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TechFaith Reports Second Quarter 2013 Financial Results



           TechFaith Reports Second Quarter 2013 Financial Results

PR Newswire

BEIJING, Aug. 20, 2013

BEIJING, Aug. 20, 2013 /PRNewswire/ -- China TechFaith Wireless Communication
Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today
announced unaudited financial results for the second quarter ended June 30,
2013.

For the second quarter of 2013, TechFaith reported net revenue of US$30.2
million, an increase of 6.8% compared to US$28.2 million in the previous
quarter. Revenue in the second quarter of 2013 derived from the Company's
Original Developed Product (ODP) was US$20.1 million compared to US$14.5
million in the first quarter of 2013 and US$13.5 million in the second quarter
of 2012. Revenue from the Company's Game segment was US$1.6 million compared
to US$3.4 million in the prior quarter and US$7.2 million in the second
quarter of 2012. Revenue in the second quarter of 2013 from the Company's
Brand name phone sales segment was US$8.4 million compared to US$10.3 million
in the first quarter of 2013 and US$11.8 million in the second quarter of
2012.

Gross profit for the second quarter of 2013 was US$3.4 million compared to
US$4.6 million in the previous quarter and US$7.3 million in the second
quarter of 2012. Gross margin for the second quarter of 2013 was 11% compared
to 16% in the previous quarter and 23% compared to the second quarter of 2012.
Net loss attributed to TechFaith for the second quarter of 2013 was US$0.97
million or US$0.02 loss per basic and diluted weighted average outstanding
ADS, compared to net income of US$0.3 million or US$0.01 per basic and diluted
weighted average outstanding ADS in the previous quarter and a net loss of
US$0.7 million or US$0.01 loss per basic and diluted weighted average
outstanding ADS in the second quarter of 2012.

Ms. Ouyang Yuping, TechFaith's Chief Financial Officer, said, "While revenue
for the second quarter was in line with our guidance, our gross margin was
lower than expected as a result of  the negative impact of competitions from
the market. We would expect to see improvement in our gross margin in the
third quarter. Demand in our ODP business was able to offset declines in both
our Brand name phone sales and game business. This volatility is a
continuation of the difficult business environment we have been navigating,
with high competition in both domestic and international markets, shorter
product lifecycles and lower average selling prices. While our balance of cash
and cash equivalents remained robust at US$257.7 million it reflects a decline
of about US$3.5 million compared to the prior quarter. The slight decline is
primarily due to capital expenditure on equipment and facility constructions."

Mr. Deyou Dong, President and Chief Operating Officer of TechFaith, said, "We
continue to see demand for our popular ruggedized phones. As a result, we
launched several new models this year, and have received positive feedback. We
are optimistic that shipments for the new ruggedized models will increase over
the next few quarters given the uniqueness of the integrated hardware and
software. The phone meets demands from a specific segment of the market and
allows us to have more stability over our pricing. We are working to leverage
our success with the ruggedized line into other niche models where market
demand is not being presently met. We also continue to draw on our expertise
to provide customized enterprise solutions for our customers and continue to
develop our 17Fox brand in the domestic China market. In line with this
strategy, we acquired some additional application software during the second
quarter."

Mr. Defu Dong, Chairman and Chief Executive Officer of TechFaith, said, "The
market remains highly competitive with new features quickly adopted by other
handset developers. Our focus on niche opportunities gives us a more
defensible market position but the unit volumes are much lower than those in
popular mass market designs. This makes it critical that we maintain close
relationships with our customers in order to meet their changing needs. We are
confident that we can be successful in our approach but do not expect to see a
rebound in our revenue to our higher historical levels over the
near-term. Rather, we are focusing on driving improved profitability at the
lower revenue level, and further strengthening our balance sheet. We also
remain optimistic about the development of our facilities, which remain on
track, as seen by the increased asset level on our balance sheet in terms of
construction in progress and property value held."

Third Quarter of 2013 Outlook

The forecast below is TechFaith's current and preliminary view, which is
subject to change. TechFaith currently expects total revenues for the third
quarter of 2013 to be in the range of US$29.0 million to US$33.0 million.

Investor Conference Call / Webcast Details

TechFaith will hold a conference call on Tuesday, August 20, 2013 at 8:00 a.m.
U.S. Eastern Time (8:00 p.m. Tuesday, August 20, 2013 in Beijing) using
dial-in +1-857-244-7556 or +1-877-474-9503. The conference call passcode is
16255845. 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
32882355. 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)
                                   Three Months  Three Months             Six Months
                                   Ended         Ended                    Ended
                                   March 31,     June 30,                 June 30,
                                   2013          2013        2012         2013        2012
Revenues:
ODP                                $14,532       $20,128     $13,470      $34,660     $32,415
Brand name phone sales             10,301        8,392       11,785       18,693      27,320
Game                               3,402         1,643       7,151        5,045       15,347
Total net revenues                 $28,235       $30,163     $32,406      $58,398     $75,082
Cost of revenues:
ODP                                $13,157       $19,059     $13,661      $32,216     $31,172
Brand name phone sales             7,878         6,414       7,680        14,292      17,527
Game                               2,639         1,303       3,746        3,942       8,232
Total cost of revenues             $23,674       $26,776     $25,087      $50,450     $56,931
Gross Profit                       $4,561        $3,387      $7,319       $7,948      $18,151
Operating expenses:
General and administrative         $1,747        $1,722      $1,512       $3,469      $2,968
Research and development           1,845         1,884       2,179        3,729       5,141
Selling and marketing              647           657         4,626        1,304       9,982
Total operating expenses           $4,239        $4,263      $8,317       $8,502      $18,091
Government subsidy income          19            170         -            189         89
Other operating income             284           297         269          581         368
Income (loss) from operations      $625          $(409)      $(729)       $216        $517
Interest expenses                  -             (1)         -            (1)         -
Interest income                    523           447         635          970         1,081
Other income                       -             4           4            4           4
Change in fair value of put option (30)          (30)        -            (60)        -
Income (loss) before income
                                   $1,118        $11         $(90)        $1,129      $1,602
taxes
Income tax expenses                (754)         (1,177)     (278)        (1,931)     (1,970)
Net income (loss)                  $364          $(1,166)    $(368)       $(802)      $(368)
Less: net (income) loss

attributable to the noncontrolling (58)          196         (346)        138         (759)

interest
Net income (loss) attributable to
                                   $306          $(970)      $(714)       $(664)      $(1,127)
TechFaith
Net income (loss) attributable to

TechFaith per share
  Basic                            $0.00         $(0.00)     $(0.00)      $(0.00)     $(0.00)
  Diluted                          $0.00         $(0.00)     $(0.00)      $(0.00)     $(0.00)
Net income (loss) attribute to

TechFaith per ADS
  Basic                            $0.01         $(0.02)     $(0.01)      $(0.01)     $(0.02)
  Diluted                          $0.01         $(0.02)     $(0.01)      $(0.01)     $(0.02)
Net income (loss)                  $364          $(1,166)    $(368)       $(802)      $(368)
Other comprehensive income,

net of tax
Foreign currency translation
                                   1,032         3,974       (3,093)      5,006       (3,366)
adjustment
Comprehensive income               1,396         2,808       (3,461)      4,204       (3,734)
Less: Comprehensive income

attributable to noncontrolling     (143)         (109)       (159)        (252)       (561)

interest
Comprehensive income (loss)
                                   $1,253        $2,699      $(3,620)     $3,952      $(4,295)
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)
                                            June 30,  March 31,  December 31,

                                            2013      2013       2012
Assets
Current assets:
Cash and cash equivalents                   $257,715  $261,192   $257,950
Accounts receivable                         21,665    10,016     8,666
Inventories                                 8,189     7,316      7,490
Prepaid expenses and other current assets   8,815     12,631     15,678
Total current assets                        $296,384  $291,155   $289,784
Property, plant and equipment, net          $47,286   $43,329    $44,084
Land use rights, net                        10,694    10,623     10,645
Construction in progress                    40,252    38,919     36,530
Acquired intangible assets, net             4,041     3,612      4,061
Goodwill                                    1,242     1,242      1,242
Total assets                                $399,899  $388,880   $386,346
Liabilities and shareholders' equity
Current liabilities:
Accounts payable (including accounts

payable of the consolidated variable

interest entity without recourse to China

Techfaith Wireless Communication            19,180    10,364     11,140

Technology Limited, $nil, $nil and $nil as

of June 30, 2013, March 31, 2013 and

December 31, 2012, respectively)
Accrued expenses and other current

liabilities (including accrued expenses and

other current liabilities of the
consolidated

variable interest entity without recourse
to                                          15,212    15,672     13,464

China Techfaith Wireless Communication

Technology Limited, $187, $184 and $184

as of June 30, 2013, March 31, 2013 and

December 31, 2012, respectively)
Advance from customers (including

advance from customers of the

consolidated variable interest entity

without recourse to China Techfaith
                                            9,885     9,571      9,173
Wireless Communication Technology

Limited, $nil, $nil and $nil as of June 30,

2013, March 31, 2013 and December 31,

2012, respectively)
Deferred revenue (including deferred

revenue of the consolidated variable

interest entity without recourse to China

Techfaith Wireless Communication            2,527     3,351      4,178

Technology Limited, $nil, $nil and $nil as

of June 30, 2013, March 31, 2013 and

December 31, 2012, respectively)
Income tax payable (including income tax

payable of consolidated variable interest

entity without recourse to China Techfaith

Wireless Communication Technology           1,000     916        1,062

Limited, $22, $21 and $21 as of June 30,

2013, March 31, 2013 and December 31,

2012, respectively)
Short-term loan (including short-term loan

of the consolidated variable interest
entity

without recourse to China Techfaith
                                            15,350    15,350     15,350
Wireless Communication Technology

Limited, $nil, $nil and $nil as of June 30,

2013, March 31, 2013 and December 31,

2012, respectively)
Total current liabilities                   $63,154   $55,224    $54,367
Long-term loan                              290       290        290
Total liabilities                           $63,444   $55,514    $54,657
Shareholders' equity
Paid in capital                             $16       $16        $16
Additional paid-in capital                  143,399   143,118    142,837
Accumulated other comprehensive
                                            51,438    47,769     46,822
income
Statutory reserve                           23,137    23,137     23,137
Retained earnings                           92,808    93,778     93,472
Total Techfaith shareholders' equity        $310,798  $307,818   $306,284
Noncontrolling interest                     $25,657   $25,548    $25,405
Total shareholders' equity                  $336,455  $333,366   $331,689
Total liabilities and shareholders'
                                            $399,899  $388,880   $386,346
equity

 

SOURCE China TechFaith Wireless Technology Limited

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