TechFaith Reports First Quarter 2014 Financial Results

            TechFaith Reports First Quarter 2014 Financial Results

PR Newswire

BEIJING, May 20, 2014

BEIJING, May 20, 2014 /PRNewswire/ -- China TechFaith Wireless Communication
Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today
announced unaudited financial results for the first quarter ended March 31,
2014.

For the first quarter of 2014, TechFaith reported net revenue of US$26.2
million compared to US$31.2 million in the fourth quarter of 2013 and US$28.2
million in the first quarter of 2013. Revenue remained stable in the Company's
the Original Developed Product or ODP business, which was offset by declines
in the Company's gaming business, and seasonality led declines in the
Company's brand name phone business. Revenue in the first quarter of 2014, as
compared to the fourth quarter of 2013, derived from the Company's ODP
business, gaming and brand name phone sales, decreased by 1.4%, decreased by
94.5% and decreased by 49.9%, respectively.

Gross profit for the first quarter of 2014 was US$1.9 million compared to
US$4.0 million in the fourth quarter of 2013 and US$4.6 million in the first
quarter of 2013 primarily reflecting the adverse impact of the lower revenue
level and business mix. Gross margin for the first quarter of 2014 was 7.4%
compared to 12.9% in the fourth quarter of 2013 and 16.2% in the first quarter
of 2013. Net loss attributed to TechFaith for the first quarter of 2014 was
US$2.9 million or US$0.05 loss per basic and diluted weighted average
outstanding ADS, compared to net loss of US$2.1 million in the fourth quarter
of 2013 or US$0.04 loss per basic and diluted weighted average outstanding ADS
and net income of US$0.3 million in the first quarter of 2013 or US$0.01 per
basic and diluted weighted average outstanding ADS.

Miss Ouyang Yuping, TechFaith's Chief Financial Officer, said, "Revenue in the
first quarter was affected by our ongoing strategic shift in our gaming
business and the industry-wide impact of seasonality on the smart phone and
branded phone markets.We expect the situation to remain challenged as the
second quarter is normally a softer period for the industry.Importantly, we
continue to carefully manage our operating costs and discretionary spending,
while maintaining a strong balance sheet to support the Company's long-term
health. We reduced operating expenses by an additional US$2.5 million, or
28.0%, compared to the fourth of 2013.Our cash and cash equivalents was
US$258.5 million at the end of first quarter 2014."

Mr. Deyou Dong, President and Chief Operating Officer of TechFaith, said, "The
impact from seasonality was magnified by continued higher competition and
higher costs. Our focus remains on sustaining our core product programs,
supporting customers with new tailored mobile devices and exploring new market
segments in which we can leverage our design expertise and global reach. One
example is in smart devices, where our sales increased by 260% compared to the
previous quarter.While this is growing off a small base, it exemplifies the
potential opportunities we are building on."

Mr. Defu Dong, Chairman and Chief Executive Officer of TechFaith, said, "While
the first quarter remained challenging, we nonetheless worked hard to lessen
the impact of seasonality, mix and the ongoing strategic shift in our gaming
business.Our core business remains challenged and stressed but there is still
a far greater asset value we have created than that reflected in the Company's
share price.Our goal remains to build upon our strength in the niche and
branded mobile segments.We have seen several applications that while in their
infancy have considerable potential.For example, there has been great
interest from both consumers and developers in the wearable segment. This is
particularly exciting for us as we can leverage our extensive development
assets, including in ruggedized and tailored products.We are working with
customers on a variety of potential devices, spanning the health and
healthcare markets to fitness and outdoors.Separately, we remain on track in
the development of our High-Tech Park Campus."

Second Quarter of 2014 Outlook

The forecast below is TechFaith's current and preliminary view, which is
subject to change. TechFaith currently expects total revenues for the second
quarter of 2014 to be in the range of US$22million to US$26 million.

Investor Conference Call / Webcast Details

TechFaith will hold a conference call on Tuesday, May 20, 2014 at 8:00 a.m.
U.S. Eastern Time (8:00 p.m. Tuesday, May 20, 2014 in Beijing), using dial-in
+1-617-597-5447 or +1-877-299-4454. The conference call passcode is 86473556.
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
12659131. 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 (LOSS)
(In Thousands of U.S. Dollars, except share and per share/ADS data and unless
otherwise stated)
                                   Three Months Ended       ThreeMonthsEnded
                                   March 31                 December 31
                                   2014        2013         2013
Revenues:
ODP                                $23,338     $14,532      $23,680
Brand name phone sales             2,712       10,301       5,414
Game                               117         3,402        2,112
Total net revenues                 $26,167     $28,235      $31,206
Cost of revenues:
ODP                                $21,719     $13,157      $20,493
Brand name phone sales             2,492       7,878        4,698
Game                               26          2,639        1,992
Total cost of revenues             $24,237     $23,674      $27,183
Gross Profit                       $1,930      $4,561       $4,023
Operating expenses:
General and administrative         $2,104      $1,747       $1,660
Research and development           1,799       1,845        2,222
Selling and marketing              2,420       647          547
Impairment of long-lived assets    -           -            3,110
Impairment of goodwill             -           -            1,242
Total operating expenses           $6,323      $4,239       $8,781
Government subsidy income          -           19           84
Other operating income             612         284          960
(Loss) income from operations      $(3,781)    $625         $(3,714)
Interest expenses                  (130)       -            (78)
Interest income                    443         523          462
Other (expense) income             (1)         -            229
Change in fair value of put option (60)        (30)         (30)
(Loss) income before income taxes  $(3,529)    $1,118       $(3,131)
Income tax (expenses) benefits     (32)        (754)        891
Net (loss) income                  $(3,561)    $364         $(2,240)
Less: net (loss) income
attributable to the noncontrolling (668)       58           (176)
interest
Net (loss) income attributable to  $(2,893)    $306         $(2,064)
TechFaith
Net (loss) income attributable to
TechFaith per share
 Basic                            $(0.00)     $0.00        $(0.00)
 Diluted                          $(0.00)     $0.00        $(0.00)
Net (loss) income attribute to
TechFaith per ADS
 Basic                            $(0.05)     $0.01        $(0.04)
 Diluted                          $(0.05)     $0.01        $(0.04)
Net (loss) income                  $(3,561)    $364         $(2,240)
Other comprehensive (loss) income,
net of tax
Foreign currency translation       (9,529)     1,032        3,908
adjustment
Comprehensive (loss) income        (13,090)    1,396        1,668
Less: Comprehensive (loss) income
attributable to noncontrolling     (1,545)     143          192
interest
Comprehensive (loss) income        $(11,545)   $1,253       $1,476
attributable to TechFaith
Weighted average shares
outstanding
 Basic                            794,003,193 794,003,193  794,003,193
 Diluted                          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)
                                            March31,2014  December31,2013
Assets
Current assets:
Cash and cash equivalents                   $258,507        $265,649
Accounts receivable, net of allowances of
$605 and $543 as of March 31, 2014 and      15,613          17,100
December 31, 2013, respectively
Notes receivable                            41              58
Inventories, net                            13,461          13,576
Prepaid expenses and other current assets   10,277          10,436
Total current assets                        $297,899        $306,819
Property, plant and equipment, net          $96,519         $94,282
Land use rights, net                        10,393          10,729
Acquired intangible assets, net             3,653           2,798
Total assets                                $408,464        $414,628
Liabilities and shareholders' equity
Current liabilities:
Accounts payable (including accounts
payable of the consolidated variable
interest entity without recourse to China   11,845          14,247
Techfaith Wireless Communication Technology
Limited, $nil and $nil as of March 31, 2014
and December 31, 2013, respectively)
Short-term loan (including short-term loan
of the consolidated variable interest
entity without recourse to China Techfaith  15,350          15,350
Wireless Communication Technology Limited,
$nil and $nil as of March 31, 2014 and
December 31, 2013, respectively)
Accrued expenses and other current
liabilities(including accrued expenses and
other current liabilities of the
consolidated variable interest entity       25,991          21,302
without recourse to China Techfaith
Wireless Communication Technology Limited,
$184 and $189 as of March 31, 2014 and
December 31, 2013, respectively)
Advance from customers(including advance
from customers of the consolidated variable
interest entity without recourse to China   8,976           9,525
Techfaith Wireless Communication Technology
Limited, $nil and $nil as of March 31, 2014
and December 31, 2013, respectively)
Deferred revenue(including deferred revenue
of the consolidated variable interest
entity without recourse to China Techfaith  3,927           3,854
Wireless Communication Technology Limited,
$nil and $nil as of March 31, 2014 and
December 31, 2013, respectively)
Income tax payable (including income tax
payable of consolidated variable interest
entity without recourse to China Techfaith  190             254
Wireless Communication Technology Limited,
$22 and $22 as of March 31, 2014 and
December 31, 2013, respectively)
Put option liability (including income tax
payable of consolidated variable interest
entity without recourse to China Techfaith  1,890           1,830
Wireless Communication Technology Limited,
$nil and $nil as of March 31, 2014 and
December 31, 2013, respectively)
Total current liabilities                   $68,169         $66,362
Long-term loan (including income tax
payable of consolidated variable interest
entity without recourse to China Techfaith  5,116           290
Wireless Communication Technology Limited,
$nil and $nil as of March 31, 2014 and
December 31, 2013, respectively)
Total liabilities                           $73,285         $66,652
Shareholders' equity
Ordinary shares of par value $0.00002:
(50,000,000,000,000 shares authorized;
shares issued and outstanding, 794,003,193  $16             $16
and 794,003,193 as of March 31, 2014 and
December 31, 2013, respectively)
Additional paid-in capital                  144,376         144,083
Accumulated other comprehensive income      47,189          55,841
Statutory reserve                           23,730          23,730
Retained earnings                           87,516          90,409
Total Techfaith shareholders' equity        $302,827        $314,079
Noncontrolling interest                     $32,352         $33,897
Total shareholders' equity                  $335,179        $347,976
Total liabilities and shareholders' equity  $408,464        $414,628



SOURCE China TechFaith Wireless Technology Limited

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