QIAO XING MOBILE COMMUNICATION CO., LTD. 
By BEIJING, Dec. 7, 2010 /PRNewswire-Asia-FirstCall/ -- Qiao Xing Mobile Communication Co., Ltd. (NYSE: QXM) (''QXM'' or the "Company''), a domestic manufacturer of mobile handsets in China, today announced its unaudited financial results for the three months ended September 30, 2010.
Third Quarter 2010 Results
-- Revenues were RMB286.0 million (US$42.8 million) compared to RMB410.7
million in 3Q09.
-- Handset shipments were 370,000 units compared to 406,000 units in 3Q09.
-- Gross margin was 3.2 % compared to 15.5% in 3Q09.
-- Operating loss was RMB42.4 million (US$6.3 million) compared to an
operating income of RMB7.7 million in 3Q09.
-- Net loss attributable to holders of ordinary shares was RMB52.9 million
(US$7.9 million) compared to RMB83.8 million in 3Q09.
Revenues for the third quarter of 2010 were RMB286.0 million (US$42.8 million), compared with RMB410.7 million in the same period of 2009. The decrease from the third quarter of 2009 was primarily due to lower unit shipments and a decrease in the average selling price ("ASP") of products sold in the third quarter of 2010.
Total handset shipment in the third quarter of 2010 was approximately 370,000 units, representing a decrease of 8.9% compared with 406,000 units in the same period of 2009. The decrease in handset shipments compared to the same period of last year was primarily due to fewer new model launches and a slow-down in shipments amid increasing competition in the handset market.
The ASP of handset products decreased to RMB746 (US$112) in the third quarter of 2010, as compared to RMB866 in the third quarter of 2009. The lower ASP compared to the same period last year was primarily due to more aggressive pricing to drive sales in an increasingly competitive environment.
Gross profit in the third quarter of 2010 was RMB9.1 million (US$1.4 million), compared with RMB63.7 million in the same period of 2009. Gross margin was 3.2% in the third quarter of 2010, compared to 15.5% in the same period of 2009. The year-over-year decline in gross margin arose primarily due to the decline in ASP.
Selling and distribution ("S&D") expenses in the third quarter of 2010 were RMB33.5 million (US$5.0 million), as compared to RMB34.5 million in the same period of 2009. The decrease in S&D expenses in the third quarter of 2010 was primarily due to a reduction in payroll costs and other payroll-related expenses.
General and administrative ("G&A") expenses were RMB12.2 million (US$1.8 million) in both the third quarter of 2010 and the third quarter of 2009. Share-based compensation expenses recognized in G&A expenses were RMB4.7 million (US$0.7 million) in the third quarter of 2010, compared to RMB2.9 million in the third quarter of 2009. The increase in share-based compensation expenses in the third quarter of 2010 was, however, offset by a reduction in payroll costs and bad debt provisions.
Research and development ("R&D") expenses were RMB4.7 million (US$0.7 million), compared to RMB8.1 million in the same period of 2009. The lower R&D expenses comparing with the same period of last year was primarily due to lower payroll costs and software license fees.
Total share-based compensation expenses, which have been allocated to S&D, G&A and R&D expenses, increased to RMB5.5 million (US$0.8 million) in the third quarter of 2010 from RMB3.3 million in the same period of 2009.
Operating loss in the third quarter of 2010 was RMB42.4 million (US$6.3 million), compared to an income of RMB7.7 million in the third quarter of 2009.
Net loss attributable to holders of ordinary shares in the third quarter of 2010 was RMB52.9 million (US$7.9 million), compared to RMB83.8 million in the same period of 2009.
Basic and diluted loss per share were both RMB1.00 (US$0.1) in the third quarter of 2010. For the third quarter of 2009, basic and diluted loss per share were both RMB1.76.
Foreign Exchange Rate Used
The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from Renminbi (RMB) into United States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.6905 on September 30, 2010 as set forth in the H.10 statistical release of the Federal Reserve Board of the United States. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on September 30, 2010, or at any other certain date. The percentages stated are calculated based on RMB.
About Qiao Xing Mobile Communication Co., Ltd.
Qiao Xing Mobile Communication Co., Ltd. is a domestic manufacturer of mobile handsets in China. The Company manufactures and sells mobile handsets based primarily on GSM, TD-SCDMA, and WCDMA. It operates its business primarily through CEC Telecom Co., Ltd., or CECT, its 96.6%-owned subsidiary in China. In 2008, Qiao Xing Mobile introduced the VEVA series mobile phones and began to open its own retail stores to target the mid income consumers in major cities throughout China. Through its manufacturing facility in Huizhou, Guangdong Province, China, and two research and development centers in Huizhou and 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. For more information, please visit http://www.qxmc.com.
Safe Harbor Statement
This announcement 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 QXM'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. QXM does not undertake any obligation to update any forward-looking statement, except as required under applicable laws. All information provided in this press release is as of December 7, 2010, and QXM undertakes no duty to update such information, except as required under applicable laws.
For further information, contact:
Lucy Wang
Qiao Xing Mobile Communication Co., Ltd.
Tel: +86-10-8219-3883
Email: wangjinglu
Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(Amounts in thousands)
December 31, September 30,
------------ -------------
2009 2010
---- ----
RMB RMB
Assets
Cash 3,129,070 2,756,707
Restricted cash 251,720 111,919
Accounts receivable, net 114,689 394,073
Inventories 97,146 125,384
Prepayments to suppliers 181,550 140,312
Prepaid expenses and other current assets 36,007 28,324
Assets held for sale 163,000 -
Deferred income taxes 16,249 14,625
----- -----
Total current assets 3,989,431 3,571,344
Property, machinery and equipment, net 23,708 20,568
Equity investment 5,000 -
Goodwill 112,814 112,814
Other intangible assets, net 4,433 1,108
Deferred income taxes 1,207 1,003
---- ----
Total assets 4,136,593 3,706,837
======== ========
Liabilities and equity
Short-term borrowings 884,708 606,000
Accounts payable 60,751 72,060
Prepayments from customers 16,370 16,233
Accrued liabilities 34,590 52,143
Amounts due to related parties 5,568 7,621
Other payables and current liabilities 56,933 8,040
Embedded derivative liability 39,978 17,784
Convertible notes 112,162 112,162
------ ------
Total current liabilities 1,211,060 892,043
Warrant liabilities 22,637 14,301
----- -----
Total liabilities 1,233,697 906,344
-------- ------
Equity
Shareholders' equity 2,810,451 2,712,331
Noncontrolling interests 92,445 88,162
----- -----
Total equity 2,902,896 2,800,493
-------- --------
Total liabilities and equity 4,136,593 3,706,837
======== ========
Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
Three months
ended
September 30,
-------------
2009 2010
--- ----
RMB RMB
Revenues 410,746 286,023
Cost of goods sold (347,092) (276,876)
-------- --------
Gross profit 63,654 9,147
Selling and distribution
expenses (34,476) (33,548)
General and
administrative expenses (12,165) (12,160)
Research and development
expenses (8,133) (4,747)
Amortization of
intangible assets (1,190) (1,108)
------ ------
Operating income (loss) 7,690 (42,416)
Interest income 3,873 4,896
Interest expense (105,562) (7,619)
Foreign exchange loss,
net (256) (1,528)
Gain (loss) on
remeasurement of
embedded derivatives 18,809 (3,668)
Loss on remeasurement of
warrant liability - (4,828)
Other (loss) income, net (16) 235
--- ---
Loss before income tax
expense (75,462) (54,928)
Income tax expense (8,494) 828
------ ---
Net loss (83,956) (54,100)
Net loss attributable to
noncontrolling
interests 136 1,205
--- -----
Net loss attributable to
holders of ordinary
shares (83,820) (52,895)
======= =======
Loss per ordinary share:
- Basic (1.76) (1.00)
===== =====
- Diluted (1.76) (1.00)
===== =====
Weighted average number
of shares outstanding:
- Basic 47,610,000 53,016,000
========== ==========
- Diluted 47,610,000 53,016,000
========== ==========
SOURCE Qiao Xing Mobile Communication Co., Ltd.
