SHENZHEN, China, May 8, 2007 (PRIME NEWSWIRE) -- New Dragon Asia Corp. (AMEX:NWD), one of China's leading producers of instant noodles, flour-related products and soybean derived products, today announced its financial results for the first quarter of fiscal 2007 ended March 25, 2007.
Li Xia Wang, Chief Executive Officer of New Dragon Asia Corp., said, "We are pleased with our results for the first quarter of fiscal 2007, as we were once again able to achieve a profitable quarter. We further diversified our product mix with the addition of ginger powder, of which we commenced the production, marketing and shipping during the quarter. In addition, increased sales of soybean protein powder made it a greater contributor to our revenue base this quarter. In line with our strategy, we continue to seek new sources of revenue via new product additions and export sales."
Peter Mak, Chief Financial Officer of New Dragon Asia Corp., added, "Revenue generation during the first quarter of 2007 was strong, and by maintaining strict cost controls, we recorded net income of $3.449 million or $0.05 per common share. We remain focused on export sales of our noodles, ginger powder and soybean protein powder to help drive revenues and improve our bottom line. We believe that the addition of ginger powder to our product mix during the quarter will further contribute to our growth and profitability in the near future."
"It should also be noted that the non-cash accounting charges related to stock-based compensation included in general and administrative expenses that impacted our numbers in fiscal 2006 are now behind us, and we do not expect to see a significant impact from such charges in fiscal 2007," Mr. Mak concluded.
First Quarter Fiscal 2007 Financial Highlights
Net revenue for the quarter ended March 25, 2007 was $11.2 million, a slight increase as compared to $11.1 million for the corresponding period in 2006. The increase in revenue was driven by an increase in soybean protein powder sales.
Gross profit remained flat for the quarter ended March 25, 2007 at $1.9 million as compared to the corresponding period in 2006. Gross margin as a percentage of net revenue for each of the quarters was also flat at 17%. New Dragon Asia Corp. was able to maintain stable margins by expanding its number of suppliers, thereby controlling wheat and soybean costs.
New Dragon Asia Corp. reported operating income of $1.146 million for the first quarter 2007 as compared to an operating loss of $1.1 million in the corresponding period in 2006. The Company's strong operational performance was primarily attributable to the absence of any stock-based compensation charges during the first quarter of 2007, leading to an 81% reduction in general and administrative expenses.
Net income for the first quarter of fiscal 2007 was $3.449 million as compared to a net loss of $7.9 million for the corresponding period in 2006. This increase was due to two principal factors - the fact that there were no stock-based compensation charges during the 2007 quarter as compared to $2.3 million of stock-based compensation charges during the 2006 quarter, and a gain of $2.5 million from changes in the fair value of derivative instruments in 2007 as compared to a loss of $6.5 million from changes in the fair value of derivative instruments in 2006(1).
EBITDA was $1.65 million for the first quarter of 2007 as compared to $1.88 million for the first quarter of 2006, representing EBITDA margins of 15% and 17%, respectively.
New Dragon Asia Corp.'s cash and cash equivalents as of March 25, 2007 were $9.8 million, a decrease of $515,000 from December 25, 2006. Working capital increased to $21.8 million at March 31, 2007 from $17.6 million at December 25, 2006 primarily as a result of a decrease in the liability related to the fair value of derivative instruments(1)
Net cash used in operating activities for the three months ended March 25, 2007 was $903,000, mainly attributable to inventory purchases and payment of previously accrued tax obligations.
In lieu of the quarterly conference call, Peter Mak, the Company's Chief Financial Officer, will present the Company's results for the quarter ended March 25, 2007 at the Company's Annual Meeting of Shareholders on May 21, 2007. In the meantime, any questions related to the results or annual meeting can be directed to management, or can be sent to newdragonasia@taylor-rafferty.com. Please see http://www.newdragonasia.com/contact.html for complete contact details.
(1) Refer to the Company's Quarterly Report on Form 10-Q as filed with
the Securities and Exchange Commission, for a complete
description of the Company's accounting for derivative financial
instruments.
New Dragon Asia Corp., a Florida corporation (AMEX:NWD), is headquartered in Shandong Province, China and is engaged in the milling, sale and distribution of flour and related products, including instant noodles and soybean-derived products, to retail and commercial customers. As the fourth largest instant noodle manufacturer in China, New Dragon Asia Corp. markets its well-established Long Feng brand through a network of more than 200 key distributors and 16 regional offices in 27 Chinese provinces with an aggregate production capacity of approximately 195,000 tons of flour and more than 1.1 billion packages of instant noodles per year. Instant noodles are also exported to a growing number of countries. For more information, visit the Company's website at www.newdragonasia.com.
To supplement New Dragon Asia Corp.'s consolidated financial statements presented in accordance with GAAP, New Dragon Asia Corp. discusses its results in terms of financial measures that may be deemed to be "Non-GAAP Financial Measures" under the rules and regulations of the Securities and Exchange Commission. New Dragon Asia Corp.'s management believes that these measures provide meaningful information regarding the Company's performance and liquidity by excluding certain expenses that may not be indicative of its core operating results and facilitate comparisons to its historical operations and competitors' operating results. To the extent such measures are not readily reconcilable to comparable GAAP financial measures contained in the Company's consolidated financial statements, New Dragon Asia Corp. provides detailed reconciliations that permit investors to determine how such non-GAAP financial measures used have been derived.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, its success with acquisitions, anticipated synergies, and overseas expansion. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products and pricing; changes in consumer preferences and tastes or perceptions; effectiveness of advertising or market-spending programs; changes in laws and regulations; fluctuations in costs of production, foreign exchange and interest rates; and other factors as may be discussed in the Company's reports as periodically filed with the Securities and Exchange Commission.
NEW DRAGON ASIA CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
March 25, Dec 25,
2007 2006
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 9,761 $10,276
Accounts receivable, net 8,739 8,835
Deposits and prepayments, net 4,291 6,586
Inventories, net 14,582 11,598
Due from related companies 867 857
------- -------
Total current assets 38,240 38,152
Property, machinery and equipment, net 24,204 24,248
Land use rights, net 7,016 6,983
Goodwill 125 125
------- -------
------- -------
Total assets $69,585 $69,508
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,532 $ 2,723
Other payables and accruals 2,903 3,255
Taxes payable 1,358 3,453
Embedded derivatives, at fair value 8,601 11,138
Due to related companies -- 28
------- -------
Total current liabilities 16,394 20,597
Due to New Dragon Asia Food Limited 598 317
Due to joint venture partners 29 102
------- -------
Total liabilities 17,021 21,016
------- -------
Minority interests 279 276
------- -------
Series A and B Redeemable Convertible
Preferred Stock, $0.0001 par value:
Authorized shares - 5,000,000
Issued and outstanding - 10,162 shares
at March 25, 2007 and
December 25, 2006 4,581 4,204
Commitments
Stockholders' equity:
Class A Common Stock, $0.0001 par value:
Authorized shares - 102,000,000
Issued and outstanding - 53,698,499 at
March 25, 2007 and 53,614,723 at
December 25, 2006 5 5
Class B Common Stock, $0.0001 par value:
Authorized shares - 2,000,000
Issued and outstanding - none -- --
Additional paid-in capital 28,555 28,411
Retained earnings 15,561 12,668
Accumulated other comprehensive income 3,583 2,928
------- -------
Total stockholders' equity 47,704 44,012
------- -------
Total liabilities and stockholders' equity $69,585 $69,508
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NEW DRAGON ASIA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data; unaudited)
Three months ended
March 25,
-----------------------
2007 2006
-------- ---------
Net revenue $ 11,160 $ 11,096
Cost of goods sold (9,238) (9,242)
-------- ---------
Gross profit 1,922 1,854
Selling and distribution expenses (239) (230)
General and administrative expenses (537) (2,757)
-------- ---------
Income (loss) from operations 1,146 (1,133)
Other income (expense):
Interest income 6 16
Other income 8 5
Gain (loss) on fair value adjustments to
embedded derivatives 2,537 (6,507)
VAT refund 52 101
-------- ---------
Income (loss) before income taxes and
minority interests 3,749 (7,518)
Provision for income taxes (300) (258)
-------- ---------
Income (loss) before minority interests 3,449 (7,776)
Minority interests -- (76)
-------- ---------
Net income (loss) $ 3,449 $ (7,852)
======== =========
Accretion of Redeemable Preferred Stock (378) (508)
Preferred Stock dividends (178) (247)
-------- ---------
Income (loss) available to
common stockholders $ 2,893 $ (8,607)
======== =========
Earnings (loss) per common share
Basic $ 0.05 $ (0.17)
-------- ---------
Diluted $ 0.05 $ (0.17)
-------- ---------
Weighted average number of common
shares outstanding
Basic 53,689 49,846
-------- ---------
Diluted 53,761 49,846
-------- ---------
Reconciliation from Net Income to EBITDA
Three months ended
March 25,
-----------------------
2007 2006
-------- --------
Net income (loss) $3,449 $(7,852)
Income tax 300 258
Interest income (6) (16)
Depreciation and amortization 439 671
(Gain) loss on fair value adjustments
to embedded derivatives (2,537) 6,507
Stock-based compensation -- 2,320
-------- --------
EBITDA $ 1,645 $ 1,888
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