China Information Technology, Inc. Announces Third Quarter 2010 Results

Net cash provided by operating activities was $20.42 million for the third quarter, making the total for the nine months ended September 30, 2010 $18.87 million, an increase of $10.54 million or 126.6% from $8.33 million net cash provided by operating activities for the same period of 2009. Such increase was attributable to the improvement in accounts receivable turnover as well as increases in accounts payable and advances from customers.

Financial Outlook

For fiscal year 2010, the Company reaffirms its guidance with projected revenue in the range of $141 million to $146 million and adjusted net income in the range of $35.5 million to $39.5 million. Additionally, with strong growth momentum and high visibility in its core business, the Company is issuing guidance for the full year 2011 with projected revenue in the range of $165 million to $172 million and adjusted net income in the range of $43 million to $45 million, excluding any non-cash expenses as a result of employee stock awards, amortization of intangible assets associated with acquisitions, and changes in fair value of contingent considerations.  

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for earnings that exclude non-cash charges. China Information Technology 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, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential operating activities of China Information Technology. Accordingly, management excludes the expense arising from certain non-cash charges when making operational decisions. China Information Technology 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 China Information Technology's financial performance in comparison to historical periods. In addition, it allows investors to evaluate China Information Technology's performance using the same methodology and information as that used by China Information Technology'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, China Information Technology's management compensates for these limitations by providing the relevant disclosure of the items excluded.

The following table provides the non-GAAP financial measure and the related GAAP measure and provides a reconciliation of the non-GAAP measure to the equivalent GAAP measure.


Q3 2010 Reconciliation of Operating, Net Income and EPS

to Exclude SBC, Amortization of Intangible Assets and Contingent Consideration


3 Mos. Ended

3 Mos. Ended

9 Mos. Ended

9 Mos. Ended


30-Sep-10

30-Sep-09

30-Sep-10

30-Sep-09

Operating income

13,001,046

11,253,594

31,691,420

24,020,557

Stock based compensation ("SBC")

1,130,000

-

1,130,000

183,600

Amortization

422,697

439,840

1,349,745

1,305,550






Operating income (without SBC and amortization)

14,553,743

11,693,434

34,171,165

25,509,707






Net income Attributable to the Company

10,609,768

9,726,043

26,242,945

21,280,861

Stock based compensation ("SBC")

1,130,000

-

1,130,000

183,600

Amortization

422,697

439,840

1,349,745

1,305,550

Change in fair value of contingent consideration *

(240,718)

-

(940,986)

-






Net income (without SBC, amortization and contingent consideration)

11,921,747

10,165,883

27,781,704

22,770,011






Weighted Average Number of Shares Outstanding





Basic

51,466,927

47,536,883

51,377,933

47,531,327

Diluted

51,466,927

47,536,883

51,377,933

47,531,327






Earnings per s hare (without SBC, amortization and conti n gent consideration)





Basic

$0.23

$0.21

$0.54

$0.48

Diluted

$0.23

$0.21

$0.54

$0.48





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