SHENZHEN, China, Nov. 15 /Xinhua-PRNewswire-FirstCall/ -- Diguang International Development Co., Ltd. (OTC Bulletin Board: DGNG) ("Diguang" or "the Company") today announced financial results for the third quarter, ended September 30, 2008, of the Company’s 2008 fiscal year.
(Logo: http://www.prnasia.com/sa/200708301921.JPG )
Revenue for the third quarter was $13.6 million, compared to $15.7 million in the third quarter last year.
International sales totaled $9.4 million for the quarter ended September 30, 2008, compared to $13.6 million in international sales for the quarter ended September 30, 2007.
Sales to domestic (China) customers were $4.2 million in the third quarter of 2008, a 96.4% increase from $2.1 million reported in the third quarter of 2007.
Gross margin for the third quarter of 2008 was 6.5%, down from 19.3% gross margin in the third quarter of 2007.
Total operating expenses for the third quarter of 2008 were $2.1 million, or 15.5% of sales, compared to $2.4 million, or 15.0% of sales in the third quarter of 2007.
Net loss was $1.3 million, compared with a net income of $789,035 for the quarter ended September 30, 2007. Both basic and diluted weighted average earnings per share were with a loss of $0.06 for the third quarter of 2008, compared to $0.03 for both basic and diluted weighted average EPS in the third quarter of 2007.
As of September 30, 2008, cash and equivalents were $11.3 million, plus short-term deposits of $44,183, compared with cash and equivalents of $16.3 million at December 31, 2007.
"We experienced a significant decline in customer orders for the third quarter," stated Song Yi, President and Chief Executive Officer of Diguang, "due to lower overall demand globally for digital devices, especially those incorporating LCD displays. In response, we are being proactive on two fronts with strategies to increase higher margin revenues while better managing costs and productivity.
"On the revenue side, we are shifting sales and production focus from mid-size backlights to small-size and large-size products, to more effectively utilize our labor force and equipment," Mr. Song continued. "We are also shifting emphasis from international to domestic customers because the impact of recession in China is not as problematic as it has been in the U.S. and the European Union markets."
"Our launch of value-priced mini-notebook products has been well received," noted Mr. Song. "This initiative and our LED general lighting segment announced last quarter represent higher-margin, higher-growth opportunities that leverage both our expertise in backlights, as well as our LED technology capabilities and experience. Much of our trade show investments are focused on these two product areas."
"The weakening global economic environment also challenges us to better manage costs," observed Mr. Song. "We are responding in three ways: reducing labor costs by matching manpower with need, further linking management compensation to operating performance, and consolidating redundant facilities to reduce our operating scale. All of these steps should help us reduce operating expenditures while increasing productivity."
"When you look at our customized liquid crystal module assemblies and the new markets we are targeting in LED general lighting and mini-notebooks," Mr. Song concluded, "we have ample growth opportunities to offset declining backlight sales. When display inventories get worked off and the backlight market recovers, we will become a much stronger, more efficient company with at least three premium business segments."
Highlights for the nine months ended September 30, 2008
Net revenue was approximately $46.7 million for the nine months ended September 30, 2008, an increase of $15.3 million, or 48.8%, compared to $31.4 million for the nine months ended September 30, 2007.
Cost of sales was $40.1 million for the nine months ended September 30, 2008, an increase of $15.3 million, or 60%, compared to $25.7 million for the nine months ended September 30, 2007.
Overall gross margin for the nine months ended September 30, 2008 was 12.2%, compared to 18.1% for the nine months ended September 30, 2007.
The Company’s net loss during the nine months ended September 30, 2008 was $998,000, compared to a net loss of $921,000 for the nine months ended September 30, 2007.
The diluted weighted average earnings loss per share was $0.04 for the nine months ended September 30, 2008, compared to the same diluted weighted average earnings loss per share for the nine months ended September 30, 2007.
Recent Developments
Diguang exhibited its CCLF and LED backlights, LED general lighting products, and new line of LED mini-notebooks at the 72nd CEF Shanghai Show, November 12-15, 2008, at the Shanghai New International Expo Center.
The Company exhibited a variety of its new LED general lighting products at the 2008 Hong Kong International Lighting Fair, October 27-30, 2008.
Diguang launched its mini-notebook using LED technologies at GITEX Technology Week, in Dubai, October 19-23, 2008.
On September 24, 2008, Diguang announced that its subsidiary Shenzhen Diguang Electronics Co., Ltd. recently entered into an agreement with the Information Industry Department of Guangdong Province to research, develop and commercialize a new super-slim LED backlight.
Teleconference and Webcast Information
Management will conduct a conference call and webcast to discuss 2008 third quarter financial results, ended September 30, 2008. The conference call and webcast will take place at 10:00 a.m. Eastern U.S. time on Monday, November 17, 2008. Anyone interested in participating should call 866-804-6922 if calling from within the United States, or 857-350-1668 if calling internationally; the passcode is 98942816.
There will be a replay available until November 24, 2008. To listen to the playback, please call 888-286-8010 if calling within the United States, or 617-801-6888 if calling internationally. Please use passcode 22512941 for the replay.
The event will also be webcast live through a link on the Company’s web site at http://www.diguangintl.com , where a webcast archive will be available for 90 days, and is being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at http://www.earnings.com , Thomson’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents ( http://www.streetevents.com ), a password-protected event management site.
Use of Non-GAAP Financial Measures
Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123(R), which requires the Company to begin recognizing compensation expense relating to stock-based payment transactions. To supplement the Company’s condensed consolidated financial statements presented on a GAAP basis, the Company provides non-GAAP financial information. The Company’s management believes that these non-GAAP measures provide investors with a better understanding of how the results relate to the Company’s historical performance. The additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.
About Diguang International Development Co., Ltd.
Diguang, through its subsidiaries, specializes in the research, development, production, sale and distribution of backlights and backlight technologies. A backlight is the typical light source of a liquid crystal display (LCD). The Company is focused on providing LED and CCFL backlights for international producers of televisions, monitors, cellular phones, digital cameras, DVDs and other home appliances. Diguang currently develops an average of approximately 50 new products per month. The Company also develops energy-saving technologies and solutions for rapidly growing LED general lighting markets and offers a new line of mini-notebook computers. Diguang is a Nevada corporation with its manufacturing subsidiary located in Shenzhen, PRC, and its sales and marketing subsidiary located in the British Virgin Islands.
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: market performance of Diguang International’s products, 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 BALANCE SHEETS
(In US Dollars)
December 31, September 30,
ASSETS 2007 2008
Current assets: (Unaudited)
Cash and cash equivalents $16,250,727 $11,370,203
Short term deposits -- 44,183
Accounts receivable, net of allowance
for doubtful accounts $680,784 and
$706,253 12,713,705 17,906,767
Inventories, net of provision $841,518
and $959,953 7,499,768 9,587,866
Other receivables, net of provision
$102,574 and $110,198 389,764 316,128
VAT recoverable 407,376 --
Advance to suppliers 904,203 2,152,244
Deferred tax asset 86,572 86,572
Amount due from related parties -- 109,021
Total current assets 38,252,115 41,572,984
Investment, net of impairment $622,194
and $622,194 877,806 877,806
Property and equipment, net 17,449,871 18,639,295
Construction in progress -- 3,782
Total assets $56,579,792 $61,093,867
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Loans $-- $4,418,327
Accounts payable 18,855,416 18,851,621
Advance from customers 464,281 723,253
Accruals and other payables 3,358,199 1,998,911
Accrued payroll and related expense 795,690 660,423
Income tax payable 428,217 429,455
Amount due to related parties 1,465,790 817,148
Amount due to stockholders 1,100,000 1,681,185
Total current liabilities 26,467,593 29,580,323
Research funding advanced 245,730 320,329
Amount due to stockholders 1,100,000 --
Total non-current liabilities 1,345,730 320,329
Total liabilities 27,813,323 29,900,652
2,609,934
Minority interest 1,475,361
Stockholders’ equity:
Common stock, par value $0.001 per
share, 50 million shares authorized,
22,593,000 shares and 22,593,000
issued, 22,340,700 shares and
22,077,600 outstanding 22,593 22,593
Additional paid-in capital 20,028,955 20,456,333
Treasury stock at cost (429,295) (672,165)
Appropriated earnings 1,949,839 2,047,477
Retained earnings 3,127,110 2,031,437
Translation adjustment 2,591,906 4,697,606
Total stockholders’ equity 27,291,108 28,583,281
Total liabilities and stockholders’
equity $56,579,792 $61,093,867
DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME(LOSS)
(In US Dollars)
Nine Months Ended Three Months Ended
September 30, September 30,
2007 2008 2007 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Revenues, net $31,378,156 $46,696,057 $15,719,648 $13,599,288
Cost of sales 25,686,539 40,994,317 12,684,237 12,718,211
Gross profit 5,691,617 5,701,740 3,035,411 881,077
Selling expense 1,620,372 1,264,818 657,631 481,837
Research and
development
costs 945,399 978,377 387,052 326,774
General and
administrative
expenses 4,422,405 3,766,713 1,307,763 1,305,495
Income (loss) from
operations (1,296,559) (308,168) 682,965 (1,233,029)
Interest income
(expense), net 178,015 (170,604) 87,012 (48,150)
Investment income
(loss) 33,115 66,052 (53,935) 36,873
Other income (expense) 432,827 (189,730) 185,459 23,619
Income (loss) before
income taxes (652,602) (602,450) 901,501 (1,220,687)
Income tax provision 50,668 125,653 31,219 885
Net income (loss)
before minority
interest (703,270) (728,103) 870,282 (1,221,572)
Minority interests 217,614 269,932 81,247 79,981
Net income (loss) to
common shareholders $(920,884) $(998,035) $789,035 $(1,301,553)
Weighted average
common shares
outstanding - basic 22,590,794 22,245,762 22,586,407 22,137,326
Earnings (Loss) per
share - basic $(0.04) $(0.04) $0.03 $(0.06)
Weighted average
common shares
outstanding -
diluted 22,590,794 22,245,762 22,586,407 22,137,326
Earning (Loss) per
shares - diluted $(0.04) $(0.04) $0.03 $(0.06)
Other comprehensive
income:
Net income (loss) (920,884) (998,035) 789,035 (1,301,553)
Translation adjustment 1,335,044 2,105,700 847,845 246,327
Other comprehensive
income (loss) $414,160 $1,107,665 $1,636,880 $(1,055,226)
DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN US DOLLARS)
Nine Months Ended September 30,
2007 2008
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income (loss) $(920,884) $(998,035)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Minority interest 217,614 269,932
Depreciation 803,749 1,417,240
Inventory provision -- 55,884
Share-based compensation 785,020 427,378
Changes in operating assets and
liabilities:
Accounts receivable (10,116,018) (4,963,204)
Inventory (3,014,300) (2,045,807)
Other receivables (297,567) 69,051
VAT recoverable 170,084 403,225
Prepayments and other assets 853,168 (443,110)
Accounts payable 7,948,546 209,445
Accruals and other payable 1,331,582 (1,411,569)
Advance from customers 89,523 244,442
Taxes payable 45,649 3,355
Net cash provided by (used in)
operating activities (2,103,834) (6,761,773)
Cash flows from investing activities:
Purchase of fixed assets (5,654,178) (3,336,543)
Disposal (purchase) of marketable
securities -- (41,126)
Cash paid for an acquisition
transaction (1,977,864) --
Due from related parties -- (101,478)
Net cash used in investing activities (7,632,042) (3,479,147)
Cash flows from financing activities:
Stock repurchase (340,000) (242,870)
Due to related parties 106,013 (1,108,264)
Proceeds from a short-term bank loan -- 4,292,521
Research funding advanced -- 72,995
Investment received from Minority
Interest -- 737,500
Net cash provided by (used in)
financing activities (233,987) 3,751,882
Effect of changes in foreign exchange
rates 1,384,990 1,608,514
Net increase (decrease) in cash and
cash equivalents (8,584,873) (4,880,524)
Cash and cash equivalents, beginning
of the period 20,550,032 16,250,727
Cash and cash equivalents, end of the
period $11,965,159 $11,370,203
For more information, please contact:
Company Contact:
Viola Tse
Diguang International Development Co., Ltd.
Tel: +1-626-593-5486
Investor Relations Contact:
Sean Collins, Senior Partner
CCG Investor Relations
Tel: +1-310-477-9800 x202
Web: http://www.ccgasia.com
