HONG KONG, Nov. 11, 2003 (PRIMEZONE) -- New Dragon Asia Corp. (AMEX:NWD) today reported financial results for its third quarter ended September 25, 2003, reflecting an increase in net income and improved gross margins.
Net income for quarter increased 8.4 percent to $786,000, or $0.02 per diluted share, from $725,000, or $0.02 per diluted share, a year earlier. Net sales decreased slightly to $8.2 million from $8.4 million a year earlier, reflecting the lingering impact of SARS and the effect on consumer demand and retail sales.
Net income for the nine-month period was $514,000, or $0.01 per diluted share, compared with $2.1 million, or $0.05 per diluted share, a year ago. Sales during the nine months declined to $20.2 million from $23.0 million a year earlier -- reflecting the full impact of SARS during the March through June period.
"Results for the quarter reflect a significant improvement in business, especially given the effect of SARS on operations during the previous six months. As we enter the holiday season, a period which is historically the company's strongest, management is focused on leveraging New Dragon Asia's strength in production, distribution, brand name awareness and quality recognition within retail and commercial markets," said Xue Jun Song, chief executive officer.
Gross profit for the quarter increased by $446,000 over a year ago. Gross profit as a percentage of sales for the same period increased to 21 percent from 15 percent in third quarter of 2002, reflecting changes in product mix, but decreased for the nine months due to the impact of SARS during the March through June period. Manufacturing expenses also increased as a result of additional precautionary hygienic measures implemented at the company's food processing facilities during the outbreak of SARS.
About The Company
Headquartered in Hong Kong, New Dragon Asia Corp. is engaged in the milling, sale and distribution of flour and related products, including instant noodles, to retail and commercial customers throughout China. The company markets its well-established product line through a network of 200 key distributors and 20 regional offices in 27 Chinese provinces with an aggregate production capacity of approximately 175,000 tons of flour and more than 110 million packages of instant noodles.
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, statements concerning the company's operations and financial performance and condition. 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 of health-related issues; 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 those discussed in the Company's reports filed with the Securities and Exchange Commission from time to time.
(Financial table follows)
NEW DRAGON ASIA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
FOR THE FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 25, SEPTEMBER 25,
------------------ ------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net sales $ 8,194 $ 8,443 $ 20,220 $ 22,834
Cost of goods
sold (6,472) (7,167) (17,518) (18,789)
-------- -------- -------- --------
Gross profit 1,722 1,276 2,702 4,045
Selling and
distribution
expenses 263 224 753 780
General and
administrative
expenses 468 227 1,140 654
-------- -------- -------- --------
Income from
operations 991 825 809 2,611
Other income and
expenses:
Interest
expense (67) (48) (195) (197)
Interest
income 60 52 168 143
Other
income 19 -- 50 --
-------- -------- -------- --------
Income before
provision for
income taxes 1,003 829 832 2,557
Provision for
income taxes (217) (104) (318) (419)
-------- -------- -------- --------
Net income $ 786 $ 725 $ 514 $ 2,138
======== ======== ======== ========
Basic and
diluted
earnings
per common
share $ 0.02 $ 0.02 $ 0.01 $ 0.05
======== ======== ======== ========
Weighted average
shares used
to compute
basic and
diluted
net income
per common
share 41,700 40,911 41,175 40,911
======== ======== ======== ========