China Digital Communication Group Reports Strong Third Quarter 2009 Results

2009年11月14日 05:05美通社 】 【打印共有评论0

NEW YORK and SHENZHEN, China, Nov. 14 /PRNewswire-Asia/ -- China Digital Communication Group (OTC Bulletin Board: CMTP), a manufacturer and dIStributor of battery components in China, today announced financial rESults for the three montHS ended September 30, 2009.

Third Quarter 2009 Highlights:

-- Revenues increase 9.2% to $7.8 million

-- Net income increases 26.7% to $2.0 million

-- EPS increases 23% to $0.32 per share

-- Generated $4.7 million of cash flow from operations year-to-date

-- Ended quarter with $9.5 million of cash and no long term debt

-- Reaffirms full year net income guidance of $5.3 million to $6.0 million

Mr. Fushun Li, Chief EXecutive Officer, commented, "For the third quarter ended September 30, 2009, China Digital Communication Group reported revenue of $7.8 million versus $7.2 million in the third quarter of 2008. We experienced the strongest growth in our battery shell and cover manufacturing segment, where revenue increased by 35.2% to $1.8 million from $1.3 million for the comparable period last year. At the same time, we continue to gain traction in our battery distribution segment, which began in mid-August 2008. As a result of commencing work with our largest customer in the third quarter of 2008, we recognized strong sales in the second half of 2008, whereas sales in 2009 were more evenly distributed. We have aLSo been successful in attracting new, large customers. For example, during the third quarter, our distribution segment was awarded a $4.1 million purchase order for lithium ion batteries from China Electronics Shenzhen Company. This order is significant for several reasons. First, since China Electronics Shenzhen Company is one of the largest, export-driven state owned enterprises in China, it further enhances our reputation within the battery market. Second, it allows us to compete for additional business from China Electronics Shenzhen Company. Third, it further expands and diversifies our customer base. Going forward, we intend to capitalize on our long-standing relationships in the Chinese battery market and further expand our higher margin distribution business.

"In addition to increasing our gross profits, we have remained focused on carefully managing our operating expenses. For the third quarter of 2009, we reduced our selling, general and adMINIstrative expenses by more than 42%, even as we increased revenue. As a result, we achieved net income of $2.0 million for the third quarter of 2009, an increase of 26.7%, as compared to $1.6 million for the comparable period last year. Moreover, we continue to generate strong cash flow and have a solid balance sheet with approximately $9.5 million of cash and very litTLe debt. We are excited about our growth prospects and recognize that since we are currently utilizing just 60% of our capacity, we can increase the profitability of our existing business without having to incur significant capital expenditures. Looking ahead, we are encouraged by the near- and long-term outlook for the business, and remain confident in achieving our previouSLy issued guidance for full year revenues of $23.0-$25.0 million and net income of $5.3- $6.0 million."

Mr. Li conCLuded, "In a country with $4 billion of lithium ion battery sales per year, a growing affluent middle class and an exciting array of innovative mobile devices being introduced into the Chinese market, China Digital Communication Group is well positioned to grow through its quality product offerinGS, expanding distribution networks and aCCRetive acquisitions we have identified. In 2009, we dramatically improved our operations and profitability. We expect that 2010 will be another exciting year for us as our existing business continues to grow and we actively pursue strategic business opportunities. In addition, in 2010, management intends to significantly increase and improve its communication with the U.S. investment community. We recently hired a new investor relations firm and are developing a comprehensive strategy to increase our awareness among U.S. investors. Through increased profitability and better communication with the investment community, we look forward to creating significant value for our shareholders in the coming quarters."

Revenue for the three months ended September 30, 2009 was $7.8 million, as compared to $7.2 million for the three months ended September 30, 2008. Sales for the new battery distribution segment were $6.1 million, or 77% of the Company's net revenue in the third quarter of 2009, compared to $5.9 million, or 82% of net revenue in the third quarter of 2008. Sales of the Company's battery shell and cover business segment were $1.8 million in the third quarter of 2009, representing a 35% increase from sales of $1.3 million in the third quarter of 2008.

Gross profit was $2.4 million, or 30.9% of net revenue, for the three months ended September 30, 2009, as compared to $2.2 million, or 30.0% of net revenue, for the three months ended September 30, 2008. The improvement in gross profit and gross margin was primarily due to the Company's new battery assembly and distribution segment. Compared to the existing battery shell and cover business, the battery assembly and distribution segment generates higher gross profit due to the lower cost of sales.

Operating income was $2.3 million for the three months ended September 30, 2009, as compared to $2.0 million for the three months ended September 30, 2008, reflecting strict cost control measures and increased operational efficiency. Net income for the three months ended September 30, 2009 was $2.0 million, or $0.32 per diluted share, compared to net income of $1.6 million, or $0.26 per diluted share, for the same period last year.

As of September 30, 2009, the Company had cash and cash equivalents of $9.5 million, working capital of $12.9 million and stockholders' equity of $14.4 million. In August 2009, the Company paid off a bank loan in the amount of $2.2 million and has no long term debt. During the nine months ended September 30, 2009, net cash provided by operating activities was $4.7 million.

Conference Call

China Digital Communication Group will also host a conference call at 8:00 a.m. Eastern Time on Monday, November 16, 2009. During the call, Mr. Fushun Li, Chief Executive Officer and Mr. Junfeng Chen, Chief Financial Officer will diSCuss the Company's quarterly performance and financial results.

The telephone number for the conference call is (877) 407-0778 (U.S. callers) or (201) 689-8565 (international callers). A live webcast of the call will also be available on the Company's website http://www.chinadigitalcommunication.com . To listen to the live call online, please visit the site at least 10 minutes early to register, download and install any necessary audio software.

The webcast will be archived on the website and investors will be able to access an encore recording of the conference call through midnight November 25, 2009 by calling (877) 660-6853 (U.S. callers) or (201) 612-7415 (international callers) and entering conference ID #337465 and account #286. The encore recording will be available two hours after the conference call has concluded.

About China Digital Communication Group

China Digital Communication Group is a leading manufacturer and distributor of lithium ion batteries. The Company assembles and distributes finished batteries through its sales network and channel partners. The Company also sells high-quality lithium-ion battery shell and cap products to major lithium-ion battery cell manufacturers in China. The Company's products are used to power mobile phones, MP3 players, laptops, digital cameras, PDAs, camera recorders and other consumer electronic digital devices. Additional information about the Company is available at http://www.chinadigitalcommunication.com .

Forward Looking Statements

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.

For further information, please contact:

Crescendo Communications, LLC

David Waldman or Klea Theoharis

Tel:+1-212-671-1020

Email: cmtp@crescendo-ir.com

CHINA DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

September December

30, 2009 31, 2008

(Unaudited)

Current assets

Cash and cash equivalents$9,453,933$6,969,454

Accounts receivable 6,455,353 7,407,371

Inventory 208,026 759,477

Total current assets 16,117,313 15,136,302

Plant, property & equipment, net 694,465 859,232

Other assets

Intangible assets, net 810,352 880,920

Total assets$17,622,130$16,876,454

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable and accrued expenses$2,662,631$3,467,324

Taxes payable 360,486 399,519

Bank loan payable--2,200,500

Loan payable to related party 174,600 174,600

Total current liabilities 3,197,717 6,241,943

Stockholders' equity

Preferred stock, $.001 par value,

7,575,757 shares authorized,

7,575,757, issued and outstanding 7,576 7,576

Common stock, $.001 par value,

140,000,000 shares authorized,

5,446,105, issued and outstanding 5,446 5,446

Additional paid in capital 16,999,362 16,999,362

Statutory reserve 994,429 593,445

Other comprehensive income 1,078,457 1,144,170

Accumulated deficit(4,660,858)(8,115,488)

Total stockholders' equity 14,424,413 10,634,511

Total liabilities and stockholders'

equity$17,622,130$16,876,454

CHINA DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

Nine months ended Three months ended

September 30,September 30,

2009 2008 2009 2008

Revenue, net

Battery shell and cover$4,343,093$3,002,366$1,785,223$1,320,495

Battery 11,515,218 5,869,592 6,062,975 5,869,592

Total revenue 15,858,311 8,871,958 7,848,198 7,190,087

Cost of sales

Battery shell and cover 3,194,067 2,760,246 1,244,310 1,113,697

Battery 7,904,212 3,921,243 4,174,921 3,921,243

Total cost of revenue 11,098,279 6,681,489 5,419,231 5,034,940

Gross profit 4,760,032 2,190,469 2,428,967 2,155,147

Operating expenses

Selling expense 74,697 68,518 35,265 53,624

General and administrative

expenses 319,198 431,757 139,962 195,330

Recovery from inventory

reserve--(60,444)--(60,444)

Total operating expenses 393,895 439,831 175,227 188,510

Income from operations 4,366,137 1,750,639 2,253,740 1,966,637

Other income (expense)

Other income (expense),

net--17,470----

Miscellaneous income

(expense)1,346 4,649(72)335

Interest income (expense)(66,331)(13,534)(8,538)(29,836)

Total other income

(expense)(64,985)8,585(8,610)(29,501)

Income before income taxes 4,301,152 1,759,224 2,245,130 1,937,136

Provision for income taxes(445,538)(348,632)(232,454)(348,632)

Net income 3,855,614 1,410,592 2,012,676 1,588,504

Other comprehensive income

Foreign currency

translation(65,713)302,401(83,039)47,704

Comprehensive income$3,789,901$1,712,993$1,929,637$1,636,208

Net income per share

Basic$0.71$0.26 0.37 0.29

Diluted$0.62$0.23 0.32 0.26

Weighted average number of

shares outstanding:

Basic 5,446,105 5,446,105 5,446,105 5,446,105

Diluted 6,203,680 6,203,680 6,203,680 6,203,680

CHINA DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(UNAUDITED)

2009 2008

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income$3,855,614$1,410,592

Adjustments to reconcile net income

to net cash

provided by operating activities:

Depreciation and amortization 232,706 245,249

Recovery from inventory reserve:--(60,444)

(Increase) / decrease in current

assets:

Accounts receivables 938,174(4,946,992)

Inventory 549,823 780,331

Prepaid expense--1,726

Deposits--8,530

Increase/(Decrease) in current

liabilities:

Accounts payable and accrued expenses(846,567)2,132,317

Taxes payable(38,292)737,535

Net cash provided by operating

activities 4,691,457 308,844

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property & equipment--(5,993)

Net cash used in investing activities--(5,993)

CASH FLOWS FROM FINANCING ACTIVITIES

(Payments) / proceeds on loan payable(2,195,508)2,150,550

Net cash provided by (used in)

financing activities(2,195,508)2,150,550

Effect of exchange rate changes on

cash and cash equivalents(11,470)(103,431)

Net increase in cash and cash

equivalents 2,484,479 2,349,970

Cash and cash equivalents, beginning

balance 6,969,454 3,794,126

Cash and cash equivalents, ending

balance$9,453,933$6,144,096

SOURCE China Digital Communication Group

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