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China Information Technology, Inc. Announces Fourth Quarter And Year End 2012 Results



China Information Technology, Inc. Announces Fourth Quarter And Year End 2012
                                   Results

PR Newswire

SHENZHEN, China, April 22, 2013

SHENZHEN, China, April 22, 2013 /PRNewswire/ -- China Information Technology,
Inc. (Nasdaq: CNIT) (the "Company", "our" or "we"), a leading provider of
information technologies and display technologies ("DT') based in China, today
announced its financial results for the fourth quarter and fiscal year ended
December 31, 2012.

Fourth Quarter 2012 Financial Highlights

  o Revenues decreased by 5.9% YoY to $29.4 million
  o Gross profit decreased by 8.7% YoY to $8.5 million
  o Operating loss of $45.4 million mainly due to increases in goodwill and
    other long-lived impairments and bad debt reserves
  o Net loss of $48.5 million; adjusted net loss of $23.1 million
  o Fully diluted net loss per share of $1.79;
  o Adjusted fully diluted net loss per share of $0.86
  o Cash flow from operations decreased 89.0% to $1.0 million

Year 2012 Financial Highlights

  o Revenues decreased 24.6% YoY to $86.4 million
  o Gross profit decreased 53.7% YoY to $20.5 million
  o Operating loss of $85.7 million
  o Net loss of $89.6 million; adjusted net loss of $46.8 million
  o Fully diluted net loss per share of $3.32;
  o Adjusted fully diluted net loss per share of $1.73
  o Cash flow from operations decreased 157.1% to a cash outflow of $9.3
    million

Mr. Jiang Huai Lin, Chairman and Chief Executive Officer of the company,
commented, "During 2012, challenging macro environment and tight government
fiscal policies in China continued to have a negative impact on our
businesses, especially in our government-client based IT segment. Although our
revenues for the full year 2012 decreased by 24.6% as compared with 2011, we
continued to reap from our business transition strategy with tremendous
efforts being invested in the display technology segment during past quarters.
Our digital technology (DT) business continued to make more significant
contributions to our overall sales mix, representing 53.8% of total revenue
for the year, versus 40.5% in 2011."

"Despite overall revenue decline, our DT business maintained its sales volume
of the previous year. We secured and completed numerous important contracts in
our DT segment under China's "Digital Campus" initiative, including a $10
million contract with education clients in Anhui Province. We expect our
robust implementation of this pilot project will lead to greater opportunities
with rollout of more education information technology initiatives in China.
According to Chinabaogao.com, the IT spending in China's education industry
reached RMB 43.9 billion in 2012, with a 20.9% annual growth rate.
Furthermore, by leveraging our strong capabilities in software development to
broaden and enhance our DT product features, and by introducing web-enabled
services, including an advanced cloud distribution system embedded in our
digital signage panel (DS-Pad) products, we are well positioned to meet the
anticipated demand of our emerging markets."

"In our IT segment, despite significant downturn of our traditional core
digital public security business, we achieved healthy year-over-year growth in
our GIS and DHIS sections, as we continued to win contracts related to China's
"Smart Grid", "Map World" and health and medical reform initiatives. We also
look to capture other IT market opportunities in China such as the newly
launched "Smart City" plan, an initiative that focuses on the technologies of
the Internet of Things and cloud computing and also embraces sectors such as
transportation, healthcare and public security. According to CCID Consulting,
the IT spending of China's Smart City initiative will reach RMB 170 billion by
2014."

"The year of 2013 will be important for us as the company expects to finish
the final phase of its strategic transition process. We also expect in the
second half of the year to see momentum picking up in some of the new key
sectors especially digital education.  We have been channeling resources
within our operations to synergize different elements between our DT and IT
segments in an effort to create innovative and value-added product offerings.
A good example is our new integrated offerings which comprise enhanced display
technologies, proprietary software, and web technologies that will provide our
customers with seamless and fully-integrated hardware, software, and
cloud-based services that will allow the company to enhance profitability and
generate recurring revenues."

Fourth Quarter 2012 Results  

Revenue

For Q4 2012, revenue was $29.4 million, compared to $31.2 million in Q4 2011,
a decrease of $1.8 million, or 5.8%. The decline in total revenue was
primarily due to the continued slowdown in projects for the Company's
government customers, which have traditionally been its core customer base;
and secondarily due to the Company's conscious effort to realign its business
operations between IT and DT and between government and non-government
customers.

Product sales decreased by $1.0 million, or 7.0%, to $13.3 million in Q4 2012,
as compared to $14.3 million in Q4 2011. Product sales constituted 45.3% of
total revenue during the current period as compared with 45.7% during the
prior year. The product sales decrease was primarily due to the Company's
strategy of shifting from low-end to high-end DT products and lower prices of
traditional LCD TV products in the midst of a challenging global business
environment.

Software sales decreased by 34.4% to $6.1 million in Q4 2012, from $9.3
million for the three months ended December 31, 2011, mainly due to the
continued sluggishness in the Company's government client sector in light of
the challenging government fiscal policies and our more stringent client
acceptance policies. Software sales constituted 20.7% of total revenue, as
compared to 29.8% during the prior year.

Sales of system integration services increased by 30.7% to $9.8 million in Q4
2012, as compared to $7.5 million in Q4 2011. As a percentage of revenue, it
increased to 33.2% during Q4 2012 as compared with 24.0% during Q4 2011.

Other revenue was $217,899 in Q4 2012, an increase of 25.9%, from $173,101 in
Q4 2011.

Gross Profit and Gross Margin

Cost of revenues decreased $1.1 million, or 5%, to $20.9 million in Q4 2012,
from $22.0 million in Q4 2011. As a result, gross margin was 28.8% in Q4 2012,
a decrease of 88 basis points, from 29.6% in Q4 2011.

The decrease in the overall gross margin resulted from a number of factors,
including revenue shifting from the IT segment to the DT segment, lower
software revenues, lower system integration gross margins, and lower prices of
LCD TV products, while the cost of manufacturing rose during Q4 2012.

Administrative Expenses

Total administrative expenses increased by $18.8 million, or 160.0%, to $30.5
million in Q4 2012, from $11.7 million in Q4 2011. As a percentage of revenue,
administrative expenses increased to 103.7% in Q4 2012, from 37.5% for Q4
2011.

Notable changes that resulted in increased administrative expenses included:
(1) an increase of $13.3 million in provision of accounts receivable; (2) an
increase of $4.1 million in impairment of purchased software; and (3) an
increase of $2.8 million in depreciation and amortization expenses. The
increase in the provision of accounts receivable was due mainly to the
continued sluggishness in the Company's government client sector relating to
the digital public security business in light of the challenging government
fiscal policies. The impairment of purchased software reflected the declining
market value of certain purchased software in light of the protracted
challenging environment in the Chinese government software segment.

Research and Development Expenses

Research and development expenses decreased to $0.9 million in Q4 2012 from
$1.5 million in Q4 2011, a decrease of $0.6 million, or 40.6%. As a percentage
of revenue, research and development expenses decreased to 3.0% in Q4 2012,
from 4.8% in Q4 2011.

Selling Expenses

Selling expenses increased $1.2 million in Q4 2012, or 52.2%, to $3.4 million,
from $2.3 million in Q4 2011. As a percentage of revenue, selling expenses
increased to 11.7% for Q4 2012, from 7.2% in Q4 2011. This increase was
primarily due to the Company's efforts to introduce new products during the
quarter.

Impairment of goodwill

In light of the negative impact as a result of the falling economic growth,
stringent macro policies, and declining industry trends especially in the
traditional hardware display sector, the Company tested its goodwill for
impairment during the second quarter of 2012 and the fourth quarter 2012.
After analyzing the various operations and reporting units, the Company came
to the conclusion that a goodwill impairment loss was probable, and
consequently recognized a goodwill impairment loss of $19.0 million during Q4
2012 based on its best estimation.

Loss from Operations

Loss from operations was $45.4 million in Q4 2012, representing an increase of
loss in an amount of $39.2 million, from a loss of $6.2 million in Q4 2011.

Net Loss Attributable to the Company

As a result of the foregoing factors, net loss attributable to the Company
decreased by $41.6 million to a loss of $48.5 million in Q4 2012, from $6.8
million in Q4 2011.

Cash and Cash Equivalents

As of December 31, 2012, the Company had $10.7 million in cash and cash
equivalents, and $10.3 million in restricted cash, as compared to $14.0
million in cash and cash equivalents, and $12.5 million in restricted cash as
of December 31, 2011. During Q4 2012, cash provided by operating activities
amounted to $1.0 million, a decrease of 89.0% from $9.1 million in Q4 2011.

Year 2012 Results

Revenue

For FY 2012, revenue was $86.4 million, compared to $114.5 million for FY
2011, a decrease of $28.2 million, or 24.6%. The decrease was primarily due to
challenging macro environment and difficult fiscal environment faced by many
public sector clients as a result of the Chinese government's implementation
of macroeconomic tightening policies, which led to a slowdown in projects for
government customers, which traditionally have been the Company's core
customer base; and, secondarily, due to the Company's conscious effort to
realign its business operations to create a better revenue mix between IT and
DT segments and between government and non-government customers.

Product sales decreased by $0.75 million, or 1.60%, to $45.7 million for FY
2012, as compared to $46.4 million for FY 2011. Product sales constituted
52.9% of total revenue during 2012 as compared with 40.5% during 2011. The
increase in product sales as a percentage of total revenue primarily reflected
the Company's successful marketing campaign in promoting new DT products, its
ability to win significant large DT projects in the emerging China digital
education market during 2012.

Software sales decreased by $20.7 million, or 52.7%, to $18.60 million for FY
2012, from $39.3 million for FY 2011. Software sales constituted 21.5% of
total revenue during 2012, compared with 34.3% during 2011. The decrease was
mainly due to the Chinese government's continued austere fiscal policies and
the curtailment of the massive government economic stimulus package, which led
to a slowdown in software projects for our government customers. In addition,
the Company instituted more stringent customer acceptance policies, which
limited new projects to those with more solid credit credentials and long-term
business prospects in light of the unfavorable government fiscal environment.

Sales of system integration services decreased by $6.8 million, or 24.5%, to
$20.9 million for FY 2012, as compared to $27.7 million for FY 2011. As a
percentage of revenue, it was 24.2% the same as in 2011. The decrease was
mainly the result of the relatively sluggish macro-economic growth in 2012 and
a lack of new large system integration solutions engagements in connection
with large projects comparable to the Shenzhen Summer Universiade, which was
held in August 2011.

Other revenue increased from $1.1 million for FY 2011 to $1.2 million for FY
2012, an increase of $0.1 million, or 5.7%. Other revenue was mainly derived
from maintenance services.

Cost of revenue and gross profit

Cost of revenue decreased by $4.3 million, or 6.2%, to $65.9 million for FY
2012, from $70.2 million for FY 2011. As a percentage of revenue, cost of
revenue increased to 76.3% for FY 2012, from 61.3% for FY 2011. As a result,
gross profit as a percentage of revenue was 23.7% for FY 2012, a decrease of
1,496 basis points from 38.7% for FY 2011.

The decrease in gross profit margins resulted from several factors. First, in
the year ended December 31, 2012, the Company continued its efforts to
increase DT solutions as a percentage of total revenue. The percentage of DT
revenue increased from 40.4% for FY 2011 to 53.8% for FY 2012. The significant
increase in contribution from DT revenue resulted in a decrease in gross
profit margin for FY 2012, as DT solutions business generally has lower
average gross margins than other segments of our business. Secondly, due to
the Chinese government's implementation of macroeconomic tightening policies,
the Company's government customers reduced software project orders. As a
result, the percentage of software revenue decreased from 34.3% for FY 2011 to
21.5% for FY 2012.  Our software business typically command higher gross
margins that other business segments.

Administrative expenses

Administrative expenses increased by $41.8 million, or 183.5%, to $64.6
million for FY 2012, from $22.8 million for FY 2011. As a percentage of
revenue, administrative expenses increased to 74.8% for 2012, from 19.9% for
2011. Notable changes that resulted in increased administrative expenses
included: (1) an additional $2.2 million in inventory write downs; (2) an
increase of $20.1 million in provision of accounts receivable; (3) an increase
of $1.2 million in depreciation and amortization expenses; and (4) an increase
of $11.8 million in impairment of purchased software. DT segment's inventory
was written down mainly because the business has been shifting away from the
traditional LCD business which has been facing a global decline. The increase
in the provision of account receivable was due mainly to the continued
sluggishness in the Company's government client sector relating to the digital
public security business in light of the challenging government fiscal
policies. The impairment of purchased software reflected the declining market
value of certain purchased software in light of the protracted challenging
environment in the Chinese government software segment.

Research and development expenses

Research and development expenses increased by $0.5 million, or 10.5%, to $5.0
million for FY 2012, from $4.5 million for FY 2011. As a percentage of
revenue, research and development expenses increased to 5.7% for 2012, from
3.9% in 2011. Such increase was primarily due to the Company's efforts to
develop new products as well as to improve the future profitability of
existing products.

Selling expenses

Selling expenses increased by $2.3 million, or 30.1%, to $9.8 million for
FY2012, from $7.5 million for FY 2011. As a percentage of revenue, selling
expenses increased to 11.3% for FY 2012, from 6.6% for FY 2011. This increase
was due to new product launches, increasingly nationwide market expansion,
which requires increased travel, promotional, and telecommunication expenses,
as well as increased total compensation to sales and marketing staff.

Impairment of goodwill

In light of the negative impact as a result of the falling economic growth,
stringent macro policies, and declining industry trends especially in the
traditional hardware display sector, we tested goodwill for impairment in the
fourth quarter of 2012. After analyzing the various operations and reporting
units, the Company came to the conclusion that a goodwill impairment loss was
probable, and consequently recognized a goodwill impairment loss of $26.8
million for FY 2012 based on its best estimation.

Net loss attributable to the Company

Net loss attributable to the Company was $89.6 million for FY 2012, as
compared to a net income of $7.9 million for FY 2011.

Cash and Cash Equivalents

During the year ended December 31, 2012, net cash used in operating activities
was $9.3 million, as compared to an operating net cash inflow of $16.3 million
in the same period of 2011. The decrease was primarily due to business
operational loss during the year ended December 31, 2012.

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for earnings that
exclude non-cash charges. The Company believes that these non-GAAP financial
measures are useful to investors because they exclude non-cash charges that
management excludes when it internally evaluates the performance of the
Company's business and makes operating decisions, including internal
budgeting, and performance measurement, as these measures provide a consistent
method of comparison to historical periods. Moreover, management believes
these non-GAAP measures reflect the essential operating activities of the
Company. Accordingly, management excludes the expense arising from certain
non-cash charges when making operational decisions. The Company also believes
that providing the non-GAAP measures that management uses to its investors is
useful to investors for a number of reasons. The non-GAAP measures provide a
consistent basis for investors to understand the Company's financial
performance in comparison to historical periods. In addition, it allows
investors to evaluate the Company's performance using the same methodology and
information as that used by the Company's management. Non-GAAP measures are
subject to inherent limitations because they do not include all of the
expenses included under GAAP and because they involve the exercise of judgment
of which charges are excluded from the non-GAAP financial measure. However,
the Company's management compensates for these limitations by providing the
relevant disclosure of the items excluded.

The following table presents the non-GAAP financial measures contained in this
press release and the most directly comparable GAAP measures and provides a
reconciliation of the non-GAAP measures to the most directly comparable GAAP
measures.

Q4 and Full Year 2012 Reconciliation of Net (Loss) Income and EPS
to Exclude Amortization of Intangible Assets, Goodwill Impairment, Change in Fair Value of Contingent Consideration and Other Asset
Write-downs
                                                                                    3 Mos.        3 Mos.       12 Mos.       12 Mos.
                                                                                    Ended         Ended        Ended         Ended
                                                                                    31-Dec-12     31-Dec-11    31-Dec-12     31-Dec-11
Net (loss) income Attributable to the Company                                       (48,476,569)  (6,842,449)  (89,630,508)  7,909,398
Amortization of Intangible Assets and Land-use Rights                               316,738       321,796      1,249,538     1,272,616
Impairment of goodwill                                                              19,025,565    -            26,832,255    -
Change in fair value of contingent consideration                                    -                          -             (1,481,756)
Impairment and loss on disposal of property and equipment                           5,993,690     388,375      14,725,140    578,265
Adjusted (Loss) Net income                                                          (23,140,576)  (6,132,278)  (46,823,575)  8,278,523
Weighted Average Number of Shares Outstanding
Basic                                                                               27,007,608    27,451,219   27,017,780    26,737,638
Diluted                                                                             27,007,608    27,451,219   27,017,780    26,965,006
(Loss) earnings per share
Basic                                                                               (1.79)        (0.25)       (3.32)        0.30
Diluted                                                                             (1.79)        (0.25)       (3.32)        0.29
Adjusted (loss) earnings per share
Basic                                                                               (0.86)        (0.22)       (1.73)        0.31
Diluted                                                                             (0.86)        (0.22)       (1.73)        0.31

About China Information Technology, Inc.

China Information Technology, Inc., through its subsidiaries and other
consolidated entities, specializes in geographic information systems (GIS),
digital public security technology (DPST), and hospital information systems
(HIS), as well as high-end digital display products and solutions in China.
Headquartered in Shenzhen, China, the Company's integrated solutions include
specialized software, hardware, systems integration, and related services to
help its customers improve efficiency in information management. To learn more
about the Company, please visit its corporate website at
http://www.chinacnit.com.

Safe Harbor Statement

This press release may contain certain "forward-looking statements" relating
to the business of China Information Technology, Inc., and its subsidiary
companies. All statements, other than statements of historical fact included
herein, are "forward-looking statements". These forward-looking statements,
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 Technology, Inc. 
Iris Yan
Tel: +86 755 8370 4767

Nolan Liu
Tel: +86 755 8831 9888 ext. 8020
Email: IR@chinacnit.com
http://www.chinacnit.com

 

CHINA INFORMATION TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2012 AND 2011
Expressed in U.S. dollars (Except for share amounts)
                                                                                                    December 31    December 31
                                                                                                    2012           2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                                                           10,747,998     14,019,634
Restricted cash                                                                                     10,347,015     12,538,049
Accounts receivable, billed and unbilled, net of allowance for doubtful accounts of $29,518,000     85,958,886     103,342,459
and $9,373,000, respectively
Bills receivable                                                                                    1,531,772      247,338
Advances to suppliers                                                                               6,089,210      5,020,747
Amounts due from related parties                                                                    1,212,226      22,823
Inventories, net of provision of $5,976,000 and $5,224,000, respectively                            16,797,673     22,317,260
Other receivables and prepaid expenses                                                              8,801,985      9,603,954
Deferred tax assets                                                                                 2,297,617      2,548,834
TOTAL CURRENT ASSETS                                                                                143,784,382    169,661,098
Deposit for purchase of land use rights                                                             19,085,878     27,564,586
Long-term investments                                                                               2,580,096      2,401,561
Property, plant and equipment, net                                                                  66,269,320     91,161,093
Land use rights, net                                                                                13,122,363     1,956,616
Intangible assets, net                                                                              14,416,976     14,380,459
Goodwill                                                                                            27,622,490     53,983,687
Deferred tax assets                                                                                 540,384        683,042
TOTAL ASSETS                                                                                      $ 287,421,889  $ 361,792,142
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans                                                                             $ 50,813,046   $ 40,983,457
Accounts payable                                                                                    20,289,783     19,013,509
Bills payable                                                                                       33,686,488     27,399,393
Advances from customers                                                                             3,754,442      6,403,966
Amounts due to related parties                                                                      -              593,617
Accrued payroll and benefits                                                                        2,945,323      3,060,384
Other payables and accrued expenses                                                                 6,907,622      6,784,353
Income tax payable                                                                                  3,660,926      3,525,949
TOTAL CURRENT LIABILITIES                                                                           122,057,630    107,764,628
Long-term bank loans                                                                                74,175         109,524
Amounts due to related parties, long-term portion                                                   12,728         12,624
Deferred tax liabilities                                                                            1,263,423      1,365,680
TOTAL LIABILITIES                                                                                 $ 123,407,956  $ 109,252,456
COMMITMENTS AND CONTINGENCIES
EQUITY
Common stock, par $0.01; authorized capital 100,000,000 shares;                                    

    shares issued and outstanding 2012: 27,007,608 shares,                                          286,326      $ 286,326

    2011: 27,230,835 shares                                                                       $
Treasury stock, 2012: 584,231 shares, 2011: 360,627 at cost                                         (1,011,091)    (695,514)
Additional paid-in capital                                                                          101,261,307    101,261,307
Reserve                                                                                             14,532,587     14,488,533
Retained earnings                                                                                   5,804,023      95,600,619
Accumulated other comprehensive income                                                              21,811,064     19,925,259
Total equity of the Company                                                                         142,684,216    230,866,530
Non-controlling interest                                                                            21,329,717     21,673,156
Total equity                                                                                        164,013,933    252,539,686
TOTAL LIABILITIES AND EQUITY                                                                      $ 287,421,889  $ 361,792,142

 

 

CHINA INFORMATION TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
YEARS ENDED/THREE MONTHS ENDED DECEMBER 31, 2012 and 2011
Expressed in U.S. dollars
                                                                                            Three Months Ended              Year Ended
                                                                                            December 31,   December 31,   December 31,   December 31,

                                                                                            2012           2011           2012           2011
Revenue – Products                                                                        $ 13,317,286   $ 14,272,289   $ 45,690,706   $ 46,435,133
Revenue – Software                                                                          6,094,302      9,302,207      18,597,383     39,301,812
Revenue - System integration                                                                9,759,529      7,488,858      20,905,251     27,678,685
Revenue – Others                                                                            217,899        173,101        1,184,115      1,119,923
TOTAL REVENUE                                                                               29,389,016     31,236,455     86,377,455     114,535,553
Cost - Products sold                                                                        10,665,830     11,905,308     40,119,790     36,815,966
Cost - Software sold                                                                        2,457,882      4,381,316      8,904,134      13,302,464
Cost - System integration                                                                   7,700,260      5,527,587      15,964,817     19,625,349
Cost – Others                                                                               114,068        165,484        889,234        472,270
TOTAL COST                                                                                  20,938,040     21,979,695     65,877,975     70,216,049
GROSS PROFIT                                                                                8,450,976      9,256,760      20,499,480     44,319,504
Administrative expenses                                                                     30,483,268     11,724,243     64,609,752     22,785,631
Research and development expenses                                                           887,262        1,493,517      4,951,166      4,483,754
Selling expenses                                                                            3,427,601      2,252,247      9,786,220      7,522,986
Impairment of goodwill                                                                      19,025,565     -              26,832,255     -
(LOSS) INCOME FROM OPERATIONS                                                               (45,372,720)   (6,213,247)    (85,679,913)   9,527,133
Subsidy income                                                                              732,322        1,347,257      1,709,246      1,939,787
Other income (loss), net                                                                    (1,039,246)    (943,168)      (1,536,108)    538,624
Interest income                                                                             146,747        62,383         343,289        317,190
Interest expense                                                                            1,429,956      527,806        (4,646,818)    (2,948,406)
(LOSS) INCOME BEFORE INCOME TAXES                                                           (46,962,853)   (6,274,581)    (89,810,304)   9,374,328
Income tax benefit (expense)                                                                (1,477,857)    527,616        (812,254)      (804,149)
NET (LOSS) INCOME                                                                           (48,440,710)   (5,746,965)    (90,622,558)   8,570,179
Less: Net (income) loss attributable to the non-controlling interest                        (35,859)       (1,095,484)    992,050        (660,781)
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY                                             $ (48,476,569) $ (6,842,449)  $ (89,630,508) $ 7,909,398
Weighted average number of shares outstanding
Basic                                                                                       27,007,608     27,007,608     27,017,780     26,737,638
Diluted                                                                                     27,007,608     27,007,608     27,017,780     26,965,006
(Loss) earnings per share - Basic and Diluted
Basic - Net (loss) income attributable to the Company's                                   $ (1.79)       $ (0.25)       $ (3.32)       $ 0.30
common stockholders
Diluted - Net (loss) income attributable to the Company's                                 $ (1.79)       $ (0.25)       $ (3.32)       $ 0.29
common stockholders

 

 

CHINA INFORMATION TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
Expressed in U.S. dollars

 
                                                                                           2012            2011          2010
Net (loss) income                                                                        $ (90,622,558)  $ 8,570,179   $ 35,473,630
Other comprehensive (loss) income:
Foreign currency translation gain                                                          2,128,770       8,903,913     6,668,353
Comprehensive (loss) income                                                                (88,493,788)    17,474,092    42,141,983
Comprehensive loss (income) attributable to the non-controlling                            749,085         (964,475)     (1,431,514)
       interest
Comprehensive (loss) income attributable to the Company                                  $ (87,744,703)  $ 16,509,617  $ 40,710,469

 

 

CHINA INFORMATION TECHNOLOGY, INC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

Expressed in U.S. dollars
                                                                                                                                                                 Accumulated
                                                            Common stock             Treasury stock               Additional                                     other            Non
                                                            Par value $0.01          Par value $0.01              Paid-in                        Retained        comprehensive    controlling
                                                            Shares        Amount     Shares       Amount          Capital         Reserve        Earnings        income           interest       Total
BALANCE AS AT JANUARY 1, 2010                               24,952,571    233,548    (3,000)      (11,468)        78,495,062      8,345,371      60,462,275      5,016,575        15,357,471     167,898,834
Issuance of common stock in private                         826,017       16,520     -            -               9,113,232       -              -               -                -              9,129,752
          placements
Common stock issued upon the                                20,625        413        -            -               253,275         -              -               -                -              253,688
          exercise of warrants
Stock-based compensation                                    231,681       4,634      -            -               2,394,876       -              -               -                -              2,399,510
Common stock released upon                                  -             -          -            -               1,850,405       -              -               -                -              1,850,405
          achieving earn-out target
Net income for the year                                     -             -          -            -               -               -              34,402,004      -                1,071,626      35,473,630
Foreign currency translation gain                           -             -          -            -               -               -              -               6,308,465        359,888        6,668,353
Capital injection to Geo                                    -             -          -            -               -               -              -               -                1,714,022      1,714,022
Imputed interests in relation to                            -             -          -            -               187,500         -              -               -                -              187,500
          shareholder's loan
Transfer to reserve                                         -             -          -            -               -               4,623,614      (4,623,614)     -                -              -
BALANCE AS AT DECEMBER 31, 2010                             26,030,894    255,115    (3,000)      (11,468)        92,294,350      12,968,985     90,240,665      11,325,040       18,503,007     225,575,694
Purchase of treasury stock                                  -             -          (357,627)    (684,046)       -               -              -               -                -              (684,046)
Common stock issued upon the
          settlement of earn-out                            344,353       6,887      -            -               957,303         -              -               -                -              964,190

    target
Stock-based compensation                                    125,000       2,500      -            -               1,142,499       -              -               -                -              1,144,999
Common stock released upon
          achieving earn-out                                165,289       3,306      -            -               1,719,006       -              -               -                -              1,722,312

    target
Common stock issued on conversion of                        925,926       18,518                                  4,981,482                                                                      5,000,000
          shareholder's loan
Net income for the year                                     -             -          -            -               -               -              7,909,398       -                660,781        8,570,179
Foreign currency translation gain                           -             -          -            -               -               -              -               8,600,219        303,694        8,903,913
Imputed interests in relation to                            -             -          -            -               166,667         -              -               -                -              166,667
          shareholder's loan
Changes in an ownership interest in                         -             -          -            -               -               -              (1,029,896)     -                1,029,896      -
          Zhongtian
Capital injection to Zhongtian by                           -             -          -            -               -               -              -               -                1,175,778      1,175,778
          minority shareholders
Transfer to reserve                                         -             -          -            -               -               1,519,548      (1,519,548)     -                -              -
BALANCE AS AT DECEMBER 31, 2011                             27,591,462  $ 286,326    (360,627)  $ (695,514)     $ 101,261,307   $ 14,488,533   $ 95,600,619    $ 19,925,259     $ 21,673,156   $ 252,539,686
Purchase of treasury stock                                  -                  -     (223,604)    (315,577)       -               -              -               -                -              (315,577)
Rounding impact of share changes due
          to one for two reverse stock split                377                -     -            -               -               -              -               -                -              -
          of common stock
Net loss for the year                                       -                  -     -            -               -               -              (89,630,508)    -                (992,050)      (90,622,558)
Foreign currency translation gain                           -                  -     -            -               -               -              -               1,885,805        242,965        2,128,770
Transfer to reserve                                         -                  -     -            -               -               44,054         (44,054)        -                -              -
Capital injection to Zhongtian                              -                  -     -            -               -               -              -               -                283,612        283,612
Changes in a Parent's Ownership                             -             -          -                        -               -              -   (122,034)       -                122,034        -
          Interest in Zhongtian
BALANCE AS AT DECEMBER 31, 2012                             27,591,839  $ 286,326    (584,231)  $ (1,011,091)   $ 101,261,307   $ 14,532,587   $ 5,804,023     $ 21,811,064     $ 21,329,717   $ 164,013,933

 

CHINA INFORMATION TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

Expressed in U.S. dollars

 
                                      2012            2011            2010
OPERATING ACTIVITIES
Net (loss) income                   $ (90,622,558)  $ 8,570,179     $ 35,473,630
Adjustments to reconcile net (loss)
income to net cash provided
       by operating activities:
Provision for losses on accounts      27,882,120      4,072,406       3,652,136
receivable and other current assets
Depreciation                          11,532,635      10,853,984      7,715,013
Impairment of goodwill                26,832,255      -               -
Impairment of property and            11,809,432      -               -
equipment
Loss on disposal of intangible        69,319          -               -
assets, net
Provision for obsolete inventories    2,235,574       4,627,598       378,619
Amortization of intangible assets     2,292,518       1,757,655       1,794,555
and land use rights
Loss on disposal of property and      2,915,708       578,265         339,601
equipment, net
Change in deferred income tax         306,838         (1,694,374)     110,200
Stock-based compensation              -               -               3,130,000
Loss on write-off of land use         -               -               232,938
rights
Change in fair value of contingent    -               (1,481,756)     (325,132)
consideration
Impairment of long-term investment    -               1,002,755       855,176
Imputed interest on shareholder's     -               166,667         187,500
loan
Changes in operating assets and
liabilities, net of effects of
        business acquisitions
Increase in accounts payable and      7,175,522       7,101,150       3,761,608
bills payable
Decrease (increase) in inventories    3,579,538       (6,171,310)     (8,943,882)
Decrease (increase) in restricted     250,306         (2,772,004)     (743,913)
cash
Increase (decrease) in income tax     106,370         (275,586)       398,667
payable
Increase (decrease) in other
payables and accrued expenses and     (64,095)        1,245,553       (6,673,381)
        other liabilities
Increase in accounts receivable       (7,460,031)     (4,538,402)     (27,889,936)
(Decrease) increase in advances       (2,700,713)     (1,329,076)     3,324,359
from customers
(Increase) decrease in advances to    (1,551,504)     3,973,915       (2,044,930)
suppliers
(Increase) decrease in other          (2,031,433)     (8,944,900)     11,758,974
receivables and prepaid expenses
(Decrease) increase in amounts due    (1,825,311)     (401,392)       457,735
to/from related parties
Net cash (used in) provided by        (9,267,510)     16,341,327      26,949,537
operating activities
INVESTING ACTIVITIES
Dividends received from Xiamen Yili
Geo Information                       79,268          -               -
       Technology Co., Ltd.
Proceeds from sale of property and    18,549          -               142,049
equipment
Purchase of land use rights           (2,513,648)     -               (232,938)
Capitalized and purchased software    (2,159,866)     (1,850,595)     (1,466,554)
development costs
Purchases of property and equipment   (778,691)       (16,776,095)    (29,860,881)
Investment in Hubei Information       (158,600)       -               -
Science and Technology
Deposit for purchase of land use      (47,561)        -               (25,310,974)
rights
Investment in Tianditu                -               -               (1,183,520)
Deposit for software purchase         -               -               (2,958,800)
Net cash used in investing            (5,560,549)     (18,626,690)    (60,871,618)
activities
FINANCING ACTIVITIES
Borrowings under short-term loans     99,000,812      87,474,985      52,361,076
Decrease (increase) in restricted     2,042,836       (1,048,220)     (1,483,976)
cash in relation to bank borrowings
Capital injection to Zhongtian by     283,612         1,157,551
minority shareholders
Repayment of short-term loans         (89,499,942)    (87,299,684)    (35,938,146)
Repurchase of common stock            (315,577)       (684,046)       -
Repayment of long-term loans          (35,576)        (1,769,920)     (2,477,995)
Repayment of shareholder's loan       -               -               (1,035,580)
Capital injection to Geo by           -               -               1,744,213
minority shareholders
Borrowings from shareholder's loan    -               -               6,035,580
Borrowings under long-term loans      -               -               8,491,756
Issued common stock                   -               -               9,383,440
Net cash (used in) provided by        11,476,165      (2,169,334)     37,080,368
financing activities
Effect of exchange rate changes on    80,258          307,474         1,529,937
cash and cash equivalents
NET (DECREASE) INCREASE IN CASH AND   (3,271,636)     (4,147,223)     4,688,224
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,            14,019,634      18,166,857      13,478,633
BEGINNING
CASH AND CASH EQUIVALENTS, ENDING   $ 10,747,998    $ 14,019,634    $ 18,166,857
Supplemental disclosure of cash
flow information:
Cash paid during the year
                   Income taxes     $ 493,378       $ 2,708,313     $ 7,360,151
                           Interest $ 4,537,517     $ 2,725,058     $ 1,331,258

 

 

 

SOURCE China Information Technology, Inc.

Website: http://www.chinacpby.com
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