UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-147086-01
TONGXIN INTERNATIONAL LTD.
_____________________________________________________________________
(Translation of Registrant's Name into English)
199 Pierce Street,Suite 202
Birmingham, Michigan 48009
_____________________________________________________________________
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
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): ____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper
of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
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): ____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper
of a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the
laws of the jurisdiction in which the registrant is incorporated, domiciled
or legally organized (the registrant's "home country"), or under the rules
of the home country exchange on which the registrant's securities are
traded, as long as the report or other document is not a press release, is
not required to be and has not been distributed to the registrant's
security holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information
contained in this Form 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]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
This form 6-K consists of the following exhibits attached hereto:
1. Press release dated August 10, 2009, relating to Tongxin
International Ltd. Filed August 10, 2009 for the second quarter
financial results Ended June 30, 2009.
- -------------------------------------------------------------------------
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.
TONGXIN INTERNATIONAL LTD.
----------------------------------
(Registrant)
By: /s/ Rudy Wilson
-----------------------------
Name: Rudy Wilson
Title: Chairman of the Board
and Chief Executive Officer
/s/ Jackie Chang
-----------------------------
Name: Jackie Chang
Title: Chief Financial and
Accounting Officer
Date: August 110, 2009
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EXHIBIT
Exhibit Number Description
1. Press release dated August 10, 2009, relating to Tongxin
International Ltd. Filed August 10, 2009 for the second quarter
financial results Ended June 30, 2009.
=========================================================================
Tongxin International, Ltd. Reports Second Quarter 2009 Financial Results
CHANGSHA, China, August 10, 2009 /Xinhua-PRNewswire-FirstCall/ -- Tongxin
International Ltd. (NASDAQ: TXIC - News), a China-based manufacturer of
engineered vehicle body structures ("EVBS" or "truck cabs") and stamped
parts for the commercial automotive industry, today announced the Company's
second quarter 2009 financial results.
- - Q2 2009 revenues increased 50.2% to $34.8 million vs. Q2 2008.
- - Second quarter revenues grew 18.2% sequentially over Q1 2009
- - Q2 2009 net income increased 80.4% to $4.4 million vs. Q2 2008 and 7.9%
higher compared to Q1 2009.
- - Earnings per share based on 11.3 million basic shares outstanding were
$0.39 and $0.34 per weighted diluted shares
- - Company provides revised guidance of $120.0 million in revenues and
$14.7 million in net income for the 2009 calendar year.
Second Quarter Financial Results
Net revenues for the second quarter ended June 30, 2009 reached $34.8 million,
an approximate $11.7 million, or 50.2 % increase, over the same period the
prior year. Significant quarter-over-quarter sales increases were directly
attributed to increased sales to existing customers, new contracts the
continued recovery of the manufacturing sector after factory quotas and
shutdowns were ordered by Beijing in April, May and June 2008 in preparation
for the Summer Olympics. In the four identifiable truck segments; "Mini",
"Light", "Medium" and "Heavy", Tongxin built and shipped the majority
of their truck cabs to Mini and Light duty truck manufacturers in China. The
Company also reported their customer base is taking an increasing number of
"complete cabs" with interiors and instrumentation installed in each truck
cab. For the 3-month period ended June 30, 2009, complete truck cabs
accounted for 24% of revenues compared to 10% in 2008. Complete truck
cabs are Tongxin's highest revenue goods and have increased the average
selling price per unit.
Tongxin also reported sequential sales growth of 18.2% over the first quarter
of 2009. Driving this sales growth were shipments to the Company's more than
130 commercial vehicle manufacturers in China. Tongxin secured additional
sales orders from manufacturers who view outsourcing of cab-manufacturing as
a method to reduce overhead and manufacturing costs in a competitive
environment.
"The financial crisis has taken its toll on some of the manufacturers in our
customer base, but it has also impacted competitors in the sector," began
Vice-Chairman Duanxiang Zhang of Hunan Tongxin. "Signs of recovery are
vident by our growth year to date and we have benefitted by picking up
business from smaller competitors who were ill equipped financially to
navigate the downturn and unconfirmed reports have disclosed shut downs
of many smaller operations. Our sales team has been able to capitalize
on this event and our plants have responded quickly to shipment date
requirements to secure new business from both existing and new customers."
Cost of goods sold were $27.0 million in the second quarter 2009. 80% of
Tongxin's costs are cold rolled steel. The balance of costs are components,
paint and interiors used in the manufacturing process and labor cost.
Corresponding gross profits for the second quarter were $7.9 million compared
to $4.7 million in the second quarter of 2008. Gross margins increased 237
basis points to 22.6% in 2009 from 20.2% for the prior quarter ended June 30,
2008. A decline in gross margins from the first quarter 2009 was due to
the Company's efforts in securing current sales orders by installing less
costly and lower margin accessories into finished cabs. The goal of this
strategy is to win sales orders for new models and to stabilize the factory
work force in anticipation of a full market recovery.
Total operating expenses for the second quarter of 2009 were $1.2 million
versus $0.9 million for the same period in 2008. Included in the second
quarter operating expenses were approximately $0.6 million costs reflecting
added accounting expenses, ERP system implementation and SOX compliance costs.
Operating expenses were 3.3% compared with 4.0% for the same period, 2008.
Operating income and operating margins for the quarter were $6.7 million and
19.3%, respectively, versus $ 3.8 million and 16.2 % in 2008.
Net income was $4.4 million, representing an increase of 80.4% from $2.6
million reported in the same period prior year. Net profit margins were
12.7% for the quarter which is a 200-basis point improvement in net margins
from 10.6% reported the second quarter of 2008. Earnings per share for the
quarter were $0.39 based on 11.3 million basic shares outstanding.
"We have been pleased with the rebound in our business for this quarter and
the improving trends in key operating metrics we have witnessed compared to
2008," opened Jackie Chang, CFO of Tongxin International. "Although margins
came down a bit in the second quarter of 2009 compared to the first quarter,
we made a decision on pricing to gain market share and position us for
further growth. We negotiated a contract for steel, our largest cost
component, which effectively locks us in on current prices for the remainder
of 2009, which we believe serves as a good hedge against rising prices in
the face of improving economic activity," Chang concluded.
Six-Months Ended June, 30, 2009
According to the June 2009 China Business Update - AutoStatistics ("CBU"), a
total of 5,996,914 vehicles were sold in China (excluding exports) during the
six month period ended June 30, 2009. A breakdown in the volume is below;
- - 3.2 million passenger cars, a 22.51% increase from a year ago
- - 1.32 million Multi Purpose Vehicles (MPV), Sport Utility vehicles (SUV)
and Mini Vans (MV), a 35.36% increase from a year
- - 1.56 million commercial vehicles, a 0.53% decrease from a year ago
For the first six months ended June 30, 2009 total revenues were $64.4 million
representing an increase of 20.4% over the same period in 2008. Tongxin's
increase in revenues outperformed the overall market during the first half of
2009 and is attributed to the securing of 17 new manufacturing contracts
earlier in the year. The growth for the first half of the year is also
qualified in the Company's increase of "complete" or "finished" cabs, (the
highest priced category of cabs it sells throughout their customer base) and
the first wave of export orders from its customer base in Vietnam. Exports
to Vietnam were $7.8 million for the first six months of 2009, a 21.1%
decrease compared to the same period in 2008. Since both the cabs and chassis
are shipped to Vietnam, Tongxin credits the decrease to timing of components
availability from other suppliers and not a loss of its customer volume.
Tongxin anticipates the 2009 full year export volume to remain as strong as
2008. According to the Vietnamese Automotive Manufacturing Association,
Vietnam sold 22,000 commercial vehicles in the six-month period ended
June 30, 2009 versus 43,000 in the same period in 2008. Excluding exports
from Tongxin's revenues, the Company reported an increase in domestic revenues
of 30.1% for the first six months of 2009.
Earnings before interest and taxes were $12.8 million versus $9.3 million and
19.8% for the six months ended June 30, 2009 versus 17.3% in 2008. Tongxin
pays the standard Chinese corporate tax rate of 25% however the Company has
applied for a designation as a High-Tech Enterprise and a reduction to 15% for
its income tax rate. This application is still in the process of review and if
approved, would be retroactive to the first of the year for three consecutive
years.
Net income for the six-month period ended June 30th, 2009 increased 41.7% to
$8.5 from $6.0 in the first six months of 2008. Earnings per share were $0.75
versus $0.54 for the six month period, respectively, a 41% increase.
"We believe that the first half of 2009 gives a strong representation of our
capabilities as a valued added supplier to the market", stated CEO and
Chairman,Rudy Wilson of Tongxin International. "As domestic demand and the
effects of the stimulus packages including the latest subsidy program
announced on July 15 to spur commercial vehicles sales continue to work their
way through the economy plus a noticeable return of export orders, we,
anticipate a succession of strong quarters for Tongxin and continued demand
for EVBS in 2009." Wilson concluded.
Balance Sheet and Cash Flow Discussion
As of June 30, 2009, Tongxin International had approximately $10.4 million in
cash and cash equivalents compared to $11.3 million on December 31st, 2008 .
The Company maintained a current ratio of 1.51x and $24.6 million in accounts
receivable on June 30, 2009. Corresponding days sales outstanding ("DSO")
were 83 days. Stockholders' equity was $90.6 million on June 30, 2009 from
$ 79.8 million for December 31, 2008, an increase of $10.8 million as result
of 2009 net profit of $8.5 million and exchange rate impact of $2.3 million.
Cash flow from operations was $6.3 million mainly due to net profit of $8.5m.
Revised 2009 Guidance
Based upon continued strong growth in the Chinese domestic market and
anticipated improvement in exports to Vietnam, the Company is revising
earnings guidance and providing revenue guidance for 2009. Revenues are
estimated to be $120.0 million for the calendar year, 2009. Net income
is forecasted to increase to $14.7 million, an 18.5% increase from
previously issued guidance. Earnings per basic share outstanding are
forecasted to be $1.30 compared to previous guidance of $1.10 based on
11.3 million shares. As of June 30, 2009 the company had 12.9 million
diluted shares outstanding (based upon the Treasury Method).
The variance in basic and diluted shares is derived from the treasury
calculation for warrants. The Company has approximately five million
warrants outstanding with strike price of $5.00 and callable at $10.00.
At the Company's option, and in the event the selling price of the
Company's common shares trades at an average price of $10.00 or more
for twenty days out of a thirty day selling period, it may redeem
warrants on "an all-or-none" basis. If the warrants are redeemed the
Company would recognize gross proceeds of approximately $25 million.
Company Announcements
Tongxin is planning a number of events in the coming months.
September 9-11, 2009 - Rodman&Renshaw Investor Conference, NYC
September 18, 2009 - NASDAQ Bell Ringing and Ceremony and
Non Deal East Coast Road Show
September 29, 2009 - Maxim Group Investor Conference, NYC and
Non-Deal Road Show
Q2 2009 Earnings Conference Call
To attend the call, please use the dial information below. When prompted,
ask for the "Tongxin International Conference Call" and/or be prepared to
provide the conference ID. Details of the conference call are noted below:
Date: August, 11th 2009
Time: 11:00am ET
Conference Line Dial-In (U.S.): 1-877-941-8610
International Dial-In: +1-480-629-9031
Conference ID: 4135987
Webcast link: http://viavid.net/dce.aspx?sid=000068B7
Please dial in at least 10-minutes before the call to ensure timely
participation. A playback will be available through August 18th, 2009.
To listen, please call 1-800-406-7325 within the United States or
+1-303-590-3030 when calling internationally. Utilize the pass code 4135987
for the replay.
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 maintains a network of 130 customers throughout 20 provinces in China.
Headquartered in Changsha, Tongxin also maintains regional manufacturing in
Dali, Ziyang and Zhucheng.
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's
most recent report to the SEC on Form 6-K, 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 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.
For more information, please contact:
COMPANY:
Mr. Rudy Wilson, CEO
Tel: 248-593-8330
Email:rudy@txicint.com
Ms. Jackie Chang, CFO
Tel: 626-660-7117
China:+86-13467553808
Email:jackie@txicint.com
Web: www.txicint.com
INVESTOR RELATIONS:
John Mattio, SVP
HC International, Inc.
Tel: +1-914-669-5340 (U.S.)
Email:john.mattio@hcinternational.net
Web: www.hcinternational.net
==================================================================
CONSOLIDATED BALANCE SHEETS
As of June 30, 2009 and 2008 and December 31, 2008
(US$ amounts expressed in thousands, except for share data and earnings per share)
June 30,2009 June 30,2008 December 31,2008
---------------- ---------------- -------------------
(unaudited) (Unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 10,374 $ 15,966 $ 11,313
Restricted cash-Security deposit 3,812 - 5,836
Accounts receivable - Trade, net of
allowance 24,613 20,248 13,153
Other receivable - net of allowance
for doubtful accounts 1,270 2,476 1,600
Due from related party - 9,855 17,313
Notes receivable 4,523 4,937 -
Inventories 16,808 18,225 19,096
Investment in marketable securities 147 73 146
Prepaid expenses 3,779 7,644 4,197
Deferred tax assets 1,947 1,674 2,067
--------------- -------------- --------------
Total current assets 67,273 81,098 74,721
--------------- -------------- --------------
Investments in non-consolidated
subsidiaries and affiliates 473 907 208
Property,plant and equipment, net of
depreciation 38,373 31,167 36,918
Land occupancy rights 11,011 2,028 9,633
HNTX internal receivable 41 - -
Deferred income tax 879 - -
Goodwill 19,296 - 36,696
--------------- -------------- --------------
Total assets 137,346 115,200 158,176
--------------- -------------- --------------
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable 13,926 18,677 21,037
Accrued expenses and other liabilities 1,670 11,602 7,393
Income taxes payable 3,422 17,975 17,418
Short-term loans 24,965 18,976 16,669
Short-term loans from shareholders - 2,463 8,591
Derivative liabilities 452 - 452
--------------- -------------- --------------
Totoal current liabilities 44,435 69,693 71,560
Long-term Liabilities:
Long-term loans - 2,736 4,523
Long-term loans from shareholders - 10,476 -
Deferred tax liability 2,256 - 2,243
Other - 24 25
--------------- -------------- -------------
Total liabilities 46,691 82,929 78,351
Shareholders' equity:
Common stock - $0.001 par value,
authorized, 39,000,000 shares;
issued 12,889,758 shares and
outstanding 11,300,336 shares 13 8,762 13
Reserve funds - 13,059 -
Additional paid-in capital 77,081 - 77,081
Treasury stock, 1,589,422 shares (7,682) - (7,682)
Accumulated other comprehensive income 426 2,421
Retained earnings 20,817 8,077 9,987
--------------- -------------- -------------
Total shareholders' equity 90,655 32,271 79,825
--------------- -------------- -------------
Total liabilities and shareholders' equity 137,346 115,200 158,176
--------------- -------------- -------------
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CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months April 1st through June 30, 2009 and 2008
and six months January 1st through June 30, 2009 and 2008
(US$ amounts expressed in thousands, except for share data and earnings per share)
Three months ended June 30, Six months ended June 30,
-------------------------- ------------------------
2009 2008 2009 2008
------------ ------------ ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $ 34,862 $ 23,198 $ 64,361 $ 53,479
Cost of Goods Sold (26,994) (18,511) (48,065) (41,245)
Gross Profit 7,868 4,687 16,296 12,234
Operating expenses:
Selling and (1,442) (926) (4,107) (2,983)
General and administrative
Other income, net 302 0 572 0
Interest expense (585) (615) (1,101) (1,230)
Income before income taxes 6,143 3,146 11,660 8,021
Income tax expense (1,720) (694) (3,138) (1,977)
------------ ------------ ---------- ----------
Net Income 4,423 2,452 8,522 6,044
Other comprehensive income 0 0 0 0
------------ ------------ ---------- ----------
Comprehensive income 4,423 2,452 8,522 6,044
Net Income per share-basic 0.39 0.22 0.75 0.54
Net Income per share-diluted 0.34 0.19 0.66 0.47
Weighted average shares outstanding 11,294,633 11,294,633 11,294,633 11,294,633
Weighted average shares outstanding-diluted 12,925,932 12,925,932 12,925,932 12,925,932
===================================================================
Consolidated Statements of Cash Flows
For the six months ended June 30, 2009 and twelve months ended December 31, 2008
(US$ amounts expressed in thousands)
Six Months Ended
June 30, 2009 December 31, 2008
------------------ -----------------
(unaudited) (audited)
Cash flows from operating activities:
Net income $ 8,522 $ 20,486
Adjustments to reconcile net income
to net cash provided by operating
activities:
Reversal of bad debt allowance - (944)
Depreciation expense 733 2,828
Amortization expense - 54
Unrealized gain on warrant - (13,535)
Changes in operating assets and liabilities:
(Increase)/decrease in inventories 2,288 (5,112)
(Increase)/decrease in trade accounts /
notes receivable (15,983) 11,453
(Increase)/decrease in Due from related
party 17,313 (1,724)
(Increase)/decrease of prepaid expenses
and other current assets 2,441 (1,275)
(Increase)/decrease in deferred tax assets 120 192
(Increase)/decrease in other receivable 330 2
Increase/(decrease)in accounts payable (7,111) 967
Increase/(decrease)of accrued expenses,
and other liabilities (2,306) (943)
------------- --------------
Net cash provided by operating activities 6,347 12,449
------------- --------------
Cash flows from investing activities:
Acquisition of Hunan Tongxin Enterprise
Co., Ltd., net of cash acquired of
$5,319 - (7,700)
Cash paid for purchase of fixed assets
and intangible assets (3,566) (9,493)
Cash paid for investment (265) (75)
------------- -------------
Net cash used in investing activities (3,831) (17,268)
------------- -------------
Cash folws from financing activities:
Proceeds from loans 3,773 23,649
Proceeds from loans-related parties (8,591) 9,894
Debt repayments (25) (23,444)
Debt repayments-related parties - (16,425)
------------- -------------
Net cash (used in) provided by financing
activities (4,843) (6,326)
------------- -------------
Effect of foreign exchange rate changes 1,388 199
Net increase(decrease)in cash and cash
equivalents (939) 9,651
Cash and cash equivalents at beginning of
year 11,313 1,662
Cash and cash equivalents at end of year 10,374 11,313
Supplemental information:
Income taxes paid 3,138 2,843
Interest paid 1,102 2,702
=======================================================================