China Information Technology, Inc. Announces Third Quarter 2010 Results

* Represents a gain from the change of fair value of the contingent consideration for the acquisition of Huipu as at 09/30/2010, according to FASB ASC 805 – Business Combinations

Conference Call

China Information Technology will host a corresponding conference call and live webcast at 8:00 am Eastern Standard Time (EST) (9:00 pm, Beijing time).

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: 22786180




A live and archived webcast of the call will be available on the Investor Relations section of China Information Technology's website at http://www.chinacnit.com.

A telephone replay of the call will be available from November 08, 2010 through November 16, 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: 22786180




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 digital hospital information systems, with the goal of being the largest GIS software provider in 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 (GIS), Digital Public Security Technology (DPST), and Digital Hospital Information Systems (DHIS). 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" 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 Technology, Inc.

Iris Yan

Tel: +86-755-8370-4767  

Email: Email Contact

http://www.chinacnit.com

Christensen

Kathy Li

Tel: +1-480-614-3036

Email: Email Contact

Teal Willingham

Tel: +86-010-5971-2001

Email: Email Contact

CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009

Expressed in U.S. dollars

(Except for share and per share amounts)






September 30



December 31






2010



2009


ASSETS




(Unaudited)














CURRENT ASSETS









Cash and cash equivalents



$

18,001,834


$

13,478,633


Restricted cash




7,843,653



5,859,910


Accounts receivable:









Billed, net of allowance for doubtful accounts of $ 3,136,000 and $3,123,000, respectively




19,777,808



23,907,035


Unbilled




72,060,307



47,851,638


Bills receivable




568,860



-


Advances to suppliers




8,840,865



6,924,035


Amount due from related parties, net of allowance for doubtful accounts of $0 and $73,000, respectively




264,840



129,937


Inventories, net of provision of $ 320,000 and $184,000,respectively




23,498,795



10,936,004


Other receivables and prepaid expenses




6,772,698



15,405,089


Deferred tax assets




1,530,931



1,719,327


TOTAL CURRENT ASSETS




159,160,591



126,211,608











Deposit for software purchase




5,050,878



1,426,452


Deposit for purchase of land use rights




18,175,883



-


Long-term investments




2,055,195



2,862,016


Property, plant and equipment, net




75,218,112



53,586,514


Land use rights, net




1,914,475



1,907,611


Intangible assets, net




13,407,005



13,556,141


Goodwill




50,067,871



50,609,866


Deferred tax assets




554,747



668,730


TOTAL ASSETS



$

325,604,757


$

250,828,938











LIABILITIES AND EQUITY


















CURRENT LIABILITIES









Short-term bank loans



$

27,390,533


$

15,927,780


Accounts payable




18,033,514



20,159,317


Bills payable




26,795,017



12,658,029


Advances from customers




6,163,440



3,950,744


Amount due to related parties, current portion




678,008



583,736


Accrued payroll and benefits




1,935,712



3,142,240


Other payables and accrued expenses




7,931,283



14,252,918


Contingent consideration, current portion




1,468,901



1,857,994


Income tax payable




5,648,596



3,290,245


TOTAL CURRENT LIABILITIES




96,045,004



75,823,003











Long-term bank loans




8,592,780



1,907,100


Amount due to related parties, long-term portion




5,009,478



-


Contingent consideration, net of current portion




2,083,503



2,635,397


Deferred tax liabilities




1,863,638



2,564,604


TOTAL LIABILITIES




113,594,403



82,930,104











COMMITMENTS AND CONTINGENCIES




-



-





CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30 , 20 10 AND DECEMBER 31, 20 0 9 (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 20 10: 52,061,787 : 200 9 : 49,905,141shares



  $

255,115


$

233,548


Treasury stock, 6,000 shares, at cost




(11,468)



(11,468)


Additional paid-in capital




90,381,445



78,495,062


Reserve




8,345,371



8,345,371


Retained earnings




86,705,220



60,462,275


Accumulated other comprehensive income




8,929,721



5,016,575


Total equity of the Company




194,605,404



152,541,363


Non-controlling interest




17,404,950



15,357,471


Total equity




212,010,354



167,898,834











TOTAL LIABILITIES AND EQUITY




325,604,757



250,828,938





CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS EN DED SEPTEMBER 30 , 2010 AND 200 9 (Unaudited)

Expressed in U.S. dollars

(Except for share and per share amounts)




Three Months Ended



Nine Months Ended




September 30,



September 30,




2010



20 09



2010



20 09















Revenue - Products

$

12,643,172


$

2,444,969


$

26,462,653


$

9,055,386


Revenue - Software


29,474,263



20,178,136



67,059,131



45,111,089


Revenue - System integration


1,347,984



5,927,117



7,617,390



14,454,193


Revenue - Others


340,712



130,459



1,488,952



828,116


TOTAL REVENUE


43,806,131



28,680,681



102,628,126



69,448,784















Cost - Products sold


10,725,203



1,765,042



21,779,326



7,385,682


Cost - Software sold


11,314,585



7,365,142



27,973,686



16,059,719


Cost - System integration


621,310



4,402,388



3,667,840



10,943,151


Cost - Others


59,440



28,112



205,922



190,220


TOTAL COST


22,720,538



13,560,684



53,626,774



34,578,772















GROSS PROFIT


21,085,593



15,119,997



49,001,352



34,870,012















Administrative expenses


(5,449,209)



(2,462,872)



(10,840,741)



(6,983,595)


Research and development expenses


(937,774)



(687,580)



(2,067,854)



(1,911,844)


Selling expenses


(1,697,564)



(715,951)



(4,401,337)



(1,954,016)


INCOME FROM OPERATIONS


13,001,046



11,253,594



31,691,420



24,020,557















Subsidy income


6,521



158,520



438,201



674,379


Other income, net


350,874



2,654



992,973



167,174


Interest income


22,024



40,948



51,318



238,492


Interest expense


(548,184)



(109,204)



(960,832)



(225,858)


INCOME BEFORE INCOME TAXES


12,832,281



11,346,512



32,213,080



24,874,744















Income tax expense


(2,361,593)



(1,797,945)



(5,696,285)



(3,478,141)


NET INCOME


10,470,688



9,548,567



26,516,795



21,396,603















Add/( Less ) : Net income attributable to the non-controlling interest


139,080



177,476



( 273,850 )



(115,742)















NET INCOME ATTRIBUTABLE TO THE COMPANY

$

10,609,768


$

9,726,043


$

2 6,242,945


$

21,280,861















Weighted average number of shares













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 share - Basic and Diluted








 





Basic - Net income attributable to the Company's common stockholders

$

0. 21


$

0.20


$

0. 51


$

0.45


Diluted - Net income attributable to the Company's common stockholders

$

0. 21


$

0.20


$

0 51


$

0.45





CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30 , 2010 AND 200 9 (Unaudited)

Expressed in U.S. dollars

(Except for share and per share amounts)




Three Months Ended



Nine Months Ended




September 30,



September 30,




2010



20 09



2010



2009















Net income

$

10,470,688


$

9,548,567


$

26,516,795


$

21,396,603


Other comprehensive income:













Foreign currency translation gain


2,948,257



208,129



3,972,752



643,508















Comprehensive income


13,418,945



9,756,696



30,489,547



22,040,111


Comprehensive income attributable to the non-controlling interest


99,972



174,004



(333,456)



(119,301)


Comprehensive income attributable to the Company

$

13,518,917


$

9,930,700


$

30,156,091


$

21,920,810





CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30 , 2010 AND 2009 (Unaudited)

Expressed in U.S. dollars

(Except for share and per share amounts)




Nine Months Ended




September 30,




20 10



2009


OPERATING ACTIVITIES







Net income

$

26,516,795


$

21,396,603


Adjustments to reconcile net income to net cash provided by operating activities:







Depreciation


5,415,554



2,825,201


Amortization of intangible assets


1,349,745



1,305,550


Stock-based compensation


1,130,000



183,600


L oss on disposal of property and equipment


321,854



33,966


Loss on write-off of land use rights


231,615





Impairment of long-term investment


850,320



184,397


Loss on doubtful accounts receivable


1,060,348



576,832


Provision for obsolete inventories


130,328



-


Change in d eferred income tax


162,900



(117,583)


Deemed interests in relat ion to shareholder's loan


125,000



-


Change in fair value of contingent consideration


(940,986)



-


Changes in operating assets and liabilities, net of effects of business acquisitions:







In crease in restricted cash


(658,872)



-


Increase in accounts receivable


(19,772,920)



(17,231,581)


I ncrease in advances to suppliers


(2,394,325)



(6,177,155)


Decrease / (increase) in other receivables and prepaid expenses


8,134,566



(1,315,827)


Increase in inventories


(12,431,677)



(620,005)


I ncrease in accounts payable and bills payable


11,143,415



5,944,128


I ncrease in advances from customers


2,100,476



439,436


Increase in amount due to related parties


75,244



67,081


D ecrease in other payables and accrued expenses


(5,931,994)



(507,220)


In crease in income tax payable


2,253,344



1,338,726


Net cash provided by operating activities


18,870,730



8,326,149









INVESTING ACTIVITIES







Increase in restricted cash in relation to credit facilities


(1,172,663)



-


Proceeds from sales of property and equipment


55,925



100,299


Purchase of land use rights


(231,615)





Proceeds from sale of short-term investments


-



5,863,600


Refund of investment in former Joint Venture


-



4,397,700


Purchases of property and equipment


(24,332,630)



(3,682,753)


Capitalized and purchased software development costs


(899,204)



(435,494)


Deposit for software purchase


(4,963,154)



(6,822,826)


Deposit for business acquisition


-



(8,000,000)


Deposit for purchase of land use rights


(17,266,658)



-


Net cash used in investing activities


(48,809,999)



(8,579,474)












CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30 , 2010 AND 2009 (CONTINUED ) (Unaudited)

Expressed in U.S. dollars

(Except for share and per share amounts)




Nine Months Ended




September 30,




20 10



2009









FINANCING ACTIVITIES







Borrowing of short-term loans


37,198,374



6,296,041


Borrowing of share - holder ' s loan


6,029,700



-


Borrowing of long-term loans


8,443,540



-


Repayment of short-term loans


(26,150,419)



(1,172,720)


Repayment of shareholder ' s loan


(1,029,700)



-


Repayment of long-term loans


(1,912,300)



-


Issued common stock  


9,383,440



-


Repurchase of common stock


-



(11,468)


Capital injection to Geo by minority share-holders


1,734,309



-


Net cash provided by financing activities


33,696,944



5,111,853




Effect of exchange rate changes on cash and cash equivalent s


765,526



40,325




NET IN CREASE IN CASH AND CASH EQUIVALENTS


4,523,201



4,898,853


CASH AND CASH EQUIVALENTS, BEGINNING


13,478,633



9,565,252


CASH AND CASH EQUIVALENTS, ENDING

$

18,001,834


$

14,464,105




Supplemental disclosure of cash flow information:









Nine Months Ended




September 30,




20 10



2009


Cash paid during the period







     Income taxes

$

3,288,052


$

2,256,998


     Interest paid

$

834,857


$

209,639









Supplemental disclosure of significant non-cash transactions :











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