Tongxin International Ltd., (PINKSHEETS: TXIC), a China-based
manufacturer of engineered vehicle body structures ("EVBS") and
stamped parts for the commercial automotive industry, today
reported its unaudited financial results for its fiscal 2009 year
end.
The Company has been delayed in filing its 2009 Form 20-F due to
the process of reviewing and obtaining adequate documentation to
support and determine the appropriate accounting treatment of
certain related-party transactions between the Company's
subsidiary, Hunan Tonxgin, and a related party, Changsha Meihua
Vehicle Manufacture Co., Ltd. ("Meihua"). As previously disclosed
in its Current Report on Form 6-K filed September 17, 2010, we have
determined that there was sufficient evidence to reasonably
conclude that the accounting treatment of such related party
transactions has been recorded correctly.
For the fiscal year ended December 31, 2009, the Company
reported revenue of $121 million, representing a 24% increase from
$98.4 million in the comparable period of 2008. The increase in
revenue was principally from its sales of EVBS to Chinese customers
in the automotive commercial vehicle market. During 2009, Hunan
Tongxin captured nearly 12% of the total China market for cabs in
the commercial vehicle segment. The sale of individual components
accounted for 25% of total revenue; unpainted cabs accounted for
18% of total revenue and finished cabs with complete interiors
accounted for 13% of total revenue. The sale of dies and moulds to
other fabricators accounted for remaining 2% of total 2009
revenue.
The Company also reported, however, a net loss of $(16.8
million) for the year ended December 31, 2009, compared to net
income of $20.5 million for the consolidated results of the prior
year period ended December 31, 2008. The 2009 net loss was
primarily due to loss recognized from the change in fair value of
the warrant liability and warrant exercise expenses. An extension
of the warrants through April 30, 2012 has been approved by the
Company's Board of Directors, as announced on Wednesday, March 9,
2011.
Cash and cash equivalents as of December 31, 2009 were $16.5
million compared to $11.3 million as of December 31, 2008.
Excluding the loss/gain recognized on the change in fair value
of the warrant liability, and warrant exercise expenses, net income
would have been $4.1 million in 2009 compared to $6.9 million in
2008, a decrease of $2.8 million. The decrease in net income is due
to the increase in SG&A expenses mainly from higher selling
expenses, finance personnel and professional fees related to
SOX/ERP projects.
William E. Zielke, Chief Executive Officer and Chief
Administrative Officer of the Company, commented, "While we have
made considerable efforts in the past year to strengthen our
internal operations, we have also maintained our market position as
the largest independent Chinese supplier of commercial EVBS. The
Hunan Tongxin brand is well established and recognized for its high
quality and reliable products, and we enjoy both brand name and
trademark protection in the PRC."
Mr. Zielke continued, "Our new management team intends to
vigorously maintain our market leadership, even as we anticipate
lower revenues for 2010. In 2009, we increased the number of our
product programs and we intend to expand further the diversity of
our products, while curbing our costs and expenses. Going forward,
we are targeting the North American and European collision-parts
after-markets, leveraging the cost advantages of our high quality
components versus those of other international OEM suppliers."
Conference Call Information
Management will conduct a conference call at 8:00 A.M. Eastern
Time, on Tuesday, March 22, 2011. William E. Zielke, CEO of Tongxin
International Ltd., will present opening remarks and Thomas Chang,
VP of Finance will review the 2009 fiscal year end results.
Management will take questions from the audience at the end of the
call. Domestic participants may dial (888) 567-1602 and
international participants may dial (201) 604-5049 or toll free
(800) 4747-4646 to listen to the live broadcast. Additionally, a
live webcast will be available at
http://www.visualwebcaster.com/event.asp?id=77626. Persons unable
to participate in the live session may listen to a recording of the
conference call, by dialing (888) 632-8973 domestically and (201)
499-0429 internationally. The code for playback is (82870613)
followed by the # sign.
About Tongxin International Ltd.
Tongxin International Ltd., the largest independent supplier of
EVBS in China, is capable of providing EVBS for both the commercial
truck and light vehicle market segments. The Company also designs,
fabricates and tests dies used in the vehicle body structure
manufacturing process. EVBS consists of exterior body panels
including doors, floor pans, hoods, side panels and fenders.
Tongxin International Ltd. maintains a network of over 130
customers throughout 20 provinces in China and exports to Viet Nam.
Headquartered in Changsha, the Company also maintains regional
manufacturing in Dali, Ziyang and Zhucheng. www.txicint.com
Forward-Looking Statements
Statements contained in this press release, which are not
historical fact, constitute Forward-Looking Statements. Actual
results may differ materially due to numerous important factors
that are described in Tongxin International Ltd.'s reports to the
SEC, which may be revised or supplemented in subsequent reports to
the SEC. Such factors include, among others, the cost and timing of
implementing restructuring actions, the Company's ability to
generate cost savings or manufacturing efficiencies to offset or
exceed contractually or competitively required price reductions or
price reductions to obtain new business, conditions in the
automotive industry, and certain global and regional economic
conditions. Tongxin International Ltd. does not intend or assume
any obligation to update any forward-looking statement to reflect
events or circumstances after the date of this press release.
TONGXIN INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
(amounts are expressed in thousands, except for share data and par value,
and in U.S.$)
December 31
2009 2008
---------- ----------
(unaudited)
----------
ASSETS
Current assets:
Cash and cash equivalents $ 16,493 $ 11,313
Restricted cash - security deposit 4,692 5,836
Notes receivable 5,769 2,939
Accounts receivable-trade, net of allowance for
doubtful accounts of $2,957 and $3,856
respectively 10,204 10,214
Other receivable, net of allowance for doubtful
accounts of $406 and $407, respectively 2,076 1,600
Due (to) from related parties, net of valuation
allowance of $3,391 in 2009 (1,346) 17,313
Inventories 25,070 19,096
Prepaid expenses and other 421 1,331
Advance to suppliers 1,960 3,012
Deferred income tax assets 2,211 2,067
---------- ----------
Total current assets $ 67,549 $ 74,721
Investments in non-consolidated subsidiaries and
affiliates 209 208
Property, plant and equipment, net of accumulated
depreciation of $5,709 and $1,927, respectively 46,894 36,918
Land occupancy rights, net 13,194 9,633
Goodwill 36,880 36,696
---------- ----------
Total assets $ 164,727 $ 158,176
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,328 $ 15,201
Notes payable 4,692 5,836
Accrued expenses and other liabilities 6,867 7,393
Income taxes payable 17,257 17,418
Short-term loans payable 24,876 16,669
Short-term loans from shareholders -- 8,591
Warrant liability 11,649 452
---------- ----------
Total current liabilities $ 79,669 $ 71,560
Long-term liabilities:
Long-term loans payable 4,523
Deferred income tax liability 1,283 2,243
Other 25
---------- ----------
Total liabilities $ 80,952 $ 78,351
---------- ----------
Commitments and contingencies
Shareholders' equity:
Preferred stock - $0.001 par value, authorized
1,000,000 shares; none issued
Common stock - $0.001 par value, authorized
39,000,000 shares; 15,044,875 and 12,889,758
shares issued and 13,455,453 and 11,300,336
shares outstanding in 2009 and 2008,
respectively $ 15 $ 13
Additional paid-in-capital 97,420 77,081
Treasury stock, at cost - 1,589,422 common shares (7,682) (7,682)
Accumulated other comprehensive income 790 426
Retained earnings (deficit) (6,769) 9,987
---------- ----------
Total shareholders' equity $ 83,774 $ 79,825
---------- ----------
Total liabilities and shareholders' equity $ 164,727 $ 158,176
---------- ----------
TONGXIN INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(amounts are expressed in thousands, except for share data and earnings per
share, and in U.S.$)
Successor Company Predecessor Company
------------------------ ------------------------
For the For the
Eight-Month Four-Month
Period From Period From
Year Ended May 1, 2008 January 1,
December 31, to 2008 Year Ended
2009 December 31, to April 30, December 31,
(unaudited) 2008 2008 2007
----------- ----------- ----------- -----------
Revenues $ 121,071 $ 55,770 $ 42,588 $ 89,873
Cost of goods sold 105,421 47,207 36,310 69,865
----------- ----------- ----------- -----------
Gross profit 15,650 8,563 6,278 20,008
Selling, general and
administrative
expenses 10,192 5,248 1,793 5,372
----------- ----------- ----------- -----------
Operating income 5,458 3,315 4,485 14,636
Other income
(expenses):
Gain on extinguishment
of liability 4,034 --
Government subsidy
income 1,173 469 212 --
(Loss) gain on warrants (20,806) 13,535 -- --
Equity earnings from
equity investee -- -- -- 19
Other 15 (90) 71 --
Interest expense (1,753) (1,095) (1,607) (1,723)
----------- ----------- ----------- -----------
Total other income
(expenses) (21,372) 12,819 2,710 1,704
----------- ----------- ----------- -----------
Income (loss) before
income taxes (15,914) 16,134 7,195 12,932
Income taxes expense 842 627 2,216 3,853
----------- ----------- ----------- -----------
Net (loss) income $ (16,756) $ 15,507 $ 4,979 $ 9,079
Other comprehensive
income - foreign
translation adjustment $ 364 $ 426 $ 721 $ 940
----------- ----------- ----------- -----------
Comprehensive (loss)
income (16,392) $ 15,933 $ 5,700 $ 10,019
=========== =========== =========== ===========
Earnings (loss) per
common share-basic $ (1.38) $ 1.37 $ 0.07 $ 0.13
Earnings (loss) per
common share-diluted $ (1.38) $ 1.37 $ 0.07 $ 0.13
Weighted average shares
outstanding - basic 11,846,273 11,294,633 72,521,705 72,521,705
Weighted average shares
outstanding - diluted 11,846,273 11,294,633 72,521,705 72,521,705
Investor Relations Contact: Stanley Wunderlich Consulting For
Strategic Growth 1, Ltd. Tel: 1-800-625-2236 ext. 7770 Email: Email
Contact Website: www.cfsg1.com
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