Zoom Technologies Reports Record Fourth Quarter 2010 Revenue and Net Income

Marketwired

BEIJING--(Marketwire - 03/29/11) - Zoom Technologies, Inc. (NASDAQ:ZOOM - News)

 
Fourth Quarter 2010 Highlights:
-- Revenue increased 67% over same quarter last year to $86.6 million
-- Net income grew 169% over same quarter last year to $5.1 million

Full Year 2010 Highlights:
-- Revenue increased 34% over last year to $252.6 million
-- Net income grew 105% over last year to $12.8 million
-- Electronic Manufacturing Service (EMS) volume reached 9.7 million
units, compared to 8.5 million in 2009
-- Sold 708,000 proprietary Leimone brand phones, compared to 100,000
in 2009

First Quarter 2011 Guidance:
-- Revenue of $53.0 million, compared to $50.9 million for 1Q 2010
-- Net income of $1.98 million, compared to $1.9 million for 1Q 2010
-- Leimone brand phone sales of 158,000 units totaling $11.5 million

Full Year 2011 Guidance:
-- Revenue of $320 and $340 million, up 27%-35% from 2010
-- Net income of $16 million to $17 million, up 25%-33% from 2010
-- EMS volume growth to 13 million units
-- Leimone brand phone sales of 1.4 million units
Zoom Technologies, Inc. (NASDAQ:ZOOM - News) a leading China-based manufacturer of mobile phones and other mobile electronic products, today reported financial results for the fourth quarter and full year ended December 31, 2010.Mr. Lei Gu, Chairman and Chief Executive Officer of Zoom Technologies, commented, "We are once again extremely excited to report another record quarter of tremendous sequential and year-over-year revenue growth as well as dramatic full-year revenue growth. Our record fourth quarter results reflect both the overall robust mobile phone market in China as well as Zoom's successful execution of its strategic plan to position itself as a major player in this growth market. China's mobile phone user penetration rate continues to grow and we expect further expansion from the present 64% rate at the end of 2010. Our guidance for 2011 reinforces the confidence we feel in both the Chinese mobile market and Zoom's ability to leverage our superior engineering team and extensive supply chain network."For the fourth quarter of 2010, Zoom generated net revenue of $86.6 million, up 67% over $51.8 million for the fourth quarter 2009; and up 20% sequentially from $72.2 million in the third quarter of 2010.For the full year of 2010, Zoom reported revenue of $252.6 million, up 34% over $189.1 million for the full year 2009. The year over year revenue growth was primarily due to an increase in orders by our EMS customers and a tremendous increase in the sales of our Leimone brand phones.Mr. Gu continued, "We believe that the migration to nation-wide 3G usage in China is inevitable. Consumers continue to demand more video data, mobile web access and always connected applications and we will continue to focus our design and engineering efforts to provide the best mobile handsets on the market."For the fourth quarter of 2010, Zoom reported net income of $5.1 million, up 169% over $1.9 million for the fourth quarter 2009; and up 34% sequentially from $3.8 million in the third quarter of 2010. The increase was mainly due to large EMS orders and increased sales of our Leimone brand phones which carry a higher profit margin. Net income for the full year ended December 31, 2010 was $12.8 million compared to net income of $6.2 million for the full year 2009.Gross profit for the fourth quarter of 2010 was $12.5 million, up 380% from $2.6 million in the fourth quarter of 2009; up 91% sequentially from $6.5 million in the third quarter of 2010. Gross profit for the year 2010 was $27.7 million, up 143% from $11.4 million for 2009. Gross margin was 11% for 2010 up from 6% for 2009. Net margin was higher at 5% in 2010 as compared to 3% in 2009. The increase 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, "We are proud of the growth we have achieved in 2010 and excited about taking advantage of the foreseeable growth in China's mobile market and significantly increasing manufacturing capabilities going forward. In 2011, we expect to continue to fuel the rapidly expanding China mobile market by introducing 25 new models, including five 3G models, of our Leimone brand proprietary mobile phones. In addition, we continue to increase our manufacturing capacity and produce mobile products for top tier Chinese mobile phone companies."Looking ahead, Mr. Gu remarked, "For the first quarter ending March 31, 2011, we expect net revenue to be approximately $53.0 million and net income to be approximately $1.98 million. For the full year 2011, we maintain our previous guidance and expect net revenue to be between $320 and $340 million, and 2011 net income to be between$16 million to $17 million."Conference Call DetailsZoom will review the fourth quarter and full year 2010 results and discuss management's expectations for 2011 today, Tuesday, March 29, 2011 at 4:30 p.m. EDT (1:30 p.m. PDT). The dial-in numbers are +1-877-407-0789 for US domestic callers and +1-201-689-8562 for international callers. A telephonic replay of the call will be available through April 12, 2011. The replay dial-in numbers are +1-877-870-5176 for US domestic callers and +1-858-384-5517 for international callers. The conference ID number to access the replay is 369731.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. For information please visit us at www.zoom.comForward-Looking StatementsCertain 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 in which the outcome 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
----------------------------
2010 2009
------------- -------------

Net revenues $ 252,589,072 $ 189,055,742
Cost of goods sold (224,884,782) (177,653,678)
------------- -------------

Gross profit 27,704,290 11,402,064

Operating expenses:
Sales and marketing (466,493) (1,338,999)
General and administrative (4,450,741) (1,722,194)
Research and development expenses (3,251,209) -
Non-cash equity-based compensation (1,688,372) (44,480)
------------- -------------
Total operating expenses (9,856,815) (3,105,673)
------------- -------------

Income from operations 17,847,475 8,296,391

Other income (expenses)
Interest income 256,612 287,206
Gain/(Loss) on disposal of fixed assets 0 -
Government grant income 122,675 -
Other income 286,661 579,658
Interest expense (1,391,510) (1,327,744)
Exchange (loss) (34,411) (30,536)
Other expenses (245,873) (150,265)
------------- -------------
Total other income (expenses) (1,005,846) (641,681)
------------- -------------
Income before income taxes and
noncontrolling interest 16,841,629 7,654,710

Income tax expense (3,832,772) (1,231,180)
------------- -------------

Income before noncontrolling interest 13,008,857 6,423,530
Less: Income attributable to
noncontrolling interest (183,253) (180,383)
------------- -------------

Net income attributable to Zoom
Technologies, Inc. 12,825,604 6,243,147

Other comprehensive income Zoom
Technologies, Inc. 650,230 (32,852)
------------- -------------
Other comprehensive income noncontrolling
interest 103,203 -
------------- -------------

Comprehensive income Zoom Technologies, Inc. $ 13,475,834 $ 6,210,295
============= =============
Comprehensive income noncontrolling interest $ 286,456 $ 180,383
============= =============

Basic and diluted income per common share:
Basic $ 1.07 $ 1.22
Diluted $ 0.97 $ 1.22

Weighted average common shares outstanding:
Basic 12,035,589 5,110,340
============= =============
Diluted 13,210,181 5,131,563
============= =============






ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS



December 31, December 31,
2010 2009
------------- -------------
ASSETS
Current assets
Cash and cash equivalents $ 6,374,103 $ 1,472,300
Restricted cash 13,503,122 11,993,214
Accounts receivable, net 21,740,642 16,835,074
Inventories, net 1,955,458 1,534,989
Other receivables and prepaid expenses 432,205 311,808
Advance to suppliers 32,776,983 27,471,601
Notes receivable 746,922 -
Due from related parties 19,056,574 12,221,778
Deferred tax assets, net 103,419 504,222
------------- -------------
Total current assets 96,689,428 72,344,986

Property, plant and equipment, net 4,949,920 5,673,923
Research and development contracts in
progress 531,617 -
Construction in progress - 32,849
Construction in progress deposit - related
parties 9,790,700 -
Intangible assets 525,458 -
Goodwill 8,498,897 103,057
------------- -------------

TOTAL ASSETS $ 120,986,020 $ 78,154,815
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term loans $ 21,945,664 $ 16,000,702
Notes payable 25,318,370 23,986,427
Accounts payable 1,488,548 2,439,925
Accrued expenses and other payables 1,170,952 127,484
Advance from customers 301,014 51,243
Taxes payable 4,711,893 1,603,557
Interest payable 25,027 -
Dividends payable 599,338 579,579
Due to related parties 2,884,340 5,245,415
------------- -------------

Total current liabilities 58,445,146 50,034,332
------------- -------------

Long-term payables 580,000 -

TOTAL LIABILITIES 59,025,146 50,034,332
------------- -------------

COMMITMENTS - -

STOCKHOLDERS' EQUITY
Common stock: authorized 25,000,000
shares, par value $0.01
Issued 15,329,557 shares and
outstanding 15,273,892 shares; and
Issued 8,780,988 shares and
outstanding 8,779,308 shares at
December 31, 2010 and 2009
respectively 152,739 87,793
Shares to be issued 557 592
Subscription receivable (61,200) (378)
Deferred expenses (227,226) -
Additional paid-in capital 38,204,403 14,309,538
Treasury shares: 1,680 shares at cost (7,322) (7,322)
Statutory surplus reserve 682,528 633,378
Accumulated other comprehensive income 964,206 210,773
Retained earnings 19,030,933 6,254,479
------------- -------------

TOTAL STOCKHOLDERS' EQUITY 58,739,618 21,488,853
------------- -------------
Noncontrolling interest 3,221,256 6,631,630
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 120,986,020 $ 78,154,815
============= =============







ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS



Years Ended December 31
----------------------------
2010 2009
------------- -------------
Cash flows from operating activities:
Income including noncontrolling interest $ 13,008,857 $ 6,423,530
Adjustments to reconcile income to cash
including non-controlling interest provided
by (used in) operating activities:
Depreciation and amortization 1,626,501 1,569,686
Non-cash equity-based compensation 1,688,372 44,480
Provision for inventory obsolescence - (235,771)
Provision for doubtful receivables - 1,955
Loss on disposal of fixed assets 60,573 485.00
Provision for long-term investment - 65,781
Deferred tax assets 350,429 98,175
Changes in operating assets and liabilities:
Accounts receivable (3,111,813) (4,442,927)
Inventories (359,066) 2,422,307
Advances to suppliers 8,700,946 (3,191,156)
Prepaid expenses and other assets (187,436) 906,196
Accounts payable (1,019,655) (1,152,195)
Advance from customers 60,457 (3,741,596)
Related parties-net (12,309,184) (8,126,760)
Accrued expenses and other current
liabilities 2,546,076 (1,883,221)
------------- -------------
Net cash provided by (used in) operating
activities 11,055,057 (11,241,031)
------------- -------------

Cash flows from investing activities:
Restricted cash (1,073,912) (3,215,942)
Cash paid for long-term investments (500,000) -
Purchase of property and equipment and
other long-term assets (9,614,315) (244,426)
Proceeds from notes receivable (18,257) -
Cash increase due to acquisition of
subsidiaries 1,491,630 -
------------- -------------
Net cash used in investing activities (9,714,854) (3,460,368)
------------- -------------

Cash flows from financing activities:
Issuance of shares for cash 8,194,413 9,532,364
Proceeds from short-term loans 36,034,236 21,254,451
Advance to related parties (12,154,025) (10,580,810)
Repayment on borrowing from related
parties (23,643,764) (13,977,180)
Proceeds from (repayment on) notes payable 501,556 6,431,883
Collection on advance to related parties 4,709,255 12,780,855
Receipt from related parties 21,353,981 15,361,000
Repayments on short-term loans (31,465,282) (24,192,652)
Repayments on long-term loan - (1,169,433)
------------- -------------
Net cash provided by (used in) financing
activities 3,530,370 15,440,478
------------- -------------

Effect of exchange rate changes on cash &
cash equivalents 31,230 (79,548)

Net increase in cash and cash equivalents 4,901,803 659,531

Cash and cash equivalents, beginning balance 1,472,300 812,769
------------- -------------

Cash and cash equivalents, ending balance $ 6,374,103 $ 1,472,300
============= =============

Non-cash investing and financing activities
Acquisition of 28.97% of TCB by issuing
2,462,576 shares 4,348,247 -
Acquisition of 100% of Silver Tech by
issuing 1,342,599 shares 9,590,000 -
Acquisition of zoom.com domain name by
issuing 80,000 shares 349,600 -

SUPPLEMENTARY DISCLOSURES:

Interest paid $ 1,427,540 $ 1,221,979
============= =============

Income tax paid $ 92,255 $ 68,324
============= =============


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