BEIJING, Sept. 17 /Xinhua-PRNewswire/ -- Qiao Xing Mobile Communication Co., Ltd. ("Qiao Xing Mobile" or the "Company") (NYSE: QXM), one of China’s leading domestic manufacturers of mobile handsets operating its business primarily through its subsidiary, CEC Telecom Co., Ltd. ("CECT"), today announced its unaudited results for the quarter ended June 30, 2007.
The Company’s previously released financial results for the second quarter were preliminary because a third party valuation was required for the purposes of accounting for the deemed acquisition of an additional 3.14% equity interest in CECT that arose from the Company’s US$50.0 million capital injection into CECT in June 2007. The review was just completed and, as expected, the accounting for the deemed acquisition had no effect on the operating results for the second quarter of 2007.
As a result of the accounting for the deemed acquisition, net income including extraordinary item for the second quarter was RMB198 million (US$26.0 million), compared to the net income before extraordinary item of RMB169 million (US$22.2 million) that was previously reported in the preliminary second quarter financial results. This represents a 180% increase from the second quarter of 2006 and an 88% increase from the first quarter of 2007.
Basic and diluted earnings per share ("EPS") after extraordinary item for the second quarter of 2007 were both RMB4.13 (US$0.54), which compares to basic and diluted EPS before extraordinary items of RMB3.53 (US$0.46) that was previously reported in the preliminary second quarter 2007 results.
Additionally, the lawsuits that have recently been filed against the Company’s parent, Qiao Xing Universal Telephone Inc. (Nasdaq: XING), relating to alleged U.S. Securities law violations, are not expected to have any impact on Qiao Xing Mobile’s financial or operating performance and, in any event, will be vigorously contested by the Company’s parent.
About Qiao Xing Mobile Communication Co., Ltd.:
Qiao Xing Mobile Communication Co., Ltd. is one of the leading domestic manufacturers of mobile handsets in China in terms of unit sales volume. The Company manufactures and sells mobile handsets based primarily on Global System for Mobile Communications, or GSM, global cellular technologies. It operates its business primarily through CEC Telecom Co., Ltd., or CECT, its 96.6%-owned subsidiary in China. Currently, all of its products are sold under the "CECT" brand name. Through its manufacturing facility in Huizhou, Guangdong Province, China, and two research and development centers in Huizhou and in Beijing, the Company develops, produces and markets a wide range of mobile handsets, with increasing focus on differentiated products that generally generate higher profit margins.
Safe Harbor Statement
This press release contains forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements can be identified by words or phrases such as "aim," "anticipate," "believe," "continue," "estimate," "expect," "intend," "is /are likely to," "may," "plan," "potential," "will" or other similar expressions. Statements that are not historical facts, including statements about Qiao Xing Mobile’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Information regarding these factors is included in our filings with the Securities and Exchange Commission. Qiao Xing Mobile does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release is as of September 17, 2007, and Qiao Xing Mobile undertakes no duty to update such information, except as required under applicable law.
Qiao Xing Mobile Communication Co., Ltd.
Condensed Consolidated Balance Sheets
(Amounts in RMB thousands)
As of
December 31, June 30,
2006 2007
(Audited) (Unaudited)
Assets
Cash 762,086 1,899,092
Restricted cash 119,302 145,338
Bills receivable 9,910 41,657
Accounts receivable, net 564,618 1,032,448
Inventories 163,833 187,208
Prepayments 268,084 289,745
Other current assets 2,117 2,196
Deferred income tax assets 3,960 5,052
Total current assets 1,893,910 3,602,736
Property, machinery and equipment,
net 190,511 180,402
Non-current prepayments 38,106 36,508
Other equity investments 7,803 7,803
Goodwill 112,814 112,814
Other intangible assets, net 93,008 73,427
Total assets 2,336,152 4,013,690
========== ==========
Liabilities, minority interests and
shareholders’ equity
Short-term bank loans 385,812 663,033
Bills payable 216,978 197,232
Accounts payable 165,326 209,925
Receipts in advance 15,389 13,518
Other payables 18,788 5,857
Accrued liabilities 35,360 95,057
Deposits received 1,510 1,510
Amounts due to related parties 345,122 321,902
Income taxes payable 22,943 53,790
Total current liabilities 1,207,228 1,561,824
Deferred income tax liabilities 11,740 7,239
Total liabilities 1,218,968 1,569,063
Minority interests 76,896 64,777
Shareholders’ equity 1,040,288 2,379,850
Total liabilities, minority
interests and shareholders’
equity 2,336,152 4,013,690
Qiao Xing Mobile Communication Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
(Amounts in RMB thousands, except share and per share data)
Three months ended
Note June 30, March 31, June 30,
2006 2007 2007
Revenues 633,079 718,230 844,146
Cost of goods sold (517,630) (551,865) (561,290)
Gross profit 115,449 166,365 282,856
Selling and distribution expenses (3,771) (6,596) (17,700)
General and administrative expenses (4,768) (9,469) (21,261)
Research and development expenses (4,214) (2,953) (6,951)
Amortization of intangible assets (2,970) (13,231) (6,350)
Operating income 99,726 134,116 230,594
Foreign exchange gain (loss), net 1,066 5,242 (7,181)
Interest income 783 1,671 5,064
Interest expense (8,997) (7,762) (10,448)
Other income, net 393 126 113
Income before income tax expense,
minority interests and extraordinary
item 92,971 133,393 218,142
Income tax expense (14,273) (20,048) (35,323)
Income before minority interests and
extraordinary item 78,698 113,345 182,819
Minority interests (7,989) (8,227) (13,489)
Income before extraordinary item 70,709 105,118 169,330
Extraordinary item
- gain on
acquisition of
additional equity
interest in CECT (a) -- -- 28,689
Net income 70,709 105,118 198,019
Basic and diluted earnings per share
- Before extraordinary item 1.77 2.63 3.53
- Extraordinary item -- -- 0.60
- After extraordinary item 1.77 2.63 4.13
Weighted average number of shares
outstanding
- Basic and diluted (b) 40,000,000 40,000,000 47,967,000
Notes:
(a) Qiao Xing Mobile completed the injection of an additional US$50.0
million of capital into CECT in June 2007. The minority shareholder
of CECT did not participate in the capital injection and as a result,
Qiao Xing Mobile’s equity interest in CECT was increased from 93.41%
to 96.55%, which has been accounted for under the purchase method of
accounting. The fair value of the underlying net assets representing
Qiao Xing Mobile’s additional 3.14% equity interest acquired in CECT,
as determined by an independent third-party appraisal and which is
still subject to audit, exceeded the deemed purchase price paid by
the Company. This excess was first allocated to reduce the purchase
price allocated to certain assets while the remaining balance of
RMB28.7 million was recognized as a non-taxable extraordinary gain in
the consolidated statement of operations for the six months ended
June 30, 2007.
(b) Basic and diluted earnings (loss) per share data reflects on a
retroactive basis a 40-for-one share split that became effective on
April 13, 2007.
For more information, please contact:
Tao Ma
Qiao Xing Mobile Communication Co., Ltd.
Tel: +86-10-6250-1706
Email: matao@qxmc.com
Shelldy Cheung
Christensen
Tel: +852-2117-0861
Email: scheung@ChristensenIR.com
Christopher Gustafson
Christensen
Tel: +1-480-614-3021
Email: cgus@christensenIR.com
