updated 5/25/2011 10:46:18 AM ET 2011-05-25T14:46:18

NEW YORK and HARBIN, China, May 25, 2011 (GLOBE NEWSWIRE) -- China Digital Animation Development, Inc. (OTCBB:CHDA) today provided a business update and announced financial results for its fiscal third quarter ended March 31, 2011.

Mr. Fu Qiang, Chairman and Chief Executive Officer, commented, "We are pleased to report another quarter of strong growth. Within our animation segment alone, revenue increased 79% compared to the same period last year. We have rapidly expanded our animation development business over the past two years and our customers now span the movie, television and online industries. Market growth is due in part to increasing demand for high end special effects, including 3-D animation. We also offer animated products for commercial customers used in advertising, branding and education purposes, which we see as an important avenue for growth going forward."

Revenue for the third quarter of fiscal 2011 increased 29.2% to $2.2 million compared to $1.7 million for the same period last year. Gross profit for the third quarter of fiscal 2011 was $1.5 million versus $1.0 million for the same period last year.  The company's income from operations for the third quarter of fiscal 2011 was $1.2 million compared to $855 thousand for the third quarter of fiscal 2010. Net income for the third quarter of fiscal 2011 was $859 thousand or $0.04 per share, versus $691 thousand, or $0.03 per share in the same period last year.

About China Digital Animation Development, Inc.

China Digital Animation Development, Inc. is a premier China-based digital animation development company, operating in Harbin (one of the largest animation development centers in China) as well as Beijing in The People's Republic of China. The Company also has an administrative office in New York City. The Company is engaged in animation post-stage processing, animation outsourcing, and information transmission services. The Company also operates an animation development skills training center located in Harbin, China, which provides its students with different types of animation skill training programs such as motion graphics, product modeling, character animation, and more. The Company's technical team has extensive experience in animation production and outsourcing.

Safe Harbor Statement

In addition to historical information, this press release contains forward-looking statements, which are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. These forward-looking statements represent Management's belief as to the future of China Digital Animation Development, Inc. Whether those beliefs become reality will depend on many factors that are not under Management's control. Many risks and uncertainties exist that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in Section 1A:  "Risk Factors" In the Company's Annual Report on Form 10-K for the year ended June 30, 2010. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

CHINA DIGITAL ANIMATION DEVELOPMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
     
  March 31, June 30,
  2011 2010
  (unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents $ 10,746,682 $ 6,219,438
Accounts receivable 727,535 976,304
Other receivables 12,836 3,616
     
Total current assets 11,487,053 7,199,358
     
Property, plant and equipment, net 5,132,091 5,575,026
Land use right and other intangible assets, net 2,609,198 2,756,604
     
Total assets $ 19,228,342 $ 15,530,988
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $ -- $ 34,338
Loan payable 335,975 286,000
Accrued expenses and other payables 164,074 57,040
Taxes payable 397,513 410,339
     
Total current liabilities 897,562 787,717
     
     
Total liabilities 897,562 787,717
     
Stockholders' Equity:    
     
Common stock ($0.001 par value, 500,000,000 shares authorized, 20,270,000 shares issued and outstanding at March 31, 2011, 20,020,000 shares issued and outstanding at June 30, 2010) 20,270 20,020
Additional paid-in-capital 6,723,447 6,223,697
Accumulated other comprehensive income 2,420,047 1,873,933
Reserved Fund 1,156,476 705,738
Retained earnings 8,010,540 5,919,883
     
     
Total stockholders' equity 18,330,780 14,743,271
     
Total liabilities and stockholders' equity $ 19,228,342 $ 15,530,988
 
CHINA DIGITAL ANIMATION DEVELOPMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 (UNAUDITED)
         
  Three months ended Nine months ended
  March 31, March 31,
  2011 2010 2011 2010
Revenue $ 2,169,443 $ 1,679,143 $ 5,989,431 $ 4,057,433
         
Cost of goods sold 661,193 642,352 1,587,651 1,850,195
         
Gross profit 1,508,250 1,036,791 4,401,780 2,207,238
         
Operating expenses        
         
Selling, General and Administrative expenses 296,877 181,329 901,438 392,602
         
Total operating expenses 296,877 181,329 901,438 392,602
         
Income from operations 1,211,373 855,462 3,500,342 1,814,636
         
Other income (expenses)        
         
Interest income 8,784 82,492 17,920 251,039
Non-operating income 1,587 -- 1,587 --
Loss from disposal of property, plant and equipment -- -- -- (26)
         
Total other income 10,371 82,492 19,507 251,013
         
Income before income taxes 1,221,744 937,954 3,519,849 2,065,649
Less: Provision for income taxes 362,667 246,718 978,454 546,250
         
Net income 859,077 691,236 2,541,395 1,519,399
         
Other comprehensive income        
Foreign currency translation gain 66,608 253 546,114 52,717
         
Total comprehensive income $ 925,685 $ 691,489 $ 3,087,509 $ 1,572,116
         
Basic and diluted earnings per share $ 0.04 $ 0.03 $ 0.13 $ 0.07
         
Basic and diluted weighted average shares outstanding 20,270,000 20,510,000 20,137,701 20,510,000
 
CHINA DIGITAL ANIMATION DEVELOPMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
     
  Nine months ended
  March 31,
  2011 2010
Cash flow from operating activities:    
Net income $ 2,541,395 $ 1,519,399
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation 618,265 452,795
Amortization 235,272 153,282
Foreign currency exchange gain (1,343) --
     
Changes in operating assets and liabilities:    
Accounts receivable 276,663 265,610
Prepaid expenses -- 67,535
Advances to suppliers -- 1,443,440
Interest receivable -- (82,745)
Other receivables (7,978) (1,456)
Accounts payable -- 28,271
Accrued expenses and other payables 71,240 18,914
Taxes payable (28,008) 39,555
     
Net cash provided by operating activities 3,705,506 3,904,600
     
Cash flows from investing activities    
Purchase of property, plant and equipment -- (2,240,436)
Acquisition of intangible assets -- (1,907,100)
Additions to long term investment -- (9,043)
     
Net cash used in investing activities -- (4,156,579)
     
Cash flows from financing activities    
Proceeds from borrowing 49,975 101,000
Proceeds from sale of stock 500,000 --
     
Net cash provided by financing activities 549,975 101,000
     
Effect of exchange rate changes in cash 271,763 50,070
     
Net increase (decrease) in cash and cash equivalents 4,527,244 (100,909)
     
Cash and cash equivalents, beginning of period 6,219,438 2,282,786
     
Cash and cash equivalents, end of period $ 10,746,682 $ 2,181,877
     
Supplemental Disclosures:    
Cash paid during the period for:    
Income taxes $ 1,033,306 $ 515,968
Interest $ -- $ --
CONTACT: Crescendo Communications, LLC
         David Waldman or Klea Theoharis
         Tel: (212) 671-1020
         Email: chda@crescendo-ir.com

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