BEIJING, Oct. 1 /Xinhua-PRNewswire/ -- Asian Financial, Inc. ("Asian Financial", "Company"), a leading provider of offset printing equipment and solutions in China through its wholly-owned operating subsidiary, Duoyuan Digital Printing Technology Industry (China) Co., Ltd. ("Duoyuan"), today reported financial results for fourth quarter and fiscal year ended June 30, 2007.
Full Year 2007 Highlights
-- Total revenues were $68.4 million, a 56.3% increase over fiscal 2006
-- Operating income was $19.1 million, a 40.3% increase over fiscal
2006
-- Net income was $14.0 million, or $0.61 per basic and diluted share
-- Non-GAAP net income was $16.1 million, or $0.70 per basic and
diluted share
-- Became a US public company through share exchange transaction and
raised $23.5 million in gross proceeds from a private placement
financing
-- Introduced new equipment and updated existing production lines
-- Began production of 104 cm width large format presses
Commenting on the results, Mr. Wenhua Guo, Chairman and CEO of Asian Financial, said, "We accomplished a great deal in fiscal 2007. We successfully transitioned our product mix away from small format single-color presses to more technologically advanced large-format multicolor presses, which is evident by the excellent growth in our top line. We also achieved record net income despite the liquidated damages and penalty expenses incurred in connection with our private placement offering in the first quarter of the year."
Fourth Quarter 2007 Results
Revenues for the fourth quarter of fiscal 2007 were $19.8 million, up 37.9% from $14.3 million in the fourth quarter of fiscal 2006. The increase in revenue was driven by substantial growth in sales of multicolor offset presses resulting from strong ongoing demand. Sequentially, revenue increased 105% from the $9.6 million in the third quarter of fiscal 2007, due to seasonality factors.
Gross profit for the fourth quarter of fiscal 2007 was $9.1 million, up 27% from $7.2 million in the same period a year ago. Gross margin was 46.3% in the fourth quarter of fiscal 2007, compared to 50.2% in the same quarter last year. The decline in gross profit was primarily the result of higher labor costs associated with a drop in productivity as workers were shifted from other positions or newly hired to produce the large-format multicolor printing presses.
Operating expenses were $3.7 million, up 22.3% from $3.1 million in the fourth quarter of 2006 due primarily to higher shipping, handling and advertising expenses related to large-format multicolor presses. Operating expenses accounted for 18.9% of revenues in the fourth quarter of fiscal 2007, compared to 21.4% in the same quarter last year.
Operating income was $5.4 million in the fourth quarter of fiscal 2007, up 30.7% from $4.1 million in the same period a year ago. Net income was $3.1 million, down 7.4% from $3.3 million in the fourth quarter of fiscal 2006. Net income in the current quarter includes $0.9 million in pre-tax liquidated damage expenses associated with the failure to settle the outstanding balance of related party transactions. Earnings per basic and diluted share were $0.12, compared to $0.18 in the same quarter last year. Earnings per basic and diluted share reflect an increase in weighted average shares of 6,132,614 related to a private placement financing in the first quarter of fiscal 2007. Excluding the impact of the penalties associated with the failure to settle the outstanding balance of related party transactions, non-GAAP net income was $4.0 million, or $0.16 per basic and diluted share, up 21% from the same period last year.
Full Year 2007 Results
Net revenues were $68.4 million in fiscal 2007, up 56.3% from $43.7 million in fiscal 2006. Gross profit was $30.7 million, or 44.9% of revenues, compared to $21.3 million, or 48.6% of revenues for the same period last year. Income from operations was $19.1 million in fiscal 2007, up 40.3% from $13.6 million in the same prior period last year. Net income was $14.0 million, up 8.4% from $12.9 million in fiscal 2006. Net income in fiscal 2007 includes $2.1 million in liquidated damage expenses associated with the delay in filing the registration statement for the shares issued in its November 2, 2006 private placement and penalties associated with the failure to settle the outstanding balance of related party transactions. In addition, there were approximately $0.7 million in one-time inventory and capital expenditures adjustments that also negatively impacted net income. Earnings per basic and diluted share were $0.61, compared to $0.68 in fiscal 2006. Earnings per basic and diluted share reflect an increase in weighted average shares of 4,173,585 related to a private placement financing in the first quarter of fiscal 2007. Excluding the impact of the liquidated damages and penalties, non-GAAP net income was $16.1 million, or $0.70 per basic and diluted share, up 25% from fiscal 2006.
Financial Condition
As of June 30, 2007, cash and cash equivalents were $7.8 million, up from $3.7 million at the end of fiscal 2006. At year-end, the Company had working capital of $30.9 million, $12.9 million outstanding on its lines of credit and stockholders' equity of $59.1 million. In fiscal 2007, capital expenditures totaled $13.3 million, and were used to purchase new equipment and upgrade production lines.
Business Outlook
"In fiscal 2008, we will continue to invest in R&D to further enhance our product lines and upgrade our production capabilities," Mr. Guo said. "We have clear strategies in place for each of our main businesses including large-format offset presses and digital printing. Our long-term goals are to expand market share in each of our business segments and improve our product mix while maintaining our cost advantages over international competitors. As such, we look forward to continued strong growth in our top and bottom lines."
Guidance for Fiscal Year 2008
The Company expects to achieve approximately $23.9 million in net income and earnings per basic and diluted share of about $0.89 in the fiscal year ending June 30, 2008.
Recent Events
On July 17, 2007, the Company effected a 1-for-2.68189924 reverse stock split of its common stock. The Company had 25,000,050 outstanding and issued shares following the reverse stock split. All share and per share amounts in this press release have been retroactively restated to reflect the reverse stock split.
On July 19, 2007, the Company announced the appointment of Gene Michael Bennett as its Chief Financial Officer. Mr. Bennett is responsible for the Company's overall financial planning and controls, Chinese and U.S. GAAP compliant financial reporting, SEC filings, investor relations, merger and acquisition activities and corporate finance.
On July 19, 2007, the Company appointed Mr. Christopher Patrick Holbert as an independent director. He serves as Chairman and financial expert on the Company's audit committee, and as a member of the compensation and nominating committees.
Conference Call
The Company will conduct a conference call at 10:00 a.m. Eastern Time on Monday, October 1, 2007 to discuss fiscal year 2007 results. Joining Mr. Wenhua Guo, Asian Financial's Chairman and Chief Executive Officer, will be Mr. Gene Michael Bennett, Chief Financial Officer. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 888-419-5570. International callers should dial 617-896-9871. When prompted by the operator, mention Conference Passcode 655 927 61. If you are unable to participate in the call at this time, a replay will be available for seven days starting on Monday, October 1, 2007 at 12:00 p.m. Eastern Time. To access the replay, dial 888-286-8010 and enter the passcode 12139520. International callers should dial 617-801-6888 and enter the same passcode 12139520. The conference will be broadcast live over the Internet and can be accessed by all interested parties at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=215582&eventID=1654722 . To listen to the call please go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
Use of Non-GAAP Financial Measures
To supplement Asian Financial's condensed consolidated financial statements presented on a GAAP basis, the Company is providing certain income statement information that is not calculated according to GAAP. Non-GAAP net income discussed in this release reflect operating results excluding liquidated damage expenses associated with the delay in filing the registration statement for the shares issued in its November 2, 2006 private placement and penalties associated with the failure to settle the outstanding balance of related party transactions. The Company believes that its non-GAAP disclosures are useful in evaluating its operating results as this information supplies the user with another view of the matching of costs and expenses. A reconciliation of the adjustments to GAAP results for the three month period ended June 30, 2007 and the year ended June 30, 2007 is included below. The non-GAAP information presented is supplemental and is not purported to be a substitute for information prepared in accordance with GAAP.
About Asian Financial, Inc.
Asian Financial, Inc., through its wholly-owned subsidiaries, is engaged in the business of manufacturing and marketing commercial offset printing presses and related solutions in the People's Republic of China ("PRC"). The Company combines technical innovation with PRC cost advantages to offer a broad range of offset printing equipment at price discount as compared to western models. Asian Financial, Inc. has manufacturing and R&D facilities in Langfang in Hebei Province and Shaoyang in Hunan Province and has a distribution and service network in approximately 100 cities in China. Headquartered in Beijing, the Company is one of the largest non-government owned major offset printing equipment and solutions provider in China.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. Generally, the words "believes," "anticipates," "may," "will," "should," "expect," "intend," "estimate," "continue," and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements which include, but are not limited to, statements concerning the Company's expectations regarding its working capital requirements, financing requirements, business prospects, and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such statements are subject to certain risks and uncertainties, including the matters set forth in its Annual Report or other reports or documents the Company files with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to update these forward-looking statements. In addition, the forward-looking statements in this press release involve known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to differ materially from those expressed in or implied by the forward-looking statements contained herein. Please see the discussion on risk factors which appears in the Company's Form 10-K.
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS (UNAUDITED) AND FISCAL YEARS (AUDITED) ENDED
JUNE 30, 2007 AND 2006
Three months ended Years ended
June 30, June 30,
2007 2006 2007 2006
REVENUES $19,778,334 $14,340,162 $68,383,014 $43,746,561
COST OF SALES 10,628,805 7,143,637 37,693,679 22,477,905
GROSS PROFIT 9,149,529 7,196,525 30,689,335 21,268,656
OPERATING EXPENSES 3,748,112 3,064,261 11,628,005 7,685,850
INCOME FROM
OPERATIONS 5,401,417 4,132,264 19,061,330 13,582,806
LIQUIDATED DAMAGE
EXPENSES 941,968 -- 2,119,428 --
OTHER INCOME
(EXPENSE), net (625,863) (627,547) (915,228) (238,974)
INCOME BEFORE
MINORITY INTEREST
AND PROVISION FOR
INCOME TAXES 3,833,586 3,504,717 16,026,674 13,343,832
MINORITY INTEREST (39,539) (38,305) 240,584 187,120
INCOME BEFORE
PROVISION FOR
INCOME TAXES 3,794,047 3,466,412 15,786,090 13,156,712
PROVISION FOR INCOME
TAXES 728,031 156,716 1,806,943 261,133
NET INCOME 3,066,016 3,309,696 13,979,147 12,895,579
OTHER COMPREHENSIVE
INCOME
Foreign currency
translation gain
(loss) 578,307 61,624 1,834,313 425,857
COMPREHENSIVE INCOME $3,644,323 $ 3,371,320 $ 15,813,460 $13,321,436
BASIC AND DILUTED
WEIGHTED AVERAGE
NUMBER OF SHARES 25,000,050 18,867,436 23,041,021 18,867,436
BASIC AND DILUTED
EARNING PER SHARE $ 0.12 $ 0.18 $ 0.61 $ 0.68
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2007 AND 2006
(AUDITED)
A S S E T S
2007 2006
CURRENT ASSETS:
Cash $ 7,816,361 $ 3,739,711
Restricted cash 2,097,490 --
Accounts receivable, net of allowance
of $498,648 and $159,725
as of June 30, 2007 and 2006,
respectively 21,170,423 11,231,897
Inventories 20,074,605 16,727,833
Other receivables 68,160 130,914
Other receivables-related parties -- 892,552
Other assets 40,331 --
Advances on inventory purchases -- 2,183,483
Total current assets 51,267,370 34,906,390
PLANT AND EQUIPMENT, net 25,332,554 12,065,863
OTHER ASSETS:
Intangible assets, net 3,679,941 3,572,106
Total other assets 3,679,941 3,572,106
Total assets $ 80,279,865 $ 50,544,359
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Lines of credit $ 12,887,000 $ 12,269,600
Accounts payable 2,572,061 13,137,939
Accrued liabilities 1,107,591 752,666
Other payables 198,000 522,167
Other payables - related parties 369,564 796,753
Customer deposits -- 18,830
Taxes payable 1,078,503 463,805
Liquidated damages payable 2,119,428 --
Total liabilities 20,332,147 27,961,760
MINORITY INTEREST 800,766 527,246
COMMITMENTS AND CONTINGENT LIABILITIES -- --
SHAREHOLDERS' EQUITY:
Preferred stock; $0.001 par
value; 1,000,000 shares authorized;
no shares issued and outstanding -- --
Common stock; $0.001 par value;
100,000,000 shares authorized;
25,000,050 and 18,867,436 shares
issued and outstanding
at June 30, 2007 and 2006 25,000 18,867
Additional paid-in capital 27,263,040 5,991,034
Statutory reserves 3,282,601 1,871,198
Retained earnings 26,316,141 13,748,397
Accumulated other comprehensive
income 2,260,170 425,857
Total shareholders' equity 59,146,952 22,055,353
Total liabilities and
shareholders' equity $ 80,279,865 $ 50,544,359
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
(AUDITED)
2007 2006
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 13,979,147 $ 12,895,579
Adjustments to reconcile net
income to cash provided by
(used in) operating activities:
Minority interest 240,584 187,120
Depreciation 882,842 590,635
Amortization 70,047 67,821
Bad debt expense 322,305 --
Liquidated damage penalties 2,119,428 --
(Increase) decrease in assets:
Accounts receivable (9,452,582) (6,010,258)
Inventories (2,440,076) (1,390,188)
Other receivables 71,457 --
Other receivables -- related
parties 913,154 5,289
Advances on inventory purchases 2,233,885 (1,265,352)
Other assets (43,198) 36,625
Increase (decrease) in
liabilities:
Accounts payable (10,935,839) 4,361,870
Customer deposits (19,265) 18,653
Other payables (341,354) 286,617
Other payables -- related
parties (455,164) (6,518,709)
Accrued liabilities 312,551 69,749
Taxes payable 576,025 332,069
Net cash (used in) provided
by operating activities (1,966,053) 3,667,520
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of equipment (13,314,596) (190,422)
Payments for construction in
progress -- (107,137)
Net cash used in investing
activities (13,314,596) (297,559)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from line of credit 15,050,400 --
Payment for line of credit (15,060,400) --
Proceeds from private placement 21,278,139 --
Restricted cash (2,097,490) --
Net cash provided by
financing activities 19,170,649 --
EFFECT OF EXCHANGE RATE CHANGES ON
CASH 186,650 75,316
INCREASE (DECREASE) IN CASH 4,076,650 3,445,277
CASH, beginning of year 3,739,711 294,434
CASH, end of year $ 7,816,361 $ 3,739,711
ASIAN FINANCIAL INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL DATA
FOR THE THREE MONTHS AND YEAR ENDED JUNE 30, 2007
Non-GAAP Net income Q4 2007 FY 2007
Basic and Basic and
Diluted Diluted
Net Income Net Income EPS Net Income EPS
Adjusted Amount $4,007,984 $0.16 $16,098,575 $0.70
Adjustments
Liquidated Damage
Expenses (1) $941,968 $0.04 $2,119,428 $0.09
Amount per consolidated
statement of operations $3,066,016 $0.12 $13,979,147 $0.61
(1) Liquidated damage expenses associated with: (a) the delay in filing
the registration statement for the shares issued in its November 2,
2006 private placement; (b) the failure to settle the
outstanding balance of related party transactions