SHENZHEN, China, Aug. 16 /PRNewswire-Asia-FirstCall/ -- Diguang
International Development Co., Ltd. (OTC Bulletin Board: DGNG)
("Diguang" or the "Company"), a developer and producer of CCFL and
LED backlights for a wide range of TFT-LCD products, today
announced its financial results for the second quarter of fiscal
year 2010 ended June 30, 2010.
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Second Quarter 2010 Highlights
-- Net revenue increased 67.0% year-over-year to $17.0 million
-- Gross profit increased 284.8% year-over-year to $1.5 million with gross
margin improving 5.1 percentage points to 9.0%
-- The Company reported net income of 0.1 million, or $0.01 per diluted
share, compared to a net loss of $1.8 million, or $0.08 per diluted
share, in the second quarter of fiscal year 2009
-- Adjusted net loss (non-GAAP) was $0.05 million, or $0.00 per share,
compared to an adjusted net loss of $1.3 million, or ($0.06) per
diluted share, in the second quarter of fiscal year 2009
"We are pleased to report our first profitable quarter since
Diguang was first impacted by the global economic crisis in the
second half of 2008," said Mr. Song
Yi, the President and Chief Executive Officer of Diguang.
"During the second quarter, we maintained our focus on domestic
sales, which grew in excess of 100%. Growth in sales of our LED
products, including LED backlights, LED LCMs, LED general lighting
products and LED monitors, continued to represent a majority of our
total sales. Meanwhile, we witnessed strong momentum in our CCFL
business, as our Wuhan facility
saw an increase in OEM orders for large size CCFL backlights from
our major customers in Taiwan. We
successfully added new high-profile customers, including TCL and
Skyworth, to supply China's two
largest TV manufactures with LED backlights and LED TVs."
Highlights for the Three Months Ended June 30, 2010
Net revenue was $17.0 million for
the three months ended June 30, 2010,
an increase of 67.0% from $10.2
million for the comparable period in 2009. This was due to
the improved market demand for the Company's traditional and
newly-developed backlight products along with continued economic
recovery from the global financial crisis which adversely affected
sales in the previous year. Sales of LED products, including LED
backlights, LED liquid crystal modules (LCM), LED general lights
and liquid crystal displays (LCD), amounted to $9.8 million, or 58% of total sales revenue,
while sales of CCFL products, including CCFL backlights and CCFL
LCMs were $6.8 million, or 40% of
total sales revenue. The remainder came from miscellaneous sales.
Sales of LED backlights grew 33.2% to $7.4
million, while sales of CCFL backlights increased 162.8% to
$6.6 million in the second quarter of
2010. Sales of LCM grew 25.9% to $1.9
million, and the Company generated additional revenue of
$0.6 million from LCD LED monitors
compared to $0.1 million in the
second quarter of 2009, when it commenced mass production of this
product. The Company expects further sales growth of LCD LED
monitors. Sales of LED general lighting products declined due to
aggressive competition. However, management is still confident
about the prospect of the LED general lighting segment in the next
few years.
Gross profit for the second quarter of 2010 totaled $1.5 million, or 9.0% of net revenue, compared to
$0.4 million, or 3.9% of net revenue,
for the same period of 2009. The increase in gross margin was
primarily the result of the contribution from LED products, which
had a gross margin of 11% compared to 5% in the second quarter of
2009. However, this was partially offset by the significant
increase in OEM sales of lower margin, large size CCFL products
during the quarter.
Operating expenses totaled approximately $1.3 million for the second quarter of 2010, down
39.5% from $2.2 million in the second
quarter of 2009. Total operating expenses in the second quarter of
2010 amounted to 7.8% of net revenue, compared to 21.5% in the
second quarter of 2009. Selling expenses rose 25.0%, primarily due
to increased commissions and transportation expenses associated
with increased sales. The Company's net research and development
costs were a negative $0.2 million,
due to a government subsidy of $0.5
million that was recorded following the completion of a
display project for the Guangdong Department of Information
Industry during the quarter. As the actual funding for this project
was received in 2008, this was recorded as a non-cash item. General
and administrative expenses were $0.9
million in the second quarter of 2010, compared to
$1.1 million in the same period in
2009.
Interest expense was $0.2 million
for the second quarter of 2010, up from $72,062 in the same period of 2009 as the Company
utilized additional bank loans to support its working capital
needs.
The Company's net income attributable to common shares during
the three months ended June 30, 2010
was $0.1 million, improved from net
loss of $1.8 million attributable to
common shares for the same period in 2009. Earnings per basic and
diluted share were $0.01 for the
second quarter of 2010, improved from losses per basic and diluted
share of ($0.08) for the same period
of 2009.
Adjusted net loss (non-GAAP), which excludes non-cash items
(including non-controlling interest, depreciation, inventory
provision, loss on disposal of assets and share-based
compensation), for the second quarter of 2010 would have been
$47,156, or $0.00 per basic and diluted share. Adjusted net
loss (non-GAAP) for the second quarter of 2009 would have been
$1.3 million, or ($0.06) per basic and diluted share. Please see
the reconciliation table below.
Six Months Results Ended June 30,
2010
Total revenue for the first six months of 2010 was $29.5 million, up 82.2% from the first six months
of 2009. Gross profit for the first six months of 2010 was
$3.2 million, a significant increase
of 217.6% from gross profit of $1.0
million in the comparable period a year ago. Gross margin
was 11.0% for the first six months of 2010, up from 6.3% in the
same period of 2009. The Company recorded an operating loss of
$0.3 million, compared with an
operating loss of $3.2 million in the
first six months of 2009. Net loss attributable to common shares
for the first six months of 2010 was $0.5
million, compared with a loss of $3.0
million in the first six months of 2009. Basic and diluted
loss per share were ($0.02) for the
first six months of 2010 compared to ($0.14) in the first six months of 2009.
Excluding non-cash items, net income for the first half year of
2010 on a non-GAAP basis would have been $30,857, or $0.00
per share, compared to non-GAAP net loss of $2.0 million, or ($0.09) per share a year ago. 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 Six Months ended
June 30 June 30
2010 2009 2010 2009
GAAP net income (loss) 126,794 -1,837,175 -450,031 -3,047,593
Non-cash items:
Non controlling interest 6,282 -146,193 -44,571 -185,854
Depreciation 493,506 430,205 940,112 857,492
Bad debts allowance
(recovery) -170,638 0 107,940 0
Inventory provision -72 177,682 -33,470 156,614
Loss (gain) on disposal
of assets -379 6,140 2,307 20,179
Share-based compensation 11,218 100,090 22,437 200,180
Research and development
costs offset by funding
advanced -513,867 0 -513,867 0
Deferred tax assets 0 0 0 28,485
Non GAAP net income (loss) -47,156 -1,269,251 30,857 -1,970,497
GAAP net income (loss) 0.01 -0.08 -0.02 -0.14
Non-cash items:
Non controlling interest 0.00 -0.01 0.00 -0.01
Depreciation 0.02 0.02 0.04 0.04
Bad debts allowance -0.01 0.00 0.00 0.00
Inventory provision 0.00 0.01 0.00 0.01
Loss on disposal of
assets 0.00 0.00 0.00 0.00
Share-based compensation 0.00 0.00 0.00 0.01
Research and development
costs offset by funding
advanced -0.02 0.00 0.00 0.00
Deferred tax assets 0.00 0.00 0.00 0.00
Non GAAP net income (loss) 0.00 -0.06 0.02 -0.09
Weighted average shares
outstanding - diluted 22,072,000 22,072,000 22,072,000 22,072,000
Financial Condition
As of June 30, 2010, Diguang had
$8.0 million in cash and cash
equivalents and $3.0 million in
restricted cash. Working capital increased significantly to
approximately $6.7 million compared
to $2.8 million at the end of 2009.
As of June 30, 2010, the Company had
$7.4 million in short-term bank loans
and $8.1 million in long-term bank
loans. Shareholders' equity was $19.8
million as of June 30, 2010.
Cash used in operating activities was $1.2
million, improved from $6.2
million for the six months ended June
30, 2009, primarily due to an increase in accounts payable
and a lower net loss, offset by an increase in accounts receivable
related to increased sales to domestic customers.
Business Outlook
Diguang continues to anticipate strong growth driven by
increased demand for its LED TVs and monitors and LED backlights.
The Company recently began small scale production of its 32" and
42" ultra-thin LED backlights and TVs, and commenced large-scale
production of 19" LED TV and 24" LED backlights for TCL, one of the
largest TV manufacturers in China.
Diguang's new production facility in Shenzhen is proceeding on schedule. The new
facility, which is designed to manufacture large-size LED
backlights and LED TVs, can accommodate 15 production lines of LED
backlights used in LED TVs, with annual capacity of over 6 million
units, as well as 12 integrated production lines of LED TVs
(including LED monitors) and LED backlights, with annual capacity
of over 4 million units of LED TVs. The Company still expects to
complete construction in the fourth quarter of 2010 and will begin
production in the first quarter of 2011. The Company plans to
increase production lines on a gradual basis according to market
demand.
"We remain optimistic about the future of the LED market,
especially for LED TVs and monitors. We believe our new contracts
with China's two largest TV
manufacturers have the potential to serve as an inflection point
for our business to return to sustainable growth and
profitability," commented Mr. Song. "Given our shift toward higher
margin product mix and our efforts to aggressively cut costs, we
are confident in our ability to maintain our current level of gross
margin. We reaffirm our revenue guidance of $60 million to $80 million for the fiscal year
2010."
Use of Non-GAAP Financial Measures
The Company's financial results prepared based on U.S. GAAP for
the three and six months ended June 30,
2010 and 2009 include non-cash expenses such as
depreciation, share based compensation, bad debt allowance,
inventory provisions, loss on the disposal of assets, research and
development costs offset by funding advanced and deferred tax
assets. To supplement the Company's condensed consolidated
financial statements presented in accordance with U.S. GAAP, the
Company has provided non-GAAP financial measures excluding the
impact of these items in this release, including adjusted net
income and adjusted diluted earnings per share. The Company's
management believes that, in conjunction with U.S. GAAP financial
measures, these non-GAAP financial measures (i) improve
transparency for investors, (ii) assist investors in their
assessment of the Company's operating performance, (iii) facilitate
comparison to the Company's historical performance, (iv) ensure
that these measures are fully understood in light of how the
Company evaluates its operating results, (v) properly define the
metrics used and confirm their calculation. The additional adjusted
information is not meant to be considered in isolation or as a
substitute for items appearing on the Company's financial
statements prepared in accordance with U.S GAAP. Rather, the
non-GAAP measures should be used as supplement to U.S. GAAP results
to assist the reader in better understanding the operational
performance of the Company. The adjusted financial information that
the Company provides may also differ from the adjusted information
provided by other companies, which limits their usefulness as
comparative measures. Our 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 the U.S. 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 U.S. GAAP financial measures appears in the table
above.
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.
DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(In US Dollars)
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Revenues, net $17,042,646 $10,203,137 $29,526,840 $16,202,990
Cost of sales 15,503,593 9,803,156 26,283,433 15,181,644
Gross profit 1,539,053 399,981 3,243,407 1,021,346
Selling expense 651,082 520,662 1,251,913 938,896
Research and
development costs (195,017) 619,107 333,967 1,025,431
General and
administrative
expenses 872,045 1,056,433 1,940,977 2,187,411
Loss on disposing
assets (379) 20,179 2,307 20,179
Income (Loss) from
operations 211,322 (1,816,400) (285,757) (3,150,571)
Interest income
(expense), net (189,787) (72,062) (359,013) (159,508)
Investment income
(expense) -- 300 -- 800
Other income (expense) 108,473 (67,728) 147,065 110,193
Income (loss) before
income tax 130,008 (1,955,890) (497,705) (3,199,086)
Income tax provision 12,829 28,485 12,829 31,573
Net income (loss) 117,179 (1,984,375) (510,534) (3,230,659)
Net income (loss)
attributable to non-
controlling interest (9,615) (147,200) (60,503) (183,066)
Net income (loss)
attributable to
common shares $126,794 $(1,837,175) $(450,031) $(3,047,593)
Weighted average
common shares
outstanding - basic 22,072,000 22,072,000 22,072,000 22,072,000
Earnings (losses) per
share - basic 0.01 (0.08) (0.02) (0.14)
Weighted average
common shares
outstanding - diluted 22,072,000 22,072,000 22,072,000 22,072,000
Earnings (losses) per
shares - diluted 0.01 (0.08) (0.02) (0.14)
Comprehensive income
(loss):
Net income (loss) 117,179 (1,984,375) (510,534) (3,230,659)
Translation
adjustment 135,125 43,052 96,160 (202,817)
Comprehensive income
(loss) 252,304 (1,941,323) (414,374) (3,433,476)
Comprehensive income
(loss) attributable
to non-controlling
interest 6,282 (146,193) (44,571) (185,854)
Comprehensive income
attributable to
common shares $246,022 $(1,795,130) $(369,803) $(3,247,622)
DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
CONSOLIDATED BALANCE SHEETS
(In US Dollars)
June 30, December 31,
2010 2009
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $7,985,036 $6,190,513
Restricted cash 2,990,186 4,341,112
Accounts receivable, net of allowance
for doubtful accounts $1,529,505 and
$1,426,927 15,380,592 13,972,086
Inventories, net of provision
$3,519,124 and $3,508,548 11,069,802 7,439,287
Other receivables, net of provision
$69,032 and $69,260 312,100 465,013
VAT recoverable 541,297 82,497
Advance to suppliers 1,717,692 900,328
Total current assets 39,996,705 33,390,836
Investment, net of impairment
$1,500,000 and $1,500,000 -- --
Plant, property and equipment, net 17,480,483 17,736,766
Construction in process 4,103,667 132,079
Long-term prepayments 398,142 439,502
Total assets $61,978,997 $51,699,183
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans $7,420,789 $10,213,683
Accounts payable 21,267,387 15,446,721
Advance from customers 586,897 325,165
Accruals and other payables 2,492,387 2,510,206
Accrued payroll and related expense 796,191 712,206
Income tax payable 386,289 394,989
Amount due to stockholders - current 353,461 943,378
Total current liabilities 33,303,401 30,546,348
Long-term bank loans 8,110,300 --
Research funding advanced 756,654 952,255
Total non-current liabilities 8,866,954 952,255
Total liabilities 42,170,355 31,498,603
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 20,904,072 20,881,635
Treasury stock at cost (674,455) (674,455)
Appropriated earnings 798,974 802,408
Accumulated deficit (8,090,851) (7,644,254)
Translation adjustment 4,419,119 4,338,891
Total stockholders' equity 17,379,452 17,726,818
Non-controlling interest 2,429,190 2,473,762
Total equity 19,808,642 20,200,580
Total liabilities and stockholders'
equity $61,978,997 $51,699,183
DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(In US Dollars)
Six months ended June 30,
2010 2009
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $(510,534) $(3,230,659)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation 940,112 857,492
Bad debts allowance (107,940) --
Inventory provision (33,470) 156,614
Loss on disposing assets 2,307 20,179
Share-based compensation 22,437 200,180
Research and development costs offset
by funding advanced (513,867) --
Deferred tax asset -- 28,485
Changes in operating assets and
liabilities:
Accounts receivable (1,293,968) 15,066
Inventory (3,566,997) (3,019,267)
Other receivables 152,168 273,569
VAT recoverable (455,819) (170,768)
Prepayments and other assets (813,265) (388,562)
Accounts payable 4,612,699 (795,191)
Accruals and other payable 74,284 (69,945)
Advance from customers 262,798 (131,108)
Accrued interest payable to related
parties -- 55,057
Taxes payable (8,773) (17,745)
Net cash used in operating activities (1,237,828) (6,216,603)
Cash flows from investing activities:
Purchase of fixed assets investment
in construction (3,345,363) (59,948)
Proceeds from disposal of fixed
assets 5,527 18,447
Net cash used in investing activities (3,339,836) (41,501)
Cash flows from financing activities:
Due to related parties (597,568) (800,508)
Repayments for short-term bank
facilities (1,454,707) --
Proceeds from (repayments for) import
financing loans (1,356,660) 4,338,227
Restricted cash pledged for (released
from) import financing loans 1,350,926 (4,338,227)
Proceeds from long-term loan
facilities 8,110,300 --
Research funding advanced 317,237 --
Net cash received from financing
activities 6,369,528 (800,508)
Effect of changes in foreign exchange
rates 2,659 (205,218)
Net increase (decrease) in cash and
cash equivalents 1,794,523 (7,263,830)
Cash and cash equivalents, beginning
of the year 6,190,513 15,024,363
Cash and cash equivalents, end of the
year $7,985,036 $7,760,533
Supplemental disclosures of cash flow
information:
Cash paid for interest 403,523 147,461
Cash paid for income taxes 24,067 14,820
For more information, please contact:
Company Contact:
Victoria Liu
Diguang International Development Co., Ltd.
Email: victoria@diguang.com
Tel: +1-626-593-5486
Investor Relations Contact:
Elaine Ketchmere, Partner
CCG Investor Relations
Email: Elaine.ketchmere@ccgir.com
Tel: +1-310-954-1345
Web: http://www.ccgirasia.com
SOURCE Diguang International Development Co., Ltd.
Copyright . 16 PR Newswire
