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Zoom Technologies Reports Fourth Quarter 2011 Revenue and Net Income

Monday, April 16, 2012 4:00 PM


Fourth Quarter 2011 Highlights:

  • Revenue increased 60.6% over same quarter last year to $139.0 million
  • Net loss of $2.01 million from net income in same quarter last year of $5.10 million
  • Net loss in the quarter resulted from lowered margins in the EMS sector, increased R&D expenditures, one-time acquisition related expenses and impairment of goodwill

Full Year 2011 Highlights:

  • Revenue increased 21.3% over last year to $306.4 million
  • Net income decreased to $3.02 million from $12.83 million last year
  • Sold 1,833,000 Leimone brand phones, compared to 708,000 in 2010
  • Sales of own brand products increased to $93.9 million or 30.6% of revenues versus $36.9 million or 14.6% of revenues in 2010
  • Electronic Manufacturing Service (EMS) decreased to $187.9 million from $209.8 million in 2010

BEIJING, April 16, 2012 (GLOBE NEWSWIRE) -- Zoom Technologies, Inc. (Nasdaq:ZOOM), a leading China-based manufacturer of mobile phones and other mobile electronic products, today reported financial results for the fourth quarter and full year ended December 31, 2011.

For the fourth quarter of 2011, Zoom generated net revenue of $139.0 million, up 60.6% over $86.6 million for the fourth quarter 2010; and up 173.9% sequentially from $50.8 million in the third quarter of 2011. The jump in revenues in the fourth quarter is mainly due to i) significant increase in sales of our Leimone brand phone to 1,278,000 units just in the fourth quarter versus 554,000 units in total for the first three quarters combined, and ii) our newly acquired subsidiary in New York, Portables Unlimited LLC - a wholesale distributor of T-Mobile USA products and services, for the last two and a half months of the quarter, contributed $13.5 million in sales.

For the full year of 2011, Zoom reported revenue of $306.4 million, up 21.3% over $252.6 million for the full year 2010. The year over year revenue growth was primarily attributed to the increase in sales of our Leimone brand phones.

Mr. Lei Gu, Chairman & CEO of Zoom explained, "The sales results of our Leimone brand phones in 2011 is testimony to the strength in our own design and manufacturing. We look forward to continuing this trend in gaining market share by our branded products, and at the same time more OEM customers are relying on us for whole phone design work as well. We anticipate picking up significant volumes of contracted ODM - original design and manufacturing work, from large customers all over Asia and beyond."

For the fourth quarter of 2011, Zoom reported a net loss of $2.0 million, compared to net income of $5.1 million in the fourth quarter of 2010. In the last few months of 2011, despite a credit tightening environment and that we engaged in less profitable manufacturing contracts in order to maintain a stable employment level at the factory, our normal operations would still have managed a slight net income of approximately $1 million in the fourth quarter of 2011. However, one-time acquisition related expenses, increase R&D expenditures and impairment of goodwill, resulted in a net loss for the quarter. 

Gross profit for the fourth quarter of 2011 was $6.2 million compared to $11.6 million in the fourth quarter of 2010, and down slightly sequentially from $6.7 million in the third quarter of 2011. Gross profit for the year 2011 was $25.2 million, down slightly from $27.7 million for 2010. Gross margin was 8.2% for 2011 down from 11.0% for 2010. Net margin was reduced to 1.0% in 2011 as compared to 5.0% in 2010. The decrease in net income in 2011 from 2010 was mainly due to i) less profitable EMS business activities toward the last few months in 2011, ii) increase R&D expenses of about $2.6 million for the year, iii) one-time acquisition costs of about $1.6 million, and iv) impairment of goodwill of about $1.0 million. 

Looking ahead, Mr. Gu remarked, "From the beginning of the year 2012, we anticipate a shift from the traditional assembly-focused manufacturing for our OEM customers to delivering whole phone solutions to large mobile operators and well-known brands in Asia. These activities should enable Zoom in 2012 to return to normal profitability and healthy margins."

Conference Call Details

Zoom will review the fourth quarter and full year 2011 results and discuss management's expectations for 2012 today, Monday, April 16, 2012 at 4:30 p.m. EDT (1:30 p.m. PDT). The dial-in numbers are +1-855-500-8701 for U.S. domestic callers and +65-6723-9385 for international callers, and then enter the access code (conference ID) 71270246. A replay of the conference call will be available through April 19, 2012. The replay dial-in numbers are +1-866-214-5335 for U.S. domestic callers and +61-2-8235-5000 for international callers, and then enter access code 71270246.

About Zoom Technologies, Inc.

Zoom Technologies is a holding Company with subsidiaries that engage in the manufacturing, research and development, and sale of electronic and telecommunication products for the latest generation mobile phones, wireless communication circuitry and related software products. Zoom Technologies' subsidiary, Jiangsu Leimone, owns a majority stake of TCB Digital, which offers highly customized and high quality Electronic Manufacturing Service (EMS) for Original Equipment Manufacturer (OEM) customers as well as its Own Brand Manufacturing (OBM) under the ZOOM, LEIMONE and LONGTEL brand names. The Company's products are both exported globally and sold domestically in People's Republic of China. Zoom Technologies recently acquired ownership in Portables Unlimited LLC, a cellular service and products distributor in the U.S.

The Zoom Technologies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9665

Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking statements" that involve risks and uncertainties. These include statements about our expectations, plans, objectives, assumptions or future events in which the outcome cannot be assured. You should not place undue reliance on these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission. We undertake no obligation to publicly release revisions to these forward-looking statements to reflect future events or circumstances or reflect the occurrence of unanticipated events.

ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 
 
  December 31, 2011 December 31, 2010
ASSETS     
Current assets    
Cash and equivalents  $ 1,131,109  $ 6,374,103
Restricted cash 15,507,408 13,503,122
Accounts receivable, net 48,970,549 21,740,642
Inventories, net 3,070,000 1,955,458
Purchase deposit 8,549,315  --
Other receivables and prepaid expenses 9,784,007 432,205
Advance to suppliers 9,834,017 32,776,983
Notes receivable 1,086,606 746,922
Due from related parties 30,425,700 19,056,574
Costs in excess of revenue - R&D contracts 91,880 531,617
Deferred tax assets, net 56,149 103,419
Total current assets 128,506,740 97,221,045
     
Property, plant and equipment, net  6,260,675 4,949,920
Equipment deposit 101,859  --
Construction in progress deposit - related party 10,170,809 9,790,700
Intangible assets 772,527  525,458
Goodwill 36,332,497 8,498,897
     
TOTAL ASSETS  $ 182,145,107  $ 120,986,020
     
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities    
Short-term loans  $ 26,405,343  $ 21,945,664
Notes payable 29,443,650 25,318,370
Accounts payable 14,336,883 1,488,548
Accrued expenses and other payables 10,173,712 1,170,952
Advance from customers 1,112,179 301,014
Taxes payable 4,287,309 4,711,893
Interest payable  85,323  25,027
Dividends payable 622,606 599,338
Due to related parties 6,742,373 2,884,340
Total current liabilities 93,209,378 58,445,146
     
Long-term payables  145,000  580,000
Long-term notes payable  500,000  --
Long-term loan  10,458  --
     
TOTAL LIABILITIES 93,864,836 59,025,146
     
COMMITMENTS    
     
STOCKHOLDERS' EQUITY     
Preferred stock: authorized 1,000,000 shares, par value $0.01 none issued and outstanding  --  --
Common stock: authorized 35,000,000 shares, par value $0.01  
Issued 23,865,723 shares and outstanding 23,864,043 shares; and Issued 15,275,572 shares and outstanding 15,273,892 shares at December 31, 2011 and December 31, 2010  238,640 152,739
Shares to be issued  1,000 557
Subscription receivable  -- (61,200)
Deferred expenses (1,400,068) (227,226)
Additional paid-in capital 53,133,895 38,204,403
Treasury shares: 1,680 shares at cost (7,322) (7,322)
Statutory surplus reserve 682,528 682,528
Accumulated other comprehensive income   2,081,429 964,206
Retained earnings 22,048,539 19,030,933
TOTAL STOCKHOLDERS' EQUITY 76,778,641 58,739,618
Noncontrolling interest 11,501,630 3,221,256
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 182,145,107  $ 120,986,020
 
ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
     
  Years Ended December 31
  2011 2010
     
Net revenues  $ 306,374,389  $ 252,589,072
Cost of goods sold 281,179,403 224,884,782
     
Gross profit  25,194,986  27,704,290
     
Operating expenses:     
Sales and marketing 798,345 466,493
General and administrative 8,216,982 4,390,168
Research and development 5,874,728 3,251,209
Non-cash equity-based compensation  2,413,992 1,688,372
Impairment of goodwill 1,033,762  --
Total operating expenses 18,337,809 9,796,242
     
Income from operations  6,857,177 17,908,048
     
Other income (expenses)    
Interest income 322,261 256,612
Loss on disposal of fixed assets (8,529) (60,573)
Government grants 236,503  122,675
Other income 1,394,396  286,661
Interest expense (2,771,861) (1,391,510)
Exchange loss (91,698) (34,411)
Other expenses (357,270) (245,873)
Total other expenses (1,276,198) (1,066,419)
     
Income before income taxes and non-controlling interest 5,580,979 16,841,629
     
Income taxes 2,307,570 3,832,772
     
Income before noncontrolling interest 3,273,409 13,008,857
Less: income attributable to noncontrolling interest 255,803 183,253
     
Net income attributable to Zoom Technologies, Inc. 3,017,606 12,825,604
     
Foreign currency translation gain - Zoom Technologies, Inc. 1,117,223 650,230
Foreign currency translation gain - Noncontrolling interest 121,557 103,203
     
Comprehensive income Zoom Technologies, Inc.  $ 4,134,829  $ 13,475,834
Comprehensive income noncontrolling interest  $ 377,360  $ 286,456
     
Basic and diluted earnings per common share:    
Basic  $ 0.18  $ 1.07
Diluted  $ 0.15  $ 0.97
     
Weighted average common shares outstanding:    
 Basic  17,156,446 12,035,589
 Diluted 20,110,099 13,210,181
 
ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS 
 
  Years Ended December 31
  2011 2010
Cash flows from operating activities:     
Income including noncontrolling interest  $ 3,273,409  $ 13,008,857
Loss from discontinued operations    
Adjustments to reconcile income including non-controlling interest to cash used in operating activities:    
Depreciation and amortization 1,691,187 1,626,501
Non-cash equity-based compensation 2,413,992  1,688,372
Provision for inventory obsolescence (108,096)  -- 
Provision on accounts receivable 703,994  87,588
Loss on disposal of fixed assets 8,529  60,573
Impairment for goodwill   1,033,762  -- 
Changes in deferred tax assets 50,421 350,429
Changes in operating assets and liabilities:     
Accounts receivable  (20,900,645) (3,199,401)
Inventories  52,082 (359,066)
Advances to suppliers  23,720,640 8,700,946
Prepaid expenses and other assets (15,507,644) (187,436)
Accounts payable  1,805,357 (1,019,655)
Advance from customers 273,787 60,457
Related parties-net (6,828,582) (12,309,184)
Accrued expenses and other current liabilities  1,367,451 2,546,076
Net cash provided by (used in) operating activities (6,950,356) 11,055,057
     
Cash flows from investing activities:    
Restricted cash (1,455,083) (1,073,912)
Cash paid for long-term investments -- (500,000)
Cash paid for acquisition of subsidiary (1,400,000)  
Purchase of property and equipment and other long-term assets (115,368) (9,614,315)
Proceeds from (payment on) notes receivable (305,446) (18,257)
Cash increase due to acquisition of subsidiaries 316,160  1,491,630
     
Net cash used in investing activities  (2,959,737) (9,714,854)
     
Cash flows from financing activities:    
Issuance of shares for cash 3,102,464  8,194,413
Proceeds from short-term loans 27,773,276 36,034,236
Advance to related parties (542,003) (12,154,025)
Repayment on borrowing from related parties (320,000) (23,643,764)
Proceeds from borrowings from related parties  125,000 --
Proceeds from (repayment on) notes payable  3,089,328 501,556
Collection on advance to related parties 939,717 4,709,255
Receipt from related parties (4,091,718) 21,353,981
Repayments on short-term loans (25,535,290) (31,465,282)
Repayments on long-term loan (9,634)  -- 
Net cash provided by financing activities 4,531,140 3,530,370
     
Effect of exchange rate changes on cash & equivalents 135,959 31,230
     
Net (decrease) and increase in cash and equivalents (5,242,994) 4,901,803
     
Cash and equivalents, beginning balance 6,374,103 1,472,300
     
Cash and equivalents, ending balance  $ 1,131,109  $ 6,374,103
     
     
  Years Ended December 31
  2011 2010
SUPPLEMENTARY DISCLOSURES:    
Interest paid  $ 1,324,331  $ 1,427,540
Income tax paid  $ 2,812,248  $ 92,255
Non-cash investing and financing activities    
Acquisition of 29.0% of TCB by issuing 2,462,576 shares  $ --   $ 4,348,247
Acquisition of 100% of Silver Tech by issuing 1,342,599 shares  $ --   $ 9,590,000
Acquisition of 100% of CDE by issuing 484,800 shares  $ 1,818,000  $ -- 
Acquisition of zoom.com domain name by issuing 80,000 shares  $ --   $ 349,600
Acquisition of 55% of Portables by issuing 1,494,688 shares  $ 3,306,171  $ -- 
Shares issued to settle T-Mobile indebtedness  $ 2,566,284 $ --
Note issued to CNCG as part of Portables acquisition  $ 500,000 $ --
CONTACT: Investor Contact:
         Lynn Wei
         Investor Relations Coordinator
         Zoom Technologies, Inc.
         +86-10-5935-9576
         weilin@zoom.com
         www.zoom.com

Zoom Technologies, Inc. Logo

(Source: PrimeZone )
(Source: Quotemedia)

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