QXM Qiao Xing Mobile Communication Co., Ltd. Ordinary Shares

BEIJING, China. Oct. 24 /Xinhua-PRNewswire-FirstCall/ -- Qiao Xing Mobile Communication Co., Ltd. ("Qiao Xing Mobile" or the "Company") (NYSE:QXM), one of China's leading domestic manufacturers of mobile handsets operating its business primarily through its subsidiary, CEC Telecom Co., Ltd. ("CECT"), today announced its unaudited results for the quarter ended June 30, 2008. The Company previously only released its operating results for the second quarter because a third party valuation was being conducted for the purposes of accounting for the $70 million convertible notes issued in May 2008. The valuation was just completed and the Company is reporting its unaudited financial results for the second quarter of 2008. Net income before extraordinary item for the second quarter was RMB133.4 million (US$19.4 million)(1). This represents a 25.4% decrease from the second quarter of 2007 and a 25.5% increase from the first quarter of 2008. Basic and diluted earnings per share for the second quarter of 2008 were RMB2.46 (US$0.36) and RMB0.82 (US$0.12), respectively. Mr. Wu Zhiyang, Chairman of Qiao Xing Mobile, said, "We remain very positive about our third quarter operating results and expect to meet our targeted operating income." (1) This announcement contains translations of certain Renminbi (RMB) amounts into United States dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ were made at a rate of RMB6.8591 to US$1.00, the effective noon buying rate as of June 30, 2008 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts referred to in this announcement could have been or could be converted into U.S. dollars at any particular rate or at all. About Qiao Xing Mobile Communication Co., Ltd. Qiao Xing Mobile Communication Co., Ltd. is one of the leading domestic manufacturers of mobile handsets in China in terms of unit sales volume. The Company manufactures and sells mobile handsets based primarily on Global System for Mobile Communications, or GSM, global cellular technologies. It operates its business primarily through CEC Telecom Co., Ltd., or CECT, its 96.6%-owned subsidiary in 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 generally generate higher profit margins. For more information, please visit http://www.qxmc.com/ . Safe Harbor Statement This press release 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 Mobile'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 Mobile does not undertake any obligation to update any forward-looking statement, except as required under applicable laws. All information provided in this press release is as of October 24, 2008, and Qiao Xing Mobile undertakes no duty to update such information, except as required under applicable law. For further information, please contact: Tao Ma Qiao Xing Mobile Communication Co., Ltd. Tel: +86-10-8219-3706 Email: Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets (amounts in thousands) December 31, 2007 June 30, 2008 RMB RMB Assets Cash 2,729,982 2,787,582 Restricted cash 94,384 120,100 Accounts receivable, net 418,564 490,159 Bills receivable - 23,400 Inventories 177,279 151,096 Prepayments to suppliers 155,993 486,837 Prepaid expenses and other 19,295 11,209 current assets Deferred income taxes 5,685 5,366 Total current assets 3,601,182 4,075,749 Property, machinery and equipment, net 175,469 183,387 Land use rights 36,106 35,706 Equity investment 7,803 7,803 Goodwill 112,814 112,814 Other intangible assets, net 60,728 53,348 Deferred debt issuance costs, net - 49,606 Total assets 3,994,102 4,518,413 Liabilities, minority interests and shareholders' equity Short-term borrowings 983,904 1,192,728 Accounts payable 107,990 75,609 Prepayments from customers 4,585 10,512 Accrued liabilities 41,401 53,036 Amounts due to related parties 4,532 29,358 Other payables and current 58,630 22,510 liabilities Embedded derivative liability - 185,573 Income taxes payable 38,722 25,520 Total current liabilities 1,239,764 1,594,846 Convertible notes - 166,956 Deferred income taxes 5,561 4,680 Total liabilities 1,245,325 1,766,482 Minority interests 78,235 84,216 Shareholders' equity 2,670,542 2,667,715 Total liabilities, minority interests and shareholders' equity 3,994,102 4,518,413 Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (amounts in thousands, expect share and per share data) Three months ended Note June 30, 2007 March 31, 2008 June 30, 2008 RMB RMB RMB (Restated)(1) Revenues 844,146 604,455 383,689 Cost of goods sold (561,290) (414,583) (250,666) Gross profit 282,856 189,872 133,023 Selling and distribution Expenses (17,700) (16,761) (33,153) General and administrative expenses (21,261) (11,232) (12,680) Research and development expenses (6,951) (5,685) (7,963) Amortization of intangible assets (6,350) (4,222) (3,158) Operating income 230,594 151,972 76,069 Foreign exchange gain (loss), net 2,228 4,367 (2,502) Interest income 5,063 6,589 6,589 Interest expense (10,448) (13,725) (35,635) Gain on remeasurement of embedded derivatives - - 113,730 Other income (loss), net 113 291 (3,975) Income before income tax expense, minority interests and extraordinary items 227,550 149,494 154,276 Income tax expense (35,323) (39,076) (19,005) Income before minority interests and extraordinary item 192,227 110,418 135,271 Minority interests (13,489) (4,118) (1,863) Net income before extraordinary item 178,738 106,300 133,408 Extraordinary item - gain on acquisition of additional equity interest in CECT 28,689 - - Net income 207,427 106,300 133,408 Basic earnings per Share (2) - Before extraordinary item 3.72 2.00 2.46 - Extraordinary item 0.60 - - - After extraordinary item 4.32 2.00 2.46 Diluted earnings per Share: (2) - Before extraordinary item 3.72 2.00 0.82 - Extraordinary item 0.60 - - - After extraordinary item 4.32 2.00 0.82 Weighted average number of shares outstanding: (2) - Basic 47,967,000 53,028,000 49,467,000 - Diluted 47,967,000 53,028,000 54,333,000 Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (1) As previously announced, the financial statements of the Company for the three months ended June 30, 2007 have been revised to correct an immaterial error that resulted from a change in the functional currency of the Company from Renminbi to United States dollar. With the completion of the Company's listing on the NYSE on May 3, 2007, substantially all of its cash and financings are now denominated in United States dollars. Due to this significant change in the Company's economic facts and circumstances, management concluded that the Company's functional currency should be changed from Renminbi to United States dollars, effective May 3, 2007. The functional currency of all other companies in the Group continues to be Renminbi. The change in functional currency has resulted in an increase in the previously reported consolidated net income for the three months ended June 30, 2007 by approximately RMB9.4 million. (2) Basic and diluted earnings per share data reflects on a retroactive basis a 40-for-one share split that became effective on April 13, 2007. (3) The accompanying unaudited condensed consolidated financial statements do not fully comply with U.S. GAAP due to the omission of certain required disclosures. DATASOURCE: Qiao Xing Mobile Communication Co., Ltd. CONTACT: Tao Ma, Qiao Xing Mobile Communication Co., Ltd., +86-10-8219 3706, or

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