FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of May 2006
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Commission File Number: 000-51242
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CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
3/F M8 West, No. 1 Jiu Xian Qiao East Road
Chao Yang District, Beijing 100016, People's Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):________________
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):________________
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82- N/A
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CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
Form 6-K
TABLE OF CONTENTS
Page
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Signature 3
Exhibit 99.1 - Press Release 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHINA TECHFAITH WIRELESS
COMMUNICATION TECHNOLOGY LIMITED
By: /s/ Defu Dong
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Name: Defu Dong
Title: Chairman and Chief Executive Officer
Date: May 16, 2006
Exhibit 99.1
(TECHFAITHWIRELESS LOGO)
TECHFAITH REPORTS FIRST QUARTER 2006 RESULTS
ANNOUNCES 9 NEW SMARTPHONE CONTRACTS
BEIJING, CHINA, MAY 16, 2006 -- China TechFaith Wireless Communication
Technology Limited (Nasdaq: CNTF), a handset application software and handset
solution provider based in China, today announced its unaudited financial
results for the first quarter ended March 31, 2006. The Company also reiterated
its prior financial guidance for the second quarter and full year 2006 and
announced 9 new Smartphone contracts.
Defu Dong, TechFaith's Chairman and CEO, said, "The first quarter developed as
we expected and was a transition period. We remain confident based on the
success and outlook of our three business units -- handset design, smartphone
and pocket PC, and application software. Our focused structure differentiates
TechFaith and is helping us work effectively with customers globally to speed
the design process, reduce the time to market and lower the costs."
"The upside in first quarter revenue compared to prior guidance was primarily
due to the relatively faster growth of existing customers than we had expected.
Based on current forecasts, we are reiterating our prior guidance. We expect
sequential revenue and profit growth will resume in the second quarter based on
existing customer orders and our successful business diversification efforts. We
already have multiple new customers ramping design programs with us, including
one in Japan and at least two in Europe. Specifically, based on existing orders,
we expect second quarter 2006 revenue to be approximately US$24 million, with
net income of approximately US$8.5 million."
TECHFAITH'S UNAUDITED FIRST QUARTER 2006 RESULTS
Net revenue for the first quarter of 2006 was US$12.8 million, as compared to
US$21.5 million for the same period in 2005. As outlined in the Company's press
release on March 21, 2006, it expected lower revenue due to lower orders from a
major customer along with TechFaith's discontinuance of 2 out of 4 GSM platforms
to focus on 3G opportunities.
Design fee revenue for the first quarter of 2006 was US$9.0 million, as compared
to US$16.5 million for the same period in 2005. Royalty income in the first
quarter of 2006 was US$1.8 million, as compared to US$3.1 million for the same
period in 2005. Revenue from component products was US$2.0 million in the first
quarter of 2006, as compared to US$1.8 million in the same period in 2005. In
the first quarter of 2006, approximately 65.4% of revenue from component
products was from sales of wireless modules and 34.6% from sales of other
component products.
Net income for the first quarter of 2006 was US$1.3 million or US$0.03 per
weighted average outstanding ADS (basic and diluted), compared to net income of
US$8.3 million or US$0.25 per basic weighted average outstanding ADS or US$0.22
per diluted weighted average outstanding ADS in the same period in 2005.
Gilbert Lee, President and Chief Operating Officer of TechFaith, said, "During
the quarter we expanded our long-standing relationship with Qualcomm to form a
new mobile software company. The new company, TechFaith Software China Ltd.,
will develop software for
wireless devices. The independent entity will be based in Beijing and Hangzhou,
China and will receive cash and in-kind_contributions worth up to US$35 million
from both parties, subject to performance milestones and other conditions. This
is an important initiative for us and significantly expands the dedicated
resources we have. The company will focus on application software for handset
usage. In the initial phase, all products will be based on Qualcomm's platform."
BUSINESS OUTLOOK
Mr. Dong concluded, "With the first quarter behind us, we believe TechFaith is
back on the fast growth trajectory we were previously on. We are very positive
about our growth prospects for 2006 given the strength of our core business and
the expected global growth of the handset sales. New technologies are being
embraced at a faster pace by consumers, which are driving carriers and handset
brand owners to accelerate their adoption of advanced technologies to remain
competitive. Software remains the backbone of these new feature sets and
TechFaith has the realigned structure, handset application software and design
strengths, and long-term customer relationships already in place to benefit.
TechFaith continues to expect revenue from Smartphone opportunities will
contribute 25% of its 2006 revenue. Nine new Smartphone contracts have already
been signed. Reflecting the large, global opportunity we are pursuing in this
area, among the nine new contracts, five are with customers in China, two are
with customers in Europe, one is with a customer in Southeast Asia and one is
with a customer in Russia. Smartphone adoption is accelerating given the
compelling benefits and convergence of telecommunications, email, music, camera
and many other feature sets. The complexity of the devices and required software
also continues to increase with each feature set added. This trend bodes well
for TechFaith given our expertise in helping customers address this complexity
in a cost-down environment.
As part of our Smartphone efforts we are aggressively going after the Windows
Mobile and Windows Media opportunity. We recently signed a M.O.U. with Microsoft
to establish a strategic collaboration to promote the use of Windows Mobile and
Windows Media technology. TechFaith and Microsoft will work together to improve
the user experience and market share of Windows Mobile based devices, while
reducing the time to market and lowering development costs. This strategic
collaboration will give us a further competitive advantage in the marketplace.
Finally, we continue to expect that international brand owners will represent
60% to 70% of our revenue in 2006, about the same level in 2005. However, the
percentage of revenue from product designed for international markets is
expected to increase to 20% to 30% in 2006, up from 5% in 2005, with demand from
Japan, United States, Russia, India and European countries."
TechFaith's ADSs, each of which represents 15 ordinary shares of TechFaith, are
currently trading on the Nasdaq National Market under the symbol "CNTF."
INVESTOR CONFERENCE CALL / WEBCAST DETAILS
The dial-in number for the live audio call beginning on May 15, 2006 at 7:00
p.m. U.S. Eastern Time (7:00 a.m., May 16, 2006 in Beijing) is 1-800-599-9829
(domestic) or 1-617-847-8703 (international). The passcode is 92133459. A live
webcast of the conference call will be available on China TechFaith's website at
www.techfaithwireless.com.
A replay of the call will be available on May 15, 2006 at 9:00 p.m., U.S.
Eastern Time (9:00 a.m., May 16, 2006 in Beijing) through midnight on May 22,
2006, U.S. Eastern Time (noon, May 23, 2006 in Beijing) at
www.techfaithwireless.com and by telephone at 1-888-286-8010 (domestic) or
1-617-801-6888 (international). The passcode to access the replay is 58454500.
ABOUT TECHFAITH
TechFaith (NASDAQ: CNTF) is one of the largest handset application software and
handset solution providers. Based in China, the Company employs approximately
2,350 professionals with 90% engineers. TechFaith's three business units are
handset design, application software, and smartphone and pocket PC. With the
capability of developing MMI/UI software on GSM/GPRS, CDMA1X, EVDO,
WCDMA/UMTS, HSDPA and TD-SCDMA communication technologies, TechFaith is able to
provide MMI/UI software packages that fulfill the specifications of handset
brand owners and major global operators. Having a full range of wireless
application software including WAP, Java, MMS, WWW browser, SyncML and DRM,
TechFaith is also providing total solutions for upper layer software of
handsets. In addition, TechFaith is developing smart phone software based on
open operating systems including Linux and Windows Mobile, and capable of
implementing high-end smart phones integrating Bluetooth, WiFi, high mega pixel
cameras etc. based on different communication technologies according to special
requirements of customers. TechSoft, the Company's newly established entity with
Qualcomm's capital investment is focusing on the development of application
software for wireless devices. For more information, please visit
www.techfaithwireless.com.
SAFE HARBOR STATEMENT
This announcement contains forward-looking statements. These statements are made
under the "safe harbor" provisions of the U.S. Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be identified by
terminology such as "will," "expects," "anticipates," "future," "intends,"
"plans," "believes," "estimates" and similar statements. Among other things, the
business outlook and quotations from management in this announcement, as well as
TechFaith's strategic and operational plans, contain forward-looking statements.
TechFaith may also make written or oral forward-looking statements in its
periodic reports to the U.S. Securities and Exchange Commission on forms 20-F
and 6-K, etc., in its annual report to shareholders, in press releases and other
written materials and in oral statements made by its officers, directors or
employees to third parties. Statements that are not historical facts, including
statements about TechFaith's beliefs and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and uncertainties.
A number of important factors could cause actual results to differ materially
from those contained in any forward-looking statement. Potential risks and
uncertainties include, but are not limited to, TechFaith's limited operating
history, TechFaith's ability to successfully execute its business plan and
growth strategy, mobile handset brand owners' discontinuation or reduction of
the use of independent design houses, TechFaith's ability to retain existing or
attract additional international customers, TechFaith's earnings or margin
declines, failure of competing against new and existing competitors, and other
risks outlined in TechFaith's filings with the U.S. Securities and Exchange
Commission, including its registration statement on Form F-1, as amended.
TechFaith does not undertake any obligation to update any forward-looking
statement, except as required under applicable law.
CONTACTS:
In China: In the U.S.:
Ms. Helen Zhang David Pasquale, EVP at The Ruth Group
Tel: 86-10-5822-7395 Tel:+646-536-7006
ir@mail.techfaith.cn dpasquale@theruthgroup.com
CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND
PER SHARE/ADS DATA AND UNLESS OTHERWISE STATED)
THREE MONTHS ENDED
MARCH 31, 2005 DEC 31, 2005 MARCH 31, 2006
(unaudited) (unaudited) (unaudited)
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Revenues:
Design fees $ 16,534 $ 14,777 $ 8,990
Royalty income 3,100 4,081 1,849
Component products 1,846 5,251 1,993
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Total net revenues $ 21,480 $ 24,109 $ 12,832
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Cost of revenues
Design fees $ 6,408 $ 6,135 $ 5,541
Royalty income - - -
Component products 1,566 4,009 1,687
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Total cost of revenues $ 7,974 $ 10,144 $ 7,228
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Gross profit $ 13,506 $ 13,965 $ 5,604
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Operating expenses:
General and administrative ($ 1,331) ($ 3,249) ($ 2,518)
Research and development (868) (896) (2,681)
Selling and marketing (267) (372) (467)
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Total operating expenses ($ 2,466) ($ 4,517) ($ 5,666)
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Income (loss) from operations $ 11,040 $ 9,448 ($ 62)
Interest expense (583) - -
Other income, net 73 1,031 1,219
Change in fair value of call option (1,303) - -
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Income before income taxes $ 9,227 $ 10,479 $ 1,157
Income tax - (54) -
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Income before minority interests $ 9,227 $ 10,425 $ 1,157
Minority interests (976) 65 109
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Net income $ 8,251 $ 10,490 $ 1,266
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Net income per ordinary share
Basic $ 0.02 $ 0.02 $ -
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Diluted $ 0.02 $ 0.02 $ -
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Net income per ADS*
Basic $ 0.25 $ 0.24 $ 0.03
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Diluted $ 0.22 $ 0.24 $ 0.03
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Weighted average ordinary shares
outstanding
Basic 500,000,000 658,183,409 658,183,409
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Diluted 566,037,735 658,183,409 658,183,409
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* Each ADS represents 15 ordinary shares
CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
UNAUDITED SUPPLEMENTAL FINANCIAL DATA
(IN THOUSANDS OF U.S. DOLLAR)
REVENUE BREAKOUT 1Q05 2Q05 3Q05 4Q05 1Q06
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DESIGN FEES
International customers $14,062 $12,203 $10,238 $ 9,167 $ 5,737
Domestic customers $ 2,472 $ 2,872 $ 6,396 $ 5,610 $ 3,253
ROYALTY
International customers $ 181 $ 432 $ 387 $ 349 $ 454
Domestic customers $ 2,189 $ 3,311 $ 2,792 $ 2,778 $ 638
Component vendors $ 730 $ 670 $ 878 $ 954 $ 757
COMPONENT PRODUCTS
Wireless module $ 59 $ 639 $ 1,375 $ 3,420 $ 1,304
Other component sales $ 1,787 $ 1,086 $ 1,242 $ 1,831 $ 689
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TOTAL NET REVENUES $21,480 $21,213 $23,308 $24,109 $12,832
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CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(IN THOUSANDS OF U.S. DOLLARS)
THREE MONTHS ENDED
MARCH 31, 2005 DEC 31, 2005 MAR 31, 2006
(unaudited) (unaudited) (unaudited)
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Cash flows from operating activities:
Net income $ 8,251 $ 10,490 $ 1,266
Adjustments to reconcile net income to net cash (used in)
provided by operating activities (4,381) (6,821) 11,185
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Net cash provided by operating activities $ 3,870 $ 3,669 $ 12,451
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Cash flows from investing activities:
Deposit paid for acquisition of plant, machinery and
equipment (416) (597) (534)
Purchase of plant, machinery and equipment (1,298) (1,275) (1,240)
Investment in an affiliate - - (1,243)
Proceeds on disposal of plant, machinery and equipment - 8 1
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Net cash used in investing activities ($ 1,714) ($ 1,864) ($ 3,016)
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Effect of exchange rate changes $ 30 $ 203 $ 454
Net increase in cash and equivalents 2,186 2,008 9,889
Cash and equivalents, beginning of the period 35,086 135,199 137,207
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Cash and equivalents, end of the period $ 37,272 $ 137,207 $ 147,096
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CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF U.S. DOLLARS)
MARCH 31, 2005 DEC 31, 2005 MAR 31, 2006
(unaudited) (audited) (unaudited)
--------------- ------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 37,272 $137,207 $147,096
Accounts receivable 16,915 34,060 24,220
Notes receivable 2,600 1,070 659
Marketable securities 261 - -
Deposit 3,852 - -
Inventories 4,774 4,974 6,010
Prepaid expenses and other current assets 3,454 926 1,405
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TOTAL CURRENT ASSETS $ 69,128 $178,237 $179,390
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Deposits for acquisition of plant, machinery and
equipment, and acquired intangible assets $ 945 $ 597 $ 1,021
Plant, machinery and equipment, net 9,937 14,483 14,219
Acquired intangible assets, net 853 846 750
Investment in an affiliate - - 1,243
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TOTAL ASSETS $ 80,863 $194,163 $196,623
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Account payable $ 2,999 $ 3,294 $ 3,051
Accrued expenses and other current liabilities 6,418 9,714 9,203
Advance from customers 16,975 2,273 3,818
Profit tax payable - 54 54
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TOTAL CURRENT LIABILITIES $ 26,392 $ 15,335 $ 16,126
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Convertible notes $ 12,122 $ - $ -
Derivative liability 3,259 - -
Minority interests 2,716 2,975 2,865
SHAREHOLDERS' EQUITY
Ordinary shares of par value $0.00002 10 13 13
Additional paid-in capital 4,832 109,798 109,857
Accumulated other comprehensive income 80 1,456 1,910
Retained earnings 31,452 64,586 65,852
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TOTAL SHAREHOLDERS' EQUITY $ 36,374 $175,853 $177,632
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 80,863 $194,163 $196,623
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