TechFaith Reports First Quarter 2009 Financial Results
2009-05-19 22:12:02 -
BEIJING -- (Marketwire) -- 05/19/09 -- China Techfaith Wireless Communication Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today announced its unaudited financial results for the first quarter of 2009 ended March 31, 2009.
For the first quarter of 2009, TechFaith reported total net revenues of US$48.7 million, a 6.1% decrease compared to US$51.9 million in the previous quarter. Gross profit for the first quarter of 2009 was US$8.8 million, a 5.1% increase compared to US$8.4 million in the previous quarter. Gross margin for the first quarter of 2009 was 18.1% compared to 16.2% in the previous quarter. The improvement in gross profit and gross margin was mainly attributed to increased sales of products with a higher average selling price and margin although the revenues from design fees decreased compared to the previous quarter. Operating expense for the quarter was US$5.7 million, a 31% reduction compared to US$8.2 million in the previous quarter. The reduction in operating expenses was mainly attributed to the Company's continued cost-cutting efforts.
Net income for the first quarter of 2009 was US$2.1 million, or US$0.05 per weighted average outstanding ADS (basic and diluted), an improvement of 157.4% compared to net income of US$0.8 million, or US$0.02 per weighted average outstanding ADS (basic and diluted) in the previous quarter.
Defu Dong, TechFaith's Chairman and CEO, said, "We are very pleased with the quarter's results. We achieved continued profit improvements sequentially and on a year-over-year basis, despite a slight decline in sales. Our focus on reducing TechFaith's operating expenses, while supporting the growth segments of our business is starting to show results.
Our partner network, new cellphone pipeline and line-up of existing cellphones in the marketplace are all clearly stronger now than in prior quarters."
"Demand in our core ODP cellphone business is being led by the domestic 3G market, with further gains in our smartphones and feature phones. Our co-branding business, through close cooperation with our business partners under their brand name continues to gain traction. We also cooperate with our business partners in the product launch, marketing activities and shipment. Of note, we launched 16 different cellphones, 3 of these internationally in the first quarter. We are demonstrating the strength of our business model as we are able to successfully launch cellphones in the marketplace faster and launch feature-rich cellphones that have higher profit margins as compared with other cellphones on the market. We are also targeting further reductions in our cost structure in the areas of administrative cost and non-essential expenses."
"Our focus remains on driving revenue and profit growth in our cellphone business. We have made a series of strategic changes to our core cellphone business model over the years in order to become a long-term, competitive winner. We are confident in our business model going forward and believe our ODP business will benefit from sales gains in high-end and feature-rich cellphones both domestically and internationally. We are also encouraged by gains in our co-branding business, which is allowing us to introduce a greater number of cellphone models to the market. Importantly, we are able to leverage TechFaith's strengths with the design, manufacturing, sales and distribution strengths of our partners."
"We continue to make further progress in our gaming business. One Net Entertainment Limited will launch 16 mobile massive multiplayer online role-playing games (MMORPG) titles on its Chinese mobile games website www.798uu.com : www.798uu.com in June. This is in addition to our announcement in March that One Net Entertainment would launch three separate MMORPGs in China for PC online gamers on its website www.798game.com : www.798game.com . One Net Entertainment is building an integrated model, using a combination of self-developed, co-developed and licensed content, designed to help it launch games faster and more efficiently. We plan to set-up two additional game development studios over the next few months. As part of our growth efforts, we recently announced that DGVC Partners and Infiniti Capital had agreed to invest a total of US$20 million in One Net Entertainment Limited through its parent company, Leo Technology Limited, which in turn is a wholly-owned subsidiary of TechFaith (The transaction is subject to certain closing conditions). We expect the investment will help us to execute on our growth strategy and allow us to pursue game development and publishing opportunities to even further accelerate One Net Entertainment's growth prospects."
Second Quarter 2009 Outlook
TechFaith currently expects revenue to be in the range of US$45 million to US$49 million for the second quarter of 2009, with further improvement in profit margin as new 3G products are launched into the market. This forecast reflects TechFaith's current and preliminary view, which is subject to change.
Conference Call
TechFaith will hold a conference call on Tuesday, May 19, 2009 at 7:00 p.m.
U.S. Eastern Time (7:00 a.m. May 20, 2009 in Beijing). The dial-in number for the live audio call beginning is +1-617-597-5313. The conference call passcode is 47784951. A live webcast of the conference call will also be available on TechFaith's website at www.techfaithwireless.com : www.techfaithwireless.com .
A replay of the call will be available approximately 1 hour after the conclusion of the live call through 12:00 p.m. on June 2, 2009, U.S.
Eastern Time (12:00 a.m., June 3, 2009 in Beijing) by telephone at +1-617-801-6888. To access the replay use passcode 26746487. A webcast replay will also be available at www.techfaithwireless.com : www.techfaithwireless.com .
About TechFaith
TechFaith (NASDAQ: CNTF) is an original developed product provider focused on research and development of cellphone solutions. Based in China, TechFaith employs approximately 400 professionals, of whom approximately 90% are engineers. TechFaith engages in the development and production of middle to high end handsets and tailor made handsets. TechFaith's original developed products include: (1) multimedia phones and dual mode dual card handsets of multiple wireless technology combination such as GSM/GSM, GSM/CDMA, GSM/WCDMA, GSM/TD-SCDMA and UMTS/CDMA; (2) Windows-based smartphones and Pocket PC phones; and (3) handsets with interactive online gaming and professional game terminals with phone functionality.
With the capability of developing Middleware Application MMI/UI software on 2G/2.5G(GSM/GPRS, CDMA1X), 3G(EV-DO, WCDMA/UMTS, TD-SCDMA) and 3.5G(HSDPA) communication technologies, TechFaith is able to provide Middleware Application MMI/UI software packages that fulfill the specifications of handset brand owners and carriers in the global market. For more information, please visit www.techfaithwireless.com : www.techfaithwireless.com
About One Net Entertainment Ltd.
Based in Beijing, One Net Entertainment is a wholly-owned subsidiary of China Techfaith Wireless Communication Technology Limited ("TechFaith") (NASDAQ: CNTF). One Net Entertainment is targeting both the mobile and online PC gaming markets through its websites www.798uu.com : www.798uu.com and www.798game.com : www.798game.com , respectively. One Net Entertainment is leveraging an integrated model of using a combination of self-developed as well as co-developed and licensed content, as such strategy is designed to help it launch games faster and more efficiently. Three massive multiplayer online role-playing games (MMORPGs) are planned to launch in 2009 for online PC users on www.798game.com : www.798game.com . 16 titles are planned to launch in June for mobile gamers on the company's Chinese mobile games website www.798uu.com : www.798uu.com .
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates, "future," "intends," "plans," "believes," "estimates," "confident,"
"outlook" and similar statements. Among other things, the business outlook and strategic and operational plans of TechFaith contain forward-looking statements. TechFaith may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties.
Statements that are not historical facts, including statements about TechFaith's beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, those risks outlined in TechFaith's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. TechFaith does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of U.S. Dollars, except share and per share/ADS data and
unless otherwise stated)
Three Months Ended Three Months Ended
December 31, March 31,
2008 2008
(As Adjusted)(1)(As Adjusted)(1) 2009 (1)
------------- ------------- -------------
Revenues:
Handset design $ 7,168 $ 4,564 $ 655
Product sales 44,687 45,031 48,015
------------- ------------- -------------
Total net revenues $ 51,855 $ 49,595 $ 48,670
Cost of revenues:
Handset design $ 3,347 $ 2,196 $ 808
Product sales 40,125 37,678 39,048
------------- ------------- -------------
Total cost of revenues $ 43,472 $ 39,874 $ 39,856
Gross Profit $ 8,383 $ 9,721 $ 8,814
Operating expenses:
General and administrative $ 2,977 $ 3,201 $ 1,740
Research and development 2,612 5,496 3,096
Selling and marketing 1,668 853 802
Impairment of Long-lived
Assets 880 - -
Exchange loss 40 534 14
------------- ------------- -------------
Total operating expenses $ 8,177 $ 10,084 $ 5,652
Government subsidy income 825 172 5
Other operating income - 2,369 -
Income from operations $ 1,031 $ 2,178 $ 3,167
Interest expense (26) (9) (30)
Interest income 295 417 177
Other income (expense), net (11) 3 -
Change in fair value of put
option (663) 15 (18)
------------- ------------- -------------
Income before income taxes $ 626 $ 2,604 $ 3,296
Income tax 114 - (1,219)
------------- ------------- -------------
Net income $ 740 $ 2,604 $ 2,077
Less: net loss attributable
to the noncontrolling
interest (2) (84) (259) (44)
------------- ------------- -------------
Net income attributable to
TechFaith $ 824 $ 2,863 $ 2,121
============= ============= =============
Net income per ordinary share
Basic $ - $ - $ -
============= ============= =============
Diluted $ - $ - $ -
============= ============= =============
Net income per ADS
Basic $ 0.02 $ 0.07 $ 0.05
============= ============= =============
Diluted $ 0.02 $ 0.07 $ 0.05
============= ============= =============
Weighted average ordinary
shares outstanding
Basic 650,034,590 649,913,136 650,034,590
============= ============= =============
Diluted 650,034,590 650,028,831 650,034,590
============= ============= =============
(1) Effective January 1, 2009, the Company adopted SFAS 160. SFAS160, which
was retrospectively applied, requires noncontrolling interests to be
separately presented as a component of stockholders' equity on the
unaudited condensed consolidated financial statements.
(2) Amounts were extracted from Form 6-K for the quarter ended March31,
2008 and for the quarter ended December 31, 2008, as adjusted resulting
from the adoption of Statement of Financial Accounting
Standards No. 160.
Revenue Breakout 1Q08 2Q08 3Q08 4Q08 1Q09
-------- -------- -------- -------- --------
Handset design
Design fees $ 3,264 $ 4,656 $ 1,051 $ 6,517 $ 186
Royalty $ 534 $ 277 $ 166 $ 181 $ -
Components sales related to
design $ 731 $ 520 $ 544 $ 465 $ 469
Service income $ 35 $ 164 $ 13 $ 5 $ -
Product sales
Smart phone $ 18,123 $ 26,979 $ 29,367 $ 25,483 $ 27,186
Feature phone $ 23,156 $ 22,774 $ 18,525 $ 17,880 $ 20,190
Wireless module $ 3,752 $ 1,220 $ 1,035 $ 1,324 $ 639
Other components $ - $ - $ 109 $ - $ -
-------- -------- -------- -------- --------
Total net revenues $ 49,595 $ 56,590 $ 50,810 $ 51,855 $ 48,670
======== ======== ======== ======== ========
CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of U.S. Dollars, except share and per share/ADS data and
unless otherwise stated)
March 31, December 31,
2008 2008 March 31,
(As Adjusted)(3)(As Adjusted)(3) 2009(3)
------------- -------------- --------------
Assets
Current assets:
Cash and cash equivalents $ 76,295 $ 78,926 $ 97,499
Restricted cash 119 162 80
Accounts receivable 47,315 37,804 29,812
Amounts due from related
parties 3,708 5,537 7,954
Notes receivable 2,310 85 443
Inventories 49,028 37,763 30,367
Prepaid expenses and other
current assets 10,070 10,003 11,917
Deferred tax assets-current - 83 78
------------- -------------- --------------
Total current assets $ 188,845 $ 170,363 $ 178,150
Deposits for acquisition of
plant, machinery and
equipment, and acquisition
of intangible assets $ 11,131 $ - $ -
Plant, machinery and
equipment, net 27,969 24,667 23,255
Construction in progress - 23,458 23,521
Acquired intangible assets,
net 1,591 921 838
Deferred tax
assets-noncurrent - 49 29
Goodwill 606 606 606
------------- -------------- --------------
Total assets $ 230,142 $ 220,064 $ 226,399
============= ============== ==============
Liabilities and
shareholders' equity
Current liabilities:
Current portion of Long
term payable $ 1,208 $ 1,211 $ 1,211
Accounts payable 25,108 9,214 7,362
Amounts due to related
parties 74 419 438
Accrued expenses and other
current liabilities 10,979 10,247 9,597
Advance from customers 7,820 5,260 11,839
Deferred revenue 1,824 1,748 1,431
Income tax payable 146 149 1,343
------------- -------------- --------------
Total current liabilities $ 47,159 $ 28,248 $ 33,221
Long-term payable $ 297 $ - $ -
------------- -------------- --------------
Total liabilities $ 47,456 $ 28,248 $ 33,221
------------- -------------- --------------
Shareholders' equity
Ordinary shares $ 13 $ 13 $ 13
Additional paid-in capital 110,351 105,846 105,847
Treasury stock (4,628) - -
Accumulated other
comprehensive income 20,165 24,427 23,711
Statutory reserve 6,813 8,542 8,542
Retained earnings 48,571 51,980 54,101
------------- -------------- --------------
Total TechFaith
shareholders' equity $ 181,285 $ 190,808 $ 192,214
------------- -------------- --------------
Noncontrolling interest (4) $ 1,401 $ 1,008 $ 964
------------- -------------- --------------
Total shareholder's equity $ 182,686 $ 191,816 $ 193,178
------------- -------------- --------------
Total liabilities and
shareholders' equity $ 230,142 $ 220,064 $ 226,399
============= ============== ==============
(3) Effective January 1, 2009, the Company adopted SFAS 160. SFAS 160,
which was retrospectively applied, requires noncontrolling interests to
be separately presented as a component of stockholders' equity on the
unaudited condensed consolidated financial statements.
(4) March 31, 2008 and December 31, 2008 balances were extracted from the
form 6-K for the quarters ended March 31, 2008 and December 31, 2008
respectively, as adjusted resulting from the adoption of Statement of
Financial Accounting Standards No. 160.
CONTACTS:
In China:
Jay Ji
China Techfaith Wireless Communication Technology Limited
Tel: 86-10-5822-8390
ir@techfaith.cn :
ir@techfaith.cn
In the U.S.:
David Pasquale
Global IR Partners
Tel: +1 914-337-8801
cntf@globalirpartners.com :
cntf@globalirpartners.com
