Press Releases

Jingwei International Limited Reports Third Quarter 2011 Financial Results

SHENZHEN, China , Nov. 15, 2011 /PRNewswire-Asia-FirstCall/ -- Jingwei International Limited (NASDAQ: JNGW - News) ("Jingwei" or "the Company"), a leading provider of data-mining, interactive marketing and software services in China , today announced its financial results for the third quarter ended September 30, 2011 .

Third Quarter 2011 Highlights:

Total revenue decreased 17% year-over-year to $8.6 million
Data Mining segment revenue decreased 33% year-over-year to $3.6 million
Software Services segment revenue declined 1% year-over-year to $5.1 million
Gross profit declined 19% year-over-year to $3.9 million
Net income (non-GAAP) (1) declined 65% year-over-year to $1.3 million
Net loss declined to $(0.8) million
Loss per share for the quarter was $(0.04) per basic share and $(0.04) per diluted share, as compared to earnings per share of $0.13 per basic share and $0.13 per diluted share last year
Cash and cash equivalents at end of the third quarter was $4.0 million , as compared to $7.5 million at the end of 2010

"After a strong performance in operating results in 2010, we experienced some softness in our key BSS/OSS product offerings to the telecom carriers. Management changes within a major telecom carrier have also impacted the expected ramp-up of our interactive marketing services in the quarter; which in turn negatively impacted our cost structure for the services," commented Mr. George Du , Chairman and Chief Executive Officer of Jingwei. "In addition, net income was negatively affected by a one-time impairment charge of about $1.1 million to a long-term investment, as well as a sharp increase in SG&A Expense in part to support our quick business expansion in the Data mining segment."

Mr. George Du continued, "In spite of the challenges, we have invested greatly to expand our product offerings and strengthen the sales team in data mining segment. We have upgraded our major MVAS "Stock Trading Secretary" to a more comprehensive program, adding new features such as personal wealth management information, financial advisor commentaries and basic wealth management consultation over the phone. With successful deployment of the MVAS Society Channel and marketing support system for China Unicom in four provinces, the Company has built up a strong operating team for this product line. We aim to build on momentum to quickly expand the coverage to ten provinces in the next six months. In the software services segment, we have maintained our market leadership in development of IPTV billing and OSS solution, and continued to upgrade integrated call center platforms in multiple provinces for China Unicom in support of its widely popular "116114" service. Moreover we are making efforts to diversify our customer base into municipal governments and telecom carriers in Eastern European and African countries."

Key Financial Results

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

	Nine Months Ended September 30 ,			Three Months Ended September 30 ,
	2011	2010	% change	2011	2010	% change
	(Unaudited)			(Unaudited)
Data Mining Net Revenue	$12,027	$12,805	-6%	$3,569	$5,306	(32)%
Software Services Net Revenue	15,575	10,944	42%	5,069	5,104	0%
Net Revenue	27,602	23,749	16%	8,638	10,410	(17)%
Gross Profit	12,380	12,089	2%	3,919	4,840	(19)%
Net Income (non-GAAP) ⁽¹⁾	6,404	9,072	(29)%	1,290	3,631	(65)%
Net Income	2,045	6,242	(67)%	(826)	2,744	(130)%
Earnings per Basic Share	0.10	0.34	(70)%	(0.04)	0.13	(130)%
Earning per Diluted Share	0.10	0.31	(68)%	(0.04)	0.13	(130)%

Financial Outlook

Jingwei has revised its initial outlook for full year 2011 and now expects total revenue between $36.0 million and $40.0 million , net income of between $3.0 million and $4.6 million , and dilutive earnings per basic share of between $0.15 and $0.23 assuming 20.5 million weighted average common shares outstanding on a fully diluted basis.

Jingwei International Limited and Subsidiaries Consolidated Statements of Income and Comprehensive Income (in US dollars thousands, except share and per share data)
	Nine Months Ended September 30,		Three Months Ended September 30,
	2011	2010	2011	2010
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Sales	$ 27,602	$ 23,749	$ 8,638	$ 10,410
Cost of sales	15,222	11,660	4,719	5,570
Gross profit	12,380	12,089	3,919	4,840

Operating expenses
Selling, general and administrative expenses	8,013	4,023	3,040	1,462
Research and development costs	2,355	1,867	835	536
	10,368	5,890	3,875	1,998

Income from operations	2,012	6,199	44	2,842

Other income (expenses)
Subsidy income	1,265	392	344	71
Interest income	72	46	32	13
Interest expense	-	(5)	-	(1)
Impairment loss on long-term investments	(1,059)	-	(1,059)	-
Other expense	(2)	(74)	(2)	(14)
	276	359	(686)	69

Income (loss) before income taxes	2,288	6,558	(642)	2,911
Income tax expense	243	316	184	167

Net income (loss)	2,045	6,242	(826)	2,744
Less: Net income attributable to noncontrolling interest	-	-	-	-
Net income (loss) attributable to the Company ' s stockholders	2,045	6,242	(826)	2,744
Foreign currency translation adjustment	2,089	936	628	748
Comprehensive income	$ 4,134	$ 7,178	$ (198)	$ 3,492
Comprehensive income attributable to noncontrolling interest	270	156	92	124
Comprehensive income attributable to the Company ' s stockholders	3,864	7,022	(290)	3,368
Basic earnings (loss) per share	$ 0.10	$ 0.34	$ (0.04)	$ 0.13
Diluted earnings (loss) per share	$ 0.10	$ 0.31	$ (0.04)	$ 0.13
Weighted average common shares outstanding
Basic	20,407,859	18,156,763	20,442,322	20,336,167
Diluted	20,467,059	20,015,271	20,442,322	20,642,134

Jingwei International Limited and Subsidiaries Consolidated Balance Sheets (in US dollars thousands, except share and par value)
	September 3 0 , 201 1		December 31, 20 10
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	4,045	$	7,519
Accounts receivable, less allowance of doubtful accounts of $ 4,163 and $ 2 , 040 , respectively		38,447		34,558
Other receivables, prepayments and deposits, less allowance for doubtful accounts of $ 139 and $1 34 , respectively		7,952		3,610
Inventories		8,591		5,780
Deferred tax assets		321		413
Amount due from a stockholder		868		-
Total current assets		60,224		51,880

Non-current assets
Property, plant and equipment, net		1,805		1,854
Intangible assets, net		15,006		17,448
Long-term investment		784		1,797
Goodwill		3,321		3,209
Total assets	$	81,140	$	76,188

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	6,685	$	4,122
Accruals and other payable		1,716		1,890
Income tax payable		1,601		1,610
Deferred tax		265		259
Loan from a stockholder		268		262
Amount due to a related company		819		-
Total current liabilities		11,354		8,143

Non-current liabilities
Deferred tax liabilities		804		965
Total liabilities		12,158		9,108

Commitments and contingencies		-		-
Equity
Common stock, ($0.001 par value; 75,000,000 shares authorized; 20,478,676 and 20,350,167 shares issued as of September 30, 2011 and December 31, 2010, respectively; 20,438,461 and 20,347,167 shares outstanding as of September 30, 2011 and December 31, 2010, respectively)		21		20
Treasury stock, at cost ( 40,215 shares and 3,000 share as of September 30 , 201 1 and December 31, 20 10 , respectively)		(129)		(12)
Additional paid-in capital		20,386		22,502
Statutory and other reserves		3,590		3,590
Retained earnings		30,993		28,948
Accumulated other comprehensive income		6,118		4,299
Total Company ' s stockholders ' equity		60,979		59,347
Noncontrolling interest		8,003		7,733
Total equity		68,982		67,080

Total liabilities and equity	$	81,140	$	76,188

Jingwei International Limited and Subsidiaries Consolidated Statements of Cash Flows (in US dollars thousands)
	Nine Months Ended September 30,
	201 1		20 10
	(Unaudited)		(Unaudited)
Cash flows from operating activities
Net income	$	2,045	$	6,242
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amorti z ation		3,770		2,625
Allowance for doubtful accounts		2,527		-
Share-based compensation expense		200		495
Loss on investment impairment		1,059
Changes in operating assets and liabilities:
Accounts receivable s		(6,417)		(8,815)
Other receivables, prepayments and deposits		(4,342)		967
Inventories		(2,811)		(2,290)
Deferred tax asset		(63)		(27)
Amount due from shareholders		(868)
Accounts payable		2,500		(31)
Accruals and other payables		(410)		235
Amount due to related companies		819
Income tax payable		(9)		(31)
Net cash used in operating activities		(2,000)		(630)
Cash flows from investing activities
Acquisition of property and equipment		(562)		(223)
Acquisition of intangible assets		(69)		(187)
Cash paid for business acquisition		(2,004)		-
Net cash used in investing activities		(2,635)		(410	)
Cash flows from financing activities
Repurchase of common shares		(39)
Loan from a stockholder		118
Repayment of stockholder loans		(412)		-
Net cash used in financing activities		(333)		-
Effect of foreign currency translation on cash and cash equivalents		1,494		904
Net decrease in cash and cash equivalents		(3,474)		(136)
Cash and cash equivalents - beginning of period		7,519		10,239
Cash and cash equivalents - end of period	$	4,045	$	10,103
Supplemental Disclosure of Cash Flow Information
Income tax paid	$	412	$	404
Interest paid	$	-	$	-

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, 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.

Company Contact:
Jingwei International Limited
Yong Xu or Cao Wei
Tel: +86-755-8631-9430
Email: weicao@jingweicom.com
www.jingweicom.com

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.

Note (1):

Net income (non-GAAP)

Net income (non-GAAP) excludes share-based compensation expenses and amortization of acquired intangible assets. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our operating performance. The following table provides the non-GAAP financial measure and the related GAAP measure and provides a reconciliation of the non-GAAP measure to the equivalent GAAP measure.


Q3-2011 Reconciliation of Net Income to Net Income (non-GAAP)
For Nine Months and Three Months Ended September 30, 2011
	9 Mos. Ended	9 Mos. Ended	3 Mos. Ended	3 Mos. Ended
	30-Sep-11	30-Sep-10	30-Sep-11	30-Sep-10
Net income Attributable to the Company	2,045	6,242	-826	2,744
Amortization of intangibles assets	3,100	2,335	1,029	795
Share-based compensation expenses	200	49 5	28	92
Impairment loss on long-term investment	1,059		1,059
Net income (non-GAAP)	6,404	9, 07 2	1,290	3,631