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TechFaith Reports Third Quarter 2013 Financial Results



            TechFaith Reports Third Quarter 2013 Financial Results

PR Newswire

BEIJING, Nov. 25, 2013

BEIJING, Nov. 25, 2013 /PRNewswire/ -- China TechFaith Wireless Communication
Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today
announced unaudited financial results for the third quarter ended September
30, 2013.

For the third quarter of 2013, TechFaith reported net revenue of US$29.9
million, a decrease of 0.9% compared to US$30.2 million in the previous
quarter. Revenue in the third quarter of 2013 from the Company's Original
Developed Product (ODP) segment was US$21.3 million compared to US$20.1
million in the previous quarter and US$13.3 million in the third quarter of
2012. Revenue in the third quarter of 2013 from the Company's Brand name phone
sales segment was US$8.1 million, compared US$8.4 million in the previous
quarter and US$11.3 million in the third quarter of 2012. Revenue from the
Company's Game segment was US$0.49 million compared to US$1.6 million in the
previous quarter and US$6.9 million in the third quarter of 2012.  

Gross profit for the third quarter of 2013 was US$4.9 million compared to
US$3.4 million in the previous quarter and US$7.2 million in the third quarter
of 2012. Gross margin for the third quarter of 2013 was 16% compared to 11% in
the previous quarter and 23% in the third quarter of 2012. Net income
attributed to TechFaith for the third quarter of 2013 was US$0.26 million or
US$0.00 per basic and diluted weighted average outstanding ADS, compared to
net loss of US$0.97 million or US$0.02 loss per basic and diluted weighted
average outstanding ADS in the previous quarter and net income of US$0.88
million or US$0.02 per basic and diluted weighted average outstanding ADS in
the third quarter of 2012.

Ms. Ouyang Yuping, TechFaith's Chief Financial Officer said: "We were able to
achieve positive net income in the third quarter, reversing the loss from the
prior quarter despite revenue being about the same level quarter to quarter. 
An increase in demand in our ODP business helped to offset declines in our
Game segment.  Importantly, we benefited from a more favorable product mix. 
As a result, our gross margin improved to 16% in the third quarter from 11%. 
We think there is additional room for improvement as we focus on expanding our
revenue derived from niche mobile phone markets, where customers are seeking
tailored, more specialized product offerings.  This includes our medical and
ruggedized products lines.  We remain focused on reducing costs where possible
and closely managing our operations to gain added efficiencies where
possible.  This strategy, combined with our improved margin, helped us to
increase our balance of cash and cash equivalents to US$267 million at the end
of the third quarter of 2013 compared to US$258 million at the end of 2012."

Mr. Deyou Dong, President and Chief Operating Officer of TechFaith, said, "The
overall operating environment remains highly competitive and dynamically
changing. This creates challenges and opportunities from a product development
standpoint, given evolving customer demand levels.  For TechFaith, we have
determined a significant, sustainable opportunity within this environment is
for tailored, niche phones.  Many of the features we have been pushing
forward, including ruggedized models and the convergence of value added
healthcare functions into mobile phones, are now being adopted by some of the
largest handset manufacturers given the validation of market demand.  We
expect to further build on these opportunities in the coming quarters, as we
work to capitalize on interest seen at the recent Gitex Technology Week in
Dubai, and in other markets. We also plan to introduce additional, value added
outdoor applications to integrate with our mobile devices to provide a more
holistic experience for the end consumers."

Mr. Defu Dong, Chairman and Chief Executive Officer of TechFaith, said, "We
continue to focus on best positioning our mobile phones to address higher
margin niche opportunities.  This strategy is allowing us to more effectively
deploy development and production resources, and to improve profitability on a
lower revenue level.  In our gaming segment, the challenges have been greater
than seen when our motion gaming business was expanding several quarters ago. 
We still believe there are opportunities to create value in the gaming
business, within software and mobile platforms, in order to expand our
existing customer base. Separately, we continue to move forward with the
development of previously announced facilities.  Our focus remains on
balancing this portfolio with facilities needed for our own operations and
those that can be potentially leased or sold to third parties as we seek to
increase value for our shareholders."

Fourth Quarter of 2013 Outlook

TechFaith currently expects total revenues for the fourth quarter of 2013 to
be in the range of US$28.0million to US$32 million.  This forecast is
TechFaith's current and preliminary view, which is subject to change.  

Investor Conference Call / Webcast Details

TechFaith will hold a conference call on Monday, November 25, 2013 at 8:00
a.m. U.S. Eastern Time (9:00 p.m. Monday, November 25, 2013 in Beijing) using
dial-in +1-857-244-7321 or +1-877-415-3178. The conference call passcode is
36850911.  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
59784798.  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 Ended       Nine Months Ended
                Ended
                June 30       September 30             September 30
                2013          2013        2012         2013        2012
Revenues:
ODP             $20,128       $21,321     $13,311      $55,981     $45,726
Brand name      8,392         8,096       11,329       26,789      38,649
phone sales
Game            1,643         486         6,909        5,531       22,256
Total net       $30,163       $29,903     $31,549      $88,301     $106,631
revenues
Cost of
revenues:
ODP             $19,059       $18,280     $12,222      $50,496     $43,394
Brand name      6,414         6,384       7,783        20,676      25,310
phone sales
Game            1,303         373         4,337        4,315       12,569
Total cost of   $26,776       $25,037     $24,342      $75,487     $81,273
revenues
Gross Profit    $3,387        $4,866      $7,207       $12,814     $25,358
Operating
expenses:
General and     $1,722        $1,193      $669         $4,662      $3,637
administrative
Research and    1,884         2,334       2,192        6,063       7,333
development
Selling and     657           684         1,545        1,988       11,527
marketing
Impairment of
intangible      -             515         702          515         702
assets
Total operating $4,263        $4,726      $5,108       $13,228     $23,199
expenses
Government      170           84          99           273         188
subsidy income
Other operating 297           580         281          1,161       649
income
(Loss) income   $(409)        $804        $2,479       $1,020      $2,996
from operations
Interest        (1)           (36)        -            (37)        -
expenses
Interest income 447           456         523          1,426       1,604
Other income    4             13          (313)        17          (309)
(expense)
Change in fair
value of put    (30)          (60)        (90)         (120)       (90)
option
Income before   $11           $1,177      $2,599       $2,306      $4,201
income taxes
Income tax      (1,177)       (1,106)     (1,518)      (3,037)     (3,488)
expenses
Net (loss)      $(1,166)      $71         $1,081       $(731)      $713
income
Less: net
(loss) income
attributable to (196)         (187)       205          (325)       964
the
noncontrolling
interest
Net (loss)
income          $(970)        $258        $876         $(406)      $(251)
attributable to
TechFaith
Net (loss)
income
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 (loss)
income
attribute to
TechFaith per
ADS
  Basic         $(0.02)       $0.00       $0.02        $(0.01)     $(0.00)
  Diluted       $(0.02)       $0.00       $0.02        $(0.01)     $(0.00)
Net (loss)      $(1,166)      $71         $1,081       $(731)      $713
income
Other
comprehensive
income, net of
tax
Foreign
currency        3,974         978         4,008        5,984       642
translation
adjustment
Comprehensive   2,808         1,049       5,089        5,253       1,355
income
Less:
Comprehensive
income (loss)   109           (72)        482          180         1,043
attributable to
noncontrolling
interest
Comprehensive
income          $2,699        $1,121      $4,607       $5,073      $312
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)
                                        September 30,  June 30,  December 31,
                                        2013           2013      2012
Assets
Current assets:
Cash and cash equivalents               $267,024       $257,715  $257,950
Accounts receivable                     25,156         21,665    8,666
Notes receivable                        33             -         -
Inventories                             7,681          8,189     7,490
Prepaid expenses and other current      8,394          8,815     15,678
assets
Total current assets                    $308,288       $296,384  $289,784
Property, plant and equipment, net      $46,517        $47,286   $44,084
Land use rights, net                    10,669         10,694    10,645
Construction in progress                41,732         40,252    36,530
Acquired intangible assets, net         4,863          4,041     4,061
Goodwill                                1,242          1,242     1,242
Total assets                            $413,311       $399,899  $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  19,795         19,180    11,140
Technology Limited, $nil, $nil and $nil
as of September 30, 2013, June 30, 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 China Techfaith     18,007         15,212    13,464
Wireless Communication Technology
Limited, $187, $187 and $184 as of
September 30, 2013, June 30, 2013 and
December 31, 2012, respectively)
Advance from customers(including
advance from customers of the
consolidated variable interest entity
without recourse to China Techfaith     9,602          9,885     9,173
Wireless Communication Technology
Limited, $nil, $nil and $nil as of
September 30, 2013, June 30, 2013 and
December 31, 2012, respectively)
Deferred revenue(including deferred
revenue of the consolidated variable
interest entity without recourse to
China Techfaith Wireless Communication  2,756          2,527     4,178
Technology Limited, $nil, $nil and $nil
as of September 30, 2013, June 30, 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  1,606          1,000     1,062
Technology Limited, $22, $22 and $21 as
of September 30, 2013, June 30, 2013
and December 31, 2012, respectively)
Short-term loan (including short-term
loan of the consolidated variable
interest entity without recourse to
China Techfaith Wireless Communication  15,350         15,350    15,350
Technology Limited, $nil, $nil and $nil
as of September 30, 2013, June 30, 2013
and December 31, 2012, respectively)
Total current liabilities               $67,116        $63,154   $54,367
Long-term loan                          290            290       290
Total liabilities                       $67,406        $63,444   $54,657
Shareholders' equity
Paid in capital                         $16            $16       $16
Additional paid-in capital              143,680        143,399   142,837
Accumulated other comprehensive income  52,301         51,438    46,822
Statutory reserve                       23,137         23,137    23,137
Retained earnings                       93,066         92,808    93,472
Total Techfaith shareholders' equity    $312,200       $310,798  $306,284
Noncontrolling interest                 $33,705        $25,657   $25,405
Total shareholders' equity              $345,905       $336,455  $331,689
Total liabilities and shareholders'     $413,311       $399,899  $386,346
equity

 

 

SOURCE China TechFaith Wireless Communication Technology Limited

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