Qiao Xing Mobile Announces Revised Financial Results for the Fourth Quarter and the Full Year Ended December 31, 2008

BEIJING, June 30 /PRNewswire-Asia-FirstCall/ -- Qiao Xing Mobile Communication Co., Ltd. ("Qiao Xing Mobile" or the "Company") (NYSE:QXM), a domestic manufacturer of mobile handsets in China, today announced its revised financial results for the fourth quarter and the full year ended December 31, 2008.

After the Company's earnings release on May 12, 2009, Qiao Xing Mobile continued to finalize its  full year 2008 financial results and determined that it was necessary to record a non-cash intangible asset impairment charge to write-down the value of its CECT brand due to the Company's strategic shift to focus more on its high-end VEVA brand.

The impairment charge resulted in a RMB22.3 million decrease in the Company's full year net income from the previously reported RMB446.1 million to RMB423.8 million and a RMB0.39 decrease in its diluted earnings per share from RMB7.38 to RMB6.99. For the fourth quarter ended December 31, 2008, the impairment charge reduced the Company's net income from RMB56.3 million to RMB34.0 million while diluted earnings per share decreased from RMB0.93 to RMB0.56.  The full impact of the impairment charge on the Company's financial statements is set out in the attached statements.

About Qiao Xing Mobile Communication Co., Ltd.

Qiao Xing Mobile Communication Co., Ltd. is a domestic manufacturer of mobile handsets in China. The Company manufactures and sells mobile handsets based primarily on GSM, TD-SCDMA and WCDMA standards. It operates its business primarily through CEC Telecom Co., Ltd., or CECT, its 96.6%-owned subsidiary in China. In 2008, Qiao Xing Mobile introduced the VEVA series of mobile phones and began to open its own retail stores to target mid-income consumers in major cities throughout 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 generate higher profit margins. For more information, please visit http://www.qxmc.com/ .

        Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
             Unaudited Condensed Consolidated Balance Sheets
                          (Amounts in thousands)

                                                      December 31, 2008
                                                                 Previously
                                                   Revised       announced
                                                      RMB             RMB
  Assets
  Cash                                           2,907,148       2,907,148
  Restricted cash                                  136,299         136,299
  Accounts receivable, net                         462,282         462,282
  Bills receivable                                  43,516          43,516
  Inventories                                      183,169         183,169
  Prepayments to suppliers                         363,907         363,907
  Prepaid expenses and other current assets         38,996          38,996
  Deferred income taxes                              6,994           6,994
  Deferred debt issuance costs, net                 34,689          34,689
        Total current assets                     4,177,000       4,177,000

  Property, machinery and equipment, net           167,233         167,233
  Land use rights                                   35,304          35,304
  Equity investment                                  7,803           7,803
  Goodwill                                         112,814         112,814
  Other intangible assets, net                      22,766          49,001
        Total assets                             4,522,920       4,549,155

  Liabilities, minority interests
   and shareholders' equity

  Short-term borrowings                            983,950         983,950
  Accounts payable                                  52,047          52,047
  Prepayments from customers                        42,551          42,551
  Accrued liabilities                               50,014          50,014
  Amounts due to related parties                    11,155          11,155
  Other payables and current liabilities             7,227           7,227
  Income taxes payable                              38,462          38,462
  Embedded derivative liability                    124,130         124,130
  Convertible notes                                206,211         206,211
        Total current liabilities                1,515,747       1,515,747

  Deferred income taxes                                320           4,255
        Total liabilities                        1,516,067       1,520,002

  Minority interests                                92,065          92,065

  Shareholders' equity                           2,914,788       2,937,088

        Total liabilities,                       4,522,920       4,549,155
         minority interests and
         shareholders' equity



        Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
        Unaudited Condensed Consolidated Statements of Operations
         (Amounts in thousands, except share and per share data)

                                     Year ended          Three months ended
                                 December 31, 2008       December 31, 2008
                                         Previously              Previously
                               Revised   announced     Revised   announced
                                  RMB         RMB         RMB         RMB

  Revenues                   2,153,873   2,153,873     557,847     557,847
  Cost of goods sold        (1,287,096) (1,287,096)   (336,749)   (336,749)
  Gross profit                 866,777     866,777     221,098     221,098
  Selling and distribution
   expenses                   (146,551)   (146,551)    (35,388)    (35,388)
  General and administrative
   expenses                    (44,231)    (44,231)     (8,838)     (8,838)
  Research and development
   expenses                    (29,242)    (29,242)     (8,545)     (8,545)
  Amortization of intangible
   assets                      (11,727)    (11,727)     (1,190)     (1,190)
  Impairment of intangible
   assets                      (26,235)         --     (26,235)         --
  Operating income             608,791     635,026     140,902     167,137
  Interest income               24,405      24,405       4,658       4,658
  Interest expense            (165,506)   (165,506)    (65,783)    (65,783)
  Foreign exchange gain
   (loss), net                  (5,142)     (5,142)      1,700       1,700
  Gain (loss) on
   remeasurement of
   embedded derivatives        144,939     144,939      (7,774)     (7,774)
  Loss on extinguishment of
   convertible debts           (10,634)    (10,634)         --          --
  Other income (loss), net      (1,431)     (1,431)      1,642       1,642
  Income before income tax
   expense, minority
   interests and
   extraordinary item          595,422     621,657      75,345     101,580
  Income tax expense          (155,717)   (159,652)    (37,395)    (41,330)
  Income before minority
   interests and
   extraordinary item          439,705     462,005      37,950      60,250
  Minority interests           (15,901)    (15,901)     (3,901)     (3,901)
  Income before
   extraordinary item          423,804     446,104      34,049      56,349
  Extraordinary item - gain
   on acquisition
   of additional equity
   interest in CECT                 --          --          --          --
  Net income                   423,804     446,104      34,049      56,349

  Earnings per share:
  - Basic                         7.52        7.91        0.56        0.93
  - Diluted                       6.99        7.38        0.56        0.93

  Weighted average number of
   shares outstanding:
  - Basic                   49,216,000  49,216,000  47,610,000  47,610,000
  - Diluted                 56,386,000  56,386,000  47,610,000  47,610,000



  For further information, contact:

   Ms. Shi Heng
   Qiao Xing Mobile Communication Co., Ltd.
   Tel:   [phone]
   Email: 

DATASOURCE: Qiao Xing Mobile Communication Co., Ltd.



CONTACT:  Ms. Shi Heng of Qiao Xing Mobile Communication Co., Ltd.,

[phone], or 



Web site:  http://www.qxmc.com/ 

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