Jingwei Reports Fourth Quarter and Record Full Year 2010 Results

News provided by

Jingwei International Limited

Mar 31, 2011, 07:00 ET

SHENZHEN, China, March 31, 2011 /PRNewswire-Asia-FirstCall/ -- Jingwei International Limited (Nasdaq: JNGW), or Jingwei, a leading provider of data mining, interactive marketing and software services in China, today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2010.

Fourth Quarter 2010 Financial Results

Net revenue for the fourth quarter of 2010 increased 4% to $14.0 million, as compared to $13.5 million in the same quarter last year.  The moderate increase was attributed to a continued strong growth of the software service segment, while revenues from the data mining segment trailed the results in the same quarter in 2009. Gross profit increased 24% to $6.1 million in the fourth quarter of 2010, as compared to $4.9 million in the previous year. Gross margin was 44%, as compared to 37% in the same quarter last year. Net income increased 16% to $3.7 million from $3.2 million. Diluted earnings per share increased 6% to $0.18 in the fourth quarter of 2010 from $0.17 in the same quarter in 2009.

Key financial results for the fourth quarter of 2010 versus the fourth quarter of 2009 are summarized as follows:


2010

2009


(in millions)







Data Mining
Services

Software
Services

Total

Data Mining
Services

Software
Services

Total

Net Revenue

$

5.1

$

8.9

$

14.0

$

9.2

$

4.3

$

13.5

Gross Profit

2.4

3.7

6.1

2.8

2.1

4.9

Gross Margin

47%

42%

44%

30%

51%

37%

Net Income




3.7




3.2

Net Profit Margin




26%




24%

Diluted Earnings per Share



$

0.18



$

0.17

Full Year 2010 Financial Results

Net revenue increased 24% year over year to $37.6 million in 2010 from $30.3 million in 2009, primarily driven by continuous robust demand for our software and system integration solutions in the telecommunications and power sectors, offset by a small decline in revenues from the data mining segment. Gross profit increased 61% to $18.1 million in 2010 from $11.3 million in 2009. Gross margin was 48% in 2010, as compared with 38% in 2009. Net income increased 66% year over year to $9.9 million in 2010 from $6.0 million in the previous year. Diluted earnings per share increased 54% to $0.52 in 2010 from $0.34 in 2009.

Key financial results for 2010 versus 2009 are summarized as follows:


2010

2009


(in millions)







Data Mining
Services

Software
Services

Total

Data Mining
Services

Software
Services

Total

Net Revenue

$

17.9

$

19.7

$

37.6

$

19.5

$

10.8

$

30.3

Gross Profit

7.3

10.8

18.1

7.0

4.3

11.3

Gross Margin

41%

55%

48%

36%

40%

37%

Net Income




9.9




6.0

Net Profit Margin




26%




20%

Diluted Earnings per Share



$

0.52



$

0.34














Rick Luk, Chief Executive Officer of Jingwei stated, "I am happy to report that we had another good quarter in the fourth quarter of 2010, which added a nice finishing touch to the best ever year for the Company in terms of revenue and net income performance. We have not only met our aggressive revenue projection, to finish the year at $37.6 million, but also beaten our revised net income guidance of $9.8 million to reach a record $9.9 million, an increase of 66% compared to $6.0 million in 2009. In addition, we have significantly improved gross and net profit margin due to better product mix, higher operating efficiencies and preferential income tax treatment in 2010. In the quarter, we completed the acquisition of a 100% equity interest in Shanghai Haicom Limited, a provider of internet and mobile value added service platforms to telecom carriers in more than 10 provinces.  This acquisition significantly broadened our mobile VAS portfolio, and extended our reach to a dozen of strategically important regional subsidiaries of China Unicom and China Telecom."

"Looking ahead, we expect the strong growth of 3G user base, 3G related value-added services and mobile internet marketing should continue to drive our business", said Rick Luk. "In these areas, we will keep a sharp focus to leverage our assets and core competences to design, build and operate enhanced mobile value-added service platforms for the regional mobile operators to strengthen our recurring revenue stream to grow our business.  In Software Services, apart from 3G opportunities, we will continue to capitalize on the business opportunity brought on by the 3-Network Convergence program, and expect to see robust demand for our solutions in both the telecom and cable TV sectors as well as for other countries outside China.

BUSINESS OUTLOOK

The Company confirmed that for fiscal 2011, it is forecasting to achieve total revenue of between $45.2 million and $49.2 million, net income of between $11.8 million and $13.0 million, and dilutive earnings per basic share of between $0.58 and $0.64 assuming 20.4 million weighted average common shares outstanding on a dilutive basis.

The range of anticipated revenues takes into account both organic growth and the possibility of acquisition related growth within the context of current economic conditions.

About Jingwei International

Jingwei International Limited ("Jingwei" or the "Company") is a leading provider of data mining, interactive marketing and software services in China. By leveraging its proprietary database of over 400 million consumer profiles, Jingwei helps companies to more effectively reach their target audiences. To capitalize on China's rapid growth in mobile, Internet and e-Commerce applications, Jingwei has focused on enhanced data mining offerings that encompass interactive marketing, bundled mobility solutions and mobile value added services.  The Company's software services include business intelligence ("BI"), billing and operations support ("BSS/OSS"), and customer relationship management ("CRM") solutions for Chinese telecom operators and power companies. For more information, please visit the Company's web site: http://www.jingweicom.com.

Safe Harbor Statement

Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding our future plans, objectives or performance. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with effects of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.

-Financial Tables Follow-

Jingwei International Limited and Subsidiaries

Consolidated Balance Sheets

(in US dollars thousands, except share and par value)

December 31,


2010

2009

ASSETS


Current assets


Cash and cash equivalents

$7,519

$10,239

Accounts receivable, less allowance of doubtful accounts of
 $2,040 and $1,266, respectively

34,558

23,457

Other receivables, prepayments and deposits, less allowance
 for doubtful accounts of $134 and $176, respectively

3,610

3,219

Inventories

5,780

2,316

Deferred tax assets

413

258

Total current assets

51,880

39,489




Non-current assets


Property, plant and equipment, net

1,854

1,385

Intangible assets, net

17,448

17,451

Long-term investment

1,797

1,737

Goodwill

3,209

-

Total assets

$76,188

$60,062




LIABILITIES AND EQUITY


Current liabilities


Accounts payable

$4,122

$4,154

Accruals and other payable

1,890

1,279

Income tax payable

1,610

1,719

Loan from a stockholder

262

369

Deferred tax liability

259

Total current liabilities

8,143

7,521




Non-current liabilities


Deferred tax liabilities – non current

965

803




Total liabilities

9,108

8,324

Commitments and contingencies

-

-

Equity


Common stock, ($0.001 par value; 75,000,000 shares
 authorized; 20,350,167 and 17,049,000 shares issued as of
 December 31, 2010 and 2009, respectively; 20,347,167
 and 17,049,000 shares outstanding as of December 31,
 2010 and 2009, respectively)

20

17

Additional paid-in capital

22,502

18,931

Treasury Stock, at cost (3,000 and 0 shares
 as of December 31, 2010 and 2009, respectively)

(12)

Statutory and other reserves

3,590

2,916

Retained earnings

28,948

19,738

Accumulated other comprehensive income

4,299

2,658

Total Company's stockholders' equity

59,347

44,260

Noncontrolling interest

7,733

7,478

Total equity

67,080

51,738




Total liabilities and equity

$76,188

$60,062

Jingwei International Limited and Subsidiaries

Consolidated Statements of Income and Comprehensive Income

(in US dollars thousands, except share and per share data)


Years Ended December 31


2010

2009










Sales  

$37,641

$30,259

Cost of sales  

19,477

18,998

Gross profit


18,164

11,261





Operating expenses





Selling, general and administrative expenses  

6,673

3,859

Research and development costs  

2,415

1,155


9,088

5,014





Income from operations


9,076

6,247





Other income (expenses)





Subsidy income


520

736

Interest income  

60

181

Interest expense

(33)

(14)

Other income (expense)

390

(56)


937

847

Income before income taxes

10,013

7,094

Income tax expense


129

1,126





Net income


9,884

5,968

Less: Net income attributable to noncontrolling interest


-

-

Net income attributable to the Company's
stockholders


9,884

5,968

Foreign currency translation adjustment

1,896

112

Comprehensive income


$11,780

$6,080

Comprehensive income attributable to noncontrolling
interest

255

18

Comprehensive income attributable to the Company's
stockholders

11,525

6,062

   Basic earnings per share


$0.53

$0.35

   Diluted earnings per share

$0.52

$0.34

Weighted average common shares outstanding


   Basic


18,707,424

17,049,000

   Diluted


18,933,659

17,512,610

Jingwei International Limited and Subsidiaries

Consolidated Statements of Cash Flows

(in US dollars thousands)


Years Ended December 31


2010

2009





Cash flows from operating activities



Net income

$ 9,884

$ 5,968

Adjustments to reconcile net income to net



 cash provided by operating activities:



   Depreciation & amortization

3,970

2,763

   Allowance for doubtful accounts

1,409

1,189

   Share-based compensation expense

556

240

Changes in operating assets and liabilities:



   Accounts receivable


(10,946)

(5,216)

   Other receivables, prepayments and deposits

(632)

472

   Inventories

(2,591)

486

   Deferred tax


(134)

(258)

   Accounts payable


(249)

2,187

   Accruals and other payables

(302)

(186)

   Income tax payable

(187)

1,168

Net cash provided by operating activities

778

8,813

Cash flows from investing activities



Acquisition of property and equipment

(601)

(445)

Acquisition of intangible assets
Cash paid for business acquisition


(225)
(4,096)

(3,633)

Net cash used in investing activities

(4,922)

(4,078)

Cash flows from financing activities
Proceeds from exercise of stock options

14

Repayment of stockholder loans

(107)

(190)

Net cash used in financing activities

(93)

(190)

Effect of foreign currency translation on cash and cash equivalents

1,517

222

Net decrease (increase) in cash and cash equivalents

(2,720)

4,767

Cash and cash equivalents - beginning of year

10,239

5,472

Cash and cash equivalents - end of year

$ 7,519

$10,239

Supplemental disclosure of cash flow information



   Income tax paid

$   404

$   310

   Interest paid

$      -

$       -

Non-cash investing activities



Share consideration issued for acquisition of intangible assets from Newway

$ 3,287

$       -





Company Contact:

Jingwei International Limited

Yong Xu or Cao Wei

Tel:  +86-755-8631-9430

Email: [email protected]

Web: www.jingweicom.com

SOURCE Jingwei International Limited

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