SHENZHEN, China, May 8, 2008 (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 2008 ended March 25, 2008.
Li Xia Wang, Chief Executive Officer of New Dragon Asia Corp., said, "We are off to a good start in fiscal 2008 as we saw year-on-year revenue growth in the first quarter. Our decision to pre-pay for a bulk supply of raw materials in late 2007 to lock in lower prices, coupled with growth in higher-margin export sales, led to a slight increase in gross margins year-on-year. We believe that the raw material pricing environment is likely to remain difficult for the rest of the year, however we still have supplies left from our bulk purchase, and the relationships we have with our suppliers should enable us to secure the best possible pricing for the supplies we need going forward. We believe that our key growth drivers for the remainder of the year are likely to be our soybean products and export sales, with stable performance from our traditional flour and noodles."
Peter Mak, Chief Financial Officer of New Dragon Asia Corp., added, "Maintaining our margins has always been a key priority for our team. This year is no different as we will work diligently to keep our margins steady in spite of rising raw materials costs. We kept careful control of our SG&A costs in the first quarter. Pairing these cost controls with our pre-payment for raw materials, we were able to deliver a profitable first quarter performance in spite of increasing raw materials costs."
First Quarter Fiscal 2008 Financial Highlights
Net revenue for the quarter ended March 25, 2008 was $11.70 million, a 4.8% increase as compared to $11.16 million for the first quarter of fiscal 2007. The increase in revenue was a result of a year-on-year increase in soybean product sales of 31% to $2.19 million for the quarter.
For the quarter ended March 25, 2008, gross profit was $2.1 million as compared to $1.9 million in the corresponding period in 2007. Gross margin as a percentage of net revenue for the quarter was also up slightly to 18%. This increase was primarily due to an increase in export sales, which generate higher margins.
New Dragon Asia Corp. reported operating income of $1.4 million for the first quarter of fiscal 2008 as compared to $1.1 million in the first quarter of fiscal 2007. This increase was also primarily attributable to the growth in export sales.
Net income for the first quarter of fiscal 2008 was $1.98 million as compared to $3.45 million for the corresponding period in 2007. The decrease was mainly due to a fluctuation in the gain derived from the change in fair value of derivative instruments(1). Earnings per share (basic and diluted) were $0.03 for the first quarter of fiscal 2008 as compared to $0.05 per share (basic and diluted) in the first quarter of fiscal 2007.
First Quarter Fiscal 2008 Balance Sheet / Cash Flow Information
New Dragon Asia Corp.'s cash and cash equivalents as of March 25, 2008 were approximately $5.7 million, an increase of approximately $2 million from December 25, 2007. Working capital increased to $40.7 million at March 25, 2008 from $36.2 million at December 25, 2007; this increase was in line with the overall growth of the business.
Net cash provided by operating activities was $109,000 in the first quarter of fiscal 2008 compared with $903,000 used for operating activities in the first quarter of fiscal 2007. Net cash provided by financing activities was $649,000 in the first quarter of fiscal 2008 compared to $159,000 provided by financing activities in the first quarter of fiscal 2007.
Conference Call
Mr. Peter Mak, Chief Financial Officer, will host a conference call on Thursday, May 8, 2008 at 8:30 AM (New York)/1:30 PM (London)/8:30 PM (China) to review the results. The conference call will also be available via listen-only webcast at www.newdragonasia.com and will be archived on the Company's website for one year from the date of broadcast.
The dial-in information for the call is as follows:
In North America: Dial-in: +1 480-629-1990 Replay: + 1 303 590 3030 Passcode: 3875494# In Europe: Dial-in: + 44-20-8515-2302 Replay: + 44 207 154 2833 Passcode: 3875494# In Asia: Dial-in: + 852-3009-5027 Replay: + 852 2287 4304 Passcode: 082110#
The replay will be available for one week following the conclusion of the live call.
(1) Please see the Company's Form 10-Q filed with the Securities
and Exchange Commission for a complete description of
"Accounting for Derivative 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.
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 STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data; unaudited)
Three months ended
March 25,
------------------
2008 2007
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Net revenue $11,699 $11,160
Cost of goods sold (9,557) (9,238)
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Gross profit 2,142 1,922
Selling and distribution expenses (221) (239)
General and administrative expenses (505) (537)
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Income from operations 1,416 1,146
Other income (expense):
Interest income 2 6
Other income 188 8
Gain on fair value adjustments to embedded
derivatives 690 2,537
VAT refund -- 52
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Income before income taxes and minority interests 2,296 3,749
Provision for income taxes (314) (300)
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Net income $ 1,982 $ 3,449
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Accretion of Redeemable Preferred Stock (359) (378)
Preferred Stock dividends (153) (178)
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Income available to common stockholders $ 1,470 $ 2,893
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Earnings per common share
Basic $ 0.03 $ 0.05
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Diluted $ 0.03 $ 0.05
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Weighted average number of common shares
outstanding
Basic 55,940 53,689
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Diluted 56,077 53,761
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NEW DRAGON ASIA CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
March 25, Dec. 25,
2008 2007
------- -------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 5,691 $ 3,646
Accounts receivable, net 10,172 9,223
Deposits and prepayments, net 13,292 12,183
Inventories, net 24,390 22,050
Due from related companies 967 913
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Total current assets 54,512 48,015
Property, machinery and equipment, net 27,067 25,986
Land use rights, net 7,573 7,294
Goodwill 125 125
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Total assets $89,277 $81,420
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,783 $ 2,982
Other payables and accruals 3,194 2,765
Taxes payable 4,078 3,530
Embedded derivatives, at fair value 1,752 2,493
Due to related companies -- 36
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Total current liabilities 13,807 11,806
Due to New Dragon Asia Food Limited 1,837 1,405
Due to joint venture partners 573 272
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Total liabilities 16,217 13,483
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Minority interests 306 294
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Series A and B Redeemable Convertible Preferred
Stock, $0.0001 par value:
Authorized shares - 5,000,000
Issued and outstanding - 8,757,065 shares and
9,434 shares at March 25, 2008 and
December 25, 2007 5,258 5,321
Commitments
Stockholders' equity:
Class A Common Stock, $0.0001 par value:
Authorized shares - 102,000,000
Issued and outstanding - 56,071,947 at
March 25, 2008 and 55,195,385 at
December 25, 2007 6 5
Class B Common Stock, $0.0001 par value:
Authorized shares - 2,000,000
Issued and outstanding - none -- --
Additional paid-in capital 30,544 29,982
Retained earnings 26,038 24,568
Accumulated other comprehensive income 10,908 7,767
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Total stockholders' equity 67,496 62,322
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Total liabilities and stockholders' equity $89,277 $81,420
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