China Information Security will host a corresponding conference call and live webcast at 8:00 am Eastern Daylight Time (8:00 pm, Beijing time) on Thursday, August 5, 2010.
The dial-in details for the live conference call are as follows:
-- U.S. Toll Free Number: 1-866-519-4004
-- International Dial-in Number: +65-6723-9381
-- Mainland China Toll Free Number: 10-800-819-0121
-- Hong Kong Toll Free Number: 80-093-0346
Conference ID: 90844727
A live and archived webcast of the conference call will be available on the Investor Relations section of China Information Security's website athttp://www.chinacpby.com .
A telephone replay of the call will be available from August 5, 2010 through August 12, 2010.
The dial-in details for the replay are as follows:
-- U.S. Toll Free Number 1-866-214-5335
-- International Dial-in Number +61-2-8235-5000
Conference ID: 90844727
About China Information Security Technology, Inc.
China Information Security Technology, Inc., together with its subsidiaries, specializes in Geographic Information Systems (GIS), digital public security and hospital information systems, with the goal of being the largest GIS software provider in the People's Republic of China. Headquartered in Shenzhen, China, the Company's total solutions include specialized software, hardware, systems integration, and related services organized into three business segments - Geographic Information Systems, Digital Information Security Technology (DIST), and Digital Hospital Information Systems (DHIS). To learn more about the Company, please visit its corporate website at http://www.chinacpby.com .
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of China Information Security Technology, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding: the significance of the Company's new contract wins during the quarter; the ability of the Company to continue to strengthen its position in the industry by winning and successfully performing under national contracts; the ability of the Company to secure future opportunities in the market by leveraging its R&D capabilities and reputation; the continued support of the Chinese government for domestic GIS products; the general ability of the Company to achieve its commercial objectives, including the Company's plan to sustain the growth while creating shareholder value; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For further information, please contact:
China Information Security Technology, Inc.
Iris Yan
Tel: +86-755-8370-4767
Email: ir@chinacpby.com
Web: http://www.chinacpby.com
Christensen
Kathy Li
Tel: +1-480-614-3036
Email: kli@christensenir.com
Roger Hu
Tel: +86-158-1049-5326
Email: rhu@christensenir.com
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2010 AND DECEMBER 31, 2009
Expressed in U.S. dollars
(Except for share and per share amounts)
June 30 December 31
2010 2009
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $17,745,272 $ 13,478,633
Restricted cash 5,795,203 5,859,910
Accounts receivable:
Billed, net of allowance for doubtful
accounts of $2,944,000 and
$3,123,000, respectively 24,114,664 23,907,035
Unbilled 58,149,465 47,851,638
Bills receivable 218,622 --
Advances to suppliers 4,084,692 6,924,035
Amount due from related parties, net
of allowance for doubtful accounts
of $0 and $73,000, respectively 158,467 129,937
Inventories, net of provision of
$183,000 and $184,000, respectively 20,985,556 10,936,004
Other receivables and prepaid
expenses 14,751,936 15,405,089
Deferred tax assets 1,622,613 1,719,327
TOTAL CURRENT ASSETS 147,626,490 126,211,608
Deposit for software purchase 4,797,561 1,426,452
Deposit for purchase of land use
rights 925,912 --
Long-term investments 2,873,722 2,862,016
Property, plant and equipment, net 62,612,136 53,586,514
Land use rights, net 2,123,702 1,907,611
Intangible assets, net 13,138,669 13,556,141
Goodwill 50,067,871 50,609,866
Deferred tax assets 428,336 668,730
TOTAL ASSETS $284,594,399 $ 250,828,938
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans $22,121,740 $ 15,927,780
Accounts payable 17,115,384 20,159,317
Bills payable 10,605,305 12,658,029
Advances from customers 3,266,171 3,950,744
Amount due to related parties,
current portion 667,138 583,736
Accrued payroll and benefits 1,609,966 3,142,240
Other payables and accrued expenses 14,969,739 14,252,918
Contingent consideration, current
portion 1,568,437 1,857,994
Income tax payable 3,875,563 3,290,245
TOTAL CURRENT LIABILITIES 75,799,443 75,823,003
Long-term bank loans 4,036,020 1,907,100
Amount due to related parties, long-
term portion 5,015,528 --
Contingent consideration, net of
current portion 2,224,685 2,635,397
Deferred tax liabilities 1,896,337 2,564,604
TOTAL LIABILITIES 88,972,013 82,930,104
COMMITMENTS AND CONTINGENCIES -- --
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2010 AND DECEMBER 31, 2009 (CONTINUED)
Expressed in U.S. dollars
(Except for share and per share amounts)
EQUITY
Common stock, par $0.01; authorized
capital 200,000,000 shares; shares
issued and outstanding 2010:
51,811,787: 2009: 49,905,141 shares $ 252,615 $233,548
Treasury stock, 6,000 shares, at cost (11,468) (11,468)
Additional paid-in capital 89,128,945 78,495,062
Reserve 8,345,371 8,345,371
Retained earnings 76,095,452 60,462,275
Accumulated other comprehensive income 6,020,572 5,016,575
Total equity of the Company 179,831,487 152,541,363
Non-controlling interest 15,790,899 15,357,471
Total equity 195,622,386 167,898,834
TOTAL LIABILITIES AND EQUITY 284,594,399 250,828,938
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (Unaudited)
Expressed in U.S. dollars
(Except for share and per share amounts)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
Revenue - Products $7,471,511 $ 3,789,288 $13,819,481 $6,610,416
Revenue - Software 22,406,236 15,921,487 37,584,868 24,932,952
Revenue - System
integration 3,485,523 5,571,619 6,269,406 8,527,076
Revenue - Others 153,618 505,525 1,148,240 697,659
TOTAL REVENUE 33,516,888 25,787,919 58,821,995 40,768,103
Cost - Products sold 5,813,701 3,007,849 11,054,123 5,620,640
Cost - Software sold 10,257,690 5,993,637 16,659,101 8,694,577
Cost - System
integration 570,721 4,395,011 3,046,531 6,540,763
Cost - Others 76,470 124,671 146,481 162,108
TOTAL COST 16,718,582 13,521,168 30,906,236 21,018,088
GROSS PROFIT 16,798,306 12,266,751 27,915,759 19,750,015
Administrative expenses (2,621,501) (2,304,376) (5,391,532) (4,520,723)
Research and development
expenses (560,649) (720,411) (1,130,080) (1,224,263)
Selling expenses (1,489,212) (644,349) (2,703,774) (1,238,064)
INCOME FROM OPERATIONS 12,126,944 8,597,615 18,690,373 12,766,965
Subsidy income 268,898 318,071 431,680 515,860
Other (loss)/income, net (324,700) (16,845) 642,099 164,521
Interest income 10,403 120,627 29,294 197,544
Interest expense (263,756) (56,443) (412,647) (116,653)
INCOME BEFORE INCOME
TAXES 11,817,789 8,963,025 19,380,799 13,528,237
Income tax expense (2,163,609) (1,091,800) (3,334,692) (1,680,196)
NET INCOME 9,654,180 7,871,225 16,046,107 11,848,041
Less: Net income
attributable to the
non-controlling
interest (302,111) (73,395) (412,930) (293,218)
NET INCOME ATTRIBUTABLE
TO THE COMPANY
$9,352,069 $7,797,830 $15,633,177 $11,554,823
Weighted average number
of shares
Basic 51,450,623 47,536,883 51,332,698 47,528,503
Diluted 51,450,623 47,536,883 51,332,698 47,528,503
Earnings per share -
Basic and Diluted
Basic - Net income
attributable to the
Company's common
stockholders $0.18 $0.16 $0.30 $0.24
Diluted - Net income
attributable to the
Company's common
stockholders $0.18 $0.16 $0.30 $0.24
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (Unaudited)
Expressed in U.S. dollars
(Except for share and per share amounts)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
Net income $9,654,180 $7,871,225 16,046,107 $11,848,041
Other comprehensive
income:
Foreign currency
translation gain 787,465 (16,365) 1,024,495 435,377
Comprehensive income 10,441,645 7,854,860 17,070,602 12,283,418
Comprehensive income
attributable to the non-
controlling interest
(322,572) (73,310) (433,428) (293,133)
Comprehensive income
attributable to the
Company $10,119,073 $7,781,550 16,637,174 $11,990,285
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (Unaudited)
Expressed in U.S. dollars
(Except for share and per share amounts)
Six Months Ended
June 30, 2010 June 30, 2009
OPERATING ACTIVITIES
Net income $16,046,107 $11,848,041
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 3,441,071 1,852,357
Amortization of intangible assets 927,048 865,710
Stock-based compensation -- 183,600
Loss on disposal of property and
equipment 320,957 31,764
Change in allowance for accounts
receivable 267,716 573,881
Reversal of write-down of inventories (1,362) --
Change in deferred income tax 215,192 (29,517)
Change in fair value of contingent
consideration (700,268) --
Changes in operating assets and
liabilities, net of effects of
business acquisitions:
Decrease in restricted cash 457,202 --
Increase in accounts receivable (10,656,507) (14,665,591)
Decrease / (increase) in advances to
suppliers 2,091,453 (3,028,042)
Decrease / (increase) in other
receivables and prepaid expenses 313,302 (1,540,531)
Increase in inventories (10,164,333) (1,657,773)
(Decrease) / increase in accounts
payable (5,209,216) 4,643,442
(Decrease) / increase in advances
from customers (695,808) 4,469,480
Increase in amount due to related
parties 5,311,077 177,621
Increase / (decrease) in other
payables and accrued expenses 921,098 (432,401)
Increase in income tax payable 569,611 695,912
Net cash provided by operating
activities 3,454,340 3,987,953
INVESTING ACTIVITIES
Increase in restricted cash related
to bank borrowings (368,895) --
Proceeds from sales of property and
equipment 44,007 100,225
Proceeds from sale of short-term
investments -- 5,862,800
Refund of investment in former Joint
Venture -- 4,397,100
Purchase of land-use-rights (230,970) --
Purchases of property and equipment (11,038,575) (630,478)
Capitalized and purchased software
development costs (432,547) (308,484)
Deposit for software purchase (4,777,693) (4,781,846)
Deposit for purchase of land-use-
rights (165,093) --
Net cash (used in) / provided by
investing activities (16,969,766) 4,639,317
FINANCING ACTIVITIES
Borrowing of short-term loans 21,003,299 1,898,082
Borrowing of long-term loans 4,019,306 --
Repayment of short-term loans (14,887,816) (732,850)
Repayment of long-term loans (1,906,970) --
Issued common stock 9,383,440 --
Repurchase of common stock -- (11,468)
Net cash provided by financing
activities 17,611,259 1,153,764
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (CONTINUED) (Unaudited)
Expressed in U.S. dollars
(Except for share and per share amounts)
Six Months Ended
June 30, June 30,
2010 2009
Effect of exchange rate changes on
cash and cash equivalents 170,806 30,757
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,266,639 9,811,791
CASH AND CASH EQUIVALENTS, BEGINNING 13,478,633 9,565,252
CASH AND CASH EQUIVALENTS, ENDING $17,745,272 $19,377,043
Supplemental disclosure of cash
flow information:
Six Months Ended
June 30, June 30,
2010 2009
Cash paid during the period
Income taxes $2,547,020 $1,013,801
Interest paid $449,494 $117,327
Supplemental disclosure
of significant non-cash
transactions:
