Jingwei International Limited Reports First Quarter 2011 Financial Results

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May 16, 2011, 06:00 ET

SHENZHEN, China, May 16, 2011 /PRNewswire-Asia/ -- Jingwei International Limited (NASDAQ: JNGW) ("Jingwei" or "the Company"), a leading provider of data-mining, interactive marketing and software services in China's rapidly growing economy, today announced its financial results for the first quarter ended March 31, 2011.

First Quarter 2011 Highlights:

Total revenue increased 47% year-over-year to $7.5 million
Data Mining segment revenue grew 18% year-over-year to $3.6 million
Software Services segment revenue rose 92% year-over-year to $3.9 million
Gross profit climbed 49% year-over-year to $3.9 million
Gross margin was flat year-over-year at 52%
Net income declined 8% year-over-year to $0.9 million
EPS for the quarter was$0.05 per basic share and $0.05 per diluted share compared to $0.06 per basic share and $0.05 per diluted share last year

"We are pleased to report strong year-over-year revenue growth in our two business segments as we sharpened our focus in mobile value-added services ("MVAS") during the quarter," commented Mr. George Du, Chairman and Chief Executive Officer of Jingwei. "In data mining, we have expanded our offerings in 3G related services, and have entered into a strategic partnering agreement with Zhejiang China Unicom to design, develop and operate Zhejiang China Unicom's MVAS Society Channel and marketing support system. As this business has drawn interest from several other China Unicom provincial offices, we expect to see a significant revenue contribution from this part of the business later this year."

"In Software Services, the Company continued to expand the deployment of internet protocol TV ("IPTV") overseas through our business partner in the quarter. In addition, we have been engaged by several China Unicom's regional offices to upgrade their integrated call center platforms, and to develop new capabilities called "Communication Managers," to support China Unicom's launch of the "WO Family Service" offering nationwide."

Key Financial Results

Key financial results for the first quarter 2011 versus the first quarter 2010 are as follows (in US dollars thousands, except per share data):


	Three Months Ended March 31
	2011	2010	% change
	(Unaudited)	(Unaudited)

Data Mining Net Revenue	$3,615	$3,070	18%
Software Services Net Revenue	3,927	2,050	92%
Net Revenue	7,542	5,120	47%
Gross Profit	3,934	2,640	49%
Net Income	944	1,021	-8%
Earnings per Basic Share	0.05	0.06	-17%
Earning per Diluted Share	0.05	0.05	-

Financial Outlook

In 2011, the Company reiterates its guidance with projected 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 20.5 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 Limited:

Jingwei International Limited ("Jingwei") has established a leading position in China in data mining, interactive marketing and software services. 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 explosive mobile, Internet and e-Commerce growth, Jingwei has focused on new data mining offerings that encompass interactive marketing, bundled mobility solutions and mobile value added services. The Company's software services include business intelligence, billing, customer relationship management and decision support solutions for Chinese telecom operators and power companies.

Business Risks and Forward-Looking Statements

This report includes forward-looking statements. Generally, the words "believes," "anticipates," "may," "will," "should," "expect," "intend," "estimate," "continue," and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

-Financial Tables Follow-

Jingwei International Limited and Subsidiaries Condensed Consolidated Statements of Income and Comprehensive Income (in US dollars thousands, except share and per share data)
	Three Months Ended March 31,
	2011		2010
	(Unaudited)		(Unaudited)

Sales	$	7,542	$	5,120
Cost of sales		3,608		2,480
Gross profit		3,934		2,640

Operating expenses
Selling, general and administrative expenses		2,581		954
Research and development costs		739		733
		3,320		1,687

Income from operations		614		953

Other income (expenses)
Subsidy income		399		309
Interest income		32		23
Interest expense		-		(2)
Other expense		(1)		(46)
		430		284

Income before income taxes		1,043		1,237
Income tax expense		99		216

Net income		944		1,021
Less: Net income attributable to noncontrolling interest		-		-
Net income attributable to the Company's stockholders		944		1,021
Foreign currency translation adjustment		590		18
Comprehensive income	$	1,534	$	1,039
Comprehensive income attributable to noncontrolling interest		73		18
Comprehensive income attributable to the Company's stockholders		1,461		1,021
Basic earnings per share	$	0.05	$	0.06
Diluted earnings per share	$	0.05	$	0.05
Weighted average common shares outstanding
Basic		20,353,270		17,049,000
Diluted		20,549,905		18,862,295
See notes to condensed consolidated financial statements.

Jingwei International Limited and Subsidiaries Condensed Consolidated Balance Sheets (in US dollars thousands, except share and par value)
	March 31, 2011		December 31, 2010
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	5,003	$	7,519
Accounts receivable, less allowance of doubtful accounts of $2,155 and $2,040, respectively		35,166		34,558
Other receivables, prepayments and deposits, less allowance for doubtful accounts of $135 and $134, respectively		6,242		3,610
Inventories		7,080		5,780
Deferred tax assets		420		413
Total current assets		53,911		51,880

Non-current assets
Property, plant and equipment, net		2,158		1,854
Intangible assets, net		16,651		17,448
Long-term investment		1,814		1,797
Goodwill		3,239		3,209
Total assets	$	77,773	$	76,188

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	4,450	$	4,122
Accruals and other payable		1,595		1,890
Income tax payable		1,687		1,610
Deferred tax		261		259
Loan from a stockholder		157		262
Total current liabilities		8,150		8,143

Non-current liabilities
Deferred tax liabilities		909		965

Total liabilities		9,059		9,108

Commitments and contingencies		-		-
Equity
Common stock, ($0.001 par value; 75,000,000 shares authorized; 20,362,209 and 20,350,167 shares issued as of March 31, 2011 and December 31, 2010, respectively; 20,354,209 and 20,347,167 shares outstanding as of March 31, 2011 and December 31, 2010, respectively)		20		20
Treasury stock, at cost (8,000 shares and 3,000 share as of March 31, 2011 and December 31, 2010, respectively)		(32)		(12)
Additional paid-in capital		22,622		22,502
Statutory and other reserves		3,590		3,590
Retained earnings		29,892		28,948
Accumulated other comprehensive income		4,816		4,299
Total Company's stockholders' equity		60,908		59,347
Noncontrolling interest		7,806		7,733
Total equity		68,714		67,080

Total liabilities and equity	$	77,773	$	76,188
See notes to condensed consolidated financial statements.

Jingwei International Limited and Subsidiaries Condensed Consolidated Statements of Cash Flows (in US dollars thousands)
	Three Months Ended March 31,
	2011		2010
	(Unaudited)		(Unaudited)
Cash flows from operating activities
Net income	$	944	$	1,021
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortisation		1,228		854
Allowance for doubtful accounts		527		10
Share-based compensation expense		100		66
Changes in operating assets and liabilities:
Accounts receivables		(1,135)		(140)
Other receivables, prepayments and deposits		(2,632)		1,304
Inventories		(1,300)		(2,156)
Deferred tax asset		(61)		34
Accounts payable		267		(1,191)
Accruals and other payables		11		(104)
Income tax payable		77		51
Net cash used in operating activities		(1,974)		(251)
Cash flows from investing activities
Acquisition of property and equipment		(491)		(153)
Acquisition of intangible assets		(67)		-
Net cash used in investing activities		(558)		(153)
Cash flows from financing activities
Repayment of stockholder loans		(411)		-
Net cash used in financing activities		(411)		-
Effect of foreign currency translation on cash and cash equivalents		427		73
Net decrease in cash and cash equivalents		(2,516)		(331)
Cash and cash equivalents - beginning of period		7,519		10,239
Cash and cash equivalents - end of period	$	5,003	$	9,908
Supplemental Disclosure of Cash Flow Information
Income tax paid	$	104	$	131
Interest paid	$	-	$	-
See notes to condensed consolidated financial statements.