China Digital Communication Group Reports First Quarter 2009 Financial Results
May 12 2009 - 5:02PM
PR Newswire (US)
Strong Growth Exhibited, Q1 Revenue Increases 445% to $2.6 Million,
Q1 Net Income of $0.5 Million Compared to Net Loss in Q1 2008 NEW
YORK and SHENZHEN, China, May 12 /PRNewswire-Asia-FirstCall/ --
China Digital Communication Group (OTC:CHID) (BULLETIN BOARD: CHID)
, a manufacturer of battery components in China, announced today
its financial results for the three months ended March 31, 2009.
First Quarter Highlights - Revenue was $2.6 million, an increase of
445% from $0.5 million in 2008 - Gross profit was $0.7 million,
compared to $(51,000) in 2008 - Net income was $0.5 million,
compared to $(0.2) million in 2008 - Basic and fully diluted
earnings per share increased to $0.01 from $(0.00) in 2008 First
Quarter 2009 Results "Compared to last year, we are quite pleased
with China Digital's results for the first quarter of 2009. The
strong growth in our revenue and net income was the result of the
contribution of the new battery distribution business which
commenced in the third quarter of 2008 as well as sales increases
among our existing customers," said Mr. Fushun Li, China Digital's
newly appointed Chief Executive Officer. "We have added additional
capacity in our battery shell and cover segment, enabling CHID to
serve China's expanding demand for electronic components and 3C
related products." China Digital's net revenue in the first quarter
of 2009 was $2.6 million, an increase of 445% from $0.5 million in
the first quarter of 2008. Net revenue increased primary due to
CHID's entrance into a new business segment as a distributor of
batteries during the third quarter of 2008. A contributing factor
was the increase of sales in the Company's existing battery shell
and cover business. Sales for the new battery distribution segment
were $1.8 million, or 67% of the Company's net revenue in the first
quarter of 2009. Sales of the Company's existing battery shell and
cover business segment were $0.9 million in the first quarter of
2009, representing a 78% increase from sales of $0.5 million in the
first quarter of 2008. This increase is primarily attributed to the
general increase in sales to our existing customers. Gross profit
in the first quarter of 2009 was $0.7 million, compared with a
gross loss of $(51,000) in the first quarter of 2008. Gross profit
margin was 27% in the first quarter of 2009. The improvement in
gross profit margin was primarily due to the Company's new battery
distribution segment. Compared to the existing battery shell and
cover business, the battery distribution segment generates higher
profit due to the relative lower cost of sales. Operating expenses
in the first quarter of 2009 were $119,000, compared to $139,000 in
the first quarter of 2008. This decrease was primarily due to a
decrease in professional fees. Income from operations in the first
quarter of 2009 was $0.6 million, compared with $(0.2) million in
the first quarter of 2008. Operating margin was 23% in the first
quarter of 2009, compared to a loss from operations of $(0.2)
million in the first quarter of 2008. Income taxes were $62,000
compared to $0 in the first quarter of 2008. The Company's
effective tax rate was 11% compared to 0%, due to the fact that
there was no income in the first quarter of 2008. Net income was
$0.5 million in the first quarter of 2009, compared to a net loss
of $(0.2) million in the first quarter of 2008. Basic and diluted
earnings per share were $0.01 for the first quarter of 2009,
compared to $(0.00) in the first quarter of 2008. Financial
Condition As of March 31, 2009, China Digital had cash and cash
equivalents of $10.2 million and working capital of $9.5 million.
Loan payables totaled $2.2 million and shareholders' equity was
$11.1 million. During the three months ended March 31, 2009, net
cash provided by operating activities was $3.2 million and was
primarily from account receivables. Recent Developments On May 4,
2009, China Digital filed an information statement to inform its
shareholders of a pending "10 to 1" reverse split. The action was
approved by the Board of Directors of China Digital on April 30,
2009 and China Digital anticipates an effective date of June 5,
2009. On May 11, 2009, China Digital announced the appointment of
its new CEO and director, Mr. Fushun Li, who brings a wealth of
experience as an industry veteran of China's electronic
manufacturing industry. Mr. Li was formerly the founder and
president of Shenzhen Kai Bi Te Tech. Co., Ltd, an electronic
components and 3C electronic products manufacturer that reached
revenues in excess of 1 billion RMB under his leadership. Mr. Li's
background spans more than 20 years in various executive roles at
equipment manufacturers and electronic companies in Shenzhen and
Guangzhou. Business Outlook "Considering the global economic
downturn, we believed that our performance for the first quarter in
2009 demonstrates the strong growth potential of our business model
and the insatiable demand for batteries in our consumer-electronic
driven culture," said Mr. Li. "With the addition of our new battery
selling business, which complements our existing shell and cover
production, we remain confident that our growth will handsomely
exceed 2008 performance for the remainder of 2009 and beyond."
About China Digital Communication Group: China Digital
Communication Group, through its wholly owned subsidiary, Shenzhen
E'Jenie Science and Technology Co., Ltd. (E'Jenie), is one of
China's leading manufacturers and developers of advanced
telecommunications equipment. E'Jenie sells advanced high-quality
lithium-ion battery shell and cap products to all major lithium-ion
battery cell manufacturers in China. E'Jenie's products are used to
power mobile phones, MP3 players, laptops, digital cameras, PDAs,
camera recorders and other consumer electronic digital devices.
China Digital Communication Group is continuing its expansion
across East Asia, while seeking distribution partners and
acquisitions in new global markets, including the U.S. For more
information, please visit:
http://www.chinadigitalcommunication.com/ Forward-looking
statement: Except for the historical information, the matters
discussed in this news release may contain forward-looking
statements, including, but not limited to, factors relating to
future sales. These forward-looking statements may involve a number
of risks and uncertainties. Actual results may differ materially
based on a number of factors, including, but not limited to,
uncertainties in product demand, risks related to doing business in
China, the impact of competitive products and pricing, changing
economic conditions around the world, release and sales of new
products and other risk factors detailed in the Company's most
recent annual report and other filings with the Securities and
Exchange Commission. China Digital Communication Group and
Subsidiaries Selected Consolidated Statements of Operations (in
millions, except per share amounts) (unaudited) Three months ended
March 31, 2009 2008 Revenue $ 2.6 $ 0.5 Cost of revenue 1.9 0.5
Selling, general and admin expenses 0.1 0.1 Income from operations
0.6 (0.2) Interest expense and other (0.03) (0.03) Provision for
income taxes (0.06) -- Net income(loss) $ 0.5 $ (0.2) Basic and
diluted earnings per share $ 0.01 $ (0.00) Basic weighted average
shares 54.5 54.5 Diluted weighted average shares 54.5 54.5 NOTE:
The above numbers may not total correctly due to rounding. China
Digital Communication Group and Subsidiaries Selected Consolidated
Balance Sheet Items (in millions) (unaudited) March 31, December
31, 2009 2008 Cash and cash equivalents $ 10.2 $ 7.0 Accounts
receivable, net 2.7 7.4 Inventories 0.3 0.8 Property, plant &
equipment, net 0.8 0.9 Intangible assets, net 0.9 0.9 Total current
liabilities 3.7 6.2 Total stockholders' equity $ 11.1 $ 10.6 NOTE:
The above numbers may not total correctly due to rounding. China
Digital Communication Group and Subsidiaries Selected Consolidated
Cash Flow Items (in millions) (unaudited) Three months ended March
31, 2009 2008 Net cash provided (used) by operating $ $ activities
3.2 (0.0) Net cash provided by financing activities 0.0 (0.3)
Effective exchange rate changes (0.0) 0.1 Net change in cash and
cash equivalents $ 3.2 $ (0.2) NOTE: The above numbers may not
total correctly due to rounding. China Digital Communication Group
And Subsidiaries Selected Segment Information (in millions)
Unaudited Three months ended March 31, 2009 2008 Revenues from
unaffiliated customers: Battery shell and cover $ 0.9 $ 0.5 Battery
1.8 -- Consolidated $ 2.6 $ 0.5 Income (loss) from operation:
Battery shell and cover $ 0.1 $ (0.1) Battery 0.6 -- Corporation
(0.1) (0.1) Consolidated $ 0.6 $ (0.2) NOTE: The above numbers may
not total correctly due to rounding. For more information, please
contact: China Digital Communication Group Ken Lin Tel:
+1-917-573-0302 Email: China America Financial Communications Group
Darren Minton Tel: +1-212-823-0523 Email: DATASOURCE: China Digital
Communication Group CONTACT: China Digital Communication Group, Ken
Lin, +1-917-573-0302, or China America Financial Communications
Group, Darren Minton, +1-212-823-0523, , for China Digital
Communication Group Web site:
http://www.chinadigitalcommunication.com/
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