omniture

Asian Financial Announces Results for Third Quarter Fiscal 2009

2009-05-16 04:48 957


BEIJING, May 16 /PRNewswire-Asia/ -- Asian Financial, Inc. ("Asian Financial", or the "Company"), a leading offset printing equipment supplier in China, through its wholly owned operating subsidiary, Duoyuan Digital Press Technology Industries (China) Co., Ltd. ("Duoyuan"), today announced its financial results for the three and nine months ended March 31, 2009.

Third Quarter Fiscal 2009 Highlights

-- Revenue was $17.4 million, an increase of 8.7% from $16.0 million for

the same period last year

-- Gross profit was $9.1 million, an increase of 10.6% from $8.2 million

for the same period last year

-- Gross profit margin was 52.0%, compared to 51.1% for the same period

last year

-- Operating income was $6.2 million, an increase of 18.2% from $5.3

million for the same period last year

-- Net income was $4.9 million, an increase of 6.1% from $5.2 million for

the same period last year

-- Introduced one new press product into the market

Nine Months Ended March 31, 2009 Highlights

-- Revenue was $80.4 million, an increase of 25.5% from $64.1 million for

the same period last year

-- Gross profit was $43.1 million, an increase of 31.2% from $32.8 million

for the same period last year

-- Gross profit margin was 53.6%, compared to 51.3% for the same period

last year

-- Operating income was $31.3 million, an increase of 36.2% from $23.0

million for the same period last year

-- Net income was $26.0 million, an increase of 27.6% from $20.4 million

for the same period last year

"During the third quarter of fiscal year 2009, we successfully increased our gross and operating margins because of increased sales of our pre-press equipment and multicolor presses," said Mr. Wenhua Guo, Chairman and Chief Executive Officer of Asian Financial. "Our revenue increased modestly due to seasonality and the impact from the slowdown of China's economy caused in part by the recent challenging global financial conditions. Revenue from our multicolor presses contributed to 82% of total revenue compared to 81% for the three months ended March 31, 2008. Revenue from our pre-press equipment contributed to 5.3% of total revenue compared to 3.7% for the three months ended March 31, 2008. For the quarter, revenue from our multicolor small format presses increased 14% compared to the same period last year as we obtained new customers and increased sales to existing customers."

Third Quarter Fiscal 2009 Results

For the three months ended March 31, 2009, revenue was $17.4 million, a 8.7% increase from $16.0 million for the same period last year. The increase in revenue was mainly attributable to the increase in sales of our pre-press equipment, namely the CTP system, and multicolor (small and large format) presses. Sales of the CTP system for the three months ended March 31, 2009 were $0.9 million, an increase of 54.9%, from $0.6 million for the same period last year. Sales of multicolor large format presses for the three months ended March 31, 2009 were $8.2 million, an increase of 6.0%, from $7.7 million for the same period last year and the sales of multicolor small format presses were $6.0 million for the three months ended March 31, 2009, an increase of 14.1% from $5.3 million for the same period last year.

For the three months ended March 31, 2009, gross profit was $9.1 million, an increase of 10.6% from $8.2 million for the same period last year. Gross profit margin was 52.0%, compared to 51.1% for the same period last year. The increase in gross profit margin was mainly due to the growth in the sales of pre-press equipment and multicolor (small and large format) presses. Pre-press equipment and multicolor (small and large format) presses have higher gross profit margins than single color (small and large format) presses.

For the three months ended March 31, 2009, selling expenses were $1.5 million, an increase of 4.6% from $1.4 million for the same period last year. General and administrative expenses were $1.1 million, a decrease of 17.0% from $1.3 million for the same period last year. As a percentage of revenue, general and administrative expenses were 6.1%, a decrease of 1.8% from 7.9% for the same period last year. Research and development expenses were $0.3 million, an increase of 27.3% from $0.2 million for the same period last year. This increase was primarily due to the development of prototypes for a number of new products, specifically one new single color large format press, one new multicolor small format press and one new large format multicolor press. The Company introduced a new model of multicolor large format press into the market in February 2009.

Income from operations for the three months ended March 31, 2009 was $6.2 million, an increase of 18.2% from $5.3 million for the same period last year. Other expenses decreased 48.3% to $0.1 million from $0.2 million for the same period last year.

Income taxes for the three months ended March 31, 2009 were $1.2 million, a 43.7% increase from $0.8 million for the same period last year. The Company's effective tax rate increased to 19.4% from 13.6% for the same period last year because of a tax rate increase pursuant to prevailing Chinese tax law as of January 1, 2009.

Net income for the three months ended March 31, 2009 was $4.9 million compared to $5.2 million for the same period last year. In November 2007, the Company reached a settlement with investors who agreed to waive all penalties due in exchange for warrants or cash payments. The Company settled the liquidated damages in the third quarter of the year ended June 30, 2008. Upon settlement, the Company reversed the accrual and recognized a net liquidated damages gain of $0.9 million for the three months ended March 31, 2008. The Company had no such gain during the three months ended March 31, 2009.

Nine Months Ended March 31, 2009 Results

For the nine months ended March 31, 2009, revenue was $80.4 million, a 25.5% increase from $64.1 million for the same period last year. Gross profit was $43.1 million, an increase of 31.2% from $32.8 million for the same period last year. Gross profit margin for the nine months ended March 31, 2009 was 53.6% compared to 51.3% for the same period last year. Income from operations for the nine months ended March 31, 2009 was $31.3 million, an increase of 36.2% from $23.0 million for the same period last year. Net income for the nine months ended March 31, 2009 was $26.0 million, a 27.6% increase from $20.4 million for the same period last year.

Net income for the nine months ended March 31, 2009 included expenses of $1.0 million that were expensed in connection with the Company's proposed initial public offering due to market uncertainty. In November 2007, the Company reached a settlement with investors who agreed to waive all penalties due in exchange for warrants or cash payments. The Company settled the liquidated damages in the third quarter of the year ended June 30, 2008. Upon settlement, the Company reversed the accrual and recognized a net liquidated damages gain of $0.2 million for the nine months ended March 31, 2008. The Company had no such gain during the nine months ended March 31, 2009.

Financial Condition

As of March 31, 2009, the Company had cash and cash equivalents of $21.1 million and working capital of approximately $68.0 million. Total shareholders' equity as of March 31, 2009 was $120.2 million compared to $93.8 million as of June 30, 2008. For the nine months ended March 31, 2009, the Company generated $20.0 million of net cash from operating activities, primarily from net income.

Capital expenditures totaled $16.1 million for the nine months ended March 31, 2009, primarily due to equipment acquisition, purchase prepayments and expenses related to the launching of the Company's new post-press products, namely the cold-set corrugated printing press. For the nine months ended March 31, 2009, the Company expended $4.8 million to purchase new manufacturing equipment for the future production of cold-set corrugated printing presses, which the Company anticipates to commercially produce and sell by the end of 2010.

Business Outlook

The Company continues to focus its marketing and research and development efforts on its higher-end product offerings, such as new models in the multicolor press product category. The Company believes that by focusing on higher-end and more technologically advanced products, it is able to improve its margins over time and strengthen its position in the offset printing equipment market in China.

The Company continues to upgrade its production facilities to automate its production processes by utilizing more advanced manufacturing equipment. These upgrades reduce the need for manual labor and help to reduce raw material waste. The Company expects these production upgrades will reduce production costs.

Duoyuan's plans to enter the post-press business are progressing, with the Company in negotiation to acquire certain technology needed to manufacture cold-set corrugated printing presses. Subject to the acquisition of this technology, the Company plans to build a new factory at its Langfang manufacturing facility to produce cold-set corrugated printing presses.

About Asian Financial, Inc.

Asian Financial, Inc., through its wholly owned subsidiaries, is engaged in the business of manufacturing commercial offset printing presses in China. Asian Financial, Inc. combines technical innovation and precision engineering to offer a broad range of printing equipment and solutions. Asian Financial, Inc. has manufacturing and research and development facilities in Langfang, Hebei Province and Shaoyang, Hunan Province in addition to a distribution and service network that operates in over 65 cities in China. Headquartered in Beijing, Asian Financial, Inc. is one of the largest non-government owned offset printing equipment providers 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 "believe," "anticipate," "may," "will," "should," "expect," "intend," "estimate," "predict," "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 expectations of the Company and its directors and officers 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 on Form 10-K for the year ended June 30, 2008, the Company's Form 10-Q for the most recent quarter and other periodic 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 does not ordinarily make projections of its future operating results and undertakes no obligation (and expressly disclaims any obligation) to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 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.

Financial Tables to Follow:

ASIAN FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2009 AND 2008

(Unaudited)

Three months ended Nine months ended

March 31 March 31

2009 2008 2009 2008

REVENUES $17,411,937 $ 16,022,248 $ 80,428,651 $ 64,111,868

COST OF REVENUES 8,354,157 7,835,407 37,293,982 31,236,331

GROSS PROFIT 9,057,780 8,186,841 43,134,669 32,875,537

RESEARCH AND

DEVELOPMENT

EXPENSES 285,994 224,637 1,470,595 558,242

SELLING EXPENSES 1,475,783 1,411,360 6,974,735 5,967,069

GENERAL AND

ADMINISTRATIVE

EXPENSES 1,056,541 1,272,265 3,332,876 3,324,609

INCOME FROM

OPERATIONS 6,239,462 5,278,579 31,356,463 23,025,617

LIQUIDATED DAMAGES,

net of

settlement -- 941,968 -- 235,492

CHANGE IN FAIR VALUE

OF DERIVATIVE

INSTRUMENTS 30,271 88,284 194,347 88,284

OTHER INCOME

(EXPENSE):

Non-operating

expenses -- -- (956,936) --

Interest expense

and other

charges (210,648) (226,343) (637,387) (652,193)

Interest income

and other

income 104,309 20,583 173,496 53,508

Other expense,

net (106,339) (205,760) (1,420,827) (598,685)

INCOME BEFORE

MINORITY

INTEREST AND

PROVISION FOR

INCOME

TAXES 6,163,394 6,103,071 30,129,983 22,750,708

MINORITY INTEREST 71,652 50,432 350,375 296,718

INCOME BEFORE

PROVISION

FOR INCOME TAXES 6,091,742 6,052,639 29,779,608 22,453,990

PROVISION FOR

INCOME TAXES 1,180,761 821,501 3,711,891 2,024,946

NET INCOME 4,910,981 5,231,138 26,067,717 20,429,044

OTHER COMPREHENSIVE

INCOME

Foreign currency

translation gain

(loss) (226,770) 3,266,563 337,967 6,253,801

COMPREHENSIVE

INCOME $ 4,684,211 $ 8,497,701 $ 26,405,684 $ 26,682,845

BASIC AND DILUTED

WEIGHTED AVERAGE

NUMBER

OF SHARES 25,000,050 25,000,050 25,000,050 25,000,050

BASIC AND DILUTED

EARNINGS

PER SHARE $ 0.20 $ 0.21 $ 1.04 $ 0.82

ASIAN FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2009 AND JUNE 30, 2008

ASSETS

March 31, June 30,

2009 2008

(Unaudited)

CURRENT ASSETS:

Cash $ 21,092,243 $ 14,199,700

Accounts receivable, net of allowance for

doubtful accounts of $1,183,173

and $1,178,328 as of March 31, 2009 and

June 30, 2008, respectively 36,328,804 33,184,833

Inventories 28,922,427 23,950,551

Other receivables 30,091 20,834

Deferred expense 73,903 661,250

Total current assets 86,447,468 72,017,168

PLANT AND EQUIPMENT, net 37,703,701 34,130,651

OTHER ASSETS:

Intangible assets, net 3,959,506 4,003,128

Advances on equipment purchases 13,330,768 2,753,610

Total other assets 17,290,274 6,756,738

Total assets $141,441,443 $ 112,904,557

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Lines of credit $ 14,357,000 $ 11,380,200

Accounts payable 768,617 1,489,255

Accrued liabilities 2,007,405 1,858,112

Taxes payable 1,267,269 1,702,986

Total current liabilities 18,400,291 16,430,553

DERIVATIVE INSTRUMENT LIABILITIES 1,180,477 1,374,824

MINORITY INTEREST 1,648,654 1,292,843

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

Preferred stock; $0.001 par value;

1,000,000 shares authorized;

no shares issued and outstanding as of

March 31, 2009 and June 30, 2008 -- --

Common stock; $0.001 par value;

100,000,000 shares authorized;

25,000,050 shares issued and

outstanding as of March 31, 2009

and June 30, 2008 25,000 25,000

Additional paid-in capital 27,263,040 27,263,040

Statutory reserves 10,377,704 6,000,090

Retained earnings 71,748,279 50,058,176

Accumulated other comprehensive income 10,797,998 10,460,031

Total shareholders' equity 120,212,021 93,806,337

Total liabilities and

shareholders' equity $141,441,443 $ 112,904,557

ASIAN FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED MARCH 31, 2009 AND 2008

(Unaudited)

2009 2008

CASH FLOWS FROM OPERATING

ACTIVITIES:

Net income $ 26,067,717 $ 20,429,044

Adjustments to reconcile net

income to net cash provided by

operating activities:

Minority interest 350,375 296,718

Depreciation 2,095,986 1,615,845

Amortization 60,065 55,632

Bad debt expense -- 231,400

Change in fair value of

derivative instruments (194,347) (88,284)

Liquidated damages penalty -- 706,476

Gain from settlement of

liquidated damages -- (941,968)

Transaction gain (84,358) --

Write-off of deferred expenses 587,347 --

Changes in operating assets and

liabilities

Accounts receivable (3,006,474) (6,159,997)

Inventories (4,870,619) (1,957,350)

Other receivables (9,168) 55,922

Other assets -- 41,601

Accounts payable (726,516) (1,344,337)

Accrued liabilities 144,756 (392,632)

Taxes payable (442,570) 586,967

Net cash provided by

operating activities 19,972,194 13,135,037

CASH FLOWS FROM INVESTING

ACTIVITIES:

Purchase of equipment (5,270,119) (4,244,118)

Advances on equipment purchases (10,562,227) (1,234,533)

Payments for capitalized interest (257,388) --

Payments for

construction-in-progress -- (1,904,386)

Net cash used in investing

activities (16,089,734) (7,383,037)

CASH FLOWS FROM FINANCING

ACTIVITIES:

Proceeds from lines of credit 14,352,100 13,091,820

Principal payments for lines of

credit (11,423,100) (13,091,820)

Payments to settle liquidated

damages -- (436,000)

Restricted cash -- 2,097,490

Net cash provided by

financing activities 2,929,000 1,661,490

EFFECT OF EXCHANGE RATE CHANGES ON

CASH 81,083 1,000,347

INCREASE IN CASH 6,892,543 8,413,837

CASH, beginning of period 14,199,700 7,816,361

CASH, end of period $ 21,092,243 $ 16,230,198

Source: Asian Financial, Inc.
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