Trunkbow Announces Preliminary Fourth Quarter and Full Year 2012 Financial Results PR Newswire BEIJING, April 16, 2013 BEIJING, April 16, 2013 /PRNewswire/-- Trunkbow International Holdings Limited (NASDAQ: TBOW) ("Trunkbow" or the "Company"), a leading provider of Mobile Payment Solutions ("MPS") and Mobile Value Added Services ("MVAS") in the PRC, today announced preliminary, unaudited financial results for its fourth quarter and full year ended December 31, 2012. Full Year 2012 Financial Highlights oGross revenue was $35.5 million, compared with $29.7 million in 2011. oMVAS gross revenue increased to $21.6 million, compared with $17.4 million in 2011. oMPS gross revenue in 2012 was $13.9 million, compared with $12.3 million in 2011. oGross profit in 2012 was $29.7 million, compared with $22.9 million in 2011; gross margin improved to 85.3%, compared with 78.9% in 2011. oNet income totaled $12.7 million, or $0.34 per diluted share, compared with $16.9 million, or $0.46 per diluted share in 2011. oAs of December 31, 2012, cash and cash equivalents totaled $0.8 million. oCollected approximately $3.9 million of outstanding accounts receivable as of December 31, 2012. Fourth Quarter 2012 Financial Highlights oGross revenue was $13.6 million, compared with $9.7 million in the fourth quarter of 2011. oMPS gross revenue for the quarter was $7.7 million, compared with $8.2 million in the fourth quarter of 2011. oMVAS gross revenue increased to $6.0 million, compared with $1.5 million a year ago. oGross profit for the quarter was $12.2 million, compared with $8.3 million in the fourth quarter of 2011. oGross margin improved to 91.5%, compared with 86.7% in the fourth quarter of 2011. 2012 and Recent Business Highlights oAnnounced that the Company's board of directors received a preliminary non-binding "going-private" transaction proposal letter, dated November 2, 2012. oExtended cooperation with China Unicom through the deployment of a new terminal-based MPS platform in Sichuan and Heilongjiang Province. oSigned approximately 140 merchants for implementation of Trunkbow-UnionPay mobile applet system. Mobile apps containing this payment functionality were introduced in the second half of 2012. oBegan development of cloud-based MPS services through partnership with experienced operators to offer hosted mobile payment services for small- and medium-sized businesses. oSigned an agreement to develop and implement a new electronic payment system for China Minsheng Banking Corp., Ltd. ("CMBC"), China's first national joint-stock commercial bank, serving non state-owned enterprises, small businesses and high-end consumers. The new system will be designed to simplify mobile and Internet payments for 10 million CMBC credit cardholders. oContinued the construction and began management and operation of the cloud data center through partnership with experienced operators to offer managed hosting services. To date, no decisions have been made with respect to the Company's response to the going-private proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company will provide relevant updates with respect to the going private transaction or any other transaction as appropriate. Fourth Quarter 2012 Results Gross revenue in the fourth quarter of 2012 was $13.6 million, an increase of 40.2% year-over-year, compared with gross revenue of $9.7 million in the same period a year ago. The increase in gross revenue was primarily attributable to the growth of software sales. Revenue from MVAS increased $4.5 million, or 302.1%, to $6.0 million for the fourth quarter of 2012, compared with $1.5 million in the same period of 2011. The increase in MVAS revenue was primarily driven by the growth on MVAS software sales related to phone call and SMS management, mobile business card, color numbering and number change notification. Revenue from the Company's MPS offerings decreased 6.9% to $7.7 million for the fourth quarter of 2012, compared with $8.2 million in the same period of 2011. The decrease in MPS revenue was attributable to reduction of the MPS software sales. Cost of revenue in the fourth quarter of 2012 was $1.1 million, compared with $1.3 million in the same period of 2011. The decrease in cost of revenue was primarily attributed to reduction in the system integration, which consumed significant hardware costs. Gross profit in the fourth quarter of 2012 totaled $12.2 million, compared with $8.3 million in the fourth quarter of 2011. As a percentage of net revenue, gross margin was 91.5% in the fourth quarter of 2012, compared with 86.7% in the year-ago period. The year-over-year improvement in gross margin was attributable to the increase of software sales and decrease of revenues from system integration, which involves significantly higher hardware costs. Operating expenses in the fourth quarter of 2012 were $6.5 million, an increase of 48.3% year-over-year. The increase in operating expenses was primarily related to an increase in allowance for doubtful accounts, provided for customers' receivables and advances to suppliers that are older than one year. The allowances provided for accounts receivable and advance to suppliers were $2.1 million and $2.5 million, respectively. Operating income in the fourth quarter of 2012 was $5.7 million, compared with $3.9 million reported in the same period last year. The increase in operating income for the quarter was in line with the increase in revenue. Net income attributable to Trunkbow was $5.0 million in the fourth quarter of 2012, compared with $4.8 million in the fourth quarter of 2011. Earnings per basic and diluted share in the fourth quarter of 2012 were $0.14 each, based on basic and diluted shares outstanding of 36.8 million. This compares with $0.13 per basic and diluted share based on basic and diluted shares outstanding of 36.8 million and 37.0 million, respectively, in the year-ago period. Balance Sheet and Cash Flow As of December 31, 2012, the Company had $0.8 million in cash and cash equivalents, compared with $6.1 million as of December 31, 2011. As of December 31, 2012, the Company had working capital of $50.5 million and total shareholders' equity of $95.4 million.Accounts receivable on December 31, 2012 totaled approximately $46.9 million. As December 31, 2012, the Company had collected approximately $3.9 million of these outstanding receivables. Conference Call The Company will host a conference call to discuss financial results for the fourth quarter and 2012 full year on April 16, 2013 at 8:00 a.m. EDT. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (718) 354-1231. International callers should dial +65 6723-9381. The passcode required is 35510300. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on April 16, 2013. To access the replay, please dial +1 (646) 254-3697, international callers dial +61 (2) 8199-0299, and enter the passcode 35510300. About Trunkbow Trunkbow International Holdings (NASDAQ: TBOW) is a leading provider of Mobile Payment Solutions ("MPS") and Mobile Value Added Solutions ("MVAS") in PRC. Trunkbow's solutions enable the telecom operators to offer their subscribers access to unique mobile applications, innovative tools, value-added services that create a superior mobile experience, and as a result generate higher average revenue per user and reduce subscriber churn. Since its inception in 2001, Trunkbow has established a proven track record of innovation, and has developed a significant market presence in both the Mobile Value Added and Mobile Payment solutions markets. Trunkbow supplies its mobile payment solutions to all three Chinese mobile telecom operators, as well as re-sellers, in several provinces of China. For more information, please visit www.trunkbow.com. Safe Harbor Statement This press release contains forward-looking statements that reflect the Company's current expectations and views of future events that involve known and unknown risks, uncertainties and other factors that may cause its actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward looking statements involve known and unknown risks and uncertainties, including but not limited to uncertainties relating to the Company's relationship with China's major telecom carriers and its resellers, competition from domestic and international companies, changes in technology, contributions from revenue sharing plans and general economic conditions. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The results the Company is providing today are preliminary and unaudited and are subject to the conclusion of the audit of our financial statements, and could differ materially from the results disclosed today. Information regarding these risks, uncertainties and other factors is included in the Company's annual report on Form 10-K and other filings with the SEC. Contact Information In China: In the U.S. Trunkbow International Holdings Limited The Piacente Group Ms Alice Ye, Chief Financial Officer Brandi Floberg/Lee Roth Phone: +86 (10) 8571-2518 (Beijing) Phone: + (1) 212-481-2050 (New York) Email: email@example.com E-mail:firstname.lastname@example.org - FINANCIAL TABLES FOLLOW - TRUNKBOW INTERNATIONAL HOLDINGS LIMITED AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS December31, December31, 2012 2011 ASSETS Current assets Cash and cash equivalents $ 783,074 $ 6,139,589 Accounts receivable, net 46,896,214 41,147,767 Advances to suppliers, net 12,478,788 9,783,454 Prepayment 496,372 316,258 Other current assets 7,996,644 4,040,152 Due from directors 9,350 758,033 Inventories 5,673,179 4,924,415 Deferred tax asset 942,028 117,952 Total current assets 75,275,649 67,227,620 Property and equipment, net 39,929,472 21,420,803 Land use right, net 5,831,641 5,905,583 Intangible assets, net 271,894 33,958 Long-term prepayment 368,985 2,733,363 TOTAL ASSETS $ 121,677,641 $ 97,321,327 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 2,655,395 $ 2,238,179 Accrued expenses and other current liabilities* 3,983,227 2,216,128 Short-term loan 11,175,196 6,460,945 Due to directors 106,141 11,959 Taxes payable 6,857,978 4,209,907 Total current liabilities 24,777,937 15,137,118 Deferred revenue 1,505,881 0 Total liabilities 26,283,818 15,137,118 COMMITMENTS AND CONTINGENCIES Stockholders' equity Preferred Stock: par value $0.001, authorized 10,000,000 shares, none issued and outstanding at December 0 0 31, 2012 and December 31, 2011, respectively Common Stock: par value $0.001, authorized 190,000,000 shares, 36,807,075 shares issued and outstanding at 36,807 36,807 December 31, 2012 and December 31, 2011, respectively Additional paid-in capital 39,671,966 39,671,966 Appropriated retained earnings 6,461,938 4,504,667 Unappropriated retained earnings 45,713,187 34,989,429 Accumulated other comprehensive income 3,509,925 2,981,340 Total stockholders' equity 95,393,823 82,184,209 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 121,677,641 $ 97,321,327 TRUNKBOW INTERNATIONAL HOLDINGS LIMITED AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Three Months Ended Years Ended December 31, December 31, 2012 2011 2012 2011 Revenues $ 13,643,170 $ 9,731,237 $ 35,460,297 $ 29,715,407 Less: Business tax and surcharges 285,297 165,733 691,297 638,377 Net revenues 13,357,873 9,565,504 34,769,000 29,077,030 Cost of revenues 1,138,681 1,271,549 5,107,636 6,130,071 Gross profit 12,219,192 8,293,955 29,661,364 22,946,959 Operating expenses Selling and distribution expenses 661,369 676,611 3,197,089 2,344,993 General and administrative expenses 5,443,467 3,326,555 11,342,159 7,944,055 Research and development expenses 437,989 407,611 2,014,797 1,434,525 6,542,825 4,410,777 16,554,045 11,723,573 Income from operations 5,676,367 3,883,178 13,107,319 11,223,386 Other income (expenses) Interest income 58,388 5,193 232,693 107,467 Interest expense (223,299) (35,775) (956,492) (87,005) Refund of value-added tax 117,841 804,627 1,667,606 2,112,463 Government grants 78,732 911,552 379,159 5,651,686 Other income (9,148) (71,948) 83,562 7,890 Other expenses (332) 13,935 (12,723) (117,024) 22,182 1,627,584 1,393,805 7,675,477 Income before income tax expense 5,698,549 5,510,762 14,501,124 18,898,863 Income tax expense 715,144 717,043 1,820,095 1,958,615 Net income 4,983,405 4,793,719 12,681,029 16,940,248 Foreign currency translation fluctuation 168,324 620,773 528,585 2,405,664 Comprehensive income $ 5,151,729 $ 5,414,492 $ 13,209,614 $ 19,345,912 Weighted average number of common shares outstanding Basic 36,807,075 36,807,075 36,807,075 36,263,911 Diluted 36,807,075 36,974,086 36,812,203 37,163,690 Earnings per share Basic $ 0.14 $ 0.13 $ 0.34 $ 0.47 Diluted $ 0.14 $ 0.13 $ 0.34 $ 0.46 TRUNKBOW INTERNATIONAL HOLDINGS LIMITED AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2012 2011 Cashflowsfromoperatingactivities Net income $ 12,681,029 $ 16,940,248 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 1,667,726 323,671 Provision for doubtful accounts 6,582,008 928,218 Share-based compensation expenses 0 350,000 Deferred taxes (822,001) (116,027) Changes in operating assets and liabilities: Accounts receivable (9,467,390) (15,159,545) Advance to suppliers (5,151,720) (2,585,065) Prepayment 121,529 399,563 Other current assets (1,830,839) (795,636) Due from directors 754,321 (664,592) Inventories (709,476) (1,078,415) Long-term prepayment 354,422 (2,322,161) Accounts payable 399,323 1,328,366 Accrued expenses and other current 272,275 1,572,534 liabilities Other non-current liabilities 0 (141,940) Amounts due to directors 94,043 11,764 Taxes payable 2,613,528 337,200 Deferred revenue 1,505,165 0 Net cash flows used in operating activities 9,063,943 (671,817) Cash flows from investing activities Acquisition of property and equipment and (19,468,008) (20,823,526) intangible assets Acquisition of land use right 0 (5,877,870) Collection on loans to third parties 158,438 2,884,763 Payment on loans to third parties (2,091,387) (2,784,653) Acquisition of Delixunda Company (net of 0 (40,223) cash acquired) Net cash flows used in investing activities (21,400,957) (26,641,509) Cash flows from financing activities Proceeds from issuance of common stock (net 0 17,332,251 of finance costs) Proceeds from bank loan 18,888,700 6,355,495 Repayment of bank loan (14,227,771) (1,856,436) Proceeds from loans from third parties 2,401,024 0 Restricted deposit collected from bank 0 371,287 Proceeds from exercise of warrants 0 610,000 Net cash flows provided by financing 7,061,953 22,812,597 activities Effect of exchange rate fluctuation on cash (81,454) 380,568 and cash equivalents Net increase in cash and cash equivalents (5,356,515) (4,120,161) Cash and cash equivalents–beginning of the 6,139,589 10,259,750 year Cash and cash equivalents–end of the $ 783,074 $ 6,139,589 period Supplemental disclosure of cash flow information Cash paid for interest $ 956,492 $ 74,332 Cash paid for income taxes $ 1,649,212 $ 390,586 Supplemental disclosure of noncash financing activities Issuance of 30,000 common shares at $5.00 $ 0 $ 150,000 each for the legal fee SOURCE Trunkbow International Holdings Limited Website: http://www.trunkbow.com
Trunkbow Announces Preliminary Fourth Quarter and Full Year 2012 Financial Results
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