HUIZHOU, Guangdong, China, Nov. 27 /PRNewswire-Asia-FirstCall/ -- Qiao Xing Universal Telephone, Inc. (Nasdaq: XING) today announces its un-audited third quarter financial results for the three months ended September 30, 2008.
Highlights for the Third Quarter of 2008
Compared to the same period in last year, net sales decreased 31.5% to RMB 716.2 million (USD 102.5 million). However, gross profit increased 35.3% to the amount of RMB 333.3 million (USD 47.7 million), due to the dramatic decrease of cost of sales. Cost of sales decreased to RMB 382.9 million (USD 54.8 million), representing a decrease of 52.1%.
Gross margin increased from 23.6% in the third quarter of 2007 to 46.5% for the same period of this year.
Net operating income was RMB 234.8 million (USD 33.6 million) in the third quarter of 2008, represents an increase of 29.7% from RMB 181.0 million in the third quarter of 2007.
Net income in the third quarter of 2008 was RMB 17.4 million (USD 2.5 million), compared to net loss of RMB 9.6 million in the third quarter of 2007.
Basic earnings per share of common stock for the third quarter of 2008 was RMB 0.49 (USD 0.07), compared to basic loss per share at amount of RMB 0.33 in the same period of 2007.
Commenting on the results, Mr. Wu Rui Lin, Chairman of XING, said, "We are satisfied with our results for the third quarter of 2008. The increase of gross profit and net income demonstrated the success of our high-end luxury brand strategy."
Financial Review of Operations for the Third Quarter of 2008
Compared to the third quarter of 2007, XING's net sales decreased 31.5% to RMB 716.2 million (USD 102.5 million) for the same period this year. The decrease was mainly attributable to the recession of macro-economic environment.
Compared to the third quarter of 2007, gross profit of the Company increased 35.3% to reach RMB 333.3 million (USD 47.7 million) for the same period of this year. Gross margin increased from 23.6% of revenues for the third quarter of 2007 to 46.5% for the same period this year. The increase in gross profit and the improvement in gross margin were attributable to the successful strategic shift to new high-end luxury VEVA brand in Qiao Xing Mobile Communication Co., Ltd ("QXM"), a main subsidiary of XING.
Total operating expenses were RMB 98.4 million (USD 14.1 million) in the third quarter of 2008, which represented an increase of 51.0% from RMB 65.2 million in the third quarter of 2007. The significant increase in operating expenses in the third quarter of 2008 was mainly due to the airtime costs incurred on the sales of handset products through the infomercial arrangement in QXM. QXM sells parts of handsets to infomercial companies under a TV infomercial sales arrangement. Airtime costs incurred in QXM were RMB 52.8 million in the third quarter of 2008, compares to RMB 1.9 million in the third quarter of 2007.
Net non-operating losses were RMB 107.5 million (USD 15.4 million) in the third quarter of 2008, represented an increase of 3.9% from RMB 103.4 million in the third quarter of 2007. The details of the non-operating income (losses) are listed in the following table:
Non-operating income (expenses) for the three months ended Sep 30, 2008
RMB'000 US$'000
Non-operating income (expenses):
Interest income 6,569 941
Exchange gain (loss), net (8,933) (1,279)
Interest expense (143,925) (20,608)
Gain (loss) on remeasurement of
embedded financial derivative 48,835 6,992
Gain (loss) on disposal of equity
interests in subsidiary 281 40
Gain (loss) on extinguishment of
convertible debts (10,634) (1,523)
Other income, net 330 47
Total net non-operating income
(loss) (107,478) (15,389)
Interest expenses were RMB 143.9 million (USD 20.6 million) in the third quarter of 2008. Among these interest expenses, non-cash interest expenses represents RMB 110.1 million (USD 15.8 million), including accretion of convertible note discount at amount of RMB 107.4 million (USD 15.4 million) and amortization of deferred debt issuance cost at amount of RMB 2.7 million (USD 0.4 million). Total interest expenses paid in cash amounted to RMB 33.9 million (USD 4.8 million).
About Qiao Xing Universal Telephone, Inc.
Qiao Xing Universal Telephone, Inc. is one of China's largest manufacturers and distributor of telecommunications products in China. QXUT's product portfolio includes telecommunications terminals and related products, including fixed wireless phones, VoIP telephones, mobile handsets, PDAs and consumer electronic products, including MP3 players, cash registers and set- top-box products. The Company primarily conducts its business through its operating subsidiaries CEC Telecom Co., Ltd (CECT), and Huizhou Qiao Xing Communication Industry Co., Ltd (HZQXCI), a company engaged in R&D and distribution of indoor telephone sets and economy mobile phones under the COSUN brand. The Company Group has built a strong distribution network comprised of more than 5,000 retail stores throughout China and has established partnerships with major retailers in Europe, North America and Latin America, including Bellsouth and Wal-Mart. For more details, please visit http://www.cosun-xing.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 Qiao Xing Universal'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 Universal 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 November 27, 2008, and Qiao Xing Universal undertakes no duty to update such information, except as required under applicable law.
Qiao Xing Universal Telephone Inc. and its Subsidiaries
Condensed Consolidated Profit and Loss Account
For Three Months Ended 30 September
2007 2008
RMB'000 RMB'000 US$'000
Net sales 1,044,987 716,194 102,548
Cost of goods sold (798,741) (382,932) (54,830)
Gross profit 246,246 333,262 47,718
Total operating expenses (65,203) (98,437) (14,095)
Income from operation 181,043 234,825 33,623
Net non-operating income (loss) (103,403) (107,478) (15,389)
Income before income tax 77,640 127,347 18,234
Provision for income tax (28,732) (60,241) (8,626)
Income before minority
interests 48,908 67,107 9,609
Minority interest (58,545) (49,730) (7,121)
Net income (loss) before
extraordinary items (9,637) 17,376 2,488
Extraordinary items: -- --
Net income (loss) (9,637) 17,376 2,488
To participatory convertible notes (2,281) (327)
To common stock 15,095 2,161
Basic earnings (loss) per common
share:
Before extraordinary gain (0.33) 0.49 0.07
Extraordinary gain
After extraordinary gain (0.33) 0.49 0.07
Weighted average number of shares
outstanding
Basic 29,649,000 30,948,836 30,948,836
Qiao Xing Universal Telephone Inc. and its Subsidiaries
Condensed Consolidated Balance Sheet
December 31, September 30,
2007 2008
RMB'000 RMB'000 US$'000
ASSETS
CURRENT ASSETS
Cash and cash equivalents 3,033,010 4,153,832 611,766
Restricted cash 197,951 182,163 26,828
Bills receivable 115,261 71,426 10,519
Accounts receivable, net 941,518 487,716 71,830
Inventories 304,024 235,386 34,667
Prepaid expenses 273,881 533,422 78,561
Other current assets 1,111,408 630,933 92,922
Due from related parties 27 25 4
Deferred income taxes 13,350 7,695 1,133
Deferred debt issuance costs, net 14,579 -- --
TOTAL CURRENT ASSETS 6,005,009 6,302,597 928,231
NON-CURRENT ASSETS
Property, machinery and
equipment, net 192,601 196,202 28,896
Land use rights 36,106 35,505 5,229
Other non-current assets -- --
Investment at cost 7,803 7,802 1,149
Goodwill 76,594 82,059 12,085
Other acquired intangible assets,
net 60,728 50,191 7,392
Deferred debt issuance costs 39,644 5,839
TOTAL NON-CURRENT ASSETS 373,832 411,403 60,590
TOTAL ASSETS 6,378,841 6,714,000 988,822
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short term bank borrowings 1,471,454 1,456,989 214,582
Accounts payable 180,573 177,618 26,159
Other payables 42,009 10,715 1,578
Accrued liabilities 104,984 84,168 12,396
Deposits received 4,539 3,236 477
Finance lease obligations-current
obligations --
Deferred revenues 26,402 20,184 2,973
Due to related parties 608 193,573 28,509
Taxation payable 73,301 121,553 17,902
Convertible notes 135,667 176,537 26,000
Embedded derivatives liabilities 19,004 124,278 18,303
TOTAL CURRENT LIABILITIES 2,058,541 2,368,852 348,879
LONG-TERM LIABILITIES
Shareholders loans 7,194 6,697 986
Convertible notes 189,660 174,013 25,628
Deferred tax liabilities 5,561 4,320 636
TOTAL NON-CURRENT LIABILITIES 202,415 185,030 27,251
TOTAL LIABILITIES 2,260,956 2,553,882 376,129
MINORITY INTEREST 1,095,917 1,003,020 147,722
SHAREHOLDERS' EQUITY
Common stock, par value RMB0.008
(equivalent of US$0.001);
authorised 50,000,000 shares;
outstanding and fully paid -
30,948,836 shares as of
December 31, 2007 and September
30, 2008 251 251 34
Additional paid-in capital 1,737,541 1,864,984 274,670
Cumulative translation
adjustments (41,808) (81,687) 1,679
Retained earnings (deficits) 1,325,984 1,373,550 188,587
TOTAL SHAREHOLDERS' EQUITY 3,021,968 3,157,099 464,970
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY 6,378,841 6,714,000 988,822
The accompanying unaudited condensed consolidated financial statements do not fully comply with U.S. GAAP due to the omission of certain required disclosures.
For more information, please contact:
Rick Xiao
Qiao Xing Universal Telephone, Inc.
Tel: +86-752-282-0268
Email: rick@qiaoxing.com
SOURCE Qiao Xing Universal Telephone, Inc.
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