Zoom Technologies, Inc. (NASDAQ: ZOOM)
Full Year 2009 Highlights:
-- Net income grew 121% year over year to $6.24 million, exceeded upper
end of guidance
-- Revenue increased 135% over last year to $189.06 million
-- EMS volume reached 8.5 million units as compared to 5.4 million for
2008
-- Sold 100,000 proprietary "Leimone" brand phones
Full Year 2010 Guidance:
-- Net income guidance in range of $10.5 million to $11.5 million
-- Revenue estimates between $240 and $260 million
-- EMS volume growth to 10 million units
-- "Leimone" brand phone sales at 700,000 units
-- Increase export activities to Asia, South America and the Middle East
First Quarter 2010 Guidance:
-- Net income in range of $1.5 to $1.7 million versus $0.92 million for
same quarter 2009
-- Revenue between $38 to $42 million as compared to $28.82 million for
year ago quarter
Zoom Technologies, Inc. (NASDAQ: ZOOM) a leading China based
manufacturer of mobile phones and other mobile electronic products,
reported financial results for the fourth quarter and full year
ended December 31, 2009.
Mr. Lei Gu, Chairman and Chief Executive Officer of Zoom
Technologies, commented, "Our 2009 financial results directly
reflect the strength of the Chinese macroeconomic environment, the
robust mobile phone industry and Zoom's strategy to gain market
share. Catapulting Zoom's market opportunity is China's low user
penetration rate of only 47%, as compared to over 90% or even over
100% in many developed and developing countries. We are extremely
excited to report another quarter of tremendous year over year
revenue growth and dramatic full-year revenue growth as a
NASDAQ-listed company, offering an attractive investment
opportunity for investors. Our ability to accomplish such growth
reflects our strong expansion prospects for 2010 and beyond."
For the fourth quarter of 2009, Zoom reported net revenue of
$51.82 million, up 31% over $39.47 million for the fourth quarter
2008; and down 6% sequentially from $55.29 million of a robust
third quarter 2009. The year over year revenue growth was primarily
due to an increase in orders by our EMS customers and sales of our
own brand phones.
Mr. Gu continued, "We believe that China's pro-growth government
backing of the 3G network commercialization will drive subscriber
demand for feature-rich, customized mobile phones with new media
applications and large volume data transmission. Earlier this
month, we announced that our acquisition target, Leimone Culture,
signed an agreement with CCTV. We are excited with the prospect of
entering the mobile new media business through the acquisition of
Leimone Culture. We will continue to focus our manufacturing
activities on our core business and explore potential ancillary
revenue streams made available by the increasing usage on China 3G
networks."
For the full year of 2009, Zoom reported revenue of $189.06
million, up 135% over $80.61 million for the full year 2008. Net
income for the full year ended December 31, 2009 was $6.24 million
compared to net income of $2.82 million for the full year 2008. The
increase was mainly due to large uptake in orders from domestic EMS
customers.
Gross profit for the year 2009 was $11.4 million, up 39% from
$8.2 million for 2008. Gross margin was 6% for 2009 down from 10.2%
for 2008. Net margin was stable at 3.3% in 2009 as compared to 3.5%
in 2008. The compression in gross margins reflects our strategy to
win large orders in the competitive Chinese mobile manufacturing
market, while our effective managerial control ensured
profitability.
Mr. Gu continued, "In 2009, we made significant capacity
expansion and we are ready to take advantage of the foreseeable
growth in China's mobile market. With 14 production lines, we have
the capacity to manufacture up to 10 million units for our EMS
customers and at the same time, produce 12 models of our own
feature-rich handsets equipped with the latest technologies,
including 4 models for the 3G networks."
Looking ahead, Mr. Gu remarked, "We will continue to focus on
our mobile manufacturing business in 2010, as the market
opportunity in China is in high demand. For the first quarter
ending March 31, 2010, we expect net revenue to be between $38 and
$42 million and net income expectation to be in the range of $1.5
and $1.7 million. For the full year 2010, we expect net revenue to
be between $240 and $260 million and maintain our previously given
2010 net income expectation range of $10.5 million to $11.5
million."
Conference Call Details
Zoom will review the fourth quarter and full year 2009 results
and discuss management's expectations for 2010 today, Tuesday,
March 30, 2010 at 5 p.m. EDT (2 p.m. PDT). The dial-in numbers are
+1-877-407-9039 for US domestic callers and +1-201-689-8470 for
international callers. A telephonic replay of the call will be
available through April 14, 2010. The replay dial-in numbers are
+1-877-660-6853 for US domestic callers and +1-201-612-7415 for
international callers. The account number to access the replay is
3055 and the conference ID number is 348255.
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 3rd 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 and also designs and
manufactures its own brand of mobile phones under the Leimone
brand.
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, including the acquisition of Leimone
Culture, which may require shareholder approval which 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 STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
Years Ended December 31
----------------------------
2009 2008
------------- -------------
Net revenues $ 189,055,742 $ 80,611,981
Cost of sales (177,653,678) (72,410,992)
------------- -------------
Gross profit 11,402,064 8,200,989
Operating expenses:
Sales and marketing expenses (1,338,999) (267,076)
General and administrative expenses (1,722,194) (1,685,885)
Research and development expenses - (871,238)
Non-cash equity-based compensation
charges - options (44,480) -
------------- -------------
Impairment loss of assets 0 0
------------- -------------
(3,105,673) (2,824,199)
------------- -------------
Income from operations 8,296,391 5,376,790
Other income (expenses)
Equity in earnings in investee - 3,191
Interest income 287,206 176,102
Gain/(Loss) on disposal of fixed assets - 0
Government grant income - 176,747
Other income 579,658 4,121
Interest expense (1,327,744) (1,599,139)
Exchange loss (30,536) (91,071)
Other expenses (150,265) (37,506)
------------- -------------
(641,681) (1,367,555)
------------- -------------
Income before income taxes and
noncontrolling interests 7,654,710 4,009,235
Income tax expense (1,231,180) (611,586)
------------- -------------
Income before noncontrolling interests and
discontinued operations 6,423,530 3,397,649
Loss from discontinued operation - (246,654)
------------- -------------
Income before noncontrolling interests 6,423,530 3,150,995
Less: Income attributable to
noncontrolling interests (180,383) (330,721)
------------- -------------
Net income attributable to Zoom Technologies
Inc 6,243,147 2,820,274
Other comprehensive income/(loss) (32,852) 8,708
------------- -------------
Comprehensive income $ 6,210,295 $ 2,828,982
============= =============
Basic and diluted income/(loss) per common
share:
Basic $ 1.22 $ 0.67
Diluted 1.22 0.67
Basic 5,110,340 4,225,219
============= =============
Diluted 5,131,563 4,225,219
============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2009 2008
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 1,472,300 $ 812,769
Restricted cash 11,993,214 8,753,757
Accounts receivable, net 16,835,074 12,366,814
Other receivables and prepaid expenses 311,808 1,119,881
Advance to suppliers 27,471,601 24,275,313
Inventories, net 1,534,989 3,742,046
Due from related parties 12,221,778 6,069,842
Deferred tax assets 504,222 -
------------ ------------
Total current assets 72,344,986 57,140,422
Property, plant and equipment, net 5,673,923 7,054,892
Construction in progress 32,849 -
Long-term investments - 65,653
Due from related parties-long term - 247,294
Deferred tax assets - 600,956
Goodwill 103,057 103,057
------------ ------------
TOTAL ASSETS $ 78,154,815 $ 65,212,274
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term loans $ 16,000,702 $ 18,893,525
Notes payable 23,986,427 17,507,514
Accounts payable 2,439,925 3,580,720
Advance from customers 51,243 3,785,462
Dividends payable 579,579 578,142
Taxes payable 1,603,557 775,315
Accrued expenses and other payables 127,484 2,832,599
Due to related parties 5,245,415 5,161,169
------------ ------------
Total current liabilities 50,034,332 53,114,446
------------ ------------
Long-term loans - 1,167,168
TOTAL LIABILITIES 50,034,332 54,281,614
------------ ------------
STOCKHOLDERS' EQUITY
Common stock: authorized 25,000,000 shares,
par value $0.01 Issued 8,780,988 shares and
outstanding 8,779,308 shares at December 31,
2009; Issued 4,226,899 and 4,225,219
outstanding at December 31, 2008 87,793 42,252
Shares to be issued 592 -
Subscription receivable (378) -
Additional paid-in capital 14,309,538 3,518,363
Treasury shares: 1,680 shares at cost (7,322) (7,322)
Statutory surplus reserve 633,378 569,193
Accumulated other comprehensive income 210,773 243,625
Retained earnings 6,254,479 75,517
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 21,488,853 4,441,628
------------ ------------
Noncontrolling interests 6,631,630 6,489,032
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 78,154,815 $ 65,212,274
============ ============
The accompanying notes are an integral part of these consolidated
financial statements.
ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2009 AND 2008
2009 2008
----------- -----------
Cash flows from operating activities:
Income including noncontrolling interests $ 6,423,530 $ 3,150,995
Adjustments to reconcile net income to cash used
in operating activities:
Depreciation and amortization 1,569,686 1,231,707
Non-cash equity-based compensation charges 44,480 -
Provision for inventory obsolescence (235,771) (173,528)
Provision for doubtful receivables 1,955 (86,390)
Loss on disposal of fixed assets 485 497
Investment income - (3,191)
Provision for long-term investment 65,781 -
Deferred tax assets 98,175 (130,508)
Changes in operating assets and liabilities:
Accounts receivable (4,442,927) 266,411
Inventories 2,422,307 3,292,582
Advances to suppliers (3,191,156) (16,037,819)
Prepaid expenses and other assets 906,196 1,541,259
Accounts payable (1,152,195) (1,543,164)
Advance from customers (3,741,596) 867,776
Related parties-net (8,126,760) (721,332)
Accrued expenses and other current liabilities (1,883,221) (110,174)
----------- -----------
Net cash used in operating activities (11,241,031) (8,454,879)
----------- -----------
Cash flows from investing activities:
Restricted cash (3,215,942) (2,890,163)
Purchase of property and equipment and other
long-term assets (244,426) (2,895,299)
Proceeds from disposal of fixed assets - 9,623
Proceeds from disposal of discontinued
operations - 1,749,258
Proceeds from notes receivable - 475,622
----------- -----------
Net cash used in investing activities (3,460,368) (3,550,959)
----------- -----------
Cash flows from financing activities:
Issuance of shares for cash 9,532,364 -
Proceeds from short-term loans 21,254,451 18,600,309
Proceeds from long-term loans - 1,149,054
Advance to related parties (10,580,810) (5,649,111)
Repayment on borrowing from related parties (13,977,180) (37,884,458)
Proceeds from notes payable 6,431,883 7,199,115
Collection on advance to related parties 12,780,855 18,484,740
Receipt from related parties 15,361,000 26,885,911
Repayments on short-term loans (24,192,652) (20,213,293)
Repayments on long-term loan (1,169,433) -
----------- -----------
Net cash provided by financing activities 15,440,478 8,572,267
----------- -----------
Effect of exchange rate changes on cash & cash
equivalents (79,548) 265,756
----------- -----------
Net increase (decrease) in cash and cash
equivalents 659,531 (3,167,815)
Cash and cash equivalents, beginning balance 812,769 3,980,584
----------- -----------
Cash and cash equivalents, ending balance $ 1,472,300 $ 812,769
=========== ===========
SUPPLEMENTARY DISCLOSURE:
Interest paid $ 1,221,979 $ 1,489,630
=========== ===========
Income tax paid $ 68,324 $ 931,854
=========== ===========
The accompanying notes are an integral part of these consolidated
financial statements.
Investor Contacts: Anthony Chan Chief Financial Officer Zoom
Technologies, Inc. +1 510-396-5831 Email Contact Joseph
Villalta/Ashleigh Barreto The Ruth Group +1 646-536-7003/7028 Email
Contact Email Contact Media Contact: Jason Rando The Ruth Group
+1-646-536-7025 Email Contact