EX-99.2 3 v215223_ex99-2.htm Unassociated Document
EXHIBIT 99.2
 
 
Tongxin International, Ltd.
 
Tongxin International Ltd. Reports Fiscal 2009 Year End Results
 
Revenues increased by 24% year-over-year to a record $121 million. Management will conduct
a conference call at 8:00 A.M. Eastern Time, Tuesday, March 22, 2011
 
CHANGSHA, China – March 21, 2011 – Tongxin International Ltd., (Pink Sheets: TXIC), a China-based manufacturer of engineered vehicle body structures (“EVBS”) and stamped parts for the commercial automotive industry, today reported its unaudited results for its fiscal 2009 year end.

The Company has been delayed in filing its 2009 Form 20-F due to the process of reviewing and obtaining adequate documentation to support and determine the appropriate accounting treatment of certain related-party transactions between the Company’s subsidiary, Hunan Tonxgin, and a related party, Changsha Meihua Vehicle Manufacture Co., Ltd. (“Meihua”). As previously disclosed, we have determined that there was sufficient evidence to reasonably conclude that the accounting treatment of such related party transactions have been recorded correctly.
 
For the fiscal year ended December 31, 2009, the Company reported revenue of $121 million, representing a 24% increase from $98.4 million in the comparable period of 2008.  The increase in revenue was principally from its sales of EVBS to Chinese customers in the automotive commercial vehicle market. During 2009, Hunan Tongxin captured nearly 12% of the total China market for cabs in the commercial vehicle segment. The sale of individual components accounted for 25% of total revenue; unpainted cabs accounted for 18% of total revenue and finished cabs with compete interiors accounted for 13% of total revenue.  The sale of dies and moulds to other fabricators accounted for remaining 2% of total 2009 revenue.

The Company also reported, however, a net loss of $(16.8 million) for the year ended December 31, 2009, compared to net income of $20.5 million for the consolidated results of the prior year period ended December 31, 2008.  The 2009 net loss was primarily due to loss recognized from the change in fair value of the warrant liability and warrant exercise expenses. An extension of the warrants through April 30, 2012 was approved by the Company’s Board of Directors, as previously announced on Wednesday, March 9, 2011.

Cash and cash equivalents as of December 31, 2009 were $16.5 million compared to $11.3 million as of December 31, 2008.

Excluding the loss/gain recognized on the change in fair value of the warrant liability, and warrant exercise expenses, net income would have been $4.1 million in 2009 compared to $6.9 million in 2008, a decrease of $2.8 million.  The decrease in net income is due to the increase in SG&A expenses mainly from higher selling expenses, finance personnel and professional fees related to SOX/ERP projects.

William E. Zielke, Chief Executive Officer and Chief Administrative Officer of the Company, commented, “While we have made considerable efforts in the past year to strengthen our internal operations, we have also made considerable progress building our market position to become what we believe to  be the largest independent Chinese supplier of commercial EVBS. The Hunan Tongxin brand is well established and recognized for its high quality and reliable products, and we enjoy both brand name and trademark protection in the PRC.”

 
 
 
 
Mr. Zielke continued, “Our new management team intends to vigorously maintain our market leadership, even as we anticipate lower revenues for 2010. In 2009, we increased the number of our product programs and we intend to expand further the diversity of our products, while curbing our costs and expenses. Going forward, we are targeting the North American and European collision-parts after-markets, leveraging the cost advantages of our high quality components versus those of other international OEM suppliers.”

Conference Call Information

Management will conduct a conference call at 8:00 A.M. Eastern Time, on Tuesday, March 22, 2011. William E. Zielke, CEO of Tongxin International Ltd., will present opening remarks and Thomas Chang, VP of Finance will review the 2009 fiscal year end results.  Management will take questions from the audience at the end of the call. Domestic participants may dial (888) 567-1602 and international participants may dial (201) 604-5049 or toll free (800) 4747-4646 to listen to the live broadcast. Additionally, a live webcast will be available at http://www.visualwebcaster.com/event.asp?id=77626 Persons unable to participate in the live session may listen to a recording of the conference call, by dialing (888) 632-8973 domestically and (201) 499-0429 internationally. The code for playback is (82870613) followed by the # sign.

About Tongxin International Ltd.

Tongxin International Ltd., the largest independent supplier of EVBS in China, is capable of providing EVBS for both the commercial truck and light vehicle market segments. The Company also designs, fabricates and tests dies used in the vehicle body structure manufacturing process. EVBS consists of exterior body panels including doors, floor pans, hoods, side panels and fenders. Tongxin International Ltd. maintains a network of over 130 customers throughout 20 provinces in China and exports to Viet Nam. Headquartered in Changsha, the Company also maintains regional manufacturing in Dali, Ziyang and Zhucheng.  www.txicint.com

Forward- Looking Statements
 
Statements contained in this press release, which are not historical fact, constitute Forward-Looking Statements. Actual results may differ materially due to numerous important factors that are described in Tongxin International Ltd.'s reports to the SEC, which may be revised or supplemented in subsequent reports to the SEC. Such factors include, among others, the cost and timing of implementing restructuring actions, the Company's ability to generate cost savings or manufacturing efficiencies to offset or exceed contractually or competitively required price reductions or price reductions to obtain new business, conditions in the automotive industry, and certain global and regional economic conditions. Tongxin International Ltd. does not intend or assume any obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release.

Investor Relations Contact:
Stanley Wunderlich
Consulting For Strategic Growth 1, Ltd.
Tel: 1-800-625-2236 ext. 7770
Email: info@cfsg1.com
Website: www.cfsg1.com

 
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TONGXIN INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
(amounts are expressed in thousands, except for share data and par value, and in U.S. $)
 
   
December 31
  
   
2009
(unadutied)
    
2008
  
ASSETS
                
Current assets:
                
Cash and cash equivalents
  
$
16,493
    
$
11,313
  
Restricted cash - security deposit
    
4,692
      
5,836
  
Notes receivable
    
5,769
      
2,939
  
Accounts receivable-trade, net of allowance for doubtful accounts of $2,957 and $3,856 respectively
    
10,204
      
10,214
  
Other receivable, net of allowance for doubtful accounts of $406 and $407, respectively
    
2,076
      
1,600
  
Due (to) from related parties, net of valuation allowance of $3,391 in 2009
    
(1,346
)
    
17,313
  
Inventories
    
25,070
      
19,096
  
Prepaid expenses and other
    
421
      
1,331
  
Advance to suppliers
    
1,960
      
3,012
  
Deferred income tax assets
    
2,211
      
2,067
  
Total current assets
  
$
67,549
    
$
74,721
  
Investments in non-consolidated subsidiaries and affiliates
    
209
      
208
  
Property, plant and equipment, net of accumulated depreciation of $5,709 and $1,927, respectively
    
46,894
      
36,918
  
Land occupancy rights, net
    
13,194
      
9,633
  
Goodwill
    
36,880
      
36,696
  
Total assets
  
$
164,727
    
$
158,176
  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
  
$
14,328
    
$
15,201
  
Notes payable
    
4,692
      
5,836
  
Accrued expenses and other liabilities
    
6,867
      
7,393
  
Income taxes payable
    
17,257
      
17,418
  
Short-term loans payable
    
24,876
      
16,669
  
Short-term loans from shareholders
    
-
      
8,591
  
Warrant liability
    
11,649
      
452
  
Total current liabilities
  
$
79,669
    
$
71,560
  
Long-term liabilities:
                
Long-term loans payable
    
-
      
4,523
  
Deferred income tax liability
    
1,283
      
2,243
  
Other
    
-
      
25
  
Total liabilities
  
$
80,952
    
$
78,351
  
                 
Commitments and contingencies
                
                 
Shareholders’ equity:
                
Preferred stock - $0.001 par value, authorized 1,000,000 shares; none issued
                
Common stock - $0.001 par value, authorized 39,000,000 shares; 15,044,875 and 12,889,758 shares issued and  13,455,453 and 11,300,336 shares outstanding in 2009 and 2008, respectively
  
$
15
    
$ 
13
  
Additional paid-in-capital
    
97,420
      
77,081
  
Treasury stock, at cost - 1,589,422 common shares
    
(7,682
)
    
(7,682
) 
Accumulated other comprehensive income
    
790
      
426
  
Retained earnings (deficit)
    
(6,769
) 
    
9,987
  
Total shareholders’ equity
  
$
83,774
    
$
79,825
  
Total liabilities and shareholders’ equity
  
$
164,727
    
$
158,176
  

 
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TONGXIN INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(amounts are expressed in thousands, except for share data and earnings per share, and in U.S. $)
 
    Successor Company    
Predecessor Company
  
         
For the Eight-Month
    
For the Four-Month
        
   
Year Ended
    
Period From
    
Period From
    
Year Ended
  
   
December 31,
    
May 1, 2008 to
    
January 1, 2008
    
December 31,
  
   
2009
(unaudited)
    
December 31, 2008
    
to April 30, 2008
    
2007
  
Revenues
   $ 121,071     $ 55,770     $ 42,588     $ 89,873  
                                 
Cost of goods sold
     105,421       47,207       36,310       69,865  
                                 
Gross profit
     15,650       8,563       6,278       20,008  
                                 
Selling, general and administrative expenses
     10,192       5,248       1,793       5,372  
Operating income
     5,458       3,315       4,485       14,636  
                                 
Other income (expenses):
                                
Gain on extinguishment of liability
     -       -       4,034       -  
Government subsidy income
     1,173       469       212       -  
(Loss) gain on warrants
     (20,806 )      13,535       -       -  
Equity earnings from equity investee
     -       -       -       19  
Other
     15       (90 )      71       -  
Interest expense
     (1,753 )      (1,095 )      (1,607 )      (1,723 ) 
Total other income (expenses)
     (21,372 )      12,819       2,710       1,704  
                                 
Income (loss) before income taxes
     (15,914 )      16,134       7,195       12,932  
                                 
Income taxes expense
     842       627       2,216       3,853  
                                 
Net (loss) income
   $ (16,756 )   $ 15,507     $ 4,979     $ 9,079  
                                 
Other comprehensive income - foreign translation adjustment
   $ 364     $ 426     $ 721     $ 940  
Comprehensive (loss) income
   $ (16,392 )   $ 15,933     $ 5,700     $ 10,019  
                                 
Earnings (loss) per common share-basic
   $ (1.38 )   $ 1.37       0.07     $ 0.13  
Earnings (loss) per common share-diluted
   $ (1.38 )   $ 1.37       0.07     $ 0.13  
Weighted average shares outstanding - basic
     11,846,273       11,294,633       72,521,705       72,521,705  
Weighted average shares outstanding – diluted
     11,846,273       11,294,633       72,521,705       72,521,705  
 
 
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