 2009 on a non-GAAP basis
would have been $2.0 million, or
($0.09) per share. Excluding non-cash
items, net loss for 2008 on a non-GAAP basis would have been
$0.4 million, or ($0.02) per share. Please see the reconciliation
table above.
Financial Condition
As of December 31, 2009, Diguang
had $6.2 million in cash and cash
equivalents, $4.3 million in
restricted cash and approximately $2.8
million in working capital. As of December 31, 2009, shareholders' equity was
$51.7 million.
Recent Events
On March 9, 2010, Diguang's
management team presented at the Rodman & Renshaw China
Investment Conference in Beijing.
Business Outlook
Diguang continues to anticipate strong growth driven by
increased demand in its LED backlight, LED TV, and general lighting
product segments. According to DisplayBank's projections Global LED
market will reach $14 billion in
2013, reflecting a five-year compound annual growth rate 18.7%. The
Company has rolled out its 32", 42" and 52" LED TVs in small
batches in the first quarter of 2010 and expects to deliver large
orders in the second quarter of 2010. Diguang expects to launch its
24-inch ultra-thin monitor in the second quarter of 2010.
Diguang's new production facility in Shenzhen will be used to manufacture large
size LED backlights and LED TVs. This new facility will house ten
production lines with a total annual production capacity of 1.0
million units. The Company expects to complete construction in the
third quarter of 2010 and anticipates the facility to commence
production by the first quarter of 2011. With the additional
capacity from the Shenzhen
facility, the Company expects total capacity to expand to 6.6
million backlight units, 320,000 LED TV and monitor units, and
50,000 LED lighting units, an increase of 45.6%, 88.2% and 150%,
respectively.
General lighting products, represent a longer term growth
opportunity. According to DisplaySearch projections, the LED
lighting market could reach $2
billion by 2013. Diguang employs sales agents to expand its
geographic reach and has shipped samples of its LED general
lighting products to the US, UK, France, Netherland and Singapore. The Company has received favorable
response and is working on initial trial orders from customers in
US, UK, and France.
The Company estimates fiscal 2010 revenue to be in the range of
$60 million to $80 million.
"With distinguishing features such as superior quality, slimmer
profiles, lower energy consumption and higher color contrast
gaining consumers' attention, the global LED TV market is rapidly
gaining momentum and we expect it to be a strong catalyst for our
growth in the year ahead. We are also excited about the emerging
LED general lighting segment with increasing government support and
rising global environmental consciousness," commented Mr. Song.
"Our new production facility in Shenzhen will enable us to capitalize on the
long term growth opportunities in the LED industry. With
strategically located manufacturing bases in China's vital electronics manufacturing
regions, Diguang is well positioned to effectively meet increasing
demand from both domestic and international customers."
Use of Non-GAAP Financial Measures
GAAP results for the three months and years ended December 31, 2009 and 2008 include non-cash
expenses such as depreciation, share based compensation, bad debt
allowance, inventory provisions, loss on the disposal of assets,
and deferred tax assets. To supplement the Company's condensed
consolidated financial statements presented on a GAAP basis, the
Company has provided non- GAAP financial information excluding the
impact of these items in this release, which are non-GAAP net
income and non-GAAP diluted earnings per share. The Company's
management believes that these non-GAAP measures provide investors
with a better understanding of how the results related to the
Company's historical performance. The additional adjusted
information is not meant to be considered in isolation or as a
substitute for GAAP financials. The adjusted financial information
that the Company provides also may differ from the adjusted
information provided by other companies. Management believes that
these adjusted financial measures are useful to investors because
they exclude non-cash expenses that management excludes when it
internally evaluates the performance of the Company's business and
makes operating decisions, including internal budgeting, and
performance measurement, as these measures provide a consistent
method of comparison to historical periods. As a result, the
provision of these adjusted measures allows investors to evaluate
the Company's performance using the same methodology and
information as that used by the Company's management. Moreover,
management believes that these adjusted measures reflect the
essential operating activities of the Company. Adjusted measures
are subject to inherent limitations because they do not include all
of the expenses included under GAAP and because they involve the
exercise of judgment of which charges are excluded from the
adjusted financial measure. However, the Company's management
compensates for these limitations by providing the relevant
disclosure of the items excluded. A reconciliation of each adjusted
measures to the nearest GAAP measure appears in the table
above.
Teleconference and Webcast Information
Management will host a conference call and webcast to the 2009
fourth quarter and year-end financial results. The conference call
will take place at 9:00 a.m. Eastern
Time on Thursday, April 1,
2010.
To participate in the live conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: +1 (877) 833-3695. International callers
should dial +1 (706) 679-8022. When prompted, please enter the
conference ID number 645 864 20.
A replay will be available for 14 days starting at 10:00 a.m. Eastern Time on Thursday, April 1, 2010, and can be accessed by
dialing +1 (800) 642-1687. International callers should dial +1
(706) 645-9291. When prompted, please enter the conference ID
number 645 864 20.
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.
Phone: +1-626-593-5486
Email: viola@diguang.com
Investor Relations Contact:
Elaine Ketchmere, Partner
CCG Investor Relations
Phone: +1-310-954-1345
Email: Elaine.ketchmere@ccgir.com
Web: http://www.ccgirasia.com
(financial tables follow)
DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2009
(In US Dollars)
Three Months Ended Years Ended
December 31, December 31,
2009 2008 2009 2008
Revenues:
Revenues, net 14,415,893 8,734,623 $44,075,249 $55,430,680
Cost of sales 12,824,018 9,696,293 40,523,868 50,690,610
Gross profit 1,591,875 (961,670) 3,551,381 4,740,070
Selling expense 683,374 589,551 2,336,476 1,854,369
Research and
development 1,563,326 327,636 3,049,703 1,163,830
General and
administrative 1,226,559 1,742,804 4,411,902 5,509,517
Loss on disposing
assets 2 157,108 30,489 3,726
Impairment loss 720,698 -- 720,698 157,108
Loss from
operations (2,602,084) (3,778,769) (6,997,887) (3,948,480)
Interest income
expense, net (81,369) (89,062) (367,128) (259,666)
Investment
income (loss) -- 1,471 800 67,523
Other income
(loss) (37,478) 137,674 160,459 (190,513)
Loss before
income taxes (2,720,931) (3,728,686) (7,203,756) (4,331,136)
Income tax
provision 11,424 76,217 42,351 191,309
Net loss (2,732,355) (3,804,903) (7,246,107) (4,522,445)
Net income (loss)
attributable to
non-controlling
interest 202,927 (74,007) (45,682) 195,925
Net income (loss)
attributable to
common shares (2,935,282) (3,730,896) $(7,200,425) $(4,718,370)
Weighted average
common shares
outstanding -
basic 22,200,822 22,072,000 22,072,000 22,155,882
Losses per share
- basic (0.13) (0.17) (0.33) (0.21)
Weighted average
common shares
outstanding -
diluted 22,200,822 22,072,000 22,072,000 22,155,882
Losses per
shares -
diluted (0.13) (0.17) (0.33) (0.21)
DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
CONSOLIDATED BALANCE SHEETS
(In US Dollars)
December 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $6,190,513 $15,024,363
Restricted cash 4,341,112 --
Accounts receivable, net
of allowance for
doubtful accounts
$ 655,893 and $1,529,505 13,972,086 9,944,208
Inventories, net of
provision $2,081,334
and $3,519,124 7,439,287 7,285,860
Other receivables, net
of provision $ 101,020
and $ 69,032 465,013 535,493
VAT recoverable 82,497 112,842
Advance to suppliers 900,328 602,017
Deferred tax asset -- 28,485
Total current assets 33,390,836 33,533,268
Investment, net of
impairment $779,302 and
$ 1,500,000 -- 720,698
Plant, property and
equipment, net 17,868,845 19,369,200
Long-term prepayments 439,502 --
Total assets $51,699,183 $53,623,166
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans $10,213,683 $4,397,215
Accounts payable 15,446,721 15,643,476
Advance from customers 325,165 561,282
Accruals and other
payables 2,510,206 2,337,800
Accrued payroll and
related expense 712,206 626,277
Income tax payable 394,989 401,260
Amount due to related
parties -- 674,548
Amount due to
stockholders - current 943,378 1,005,480
Total current
liabilities 30,546,348 25,647,338
Research funding
advanced 952,255 644,925
Total non-current
liabilities 952,255 644,925
Total liabilities 31,498,603 26,292,263
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 20,881,635 20,600,460
Treasury stock at cost (674,455) (674,455)
Appropriated earnings 802,408 802,408
Accumulated deficit (7,644,254) (443,829)
Translation adjustment 4,338,891 4,503,022
Total stockholders'
equity 17,726,818 24,810,199
Non-controlling
interest 2,473,762 2,520,704
Total equity 20,200,580 27,330,903
Total liabilities and
stockholders' equity $51,699,183 $53,623,166
DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(In US Dollars)
Years Ended December 31,
2009 2008
Cash flows from
operating activities:
Net income $(7,246,107) $(4,522,445)
Adjustments to reconcile net
income to net cash provided
by (used in) operating
activities:
Depreciation 1,601,616 1,833,219
Bad debts allowance 869,079 220,720
Inventory provision 1,749,523 1,239,816
Impairment of long-term
investment 720,698 157,108
Loss on disposing
assets 30,489 3,726
Share-based
compensation 281,175 571,505
Deferred tax asset 28,485 53,522
Changes in operating
assets and
liabilities:
Accounts receivable (4,898,836) 3,079,557
Inventory (1,903,493) (1,073,437)
Other receivables 70,470 (134,174)
VAT recoverable 30,347 291,740
Prepayments and other
assets (298,422) 586,062
Accounts payable (196,458) (4,012,725)
Accruals and other
payable 258,294 (1,273,957)
Advance from customers (236,042) 79,739
Accrued interest
payable to related
parties 64,629 --
Taxes payable (6,268) (23,295)
Net cash used in
operating activities (9,080,821) (2,923,319)
Cash flows from
investing activities:
Purchase of fixed
assets (160,094) (2,607,743)
Cash paid for
acquisition of
entities (109,670) (1,194,520)
Proceeds from disposal
of fixed assets 29,154 9,161
Net cash used in
investing activities (240,610) (3,793,102)
Cash flows from
financing activities:
Stock repurchase -- (245,160)
Due to related parties (691,273) (727,161)
Capital infused by
minority interest in
North Diamond -- 737,500
Proceeds from
short-term bank
facilities 5,813,568 4,397,215
Restricted cash pledged
for import facilities (4,341,112) --
Prepaid deposit for
long-term credit
facilities (439,502) --
Research funding
advanced 307,731 391,882
Net cash received from
financing activities 649,412 4,554,276
Effect of changes in
foreign exchange rates (161,831) 935,781
Net increase (decrease)
in cash and cash
equivalents (8,833,850) (1,226,364)
Cash and cash
equivalents, beginning
of the year 15,024,363 16,250,727
Cash and cash
equivalents, end of
the year $6,190,513 $15,024,363
SOURCE Diguang International Development Co., Ltd.