TechFaith Reports Fourth Quarter and Full Year 2012 Financial Results

    TechFaith Reports Fourth Quarter and Full Year 2012 Financial Results

PR Newswire

BEIJING, March 12, 2013

BEIJING, March 12, 2013 /PRNewswire/ -- China TechFaith Wireless Communication
Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today
announced its unaudited financial results for the fourth quarter and the full
year ended December 31, 2012.

For the fourth quarter of 2012, TechFaith reported net revenues of US$31.0
million compared to US$31.5 million in the third quarter of 2012. Gross profit
for the fourth quarter of 2012 was US$5.9 million compared to US$7.2 million
in the third quarter of 2012. Gross margin for the fourth quarter was 19.1%
compared to 22.8% in the previous quarter. Net loss attributed to TechFaith
for the fourth quarter of 2012 was US$3.0 million or US$(0.06) per basic and
diluted weighted average outstanding ADS, compared to net income of US$0.9
million or US$0.02 per basic and diluted weighted average outstanding ADS in
the third quarter of 2012.

For the full year ended December 31, 2012, TechFaith reported net revenues of
US$137.7 million compared to US$323.8 million for the full year ended December
31, 2011. The decline in revenues was mainly due to higher levels of
competition, which led to a material decline in the Company's Original
Developed Product (ODP) and game business, and the negative impact of our
shift from Windows Mobile-based smartphones to Android-based smartphones.
Gross profit for the full year 2012 was US$31.3 million compared to US$85.2
million for the full year 2011. Gross margin for the full year 2012 was 22.7%
compared to 26.3% for the full year 2011. Operating expenses for the full year
2012 were US$31.1 million compared to US$50.2 million for the full year 2011.
Net loss for full year 2012 was US$3.3 million or US$ (0.06) per basic and
diluted weighted average outstanding ADS, compared to net income of US$27.1
million or US$0.51 per basic and diluted weighted average outstanding ADS for
the full year 2011.

Ms. Ouyang Yuping, TechFaith's Chief Financial Officer, said, "It was a very
challenging year for TechFaith as we were impacted by global economic weakness
and higher levels of competition. We kept strict operating controls in place
to help us weather the volatility in the market. Specifically, we reduced our
operating expenses by 38.0% for the full year. It is also worth noting that
despite the significant decline in our revenues, we were able to hold gross
margin at 22.7% for the full year 2012 by focusing on higher margin, niche
business opportunities. Our balance sheet continues to give us the ability to
pursue the long-term business initiatives and strategy that are central to our
company's success, even with higher levels of competition and further expected
market volatility."

Mr. Deyou Dong, President and Chief Operating Officer of TechFaith, said,
"2012 was a tough year for us as we faced a steep unit volume reduction in our
mobile phone business and difficult business environments in the key segments
we operate. We made the shift to Android smartphones but would have benefited
from shifting earlier in the product cycle.We understand the markets that we
are operating in, which are characterized by tough competition, fast changes,
high uncertainty and margin pressure in the mobile phone business. Our ability
to succeed in the niche segments we are targeting and our track record of
product innovations, ranging from improved imaging and bigger capacitive touch
screens, is helping us to keep on track even with the expected continuation of
headwinds and high levels of competition. For example, customer response
remains positive for our ruggedized devices. This is a product line that
leverages our strong hardware design capabilities and meets a unique need in a
profitable niche market. With that said, this is also a global market that we
see as having significant potential. We are pursuing other opportunities in
middle to high-end mobile handsets that leverage our strengths in both
domestic and international markets as we work to return to sustainable growth
and profitability."

Mr. Defu Dong, Chairman and Chief Executive Officer of TechFaith, said, "We
are focused on pursuing the opportunities that will put the rough 2012 behind
us. We have successfully navigated similar tough market situations in the past
and we are confident in our ability to do so once again. The big difference
between our current situation and our less profitable prior transition periods
is that our core business is now moving forward on a larger scale and we now
have a much stronger balance sheet. We continue to refresh our product
portfolio, which differentiates TechFaith in the niche markets we are going
after, through unique hardware offerings. We provide carriers and partners
unique solutions that address unmet mobile needs in the outdoor adventure
market and in the market for highly sensitive medical monitoring
applications.Because we are operating from a position of financial strength,
we are able to pursue the long-term strategy that is essential to the
Company's success and to creating value for our shareholders. For example, we
recently announced we would promote 3D motion sensing technology, delivery
platforms and games in China. This is an exciting new area in the gaming
market that allows us to leverage our motion gaming expertise. We have
previously built motion gaming content and distribution assets and understand
the potential 3D has to give gamers an even more entertaining experience. We
are optimistic about this opportunity and others in the core mobile
communications area, which have growth potential in 2013."

First Quarter of 2013 Outlook

The below forecast is TechFaith's current and preliminary view, which is
subject to change. TechFaith currently expects total revenues for the first
quarter of 2013 to be in the range of US$28.0 million to US$33.0 million.

Investor Conference Call / Webcast Details

TechFaith will hold a conference call on Tuesday, March 12, 2013 at 8:00 a.m.
U.S. Eastern Time (8:00 p.m. Tuesday, March 12, 2013 in Beijing).The dial-in
number for the live audio call is +1-617-213-8849 or +1-866-203-3436. The
conference call passcode is 38061147. 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 by telephone at +1-617-801-6888, with passcode
86477094. A webcast replay will also be available at
www.techfaithwireless.com.

About TechFaith

TechFaith (NASDAQ: CNTF) has three primary businesses. The Company is a
leading global mobile solutions provider for the global mobile handsets market
(previously called the ODP (Original Developed Product) business)). 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 17FOX brand (previously
"17VEE"), 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.

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 COMPREHENSIVE INCOME
(In Thousands of U.S. Dollars, except share and per share/ADS data and unless
otherwise stated)
               ThreeMonthsEnded  Three Months Ended       Twelve Months Ended
               September 30        December 31              December 31
               2012                2012        2011         2012        2011
Revenues:
ODP            $13,311             $12,077     $50,711      $57,803     $212,784
Brand name     11,329              11,617      19,274       50,266      67,535
phone sales
Game           6,909               7,338       11,702       29,594      43,481
Total net      $31,549             $31,032     $81,687      $137,663    $323,800
revenues
Cost of
revenues:
ODP            $12,222             $10,577     $45,062      $53,971     $174,991
Brand name     7,783               8,940       11,916       34,250      41,280
phone sales
Game           4,337               5,577       5,630        18,146      22,293
Total cost of  $24,342             $25,094     $62,608      $106,367    $238,564
revenues
Gross Profit   $7,207              $5,938      $19,079      $31,296     $85,236
Operating
expenses:
General and    $669                $1,957      $4,384       $5,594      $18,848
administrative
Research and   2,192               2,010       3,820        9,343       13,541
development
Selling and    1,545               801         7,652        12,328      17,196
marketing
Impairment of
intangible     702                 3,131       -            3,833       -
assets
Impairment of  -                   -           -            -           606
goodwill
Total
operating      $5,108              $7,899      $15,856      $31,098     $50,191
expenses
Government     99                  44          36           232         224
subsidy income
Other
operating      281                 475         683          1,124       2,824
income
Income (loss)
from           $2,479              $(1,442)    $3,942       $1,554      $38,093
operations
Interest       523                 428         388          2,032       1,365
income
Other
(expenses)     (313)               663         (83)         354         (79)
income
Change in fair
value of put   (90)                (60)        (150)        (150)       (150)
option
Income (loss)
before income  $2,599              $(411)      $4,097       $3,790      $39,229
taxes
Income tax     (1,518)             (2,147)     (636)        (5,635)     (9,419)
expenses
Net income     $1,081              $(2,558)    $3,461       $(1,845)    $29,810
(loss)
Less: net
income
attributable   (205)               (485)       (776)        (1,449)     (2,683)
to the
noncontrolling
interest
Net income
(loss)
attributable   $876                $(3,043)    $2,685       $(3,294)    $27,127
to
TechFaith
Net income
(loss)
attributable
to TechFaith
per share
 Basic        $0.00               $(0.00)     $0.00        $(0.00)     $0.03
 Diluted      $0.00               $(0.00)     $0.00        $(0.00)     $0.03
Net income
(loss)
attribute to
TechFaith per
ADS
 Basic        $0.02               $(0.06)     $0.05        $(0.06)     $0.51
 Diluted      $0.02               $(0.06)     $0.05        $(0.06)     $0.51
Net income     $1,081              $(2,558)    $3,461       $(1,845)    $29,810
(loss)
Other
comprehensive
income,
net of tax
Foreign
currency       4,008               2,894       3,960        3,525       13,026
translation
adjustment
Comprehensive  5,089               336         7,421        1,680       42,836
income
Less:
Comprehensive
income
attributable   (482)               (706)       (1,303)      (1,749)     (3,210)
to
noncontrolling
interest
Comprehensive
income (loss)  $4,607              $(370)      $6,118       $(69)       $39,626
attributable
to TechFaith
Weighted
average shares
outstanding
 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)
                                     December31,  September30,2012  December31,2011
                                     2012
Assets
Current assets:
Cash and cash equivalents            $257,950      $265,044            $250,637
Accounts receivable                  8,666         4,552               6,715
Inventories                          7,490         6,486               7,984
Prepaid expenses and other current   15,678        20,528              17,560
assets
Deferred tax assets-current          -             226                 207
Total current assets                 $289,784      $296,836            $283,103
Plant, machinery and equipment, net  $44,084       $44,214             $48,977
Land use rights, net                 10,645        10,607              10,755
Construction in progress             36,530        26,688              21,002
Acquired intangible assets, net      4,061         6,306               2,327
Goodwill                             1,242         1,242               1,242
Deferred tax assets-noncurrent       -             1                   3
Total assets                         $386,346      $385,894            $367,409
Liabilities and shareholders' equity
Current liabilities:
Accountspayable(includingaccounts
payable of the consolidated variable
interest entities without recourse
toChina
TechFaith Wireless Communication     11,140        10,176              8,792
Technology Limited, $nil, $nil and
$nil as
of December 31, 2012, September 30,
2012 and December 31, 2011
respectively)
Accrued expenses and other current
liabilities (including accrued
expenses and
other current liabilities of the
consolidated
variable interest entities without
recourse                             13,464        14,364              21,721
to China TechFaith Wireless
Communication Technology Limited,
$184, $684 and $837 as of as of
December 31, 2012, September 30,
2012
and December 31, 2011 respectively)
Advance from customers (including
advance from customers of the
consolidated variable interest
entities
without recourse to China TechFaith
Wireless Communication Technology    9,173         9,324               8,492
Limited, $nil and $217 and $202 as
of
December 31, 2012, September 30,
2012
and December 31, 2011 respectively)
Deferred revenue (including deferred
revenue of the consolidated variable
interest entities without recourse
to China
TechFaith Wireless Communication     4,178         4,584               219
Technology Limited, $nil, $nil and
$nil as
of December 31, 2012, September 30,
2012 and December 31, 2011
respectively)
Income tax payable (including income
tax
payable of consolidated variable
interest
entities without recourse to China
TechFaith Wireless Communication     1,062         660                 1,804
Technology Limited, $21, $21 and $21
as
of December 31, 2012, September 30,
2012 and December 31, 2011
respectively)
Short-term loan (including
short-term loan of the consolidated
variable interest
entities without recourse to China
TechFaith Wireless Communication     15,350        15,350              -
Technology Limited, $nil, $nil and
$nil as
of December 31, 2012, September 30,
2012 and December 31, 2011
respectively)
Total current liabilities            $54,367       $54,458             $41,028
Long-term loan                       290           290                 290
Deferred tax liability-noncurrent    -             81                  106
Total liabilities                    $54,657       $54,829             $41,424
Shareholders' equity
Paid in capital                      $16           $16                 $16
Additional paid-in capital           142,837       142,549             141,667
Accumulated other comprehensive      46,822        44,149              43,597
income
Statutory reserve                    23,137        22,631              22,631
Retained earnings                    93,472        97,021              97,272
Total TechFaith shareholders' equity $306,284      $306,366            $305,183
Noncontrolling interest              $25,405       $24,699             $20,802
Total shareholders' equity           $331,689      $331,065            $325,985
Total liabilities and shareholders'  $386,346      $385,894            $367,409
equity

SOURCE China TechFaith Wireless Technology Limited

Website: http://www.techfaithwireless.com
Contact: In China: Jay Ji, China Techfaith Wireless Communication Technology
Limited, +86-10-5822-8390, ir@techfaith.cn or In the U.S.: David Pasquale,
Global IR Partners, +1 914-337-8801, cntf@globalirpartners.com
 
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