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After the Company's earnings release on May 12, 2009, Qiao Xing Mobile continued to finalize its full year 2008 financial results and determined that it was necessary to record a non-cash intangible asset impairment charge to write-down the value of its CECT brand due to the Company's strategic shift to focus more on its high-end VEVA brand.
The impairment charge resulted in a RMB22.3 million decrease in the Company's full year net income from the previously reported RMB446.1 million to RMB423.8 million and a RMB0.39 decrease in its diluted earnings per share from RMB7.38 to RMB6.99. For the fourth quarter ended December 31, 2008, the impairment charge reduced the Company's net income from RMB56.3 million to RMB34.0 million while diluted earnings per share decreased from RMB0.93 to RMB0.56. The full impact of the impairment charge on the Company's financial statements is set out in the attached statements.
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 standards. 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 of mobile phones and began to open its own retail stores to target 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 generate higher profit margins. For more information, please visit http://www.qxmc.com .
Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(Amounts in thousands)
December 31, 2008
Previously
Revised announced
RMB RMB
Assets
Cash 2,907,148 2,907,148
Restricted cash 136,299 136,299
Accounts receivable, net 462,282 462,282
Bills receivable 43,516 43,516
Inventories 183,169 183,169
Prepayments to suppliers 363,907 363,907
Prepaid expenses and other current assets 38,996 38,996
Deferred income taxes 6,994 6,994
Deferred debt issuance costs, net 34,689 34,689
Total current assets 4,177,000 4,177,000
Property, machinery and equipment, net 167,233 167,233
Land use rights 35,304 35,304
Equity investment 7,803 7,803
Goodwill 112,814 112,814
Other intangible assets, net 22,766 49,001
Total assets 4,522,920 4,549,155
Liabilities, minority interests
and shareholders' equity
Short-term borrowings 983,950 983,950
Accounts payable 52,047 52,047
Prepayments from customers 42,551 42,551
Accrued liabilities 50,014 50,014
Amounts due to related parties 11,155 11,155
Other payables and current liabilities 7,227 7,227
Income taxes payable 38,462 38,462
Embedded derivative liability 124,130 124,130
Convertible notes 206,211 206,211
Total current liabilities 1,515,747 1,515,747
Deferred income taxes 320 4,255
Total liabilities 1,516,067 1,520,002
Minority interests 92,065 92,065
Shareholders' equity 2,914,788 2,937,088
Total liabilities, 4,522,920 4,549,155
minority interests and
shareholders' equity
Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
Year ended Three months ended
December 31, 2008 December 31, 2008
Previously Previously
Revised announced Revised announced
RMB RMB RMB RMB
Revenues 2,153,873 2,153,873 557,847 557,847
Cost of goods sold (1,287,096) (1,287,096) (336,749) (336,749)
Gross profit 866,777 866,777 221,098 221,098
Selling and distribution
expenses (146,551) (146,551) (35,388) (35,388)
General and administrative
expenses (44,231) (44,231) (8,838) (8,838)
Research and development
expenses (29,242) (29,242) (8,545) (8,545)
Amortization of intangible
assets (11,727) (11,727) (1,190) (1,190)
Impairment of intangible
assets (26,235) -- (26,235) --
Operating income 608,791 635,026 140,902 167,137
Interest income 24,405 24,405 4,658 4,658
Interest expense (165,506) (165,506) (65,783) (65,783)
Foreign exchange gain
(loss), net (5,142) (5,142) 1,700 1,700
Gain (loss) on
remeasurement of
embedded derivatives 144,939 144,939 (7,774) (7,774)
Loss on extinguishment of
convertible debts (10,634) (10,634) -- --
Other income (loss), net (1,431) (1,431) 1,642 1,642
Income before income tax
expense, minority
interests and
extraordinary item 595,422 621,657 75,345 101,580
Income tax expense (155,717) (159,652) (37,395) (41,330)
Income before minority
interests and
extraordinary item 439,705 462,005 37,950 60,250
Minority interests (15,901) (15,901) (3,901) (3,901)
Income before
extraordinary item 423,804 446,104 34,049 56,349
Extraordinary item - gain
on acquisition
of additional equity
interest in CECT -- -- -- --
Net income 423,804 446,104 34,049 56,349
Earnings per share:
- Basic 7.52 7.91 0.56 0.93
- Diluted 6.99 7.38 0.56 0.93
Weighted average number of
shares outstanding:
- Basic 49,216,000 49,216,000 47,610,000 47,610,000
- Diluted 56,386,000 56,386,000 47,610,000 47,610,000
For further information, contact:
Ms. Shi Heng
Qiao Xing Mobile Communication Co., Ltd.
Tel: +86-10-8219-3706
Email: shiheng@cectelecom.com
SOURCE Qiao Xing Mobile Communication Co., Ltd.
http://www.qxmc.com
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