UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 15, 2010
DEER CONSUMER PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Nevada 333-140545 20-5526104
(State or other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.)
Area 2, 1/F, Building M-6,
Central High-Tech Industrial Park, Nanshan,
Shenzhen, China 518057
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (86) 755-8602-8285
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01. Entry into a Material Definitive Agreement.
On January 15, 2010, Guangdong Deer Consumer Products, Inc., a company organized under the laws of the People’s Republic of China (“PRC”) and a wholly owned subsidiary of Deer Consumer Products, Inc. (the “Company”), a Nevada corporation, entered into a 3-year renewable Distribution Agreement (the “Distribution Agreement”) with a leading Chinese national electronics retailer. The Distribution Agreement includes the sale of a wide variety of the Company’s small home and kitchen electronics under the “DEER” brand for delivery to the national retailer’s stores. The Company and the national retailer will also jointly provide marketing and branding support.
The foregoing description of the Distribution Agreement is not complete and is qualified in its entirety by reference to the full text of the Distribution Agreement, which is filed as Exhibit 10.6 with portions omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. Exhibit 10.6 is a redacted copy of the Distribution Agreement and is incorporated herein by reference. Exhibit 10.6 is an English translation of the executed version written in Chinese. In the event of any discrepancies between the language of the English and Chinese versions of the Distribution Agreement, the Chinese-language version will control.
Item 2.02. Results of Operations and Financial Condition.
On January 20, 2010, the Company issued a press release:
· affirming its 2009 net income guidance of $11.5 million, an increase of approximately 238% from 2008 on estimated revenues of approximately $81 million, an 88% increase from 2008;
· announcing 2010 revenue guidance of between $140 million and $145 million from organic growth, an estimated revenue increase of between 73% and 79% from 2009;
· anticipating high margin, Chinese domestic market sales to increase more than 300% from 12% of total revenues in 2009 to approximately 40% of total revenues in 2010; and
· announcing 2010 net income guidance of between $22.5 and $23 million, an estimated increase in net income of between 95% and 100% from 2009.
The information contained in the press release is deemed to be “filed” under the Securities Exchange Act of 1934 as Exhibit 99.1 to this report, and such press release is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
Exhibit 10.6 Distribution Agreement by and between Guangdong Deer Consumer Products, Inc. and a leading Chinese national electronics retailer, dated January 15, 2010 (1)
Exhibit 99.1 Press Release “Deer Consumer Products, Inc. Announces 3 Year National Sales Agreement with a Leading Chinese Electronics Retailer, Provides 2010 Financial Guidance, Anticipates a Year of Record Earnings Growth,” dated January 20, 2010
(1) Application has been made with the Securities and Exchange Commission to seek confidential treatment of certain provisions of the Distribution Agreement. Omitted material for which confidential treatment has been requested has been furnished separately to the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: January 20, 2010
DEER CONSUMER PRODUCTS, INC.
By: /s/ Ying He
Name: Ying He
Title: Chief Executive Officer
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2010 ** --- Deer (brand)
(English Translation)
Memorandum of Understanding
Time of Negotiations: January 15, 2010 Friday
Place of Negotiations: **
Parties:
Party A: Guangdong Deer Consumer Products, Inc.
Party B: **
Persons in attendance:
Party A: Ying He (CEO), Chuanjing Zheng (Assistant to the President)
Party B: **
Contents of the Deer white-colored small appliances/** cooperation negotiation Memorandum of Understanding:
In order to increase its competitiveness in the home appliances retail chain-store industry, ** selects qualified and compatible manufacturers to form in-depth cooperative operations. The specific contents of the cooperative operation are as follows:
I. Cooperative operation model
1. Both parties use the one-step pricing model;
2. The length of the contract is three (3) years (2010-2012). Both parties then decide whether to renew the contract based on the circumstances of the cooperation;
3. Sales are on a commission basis;
4. Accounts settlement is centrally conducted by the Parties’ respective headquarters;
5. Party A provides sample products. The settlement price of the sample product is 80% of the price of the supplied products;
6. Agree to maintain the rate of damaged and faulty products under 2%.
II. Division of the main functions and responsibilities of the Parties.
1. Guangdong Deer Consumer Products, Inc. is responsible for:
i. Product production, the formulation of delivery cycles and the safe execution thereof;
ii. Delivery of the products to each of ** distribution depots;
iii. Support for the training of sales personnel (methods yet to be determined).
** Portions of this page have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.
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2. ** is systematically responsible for:
i. Order placement;
ii. Sales area layout;
iii. Manufacture of display stands;
iv. Management of sales personnel (hiring, daily management, training, wages and evaluation);
v. Planning and execution of sales promotion events.
3. Both Parties are responsible for:
i. Product selection;
ii. Set product price.
III. Operation categories
In 2010, the primary categories are juicers, food processors and other food processing products; additional categories are separately determined.
IV. Product profit margin standard
1. Product profit margin for 2010 is no less than **% of consolidated profit;
2. Parties will separately determine standards for 2010 [sic] and 2012.
V. After-sales service
1. Party A is responsible for after-sales service.
VI. Implementation schedule of the cooperative operation project
Details of the cooperation workflow are to be completed by February 15, 2010; the contract is to be signed at the same time.
Party A: Guangdong Deer Consumer Products, Inc. Party B: **
Representative: /s/ Ying He Representative: **
Date: 2010-01-15 Date: 2010-01-15
** Portions of this page have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.
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Deer Consumer Products, Inc. Announces 3 Year National Sales Agreement with a Leading Chinese Electronics Retailer, Provides 2010 Financial Guidance, Anticipates a Year of Record Earnings Growth
· Affirms 2009 net income guidance of $11.5 million, an increas e of approximately 238% from 2008 on estimated revenues of approximately $81 million, an 88% increase from 2008
· 2010 Re venue G uidance: between $140 million and $145 million from organic growth, an estimated revenue increase of between 73% and 79% from 2009
· Anticipate high margin, Ch inese domestic market sales to increase more than 300% from 12% of total revenues in 2009 to appro ximately 40% of total revenues in 2010
· 2010 N et I ncome G uidance : between $22.5 and $23 million , an estimated increase in net income of between 95% and 100% from 2009
· Continue to Maintain S t rong Balance Sheet : st rong cash position and no long term debt
· S trong cash position to fund the current strategic growth plan
· Anticipates favorable market environment and growth momentum to continue in 2010 and beyond
· Insiders Interest Aligned w ith Shareholders: Insider sh ares lock ed up through July 2012, representing Deer ’ s entire insider holdings and more than 48% of Deer ’ s total current outstanding shares
NEW YORK, Jan. 20, 2010 /PRNewswire-FirstCall/ -- Deer Consumer Products, Inc. ("Deer") (NASDAQ: DEER; website: www.deerinc.com ), one of the world's largest designers and ODM manufacturers of home and kitchen electronics marketing to both global and Chinese domestic consumers, announced today the Company has reached a 3 year, renewable national distribution agreement with one of the largest Chinese national electronics retailers with more than 1,200 stores nationwide.
The distribution agreement includes sale of a wide variety of Deer’s home and kitchen electronics products under the "DEER" brand for product delivery to the retailer’s nationwide stores. Deer and the national retailer will also jointly provide marketing and branding support.
Bill He, Chairman & CEO of Deer commented: “Deer anticipates a total of approximately $55 million to $60 million in high margin, Chinese domestic revenue in 2010, an increase of more than 300% from 2009. As we expected, our recent agreements with two of China’s leading domestic retailers will make up the majority of our domestic sales. In addition, we will continue to generate sales from many other regional Chinese domestic distribution channels. This is the beginning of a significantly strengthened “DEER” brand and related sales in the rapidly growing Chinese marketplace in 2010 and beyond.”
2010 REVENUE GUIDANCE: Sales Anticipated to Increase More than 73%
Deer anticipates 2010 revenues to be between $140 million and $145 million from organic growth and market expansion, an estimated increase of more than 73% from 2009. Of which, approximately 60% of revenues are anticipated from international markets and 40% of revenues from the Chinese domestic markets. Deer also anticipates international markets to expand significantly due to strong global customer demand which the Company is currently experiencing.
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2010 EARNINGS GUIDANCE: Net Income Anticipated to Increase More than 95%
Deer anticipates 2010 net income to be between $22.5 million and $23 million as a result of organic growth in revenues, an estimated increase of more than 95% in net income from 2009.
2010 GROWTH STRATEGIES: Organic Growth and Strategic Synergistic Acquisitions
Deer anticipates significant revenue and market growth from both Chinese domestic and international sales driven by China’s continued consumer wealth expansion, broader Chinese home ownerships, deeper global market penetration and strong customer demand for small home and kitchen electronics worldwide. Deer also plans to increase product offerings and may explore synergistic acquisition opportunities that may be immediately accretive to the Company’s current year earnings. Deer believes the Company can sufficiently fund 2010 organic growth strategies from cash on hand as well as anticipated internally generated cash flow.
MANAGEMENT COMMENTS:
Bill He, Chairman & CEO of Deer commented: "These recent domestic marketing channel successes with two of China’s largest retailers have provided significant visibility for our 2010 sales and earnings guidance. Our international markets continue to show exciting signs of global economic recovery and an uptrend in export growth. With a strong balance sheet, Deer anticipates strong financial performance and a year of record sales and earnings growth in 2010. "
Mr. He continued:” As a consumer product company, Deer has direct access to the vast Chinese consumers. 2010 will be an important milestone for Deer’s long term growth as we plan to further expand and establish ourselves as a market leader in various markets and distribution channels globally. Deer’s management team and insiders voluntarily entered into share lock up agreements which prevent insiders from selling any shares to the public markets till at least July 2012, which represent more than 48% of Deer’s entire outstanding shares. Our confidence in our 15 year old business and our vested interest are totally in line with those of our shareholders.”
About Deer Consumer Products, Inc.
Deer Consumer Products, Inc. ( www.deerinc.com ) is a NASDAQ Global Market listed U.S. public company headquartered in China. Deer has a 15 year operating business. Supported by more than 103 patents, trademarks, copyrights and approximately 1,900 company-trained seasonal and full-time staff, Deer is a leading designer, ODM manufacturer and global marketer of quality small home and kitchen electric appliances. Deer's product lines include blenders, juicers, soy milk makers and a large variety of other home appliances designed to make today's lifestyles simpler and healthier. With more than 100 global clients/branded products such as Black & Decker, Ariete, Disney, Toastmaster, Magic Bullet, Back to Basics and Wal-Mar, Deer has enjoyed rapid sales and earnings growth in the recent years.
Safe Harbor Statement
All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect Deer's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in Deer's filings with the Securities and Exchange Commission.
Contact Information:
____________________________________
Corporate Contact:
Mrs. Yongmei Wang
Deer Consumer Products, Inc.
Tel: 011-86-755-86028285
Email: investors@deerinc.com
____________________________________
Source: Deer Consumer Products, Inc.
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