updated 5/12/2011 9:46:56 AM ET 2011-05-12T13:46:56

JINJIANG, China, May 12, 2011 (GLOBE NEWSWIRE) -- 8888 Acquisition Corporation (OTCQB:EGHA) ("Chengchang Shoes" or the "Company"), in the business of designing, producing and selling high quality soles to manufacturers of athletic and leisure shoes in China, today reported its fiscal 2011 third quarter financial results for the period ending March 31, 2011.

Third Quarter Fiscal 2011 Financial Highlights

  • Revenue rose 150% to $10.4 million from $4.2 million in the third quarter of fiscal year 2010
     
  • Gross profit grew 171% to $3.9 million from $1.4 million in the third quarter of fiscal year 2010
     
  • Net income increased 167% to $2.4 million from $0.9 million in the third quarter of fiscal year 2010
     
  • Basic and diluted earnings per share increased to $0.07 from $0.03 in the third quarter of fiscal year 2010, despite an increase of approximately 2.5 million shares outstanding

"We are very pleased to see another robust quarter of revenue and earnings growth, which is a strong testimony to the success of our new lines of EVO products launched in May 2010," commented Chengchang Shoes' Chairman and Chief Executive Officer, Mr. Guoqing Zhuang. "Our proprietary EVO soles, featuring favorable abrasion resistance and enhanced cushioning relative to standard EVA soles, have been very well received in the market and are attracting more customer orders. We will continue to develop new products to consolidate Chengchang's leadership as a product innovator in China's rapidly growing sports shoes industry. We are confident that we have the right business strategy, supported by our experienced R&D team and efficient operating system, to meet strong current demand for our shoe sole products."

Third Quarter Fiscal 2011 Results

In the third quarter of fiscal 2011, total revenue increased 150% to $10.4 million, from $4.2 million in the comparable period of fiscal 2010. The significant increase in revenue was driven by incremental sales from the Company's EVO soles and EVO compound pellets products, which contributed $5.3 million and $2.3 million, respectively, in the third fiscal quarter, somewhat offset by declining revenue from the Company's other product categories. The Company's EVO sole and EVO compound pellet product lines, launched in May 2010, did not contribute to revenue in the third quarter of fiscal 2010.

Gross profit grew 171% to $3.9 million in the third quarter fiscal 2011, from $1.4 million in the comparable period of fiscal 2010. The increase in gross profit was primarily due to increased sales of the Company's higher margin EVO sole and EVO compound pellet products. The Company's overall gross margin increased to 37.3% in the third quarter of fiscal 2011 from 34.5% in the same quarter of fiscal 2010.

Selling expenses in the third quarter of fiscal 2011 were $65,828, or 0.6% of total revenue, compared to $26,891, or 0.6% of total revenue, in the comparable quarter of fiscal 2010.

General and administrative expenses in the third quarter of fiscal 2011 totaled $340,560, or 3.3% of total revenue, compared to $164,222, or 3.9% of total revenue, in the same period last year. The year-over-year increase in general and administrative expenses primarily reflects incremental public company costs, higher employee disability and welfare benefit payments as a result of a PRC governmental policy change in 2010.

Income from operations in the third quarter of fiscal 2011 was $3.5 million, an increase of 180% compared to $1.2 million last year. 

Third quarter fiscal 2011 net income totaled $2.4 million, or $0.07 per diluted share, 167% higher than net income of $0.9 million, or $0.03 per diluted share, in the corresponding period of fiscal 2010.

First Nine Months Fiscal Year 2011 Results

For the nine month period ended March 31, 2011, total revenue was $36.7 million, an increase of 119% year-over-year, largely attributable to incremental sales of the Company's EVO sole and EVO compound pellet products launched in May 2010. Gross profit for the nine months ended March 31, 2011 was $14.4 million, up 126% from $6.4 million for the nine months ended March 31, 2010. Gross margin was 39.4% for the nine months ended March 31, 2011, compared to 38.1% in the comparable prior year period. Net income for the nine months ended March 31, 2011 was $9.6 million, or $0.29 per diluted share, an increase of 122% as compared to the net income of $4.3 million, or $0.14 per diluted share, in the corresponding period a year ago. 

Financial Condition

As of March 31, 2011, cash and cash equivalents totaled $17.8 million, up 173% from $6.5 million on June 30, 2010. Accounts receivable increased to $14.9 million at the end of third quarter fiscal 2011, from $11.7 million at the end of June 2010, largely reflecting increased customer sales. At March 31, 2011, the Company had working capital of $22.3 million and a current ratio of 3.0. Stockholders' equity totaled $31.1 million, up from $16.9 million on June 30, 2010. Net cash provided by operations was $8.8 million for the nine months ended March 31, 2011, compared with net cash provided by operations of $5.6 million for the same period in 2010. 

Business Outlook

In light of the strong demand for the Company's proprietary EVO products, the Company has decided to lease a new 30,000 square meter manufacturing facility, which is expected to commence operation in June 2011. The Company also plans to purchase additional manufacturing equipment to ramp up production to meet increasing demand for its products during the remainder of the year. In addition, the Company is currently promoting its new proprietary dual-color, dual-hardness foam sole products, which the Company believes are extremely innovative and unique compared to other offerings in China's footwear market.

About 8888 Acquisition Corporation

The Company, through its wholly owned subsidiary, Jinjiang Chengchang Shoes Co., Ltd, is a leading designer and producer of high quality soles marketed to manufacturers of athletic and leisure shoes in China. From its strategically located manufacturing facilities in Jinjiang, Fujian Province, the Company distributes soles to its customers, which include many of China's well recognized sportswear companies and an OEM supplier of Adidas® in Asia. The Company categorize its sole products into three primary product lines: (i) EVA, or ethylene vinyl acetate, sole products; (ii) RB, or synthetic rubber, sole products; and (iii) EVO, or EVO outsole, products which are an outgrowth of its EVA product line that is designed to be more abrasive resistance and lighter and softer than EVA product line. The Company also offers EVO compound pellet products. For more information, please visit: http://www.chandracn.com .

 Safe Harbor Statement

This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Such statements include, among others, those concerning market demand for our products, our new manufacturing facility, our future operating and financial results, our expectations regarding sales of our EVO soles and EVO compound pellet products, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Forward-looking statements can be identified by the use of forward-looking terminology such as "will," "believes," "expects" or similar expressions. Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and based upon premises with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our Current Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on October 25, 2010, as amended, and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system at http://www.sec.gov .

8888 Acquisition Corporation 
Unaudited Consolidated Balance Sheets
As of March 31, 2011 and June 30, 2010
(Stated in US Dollars)
         
    March 31, 2011   June 30, 2010
Assets   [unaudited]   [audited]
Current assets        
Cash and cash equivalents    $ 17,752,590    $ 6,513,199
Restricted cash   --   517,728
Accounts receivable, net   14,878,630   11,656,785
Inventory   318,993   196,958
Advance to Suppliers   443,448   --
Prepaid expenses and taxes   7,308   1,762
Total current assets   33,400,969   18,886,432
         
Non-current assets        
Plant and equipment, net   5,317,040   5,671,102
Intangible assets, net   3,169,260   3,246,985
Deposits   336,652   42,780
Total non-current assets   8,822,952   8,960,867
         
Total Assets    $ 42,223,921    $ 27,847,299
         
         
Liabilities and Stockholders' Equity        
         
Liabilities        
Current liabilities        
Bank loans   $3,713,794   $2,787,651
Notes payable    --    1,725,759
Accounts payable and accruals   5,917,984   5,055,751
Taxes payable   1,332,509   1,333,397
Related party payable   119,989   --
Total current liabilities    $ 11,084,276    $ 10,902,558
         
Total Liabilities   $11,084,276   $10,902,558
         
         
Stockholders' Equity        
Preferred stock, $0.0001 par value,

50,000,000 shares authorized; 0 share issued

and outstanding as of March 31, 2011 and

June 30, 2010 respectively
   $ --     $ -- 
         
Common stock, $0.0001 par value,

100,000,000 shares authorized; 33,966,667

and 31,419,167 shares issued and outstanding

as of March 31, 2011 and June 30, 2010 respectively
  3,397   3,142
Additional paid-in capital   5,197,929   1,279,740
Statutory reserves   750,389   750,389
Retained earnings   24,129,876   14,535,006
Accumulated other comprehensive income   1,058,054   376,464
Total stockholders' equity   31,139,645   16,944,741
         
Total Liabilities and Stockholders' Equity    $ 42,223,921    $ 27,847,299
8888 Acquisition Corporation 
Unaudited Consolidated Statements of Income
For the three months and nine months ended March 31, 2011 and 2010
(Stated in US Dollars)
                 
    Three Months Ended March 31   Nine Months Ended March 31
    2011   2010   2011   2010
                 
Revenue    $ 10,432,547    $ 4,170,644    $ 36,665,296    $ 16,728,146
Cost of revenue   6,536,831   2,732,827   22,231,230   10,351,000
Gross profit   3,895,716   1,437,817   14,434,066   6,377,146
                 
Selling expenses   65,828   26,891   286,010   102,758
General and administrative expenses   340,560   164,222   898,401   365,653
Total operating expenses   406,388   191,113   1,184,411   468,411
                 
Operating income   3,489,328   1,246,704   13,249,655   5,908,735
                 
Other income    --   7,853   --   8,835
Other expense   (159,979)   --   (245,203)   --
Interest income   16,660   --   32,133   --
Interest expense   (41,308)   (37421)   (149,103)   (150,898)
 Total other income/(expenses)   (184,627)   (29,568)   (362,173)   (142,063)
                 
Pre-tax income   3,304,701   1,217,136   12,887,482   5,766,672
                 
Provisions for income tax   865,340   302,450   3,292,612   1,439,840
                 
Net income (loss)    $ 2,439,361    $ 914,686    $ 9,594,870    $ 4,326,832
                 
Earnings per share                
Basic    $ 0.07    $ 0.03    $ 0.29    $ 0.14
Diluted    $ 0.07    $ 0.03    $ 0.29    $ 0.14
                 
Weighted average shares outstanding                
Basic   33,966,667   31,419,167   32,947,667   31,419,167
Diluted    33,966,667   31,419,167   32,947,667   31,419,167
8888 Acquisition Corporation 
 Unaudited Consolidated Statements of Cash Flows
For the three months and nine months ended March 31, 2011 and 2010
(Stated in US Dollars)
         
  Three Months Ended March 31 Nine Months Ended March 31
  2011 2010 2011 2010
         
Net Income/(loss)  $2,439,361 $914,685 $9,594,870 $4,326,832
Adjustments to reconcile net income to net cash from operations:        
Amortization 23,364 19,223 77,725 58,887
Depreciation 348,502 304,413 1,182,305 915,543
Loss on disposal of fixed asset  156,983 -- 225,994 --
Provision for bad debt -- -- 16,190 --
Changes in operating assets and liabilities:        
(Increase)/decrease in restricted cash 476,421 (307,232) 517,728 (300,650)
(Increase)/decrease in accounts and other receivables 2,059,915 2,275,626 (3,681,483) 1,479,640
(Increase)/decrease in inventories (31,290) 382,172 (122,035) 989,723
(Increase)/decrease in prepaid expenses (5,491) (5,266) (5,544) (5,091)
Increase/(decrease) in accounts payables and accruals (1,927,391) (2,482,231) 982,221 (1,495,474)
Increase/(decrease) in taxes payables (127,216) (235,261) (888) (334,381)
Net cash provided by operating activities 3,413,158 866,129 8,787,083 5,635,029
         
Cash flows from investing activities        
Proceeds from disposal of fixed assets 15,365 -- 39,565 --
Payments for deposits (300,608) (46,482) (293,872) (46,482)
Payments for land use rights -- -- -- --
Payments for purchases of plant and equipment (229,315) (250,849) (1,093,802) (360,822)
Net cash provided/(used) in investing activities (514,558) (297,331) (1,348,109) (407,304)
         
Cash flows from financing activities        
Proceeds from Issuance of common stock -- -- 3,918,444 --
Proceeds from/(repayments of) notes (476,421) 1,024,106 (1,725,759) 1,002,167
Proceeds from/(repayment of) bank loans 782,671 (748,398) 926,143 (748,398)
Repayment of loan to related party -- -- -- (2,998,303)
Net cash provided/(used) in financing activities 306,250 275,708 3,118,828 (2,744,534)
         
Net Increase of cash and cash equivalents 3,204,850 844,505 10,557,802 2,483,191
Effect of foreign currency translation on cash  142,779 1,355 681,590 2,039
Cash and cash equivalents at beginning of year 14,404,961 4,599,526 6,513,198 2,960,156
Cash and cash equivalents at end of year $17,752,590 $5,445,386 $17,752,590 $5,445,386
CONTACT:  Company Contact:
          Mr. Peter Chen, VP of Finance
          8888 Acquisition Corporation
          Tel: +86 595 82889862 (China)
          Email: peter.chen@sportspowersole.com
          Website: www.chandracn.com
         
          Investor Relations Contact:
          Mr. Kalle Ahl, CFA, Account Manager
          CCG Investor Relations
          Tel: +1 646-833-3417
          Email: kalle.ahl@ccgir.com
          Website: www.ccgirasia.com

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 5.09%
$30K home equity loan FICO 5.19%
$75K home equity loan FICO 4.65%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.34%
13.32%
Cash Back Cards 17.82%
17.81%
Rewards Cards 17.07%
17.06%
Source: Bankrate.com