TechFaith Reports Second Quarter 2012 Financial Results
BEIJING, Aug. 16, 2012 /PRNewswire-Asia/ -- China TechFaith Wireless Communication Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today announced its unaudited financial results for the second quarter ended June 30, 2012.
For the second quarter of 2012, TechFaith reported revenue of US$32.4 million compared to US$42.7 million in the first quarter of 2012 and US$82.8 million in the second quarter of 2011. This is in line with the Company's prior guidance for revenue in the second quarter of 2012 to be in the range of US$32.0 million to US$36.0 million. The revenue decline is primarily due to increased levels of competition for the Company's high-end smart phones. Gross profit for the second quarter of 2012 was US$7.3 million, compared to US$10.8 million in the first quarter of 2012. Gross margin for the second quarter of 2012 was 22.6%, compared to 25.4% in the first quarter of 2012. The decline in gross margin is mainly due to lower revenue and pricing pressure resulting from the competitive environment. Net loss attributed to TechFaith for the second quarter of 2012 was US$0.7 million or US$0.01 loss per basic and diluted ADS, compared to a net loss of US$0.4 million or US$0.01 loss per basic and diluted ADS in the first quarter of 2012.
Miss Ouyang Yuping, TechFaith's Chief Financial Officer, said, "Revenue in the quarter came in at the lower end of our guidance due to continued weakness in our ODP and branded mobile phone business. We expect that the mobile phone business environment will remain extremely difficult in the near-term. The impact of lower revenue in the quarter and increasing competition again impacted our gross margin and resulted in a net loss for the quarter. We continue to evaluate and work to adjust our resources to better meet the current challenging business environment."
Mr. Deyou Dong, President and Chief Operating Officer of TechFaith, said, "Our focus remains on developing unique smart phones and mobile devices targeting niche and enterprise segments. We understand the market and our business is in a period of contraction. We remain focused on working closely with customers to develop the tailored solutions they need. TechFaith's ability to service these market segments will ultimately help us stabilize our business level and return to both revenue growth and profitability."
Mr. Defu Dong, Chairman and Chief Executive Officer of TechFaith, said, "As part of our ongoing strategic review and efforts to restore our business growth, we have started to shift our gaming business focus from hardware sales to software packages and applications. We believe that these changes will help us strengthen our user base and ultimately revitalize this business segment."
Third Quarter of 2012 Outlook
The below forecast is TechFaith's current and preliminary view, which is subject to change. TechFaith currently expects total revenue for the third quarter of 2012 to be in the range of US$ 30.0 million to US$ 35.0 million.
Investor Conference Call / Webcast Details
TechFaith will hold a conference call on Thursday, August 16, 2012 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Thursday, August 16, 2012 in Beijing). The dial-in phone number is +1-617-597-5309 or +1-866-713-8395. The conference call passcode is 30042849. 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 August 23, 2012, (10 a.m., August 24, 2012 in Beijing) by telephone at +1-617-801-6888. To access the replay, use passcode 85042381. A webcast replay will also be available at http://www.techfaithwireless.com.
About TechFaith
TechFaith (NASDAQ: CNTF) has three primary businesses. Under the TechFaith umbrella, the Company is a leading global mobile solutions provider for the global mobile handsets market (previously called the ODP (Original Developed Product) business)). 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 wireless mobile phone network operators and end users; the Company also serves sports enthusiasts with a tailored line under the Jungle brand and the teen market under licensed brands. Under the Company's 17VEE brand, the Company has built a leading intellectual property based motion gaming business ranging from Bluetooth-enabled motion gaming controllers and software to a planned proprietary set-top motion 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.
| 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 |
Six Months Ended |
|||||
| March 31 |
June 30 |
June 30 |
|||||
| 2012 |
2012 |
2011 |
2012 |
2011 |
|||
| Revenues: |
|||||||
| ODP |
$18,945 |
$13,470 |
$55,917 |
$32,415 |
$109,725 |
||
| Brand name phone sales |
15,535 |
11,785 |
16,179 |
27,320 |
31,093 |
||
| Game |
8,196 |
7,151 |
10,690 |
15,347 |
20,648 |
||
| Total net revenues |
$42,676 |
$32,406 |
$82,786 |
$75,082 |
$161,466 |
||
| Cost of revenues: |
|||||||
| ODP |
$17,511 |
$13,661 |
$45,141 |
$31,172 |
$85,506 |
||
| Brand name phone sales |
9,847 |
7,680 |
10,086 |
17,527 |
18,985 |
||
| Game |
4,486 |
3,746 |
5,811 |
8,232 |
9,932 |
||
| Total cost of revenues |
$31,844 |
$25,087 |
$61,038 |
$56,931 |
$114,423 |
||
| Gross Profit |
$10,832 |
$7,319 |
$21,748 |
$18,151 |
$47,043 |
||
| Operating expenses: |
|||||||
| General and administrative |
$1,456 |
$1,512 |
$6,895 |
$2,968 |
$11,338 |
||
| Research and development |
2,962 |
2,179 |
2,755 |
5,141 |
6,034 |
||
| Selling and marketing |
5,356 |
4,626 |
2,767 |
9,982 |
5,119 |
||
| Total operating expenses |
$9,774 |
$8,317 |
$12,417 |
$18,091 |
$22,491 |
||
| Government subsidy income |
89 |
- |
77 |
89 |
77 |
||
| Other operating income |
99 |
269 |
545 |
368 |
1,083 |
||
| Income (loss) from operations |
$1,246 |
$(729) |
$9,953 |
$517 |
$25,712 |
||
| Interest income |
446 |
635 |
338 |
1,081 |
615 |
||
| Investment income |
- |
- |
- |
- |
883 |
||
| Other income |
- |
4 |
- |
4 |
1 |
||
| Income (loss) before income taxes |
$1,692 |
$(90) |
$10,291 |
$1,602 |
$27,211 |
||
| Income tax expenses |
(1,692) |
(278) |
(2,367) |
(1,970) |
(4,534) |
||
| Net (loss) income |
$0 |
$(368) |
$7,924 |
$(368) |
$22,677 |
||
| Less: net income attributable to the noncontrolling interest |
(413) |
(346) |
(586) |
(759) |
(1,512) |
||
| Net income(loss) attributable to TechFaith |
$(413) |
$(714) |
$7,338 |
$(1,127) |
$21,165 |
||
| Net income (loss) attributable to TechFaith per share |
|||||||
| Basic |
$(0.00) |
$(0.00) |
$0.01 |
$(0.00) |
$0.03 |
||
| Diluted |
$(0.00) |
$(0.00) |
$0.01 |
$(0.00) |
$0.03 |
||
| Net income (loss) attribute to TechFaith per ADS |
|||||||
| Basic |
$(0.01) |
$(0.01) |
$0.14 |
$(0.02) |
$0.40 |
||
| Diluted |
$(0.01) |
$(0.01) |
$0.14 |
$(0.02) |
$0.40 |
||
| Net income |
$0 |
$(368) |
$7,924 |
$(368) |
$22,677 |
||
| Other comprehensive income (loss), net of tax adjustment |
(273) |
(3,093) |
3,442 |
(3,366) |
5,432 |
||
| Comprehensive income (loss) |
(273) |
(3,461) |
11,366 |
(3,734) |
28,109 |
||
| Less: Comprehensive income attributable to noncontrolling interest |
(402) |
(159) |
(586) |
(561) |
(1,512) |
||
| Comprehensive income (loss) attributable to TechFaith |
$(675) |
$(3,620) |
$10,780 |
$(4,295) |
$26,597 |
||
| Weighted average shares |
|||||||
| Basic |
794,003,193 |
794,003,193 |
794,003,193 |
794,003,193 |
794,003,193 |
||
| Diluted |
794,003,193 |
794,003,193 |
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) |
||||||
| June 30, 2012 |
March 31, 2012 |
December 31, 2011 |
||||
| Assets |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$252,033 |
$248,319 |
$250,637 |
|||
| Restricted cash |
26 |
- |
- |
|||
| Accounts receivable |
2,246 |
2,825 |
6,715 |
|||
| Inventories |
8,771 |
8,031 |
7,984 |
|||
| Prepaid expenses and other current assets |
14,520 |
14,715 |
17,560 |
|||
| Deferred tax assets-current |
222 |
219 |
207 |
|||
| Total current assets |
$277,818 |
$274,109 |
$283,103 |
|||
| Plant, machinery and equipment, net |
$44,926 |
$46,235 |
$48,977 |
|||
| Land use rights |
10,547 |
10,695 |
10,755 |
|||
| Construction in progress |
22,757 |
22,738 |
21,002 |
|||
| Acquired intangible assets, net |
7,563 |
6,469 |
2,327 |
|||
| Goodwill |
1,242 |
1,242 |
1,242 |
|||
| Deferred tax assets-noncurrent |
1 |
4 |
3 |
|||
| Total assets |
$364,854 |
$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, $nil and $nil as of June 30, 2012, March 31, 2012 and December 31, 2011 respectively) |
9,414 |
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, $831, $854 and $837 as of as of June 30, 2012, March 31, 2012 and December 31, 2011 respectively) |
15,639 |
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, $212 and $213 and $202 as of June 30, 2012, March 31, 2012 and December 31, 2011 respectively) |
8,681 |
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, $nil and $nil as of June 30, 2012, March 31, 2012 and December 31, 2011 respectively) |
2,111 |
695 |
219 |
|||
|
Income tax payable (including income tax payable of consolidated variable interest entities without recourse to China TechFaith Wireless Communication Technology Limited, $23, $23 and $21 as of June 30, 2012, March 31, 2012 and December 31, 2011 respectively) |
439 |
1,593 |
1,804 |
|||
|
Short-term loan (including short-term loan of the consolidated variable interest entities without recourse to China TechFaith Wireless Communication Technology Limited, $nil, $nil and $nil as of June 30, 2012, March 31, 2012 and December 31, 2011 respectively) |
5,350 |
- |
- |
|||
| Total current liabilities |
$41,634 |
$35,079 |
$41,028 |
|||
| Long-term loan |
290 |
290 |
290 |
|||
| Deferred tax liability-noncurrent |
89 |
98 |
106 |
|||
| Total liabilities |
$42,013 |
$35,467 |
$41,424 |
|||
| Shareholders' equity |
||||||
| Paid in capital |
$16 |
$16 |
$16 |
|||
| Additional paid-in capital |
142,268 |
141,980 |
141,667 |
|||
| Accumulated other comprehensive income |
40,418 |
43,324 |
43,597 |
|||
| Statutory reserve |
22,631 |
22,631 |
22,631 |
|||
| Retained earnings |
96,145 |
96,859 |
97,272 |
|||
| Total TechFaith shareholders' equity |
$301,478 |
$304,810 |
$305,183 |
|||
| Noncontrolling interest |
$21,363 |
$21,215 |
$20,802 |
|||
| Total shareholders' equity |
$322,841 |
$326,025 |
$325,985 |
|||
| Total liabilities and shareholders' equity |
$364,854 |
$361,492 |
$367,409 |
|||
SOURCE China TechFaith Wireless Technology Limited
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