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: