HONG KONG, Feb. 10 /PRNewswire-Asia/ -- Longtop Financial
Technologies Limited ("Longtop") (NYSE:LFT), a leading software
developer and solutions provider targeting the financial services
industry in China, announced today unaudited financial results for
the quarter ended December 31, 2009, which is the third quarter of
its fiscal year ending March 31, 2010. FINANCIAL HIGHLIGHTS --
Third quarter total revenues of US$54.7 million, an increase of
66.2% Year-on-Year; -- Third quarter Adjusted(1) Operating Income
of US$29.3 million, an increase of 69.3% Year-on-Year; -- Third
quarter Adjusted Net Income of US$29.3 million, which includes an
income tax benefit of US$4.0 million. Excluding the income tax
benefit of US$4.0 million Adjusted Net Income would have increased
53.1% Year-on-Year; -- Third quarter Adjusted Diluted Earnings Per
Share of US$0.53, which includes an income tax benefit of US$0.07
per share. Excluding the income tax benefit of US$0.07 Per Share,
Adjusted Diluted Earnings Per Share would have been US$0.46, an
increase of 43.8% Year-on-Year; -- Cash flow from operations was
US$39.2 million for the third quarter and US$50.1 million for the
first nine months; -- Excluding Giantstone, full year 2010 revenue
guidance increased to US$166.0 million from previous guidance of
US$158.0 million, and Adjusted Diluted Earnings Per Share guidance
increased from previous guidance of US$1.29 per share to US$1.39
per share, which includes US$0.07 per share from an income tax
benefit recorded in Q3 2010. (1) Explanation of the Company's
Adjusted (i.e. non-GAAP) financial measures and the related
reconciliations to GAAP financial measures are included in the
accompanying "Non-GAAP Disclosure" and the "Consolidated Adjusted
Statements of Operations. "I'm pleased to report that on the back
of solid execution from our management and employees, once again
our third quarter financial results exceeded our top and bottom
line guidance. We see ongoing strong demand from our customers that
execute on their long-term IT development plans irrespective of
short-term changes in macroeconomic factors. Based on our sales
pipeline and ongoing discussions with customers about their IT
spending plans, Longtop's growth prospects remain strong for fiscal
2011. I believe Longtop's competitive position is strengthening and
we are taking market share from our competitors," commented Weizhou
Lian, CEO of Longtop. "Furthermore, this quarter's results
underscore the successful integration of Sysnet with insurance
being our fastest growing customer segment. I believe the recent
acquisition of Giantstone, a leading core banking solution provider
in China will offer us new growth opportunities." FISCAL THIRD
QUARTER DETAILED FINANCIAL RESULTS Revenue 2009 Q3 and 2010 Q3
Revenue - US$000s Three months ended Nine months ended December
December % Change December December % Change 31, 2008 31, 2009 31,
2008 31, 2009 Software Development $28,857 $46,397 60.8% $68,509
$108,109 57.8% Other Services $4,041 $8,267 104.6% $11,905 $17,882
50.2% Total Revenue $32,898 $54,664 66.2% $80,414 $125,991 56.7%
Total revenues for the quarter ended December 31, 2009, were
US$54.7 million, an increase of 66.2% year-on-year (YoY) from
US$32.9 million in the corresponding year ago period, and exceeded
company guidance of US$48.5 million. Software development revenues
of US$46.4 million increased YoY by 60.8% and exceeded Company
guidance of US$42.7 million. Total revenues for the nine months
ended December 31, 2009, were US$126.0 million, an increase of
56.7% YoY from US$80.4 million in the corresponding year ago
period. Software development revenues, which were 85.8% of total
revenues for the nine months ended December 31, 2009, amounted to
US$108.1 million, a YoY increase of 57.8%. Excluding revenue from
Sysnet, total revenue for the three and nine months ended December
31, 2009, would have increased by 45.5% and 44.9 % respectively.
Software Development Revenue by customer type - US$000s Three
months ended Nine months ended December December % Change December
December % Change 31, 2008 31, 2009 31, 2008 31, 2009 Big Four
Banks 13,000 18,464 42.0% 34,028 47,272 38.9% Other Banks 11,177
18,106 62.0% 25,099 39,980 59.3% Insurance 3,699 8,309 124.6% 6,868
16,195 135.8% Enterprises 981 1,518 54.7% 2,514 4,662 85.4% Total
28,857 46,397 60.8% 68,509 108,109 57.8% Software development
revenue from the Big Four Banks was US$18.5 million in the third
quarter, an increase of 42.0% YoY, and US$47.3 million for the nine
months ended December 31, 2009, an increase of 38.9% YoY. Big Four
Banks accounted for 43.7% of software development revenues for the
nine months ended December 31, 2009, as compared to 49.7% in the
corresponding year ago period. Software development revenue from
Other Banks was US$18.1 million in the third quarter, a YoY
increase of 62.0%, and US$40.0 million for the nine months ended
December 31, 2009, an increase of 59.3% YoY. Other Banks accounted
for 37.0% of software development revenues for the nine months
ended December 31, 2009, as compared to 36.6% in the corresponding
year ago period. Software development revenue from Insurance was
US$8.3 million in the third quarter, a YoY increase of 124.6% and
US$16.2 million for the nine months ended December 31, 2009, an
increase of 135.8% YoY. Insurance accounted for 15.0% of software
development revenues in the nine months ended December 31, 2009.
Sysnet, a leading IT insurance services provider acquired by
Longtop in Q1 2010, contributed US$5.2 million in software
development revenue for the nine months ended December 31, 2009, of
which $3.3 million was recorded in Q3 2010. Software development
revenue from Enterprises was US$1.5 million and US$4.7 million for
the three and nine months ended December 31, 2009, a YoY increase
of 54.7% and 85.4% respectively. Other services revenue increased
by 104.6% YoY in the third quarter to US$8.3 million primarily due
to a US$3.1 million contribution from Sysnet's system integration
business. Sysnet's other services revenue was US$4.2 million from
the acquisition date to December 31, 2009. Gross Margins Three
months ended Nine months ended December December Change December
December Change (Decrease) (Decrease) 31, 2008 31, 2009 31, 2008
31, 2009 Adjusted Software Development 76.4% 75.1% (1.3%) 74.2%
73.1% (1.1%) Gross Margin % Adjusted Other Services Gross 33.8%
50.6% 16.8% 51.9% 40.3% (11.6%) Margin % Adjusted Total Gross
Margin % 71.2% 71.4% 0.2% 70.9% 68.4% (2.5%) Adjusted Total Gross
Margin was 71.4% and 68.4% for the three and nine months ended
December 31, 2009, as compared to 71.2% and 70.9% in the
corresponding year-ago periods. Approximately one percentage point
of the 2.5% YoY decline in Adjusted Total Gross Margin for the nine
months ended December 31, 2009, was due to a decline in Adjusted
Software Development Gross Margin associated with: (i) the
inclusion of Sysnet, which has lower gross margins than Longtop,
(ii) Longtop is investing in its software development consulting
and professional services business which has lower incremental
gross margins than Longtop's existing Adjusted Software Development
Gross Margin, and (iii) in order to meet customer requirements a
larger percentage of the workforce are being located in higher cost
centers such as Beijing. The remaining 1.5 percentage point decline
in Adjusted Total Gross Margin for the nine months ended December
31, 2009 was primarily attributable to a gross margin reduction of
ATM maintenance and system integration business lines which are
included as Other Services. Full year 2010 Adjusted Total Gross
Margin is expected to be approximately 67%, equal to the Company's
previous guidance. Operating Expenses Three months ended Nine
months ended December December % December December % 31, 2008 31,
2009 Change 31, 2008 31, 2009 Change Adjusted Operating Expenses -
US$000s 6,113 9,720 59.0% 15,119 24,600 62.7% Adjusted Operating
Expenses - % of revenue 18.6% 17.7% 18.8% 19.6% Adjusted Operating
Expenses were 19.6% of revenue for the nine months ended December
31, 2009, which is in line with full year Company guidance of
20.0%. Adjusted Operating Expenses increased by 62.7% YoY in the
nine months ended December 31, 2009, which was slightly higher than
the YoY software development revenue growth of 57.8% primarily due
to the inclusion of Sysnet, which has lower operating margins than
Longtop. Operating Income and Net Income Three months ended Nine
months ended December December % December December % Change Change
31, 2008 31, 2009 31, 2008 31, 2009 Adjusted Operating Income -
US$000s 17,299 29,288 69.3% 41,923 61,613 47.0% Adjusted Operating
Income - % of revenue 52.6% 53.6% 52.1% 48.9% Adjusted Operating
Income of US$29.3 million for the third quarter exceeded company
guidance of US$26.0 million and increased YoY by 69.3%. Adjusted
Operating Income of US$61.6 million for the nine months ended
December 31, 2009, increased 47.0% YoY. Adjusted Operating Margin
for the nine months ended December 31, 2009, of 48.9% was lower
than the corresponding period in fiscal 2009 due primarily to the
decline in Adjusted Total Gross Margin. Net Income Three months
ended Nine months ended December December % Change December
December % Change 31, 2008 31, 2009 31, 2008 31, 2009 Adjusted Net
Income - US$000s 16,532 29,313 77.3% 40,597 61,431 51.3% Adjusted
Net income per Diluted Share 0.32 0.53 65.6% 0.78 1.14 46.2%
Adjusted Net Income - % of revenue 50.3% 53.6% 50.5% 48.8% US GAAP
Net Income - US$000s 14,356 25,807 79.8% 34,640 53,100 53.3% US
GAAP Net income per Diluted Share 0.28 0.46 64.3% 0.66 0.98 48.5%
US GAAP Net Income - % of revenue 43.6% 47.2% 43.1% 42.1%
Reconciliation between US GAAP Net Income and Adjusted Net Income
Three months ended Nine months ended December December % Change
December December % Change 31, 2008 31, 2009 31, 2008 31, 2009
Adjusted Net Income - US$000s $16,532 $29,313 77.3% $40,597 $61,431
51.3% Stock compensation $1,463 $2,196 50.1% $4,205 $5,199 23.6%
Amortization of acquired intangible assets $661 $960 45.2% $1,643
$2,602 58.4% Amortization of acquired deferred compensation $52 $90
73.1% $109 $270 147.7% Acquisition related expenses $-- $260 $--
$260 Sub-total $2,176 $3,506 61.1% $5,957 $8,331 39.9% US GAAP Net
Income $14,356 $25,807 79.8% $34,640 $53,100 53.3% US GAAP and
Adjusted Net Income for the quarter ended December 31, 2009,
includes US$4.0 million (US$0.07 per fully diluted share)for an
income tax benefit ("Q3 2010 Income Tax Benefit") recorded in Q3
2010 associated with Longtop's qualification as a Key Software
Company for the 2009 calendar year. Excluding the US$4.0 million Q3
2010 Income Tax Benefit, Adjusted Net Income would have increased
53.1% as compared to Adjusted Net Income of US$16.5 million in the
corresponding year ago period, and exceeded Company guidance of
US$23.5 million and US$0.43 per fully diluted share. US GAAP net
income for the quarter ended December 31, 2009, excluding the
US$4.0 million Q3 2010 Income Tax Benefit, would have increased
51.9% as compared to US GAAP net income of US$14.4 million in the
corresponding year ago period. Adjusted Net Income for the nine
months ended December 31, 2009, excluding the US$4.0 million Q3
2010 Income Tax Benefit (US$0.07 per fully diluted share), would
have increased 41.5% as compared to Adjusted Net Income of US$40.6
million in the corresponding year ago period. US GAAP net income
for the nine months ended December 31, 2009, excluding the US$4.0
million Q3 2010 Income Tax Benefit (US$0.07 per fully diluted
share), would have increased 41.7% as compared to US GAAP net
income of US$34.6 million in the corresponding year ago period.
Operating cash flow was US$39.2 million for the Third quarter, and
US$50.1 million for the nine months ended December 31, 2009, an
increase of 46.8% YoY. Unrestricted cash balances at December 31,
2009 less short-term borrowings, were US$362.5 million. Commenting
on the results, Derek Palaschuk, CFO of Longtop, said: "In the
third quarter revenue and Adjusted Net Income once more
substantially exceeded guidance. A robust third quarter cash flow
from operations of US$39.2 million and US$50.1 million for the
first nine months together with the proceeds from the November 2009
secondary offering will allow us to continue to invest
intelligently in our existing operations and grasp further
consolidation opportunities through acquisitions that will help
extend our leading position in China's financial technology
industry." BUSINESS OUTLOOK Longtop anticipates for the quarter and
ending March 31, 2010, excluding Giantstone: i) Total revenues of
US$40.0 million, representing an increase of 54.4% YoY from
revenues of US$25.9 million in the corresponding year ago period.
Software development revenues are expected to be US$34.0 million, a
YoY increase of 61.1% from US$21.1 million in the corresponding
year ago period. ii) Adjusted Operating Income of US$16.0 million,
representing an increase of 50.9% YoY from Adjusted Operating
Income of US$10.6 million in the corresponding year ago period.
iii) Adjusted Net Income of US$15.5 million, representing an
increase of40.9% YoY from Adjusted Net Income of US$11.0 million in
the corresponding year ago period. iv) Adjusted Diluted Earnings
Per Share of US$0.26, representing an increase of 23.8% YoY from
Adjusted Diluted Earnings Per Share of US$0.21 in the corresponding
year ago period. . Longtop anticipates for its fiscal year ending
March 31, 2010, excluding Giantstone: i) Total revenues of US$166.0
million, representing an increase of 56.2% YoY from revenues of
US$106.3 million in fiscal 2009. Software development revenues are
expected to be US$142.0 million, a YoY increase of 58.5% from
US$89.6 million in fiscal 2009; ii) Adjusted Operating Income of
US$77.5 million, an increase of 47.6% YoY from Adjusted Operating
Income of US$52.5 million in fiscal 2009. iii) Adjusted Net Income
of US$77.0 million, an increase of 49.2% YoY from Adjusted Net
Income of US$51.6 million in fiscal 2009. Excluding the Q3 2010
Income Tax Benefit of US$4.0 million, Adjusted Net Income would
have increased 41.5% YoY; iv) Adjusted Diluted Earnings Per Share
of US$1.39, an increase of 41.8% from Adjusted Diluted Earnings Per
Share of US$0.98 in fiscal 2009. Excluding the Q3 2010 Income Tax
Benefit of US$0.07 per fully diluted share, Adjusted Diluted
Earnings per Share would have increased 34.7% YoY. CONFERENCE CALL
AND WEBCAST Longtop's senior management team will host a conference
call and audio web cast at 7:30 PM Eastern Time on February 10,
2010 (or 4:30 PM U.S. Pacific Time on February 10, 2010, and 8:30
AM Beijing/Hong Kong time on February 11, 2010). The conference
call will last for approximately one hour. The dial-in numbers for
the conference call are as follows: U.S. Toll Free: 1866 549 1292
(back-up number: +852 3005 2050) China Toll Free: 400 681 6949
(back-up number: +852 3005 2050) Hong Kong and International: +852
3005 2050. Passcode: 765115# A live and archived web cast of this
call will be available on Longtop's website at
http://en.longtop.com/ . NON-GAAP DISCLOSURE ("ADJUSTED") To
supplement the unaudited consolidated financial statements
presented in accordance with United States Generally Accepted
Accounting Principles ("GAAP"), Longtop's management reports and
uses non-GAAP ("Adjusted") measures of revenues, cost of revenues,
operating expenses, net income and net income per share, which are
adjusted from results based on GAAP. To supplement our financial
results presented on a GAAP basis, we use the non-GAAP measures to
exclude certain business combination accounting entries and
expenses related to acquisitions, as well as other significant
expenses including stock-based compensation that we believe are
helpful in understanding our past financial performance and our
future results. Our management regularly uses our supplemental
non-GAAP financial measures internally to understand, manage and
evaluate our business and make operating decisions. These non-GAAP
measures are among the primary factors management uses in planning
for and forecasting future periods. Compensation of our executives
is based in part on the performance of our business based on these
non-GAAP measures. Management believes these non-GAAP financial
measures enhance the user's overall understanding of our current
financial performance and our prospects for the future.
Specifically, we believe the non-GAAP financial measures provide
useful information to both management and investors by excluding
certain items that we believe are not indicative of our core
operating results. The presentation of this additional information
is not meant to be considered superior to, in isolation from or as
a substitute for results prepared in accordance with US GAAP. We
encourage investors to examine the reconciling adjustments between
the GAAP and non-GAAP measures contained in this release and which
we discuss below. Readers are cautioned not to view non-GAAP
results on a stand-alone basis or as a substitute for results under
GAAP, or as being comparable to results reported or forecasted by
other companies. Definitions of Non-GAAP Measures Adjusted Cost of
Revenue is defined as cost of revenue excluding, if applicable: (1)
non-cash compensation expense and (2) amortization of acquired
intangibles. Adjusted Gross Margin is defined as Total Revenue less
Adjusted Cost of Revenue. Adjusted Operating Expenses is defined as
operating expenses excluding, if applicable: (1) non-cash
compensation expense, (2) amortization of acquired intangibles,
deferred compensation arising on acquisition and goodwill
impairment, (3) acquisition related expenses such as fees paid to
investment bankers, due diligence and legal costs paid to third
parties which would have been included as a cost of acquisition
under Accounting Standards Codification (ASC) 805, "Business
Combinations" (formerly FASB Statement No. 141 (revised 2007),
"Business Combinations"; (4) post acquisition adjustments to the
fair value of contingent consideration which would have been
included as a cost of acquisition under ASC 805 or (5) one-time
items. Adjusted Operating Income is defined as Adjusted Gross
Margin less Adjusted Operating Expenses. Adjusted Net Income is
defined as Adjusted Operating Income plus/minus other
income/(expenses), less income taxes, excluding if applicable: (1)
one- time items and (2) discontinued operations. Adjusted EPS is
defined as Adjusted Net Income divided by diluted shares. One-Time
Items, if applicable, are excluded from Adjusted Operating Income
and Adjusted Net Income. These items are one-time in nature and
non-recurring, infrequent or unusual, and have not occurred in the
past two years or are not expected to recur in the next two years.
GAAP results include one-time items. Expenses That Are Excluded
From Our Non-GAAP Measures Non-cash compensation expense consists
principally of expense associated with the grants, including
unvested grants assumed in acquisitions, of restricted stock,
restricted stock units and stock options. These expenses are not
paid in cash, and we include the related shares in our fully
diluted shares outstanding, which, for restricted stock units and
stock options, are included on a treasury method basis. Longtop's
management believes excluding the share-based compensation expense
from its non-GAAP financial measure is useful for itself and
investors. Although share-based compensation is a key incentive
offered to our employees and especially our senior management, and
we believe such compensation contributed to the revenues earned
during the periods presented and also believe it will contribute to
the generation of future period revenues, as share-based
compensation expense does not involve any upfront or subsequent
cash outflow, Longtop does not factor this in when evaluating and
approving expenditures or when determining the allocation of its
resources to its business segments. As a result, the monthly
financial results for internal reporting and any performance
measure for commission and bonus are based on non-GAAP financial
measures that exclude share-based compensation expense. If we had
included share-based compensation expenses in our Non-GAAP Adjusted
Net Income, Adjusted Net Income would have been US$5.2 million
lower or US$56.2 million for the nine months ended December 31,2009
and our Adjusted Net Income margin would have been 4.0% lower.
Amortization of acquired intangibles is a non-cash expense relating
to acquisitions. At the time of an acquisition, the intangible
assets of the acquired company, such as backlog, customer
relationships, and intellectual property, are valued and amortized
over their estimated lives. While it is likely that we will have
significant intangible amortization expense as we continue to
acquire companies, we have excluded the effect of amortization of
intangible assets from our non-GAAP financial measures.
Amortization of intangible assets is inconsistent in amount and
frequency and is significantly affected by the timing and size of
our acquisitions. Investors should note that the use of intangible
assets contributed to revenues earned during the periods presented
and will contribute to future period revenues as well. Acquisition
proceeds allocated to deferred compensation arises where a portion
of the purchase price paid to shareholders is considered
compensation expense rather than purchase price under US GAAP.
Deferred compensation arising on acquisition is inconsistent in
amount and frequency and is significantly affected by the timing
and size of our acquisitions. Investors should note that the use of
deferred compensation arising on acquisition contributed to
revenues earned during the periods presented and will contribute to
future period revenues as well. Pursuant to ASC 805 which became
effective for business combinations made by us whose acquisition
date is on or after April 1, 2009, acquisition-related expenses
such as fees paid to investment bankers, due diligence and legal
costs paid to third parties are required to be recorded as an
operating expense when incurred. These acquisition-related expenses
are not related to the performance of our business lines, are
inconsistent in amount and frequency and are significantly affected
by the timing and size of our acquisitions Pursuant to ASC 805, as
of the acquisition date we are required to estimate and record the
fair value of contingent acquisition consideration. Generally
contingent consideration is re-measured at fair value in each
reporting period with changes in fair value recognized in earnings.
If the estimated contingency is settled for a different amount than
we have recorded at the time of the acquisition, the difference
would be recorded in our Consolidated Statement of Operations. The
contingent acquisition consideration is not related to the
performance of our business lines, is inconsistent in amount and
frequency, and is significantly affected by the timing and size of
our acquisitions. Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995 It is currently expected
that the Business Outlook will not be updated until the release of
Longtop's next quarterly earnings announcement; however, Longtop
reserves the right to update its Business Outlook at any time for
any reason. This announcement contains forward-looking statements
within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, including those with
respect to our anticipated operating results for the quarter ended
December 31, 2009 and the fiscal year ended March 31, 2010, efforts
taken to improve efficiency, strengthen management, manage the
Company's growth and the Company's competitive position. In some
cases, you can identify forward-looking statements by such terms as
"believes," "expects," "anticipates," "intends," "estimates," the
negative of these terms, or other comparable terminology. Factors
that could cause actual results to differ include the growth of the
financial services industry in China; the amount and seasonality of
IT spending by banks and other financial services companies;
competition and potential pricing pressures; our revenue growth and
solution and service mix; our ability to successfully develop,
introduce and market new solutions and services; our ability to
effectively manage our operating costs and expenses; our reliance
on a limited number of customers that account for a high percentage
of our revenues; a possible future shortage or limited availability
of employees; general economic and business conditions; the
volatility of our operating results and financial condition; our
ability to attract or retain qualified senior management personnel
and research and development staff; the outbreak of health
epidemics; the planned relocation of our headquarters; People's
Republic of China, or PRC, regulatory changes and interpretations;
and other risks detailed in the Company's filings with the
Securities and Exchange Commission. These forward-looking
statements involve known and unknown risks and uncertainties and
are based on current expectations, assumptions, estimates and
projections about the companies and the industry. The Company
undertakes no obligation to update forward-looking statements to
reflect subsequent occurring events or circumstances, or to changes
in its expectations, except as may be required by law. Although the
Company believes that the expectations expressed in these forward
looking statements are reasonable, they cannot assure you that
their expectations will turn out to be correct, and investors are
cautioned that actual results may differ materially from the
anticipated results. Our actual results of operations for the
quarter and year ended September 30, 2009, are not necessarily
indicative of our operating results for any future periods. Any
projections in this release are based on limited information
currently available to us, which is subject to change. About
Longtop Financial Technologies Limited Longtop is a leading
software development and solutions provider targeting the financial
services industry in China. Longtop develops and delivers a
comprehensive range of software applications and solutions with a
focus on meeting the rapidly growing IT needs of the financial
services institutions in China. Longtop is the highest ranked
Chinese financial technology provider on the Global FinTech 100
survey of top technology partners to the financial services
industry. Independent research firm IDC has also named Longtop the
No.1 market share leader in China's Banking IT solution market and
the No.2 market share leader in China's Insurance IT solution
market in calendar year 2008. Headquartered in Beijing, Longtop has
six solution delivery centers, three research and development
centers and 95 ATM service centers located in 27 out of 31
provinces in China. For more information, please visit:
http://en.longtop.com/ . For more information, please contact: For
Investors: Longtop Financial Technologies Limited Charles Zhang,
CFA Email: Phone: +86-10-8421-7758 For Media: IR Inside BV Caroline
Straathof Email: Phone: +31-6-5462-4301 CONSOLIDATED BALANCE SHEETS
March 31, 2009 December 31, 2009 (In U.S. dollar thousands, except
share and per share data) Assets Current assets: Cash and cash
equivalents $238,295 $389,699 Restricted cash 463 3,745 Accounts
receivable, net 29,861 87,625 Inventories 4,982 5,864 Amounts due
from related parties 682 681 Deferred tax assets 979 1,449 Other
current assets 4,712 12,549 Total current assets 279,974 501,612
Fixed assets, net 14,858 26,468 Prepaid land use right 5,167 5,090
Intangible assets, net 11,526 27,041 Goodwill 24,837 35,177
Deferred tax assets 1,479 1,479 Other assets 632 17,933 Total
assets $338,473 $614,800 Liabilities and shareholders' equity
Current liabilities: Short-term borrowings $486 $27,183 Accounts
payable 3,299 22,283 Deferred revenue 16,010 37,240 Amounts due to
related parties 17 110 Deferred tax liabilities 867 1,064 Accrued
and other current liabilities 23,810 37,892 Total current
liabilities 44,489 125,772 Long-term liabilities: Obligations under
capital leases, net of current portion 98 -- Deferred tax
liabilities 1,242 3,943 Other non-current liabilities 286 3,872
Total liabilities 46,115 133,587 Shareholders' equity: Ordinary
shares $0.01 par value (1,500,000,000 shares authorized, 51,036,816
and 56,164,938 shares issued and outstanding as of March 31, 2009
and December 31, 2009, respectively) $510 $562 Additional paid-in
capital 243,194 378,583 Retained earnings 29,451 82,551 Accumulated
other comprehensive income 19,203 19,517 Total shareholders' equity
292,358 481,213 Total liabilities and shareholders' equity $338,473
$614,800 CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended
Nine Months Ended December December December December 31, 2008 31,
2009 31, 2008 31, 2009 (In U.S. dollar thousands, except share and
per share data) Revenues: Software development $28,857 $46,397
$68,509 $108,109 Other services 4,041 8,267 11,905 17,882 Total
revenues 32,898 54,664 80,414 125,991 Cost of revenues: Software
development 7,346 12,756 19,116 31,900 Other services 3,134 4,389
6,880 11,530 Total cost of revenues 10,480 17,145 25,996 43,430
Gross profit 22,418 37,519 54,418 82,561 Operating expenses:
Research and development 1,318 2,549 3,631 6,028 Sales and
marketing 3,393 5,549 7,801 14,112 General and administrative 2,584
3,639 7,020 9,139 Total operating expenses 7,295 11,737 18,452
29,279 Income from operations 15,123 25,782 35,966 53,282 Other
income (expenses): Interest income 922 1,096 4,438 3,096 Interest
expense (13) (336) (305) (530) Other income (expense), net 3 8
(292) 313 Total other income 912 768 3,841 2,879 Income before
income tax expense 16,035 26,550 39,807 56,161 Income tax expense
(1,679) (743) (5,167) (3,061) Net income 14,356 25,807 34,640
53,100 Net income per share: Basic ordinary share $0.28 $0.48 $0.69
$1.02 Diluted $0.28 $0.46 $0.66 $0.98 Shares used in computation of
net income per share: Basic ordinary share 50,590,358 53,597,293
50,467,808 52,083,391 Diluted 52,073,161 55,597,313 52,328,310
54,070,186 Includes share-based compensation related to: Cost of
revenues software development $432 $740 $1,211 $1,663 Cost of
revenues other services 63 146 185 284 General and administrative
expenses 477 443 1,422 1,302 Sales and marketing expenses 389 717
1,102 1,597 Research and development expenses 102 150 285 353
UNAUDITED CONSOLIDATED ADJUSTED STATEMENTS OF OPERATIONS Three
Months Ended Nine Months Ended December December December December
31, 2008 31, 2009 31, 2008 31, 2009 (In U.S. dollar thousands,
except share and per share data) Revenues: Software development
28,857 46,397 68,509 108,109 Other services 4,041 8,267 11,905
17,882 Total revenues 32,898 54,664 80,414 125,991 Cost of
revenues: Software development 7,346 12,756 19,116 31,900 Other
services 3,134 4,389 6,880 11,530 Total cost of revenues 10,480
17,145 25,996 43,430 Cost of revenue adjustments: Share-based
compensation software development (432) (740) (1,211) (1,663)
Share-based compensation other services (63) (146) (185) (284)
Amortization of acquired intangible assets other services (363)
(126) (895) (470) Amortization of acquired intangible assets
software development (84) (387) (224) (965) Amortization of
acquired deferred compensation other services (34) (33) (73) (99)
Amortization of acquired deferred compensation software development
(18) (57) (36) (171) Adjusted cost of revenues: Software
development 6,812 11,572 17,645 29,101 Other services 2,674 4,084
5,727 10,677 Total adjusted cost of revenues 9,486 15,656 23,372
39,778 Gross profit 22,418 37,519 54,418 82,561 Adjusted gross
profit 23,412 39,008 57,042 86,213 Operating expenses: Research and
development 1,318 2,549 3,631 6,028 Sales and marketing 3,393 5,549
7,801 14,112 General and administrative 2,584 3,639 7,020 9,139
Total operating expenses 7,295 11,737 18,452 29,279 Operating
expense adjustments: Share-based compensation research and
development (102) (150) (285) (353) Share-based compensation sales
and marketing (389) (717) (1,102) (1,597) Share-based compensation
general and administrative (477) (443) (1,422) (1,302) Amortization
of acquired intangible assets sales and marketing (152) (378) (395)
(968) Amortization of acquired intangible assets general and
administrative (62) (69) (129) (199) Acquisition related expenses
general and administrative -- (260) -- (260) Adjusted operating
expenses: Research and development 1,216 2,399 3,346 5,675 Sales
and marketing 2,852 4,454 6,304 11,547 General and administrative
2,045 2,867 5,469 7,378 Total adjusted operating expenses 6,113
9,720 15,119 24,600 Income from operations 15,123 25,782 35,966
53,282 Adjusted income from operations 17,299 29,288 41,923 61,613
Other income (expenses): Interest income 922 1,096 4,438 3,096
Interest expense (13) (336) (305) (530) Other (expenses) income,
net 3 8 (292) 313 Total other income 912 768 3,841 2,879 Income
before income tax expense 16,035 26,550 39,807 56,161 Adjusted
income before income tax expense 18,211 30,056 45,764 64,492 Income
tax expense (1,679) (743) (5,167) (3,061) Net income 14,356 25,807
34,640 53,100 Adjusted net income 16,532 29,313 40,597 61,431 Net
income per share: Basic ordinary share $0.28 $0.48 $0.69 $1.02
Diluted $0.28 $0.46 $0.66 $0.98 Adjusted net income per share:
Basic ordinary share $0.33 $0.55 $0.80 $1.18 Diluted $0.32 $0.53
$0.78 $1.14 Shares used in computation of net income and adjusted
net income per share: Basic ordinary share 50,590,358 53,597,293
50,467,808 52,083,391 Diluted 52,073,161 55,597,313 52,328,310
54,070,186 CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended
Nine Months Ended December December December December 31, 2008 31,
2009 31, 2008 31, 2009 (In U.S. dollar thousands, except share and
per share data) Cash flows from operating activities: Net income
$14,356 $25,807 $34,640 $53,100 Adjustments to reconcile net income
to net cash provided by operating activities: Share-based
compensation 1,463 2,196 4,205 5,198 Depreciation of fixed assets
791 1,253 2,109 2,675 Amortization of intangible assets 716 1,103
1,789 2,920 Provision for doubtful accounts 55 268 101 299 Loss on
disposal of fixed assets 165 26 207 31 Deferred income taxes
(1,836) (433) (965) (467) Changes in assets and liabilities, net of
effects of acquisitions: Accounts receivable 3,783 (31,339)
(10,681) (57,595) Inventories 408 (1,343) (521) (799) Other current
assets 1,236 (474) (1,118) (7,700) Amounts due from related parties
-- 587 -- 3 Prepaid land use right 82 24 (5,193) 79 Other
non-current assets 104 91 (575) 273 Other non-current liabilities 6
43 (188) 104 Accounts payable (9,337) 14,409 (1,075) 17,117
Deferred revenue 5,011 18,238 12,043 21,214 Amounts due to related
parties -- 33 -- 93 Accrued and other current liabilities 1,836
8,671 (654) 13,535 Net cash provided by operating activities 18,839
39,160 34,124 50,080 Cash flows from investing activities: Change
in restricted cash 9,753 (3,209) 5,560 (3,282) Proceeds from sale
of fixed assets 11 -- 225 -- Purchase of fixed assets (1,005)
(3,066) (7,766) (11,897) Purchase of intangible assets -- (280) (3)
(502) Long term investment -- -- (3,911) -- Acquisitions, net of
cash acquired (19) (548) (1,397) (17,327) Deposit made on
acquisition -- (17,574) -- (17,574) Net cash used in (provided by)
investing activities 8,740 (24,677) (7,292) (50,582) Cash flows
from financing activities: Proceeds from short-term borrowings --
22,556 -- 26,947 Net proceeds from follow-on offering -- 126,648 --
126,648 Stock options exercised 425 522 1,203 3,273 Repayments of
capital leases obligations (139) (84) (721) (352) Repayment of
acquisition related liabilities -- (896) -- (4,845) Amounts due to
related parties -- -- (54) -- Net cash provided by financing
activities 286 148,746 428 151,671 Effect of exchange rates
differences (429) 40 4,646 235 Net increase in cash and cash
equivalents 27,436 163,269 31,906 151,404 Cash and cash
equivalents, beginning of period 208,996 226,430 204,526 238,295
Cash and cash equivalents, end of period $236,432 $389,699 $236,432
$389,699 Supplemental disclosure of cash flow information: Income
taxes paid $3,515 $3,760 $6,326 $3,854 Interest paid $13 $261 $308
$336 Supplemental disclosure of non- cash investing and financing
activities: Fixed assets purchased under capital leases $-- $--
$655 $-- DATASOURCE: Longtop Financial Technologies Limited
CONTACT: For Investors: Charles Zhang, CFA of Longtop Financial
Technologies Limited, , +86-10-8421-7758; For Media: IR Inside,
Caroline Straathof, , +31-6-5462-4301 Web site:
http://en.longtop.com/
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