TechFaith Reports First Quarter 2012 Financial Results
BEIJING, May 22, 2012 /PRNewswire-Asia/ -- China TechFaith Wireless Communication Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today announced unaudited financial results for the first quarter ended March 31, 2012.
For the first quarter of 2012, TechFaith reported net revenue of US$42.7 million compared to US$81.7 million in the fourth quarter of 2011 and US$78.7 million in the first quarter of 2011. This is in line with the Company's prior guidance which stated that revenue in the first quarter of 2012 would be in the range of US$41 million to US$45 million. The revenue decline is primarily due to the material impact of seasonality, higher competition and lower demand levels for mobile phones in China. Gross profit for the first quarter of 2012 was US$10.8 million, compared to US$19.1 million in the fourth quarter of 2011 and US$25.3 million in the first quarter of 2011. Gross margin for the first quarter of 2012 was 25.4%, compared to 23.4% in the fourth quarter of 2011 and 32.1% in the first quarter of 2011. The decline in gross margin on a sequential and year-over-year basis is attributed to lower revenue and increased unit costs. Net loss attributed to TechFaith for the first quarter of 2012 was US$0.4 million, or a US$0.01 loss per basic and diluted weighted average outstanding ADS, compared to net income of US$2.7 million, or US$0.05 per basic and diluted weighted average outstanding ADS in the fourth quarter of 2011, and net income of US$13.8 million or US$0.26 per basic and diluted weighted average outstanding ADS in the first quarter of 2011.
Ms. Ouyang Yuping, TechFaith's Chief Financial Officer, said, "We had an extremely challenging quarter for our business as lower demand in our Original Developed Product (ODP) segment, combined with our fixed operating costs structure, resulted in a net loss for the quarter. Our operating structure is able to support revenues considerably higher than US$100 million per quarter, which results in absorption issues with the current lower revenue levels. We are working to better align our resources to the current business environment, including potential cost reduction measures. "
Mr. Deyou Dong, President and Chief Operating Officer of TechFaith, said "Our focus is on continuing to develop commercially attractive mobile phones and phones targeting niche segments, like our ruggedized outdoor smart phones. We will continue to work to expand our sales volumes through our unique ruggedized smart phones and our branded mobile phones business which can contribute to our long-term strategy."
Mr. Defu Dong, Chairman and Chief Executive Officer of TechFaith, said, "For our game business, we intend to focus on strengthening and building up our customer base. We have successfully navigated business cycles before and are confident we can adjust our business to current demand levels."
Second Quarter of 2012 Outlook
The below forecast is TechFaith's current and preliminary view, which is subject to change. TechFaith currently expects total revenue for the second quarter of 2012 to be in the range of US$32.0 million to US$36.0 million.
Investor Conference Call / Webcast Details
TechFaith will hold a conference call on Tuesday, May 22, 2012 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Tuesday, May 22, 2012 in Beijing). The dial-in phone number is +1-617-213-8055 or +1-866-578-5771. The conference call passcode is 17104542. A live webcast of the conference call will also be available on TechFaith's website at www.techfaithwireless.com.
A replay of the call will be available approximately 2 hours after the conclusion of the live call through 10 p.m. U.S. Eastern Time on May 29, 2012, (10 a.m., May 30, 2012 in Beijing) by telephone at +1-617-801-6888. To access the replay, use passcode 87571767. A webcast replay will also be available at http://www.techfaithwireless.com.
About TechFaith
TechFaith (NASDAQ: CNTF) has three primary businesses. The Company is a leading global ODP (Original Developed Product) provider for global mobile handsets market. Under its TecFace brand, the Company is a leading developer of specialized mobile phones for differentiated market segments, including the rapidly growing Smartphone market targeting users and Operators through its TecFace brand; Outdoor and Sports enthusiasts through its Jungle brand; and the Teen market through licensed brands. Under the Company's 17Vee brand, the Company has built a leading, intellectual property based somatic gaming business ranging from Bluetooth enabled somatic gaming controllers and software to a recently launched proprietary set-top somatic game box. For more information, please visit www.techfaithwireless.com, www.17vee.com and www.798game.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 and management quotations 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.
| CONTACTS: |
|
| In China: China Techfaith Wireless Communication Technology Limited Tel: 86-10-5822-8390 |
In the U.S.: Global IR Partners |
| CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED |
||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
||||
| (In Thousands of U.S. Dollars, except share and per share/ADS data and unless otherwise stated) |
||||
| Three Months Ended |
Three Months Ended |
|||
| March 31 |
December 31 |
|||
| 2012 |
2011 |
2011 |
||
| Revenues: |
||||
| ODP |
$18,945 |
$53,808 |
$50,711 |
|
| Brand name phone sales |
15,535 |
14,914 |
19,274 |
|
| Game |
8,196 |
9,958 |
11,702 |
|
| Total net revenues |
$42,676 |
$78,680 |
$81,687 |
|
| Cost of revenues: |
||||
| ODP |
$17,511 |
$40,365 |
$45,062 |
|
| Brand name phone sales |
9,847 |
8,899 |
11,916 |
|
| Game |
4,486 |
4,121 |
5,630 |
|
| Total cost of revenues |
$31,844 |
$53,385 |
$62,608 |
|
| Gross Profit |
$10,832 |
$25,295 |
$19,079 |
|
| Operating expenses: |
||||
| General and administrative |
$1,436 |
$4,439 |
$4,453 |
|
| Research and development |
2,962 |
3,279 |
3,820 |
|
| Selling and marketing |
5,356 |
2,352 |
7,652 |
|
| Exchange (gain) loss |
20 |
4 |
(69) |
|
| Total operating expenses |
$9,774 |
$10,074 |
$15,856 |
|
| Government subsidy income |
89 |
- |
36 |
|
| Other operating income |
99 |
538 |
683 |
|
| Income from operations |
$1,246 |
$15,759 |
$3,942 |
|
| Interest income |
446 |
277 |
388 |
|
| Investment income |
- |
883 |
- |
|
| Other income (expenses) |
- |
1 |
(83) |
|
| Change in fair value of put option |
- |
- |
(150) |
|
| Income before income taxes |
$1,692 |
$16,920 |
$4,097 |
|
| Income tax expenses |
(1,692) |
(2,167) |
(636) |
|
| Net income |
$- |
$14,753 |
$3,461 |
|
| Less: net income attributable to the noncontrolling interest |
(413) |
(926) |
(776) |
|
| Net income (loss) attributable to TechFaith |
$(413) |
$13,827 |
$2,685 |
|
| Net income (loss) attributable to TechFaith per share |
||||
| Basic |
$(0.00) |
$0.02 |
$0.00 |
|
| Diluted |
$(0.00) |
$0.02 |
$0.00 |
|
| Net income (loss) attribute to TechFaith per ADS |
||||
| Basic |
$(0.01) |
$0.26 |
$0.05 |
|
| Diluted |
$(0.01) |
$0.26 |
$0.05 |
|
| Net income |
$- |
$14,753 |
$3,461 |
|
| Other comprehensive income (loss), net of tax Foreign currency translation adjustment |
(273) |
1,990 |
3,960 |
|
| Comprehensive income (loss) |
(273) |
16,743 |
7,421 |
|
| Less: Comprehensive income contributable to noncontrolling interest |
(402) |
(926) |
(1,303) |
|
| Comprehensive income (loss) attributable to TechFaith |
$(675) |
$15,817 |
$6,118 |
|
| Weighted average shares |
||||
| Basic |
794,003,193 |
794,003,193 |
794,003,193 |
|
| Diluted |
794,003,193 |
794,003,193 |
794,003,193 |
|
|
CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED |
|||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
| (In Thousands of U.S. Dollars) |
|||
| March 31, 2012 |
December 31, 2011 |
||
| Assets |
|||
| Current assets: |
|||
| Cash and cash equivalents |
$248,319 |
$250,637 |
|
| Accounts receivable |
2,825 |
6,715 |
|
| Inventories |
8,031 |
7,984 |
|
| Prepaid expenses and other current assets |
14,715 |
17,560 |
|
| Deferred tax assets-current |
219 |
207 |
|
| Total current assets |
$274,109 |
$283,103 |
|
| Plant, machinery and equipment, net |
$46,235 |
$48,977 |
|
| Land use rights, net |
10,695 |
10,755 |
|
| Construction in progress |
22,738 |
21,002 |
|
| Acquired intangible assets, net |
6,469 |
2,327 |
|
| Goodwill |
1,242 |
1,242 |
|
| Deferred tax assets-noncurrent |
4 |
3 |
|
| Total assets |
$361,492 |
$367,409 |
|
| Liabilities and shareholders' equity |
|||
| Current liabilities: |
|||
| Accounts payable (including accounts payable of the consolidated variable interest entities without recourse to China Techfaith Wireless Communication Technology Limited, $nil and $nil as of March 31, 2012 and December 31, 2011, respectively) |
8,846 |
8,792 |
|
| Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated variable interest entities without recourse to China Techfaith Wireless Communication Technology Limited, $854 and $837 as of March 31, 2012 and December 31, 2011, respectively) |
15,203 |
21,721 |
|
| Advance from customers (including advance from customers of the consolidated variable interest entities without recourse to China Techfaith Wireless Communication Technology Limited, $213 and $202 as of March 31, 2012 and December 31, 2011, respectively) |
8,742 |
8,492 |
|
|
Deferred revenue (including deferred revenue of the consolidated variable interest entities without recourse to China Techfaith Wireless Communication Technology Limited, $nil and $nil as of March 31, 2012 and December 31, 2011, respectively) |
695 |
219 |
|
| Income tax payable (including income tax payable of consolidated variable interest entities without recourse to China Techfaith Wireless Communication Technology Limited, $23 and $21 as of March 31, 2012 December 31, 2011, respectively) |
1,593 |
1,804 |
|
| Total current liabilities |
$35,079 |
$41,028 |
|
| Long-term loan (including long-term loan of the consolidated variable interest entities without recourse to China Techfaith Wireless Communication Technology Limited, $nil and $nil as of March 31, 2012 and December 31, 2011, respectively) |
290 |
290 |
|
|
Deferred tax liability-noncurrent (including deferred tax liability-noncurrent of the consolidated variable interest entities without recourse to China Techfaith Wireless Communication Technology Limited, $nil and $nil as of March 31, 2012 and December 31, 2011, respectively) |
98 |
106 |
|
| Total liabilities |
$35,467 |
$41,424 |
|
| Shareholders' equity |
|||
| Paid in capital |
$16 |
$16 |
|
| Additional paid-in capital |
141,980 |
141,667 |
|
| Accumulated other comprehensive income |
43,324 |
43,597 |
|
| Statutory reserve |
22,631 |
22,631 |
|
| Retained earnings |
96,859 |
97,272 |
|
| Total Techfaith shareholders' equity |
$304,810 |
$305,183 |
|
| Noncontrolling interests |
$21,215 |
$20,802 |
|
| Total shareholders' equity |
$326,025 |
$325,985 |
|
| Total liabilities and shareholders' equity |
$361,492 |
$367,409 |
|
SOURCE China TechFaith Wireless Technology Limited
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