-- Second Quarter Total Revenues of US$28.2 million, Up 40.8%
Year-on-Year; -- Second Quarter Adjusted(1) Net Income of US$16.2
million, an Increase of 40.4% Year-on-Year; -- Second Quarter US
GAAP Net Income of US$14.2 million, an Increase of 43.1%
Year-on-Year; -- Full Year 2009 Revenue Guidance Increased to
US$98.5 million from US$93.0 million, Adjusted Net Income Guidance
Increased to US$49.5 million from US$47.0 million and Adjusted
Diluted Earnings Per Share Guidance Increased to $0.94 Per Share
from $0.87 Per Share; (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. XIAMEN, China, Nov. 16 /Xinhua-PRNewswire/ -- 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 September 30, 2008, which is the
second quarter of its fiscal year ending March 31, 2009. "I'm
pleased to report that once again our second quarter financial
results exceeded our top and bottom line guidance. These results
demonstrate that even in the current economic environment our
business model has a strong foundation based on recurring revenue
and profits, a dependable, diversified and well-capitalized
customer base, a business focus on a high-growth market, and a
range of software development products and solutions that bring
value to our customers," commented Weizhou Lian, CEO of Longtop.
"Based on these strong fundamentals and our ongoing discussions
with customers about their IT spending plans, we are again
increasing our full year guidance and are confident we can achieve
our existing 2010 financial targets." FISCAL SECOND QUARTER
DETAILED FINANCIAL RESULTS Revenue 2008 Q2 and 2009 Q2 Revenue -
US$000s Three months ended Six months ended September September %
September September % 30, 2007 30, 2008 Change 30, 2007 30, 2008
Change Software development $18,126 $23,583 30.1% $26,332 $39,652
50.6% Other services $1,887 $4,605 144.0% $5,094 $7,864 54.4% Total
revenue $20,013 $28,188 40.8% $31,426 $47,516 51.2% Total revenues
for the quarter ended September 30, 2008, were US$28.2 million, an
increase of 40.8% year-on-year (YoY) from US$20.0 million in the
corresponding year ago period, and exceeding company guidance of
US$26 million. Software development revenues of US$23.6 million
contributed 83.7% of total revenues, a YoY increase of 30.1%. Total
revenues for the six months ended September 30, 2008, were US$47.5
million, an increase of 51.2% YoY from US$31.4 million in the
corresponding year ago period. Software development revenues, which
were 83.4% of total revenues for the six months ended September 30,
2008, amounted to US$39.7 million, a YoY increase of 50.6%.
Software Development Revenue by Customer Type - US$000s Three
months ended Six months ended September September % Change
September September % 30, 2007 30, 2008 (Decrease) 30, 2007 30,
2008 Change Big Four Banks 10,224 11,862 16.0% 16,394 21,028 28.3%
Other Banks 5,371 8,672 61.5% 6,646 13,922 109.5% Insurance 1,500
2,283 52.2% 1,887 3,169 67.9% Enterprises 1,031 766 (25.7%) 1,405
1,533 9.1% Total 18,126 23,583 30.1% 26,332 39,652 50.6% Software
Development Revenue Customer Concentration Analysis Three months
ended Six months ended September September Change September
September Change 30, 2007 30, 2008(Decrease) 30, 2007 30, 2008
(Decrease) % of Software Development Revenue from Big Four Banks
56.4% 50.3% (6.1%) 62.3% 53.0% (9.3%) Other Banks 29.6% 36.8% 7.2%
25.2% 35.1% 9.9% Insurance 8.3% 9.7% 1.4% 7.2% 8.0% 0.8%
Enterprises 5.7% 3.2% (2.5%) 5.3% 3.9% (1.4%) Total 100.0% 100.0%
0.0% 100.0% 100.0% 0.0% Software development revenue from the Big
Four Banks in the second quarter was US$11.9 million, an increase
of 16.0% YoY. Big Four banks accounted for 50.3% of software
development revenues for the fiscal second quarter 2009, as
compared to 56.4% in the corresponding year ago period. Software
development revenue from the Big Four Banks for the six months
ended September 30, 2008, was US$ 21.0 million, an increase of
28.3% YoY. Big Four Banks accounted for 53.0% of software
development revenues for the six months ended September 30, 2008,
as compared to 62.3% in the corresponding year ago period. Software
development revenue from Other Banks in the fiscal second quarter
2009 was US$8.7 million, a YoY increase of 61.5%. Other Banks
accounted for 36.8% of software development revenues for the three
months ended September 30, 2008, as compared to 29.6% in the
corresponding year ago period. Software development revenue from
Other Banks for the six months ended September 30, 2008, was
US$13.9 million, an increase of 109.5% YoY. Other Banks accounted
for 35.1% of software development revenues for the six months ended
September 30, 2008, as compared to 25.2% in the corresponding year
ago period. Gross Margins Three months ended Six months ended
September September Change September September Change 30, 2007 30,
2008 (Decrease) 30, 2007 30, 2008 (Decrease) Adjusted Total Gross
Margin % 83.2% 73.1% (10.1%) 79.8% 70.8% (9.0%) US GAAP Total Gross
Margin % 82.0% 69.8% (12.1%) 78.3% 67.3% (10.9%) Adjusted Total
Gross Margin of 73.1% in the second fiscal quarter was in line with
the Company's guidance and was 10.1% lower than the 83.2% in the
corresponding year ago period. US GAAP total gross margin in the
second quarter was 69.8% as compared to 82.0% in the corresponding
year ago period with the difference between US GAAP and Adjusted
Gross Margin being the exclusion of share-based compensation and
amortization of acquired intangibles. Adjusted Total Gross Margin
for the six months ended September 30, 2008 was 70.8%, as compared
to 79.8% in the corresponding year ago period. US GAAP total gross
margin for the six months ended September 30, 2008 was 67.3%, as
compared to 78.3% in the corresponding year ago period. The YoY
decline in gross margin is consistent with previous guidance of
full year Adjusted Gross Margin of 70.0% and was due to lower gross
margins on Fenet, which was acquired in October 2007, and a higher
mix of customized solution revenue with 71.2% of revenue coming
from customized solutions for the three months and 67.7% for the
six months ended September 30, 2008, as compared to 48.3% and 52.0%
in the respective year ago periods. The Company is well on track to
achieve its target for Adjusted Gross Margin of 70.0% for fiscal
2009. Operating Expenses Three months ended Six months ended
September September % September September % 30, 2007 30, 2008
Change 30, 2007 30, 2008 Change Adjusted Operating Expenses -
US$000s 3,052 5,038 65.1% 5,930 9,006 51.9% Adjusted Operating
Expenses - % of revenue 15.3% 17.9% -- 18.9% 19.0% -- US GAAP
operating expenses - US$000s 3,229 6,159 90.7% 6,366 11,157 75.3%
US GAAP operating expenses - % of revenue 16.1% 21.8% -- 20.3%
23.5% -- Adjusted Operating Expenses, which were 17.9% and 19.0% of
revenue for the three and six months ended September 30, 2008, are
in line with full year Company guidance of 20.0%. The YoY increase
in total Adjusted Operating Expenses of 51.9% for the first six
months of 2009 is in line with total revenue growth of 51.2%. US
GAAP operating expenses, which were 23.5% of revenue for the six
months ended September 30, 2008, increased 75.3%from the
corresponding year ago period as compared to 51.9% for Adjusted
Operating Expenses primarily due to share-based compensation
expenses subsequent to the initial public offering in October 2007,
which are excluded from the Adjusted Operating Expenses. Operating
Income Three months ended Six months ended September September %
September September % 30, 2007 30, 2008 Change 30, 2007 30, 2008
Change Adjusted Operating Income - US$000s 13,598 15,567 14.5%
19,149 24,624 28.6% Adjusted Operating Income - % of revenue 67.9%
55.2% -- 60.9% 51.8% -- US GAAP operating income - US$000s 13,174
13,526 2.7% 18,225 20,843 14.4% US GAAP operating income - % of
revenue 65.8% 48.0% -- 58.0% 43.9% -- Adjusted Operating Income was
US$15.6 million for the second quarter and US$24.6 million for the
six months ended September 30, 2008, a YoY increase of 14.5% and
28.6%, respectively. Adjusted Operating Margin for the six months
ended September 30, 2008, was 51.8%, higher than the Company
guidance of 50% for the full year. US GAAP operating income was
US$13.5 million for the second quarter and US$20.8 million for the
six months ended September 30, 2008, a YoY increase of 2.7% and
14.4%, respectively, from the corresponding year ago periods. Net
Income Three months ended Six months ended September September %
September September % 30, 2007 30, 2008 Change 30, 2007 30, 2008
Change (Decrease) Adjusted Net Income - US$000s 11,568 16,238 40.4%
17,065 24,065 41.0% Adjusted Net Income per diluted share 0.28 0.31
10.4% 0.42 0.46 9.5% Adjusted Net Income - % of revenue 57.8% 57.6%
-- 54.3% 50.6% -- US GAAP net income - US$000s 9,919 14,197 43.1%
14,848 20,284 36.6% US GAAP net income per diluted share 0.24 0.27
12.5% 0.37 0.27 (27.0%) US GAAP net income - % of revenue 49.6%
50.4% -- 47.2% 42.7% -- Reconciliation between US GAAP Net Income
and Adjusted Net Income Three months ended Six months ended
September September % September September % 30, 2007 30, 2008
Change 30, 2007 30, 2008 Change (Decrease) (Decrease) Adjusted Net
Income $11,568 $16,238 40.4% $17,065 $24,065 41.0% - US$000s Stock
compensation $180 $1,428 693.3% $442 $2,742 520.4% Acquisition
related amortization and charges $244 $613 151.2% $482 $1,039
115.6% Loss from discontinued operations $1,225 $-- (100.0%) $1,293
$-- (100.0%) Sub-total $1,649 $2,041 23.8% $2,217 $3,781 70.5% US
GAAP net income $9,919 $14,197 43.1% $14,848 $20,284 36.6% Adjusted
Net Income for the quarter ended September 30, 2008, of US$16.2
million or US$0.31 per fully diluted share increased 40.4% as
compared to Adjusted Net Income of US$11.6 million in the
corresponding year ago period, and exceeded Company guidance of
US$13.5 million and US$0.25 per fully diluted share. US GAAP net
income for the quarter ended September 30, 2008, of US$14.2 million
or US$0.27 per fully diluted share increased 43.1% as compared to
US GAAP net income of US$9.9 million in the corresponding year ago
period. US GAAP and Adjusted Net Income for the quarter ended
September 30, 2008, included an $877,000 government subsidy
(September 30, 2007: Nil) recorded as other income and a $1.9
million income tax refund (September 30, 2007: Nil). Adjusted Net
Income for the six months ended September 30, 2008, of US$24.1
million or US$0.46 per fully diluted share increased 41.0% as
compared to Adjusted Net Income of US$17.1 million in the
corresponding year ago period. US GAAP net income for the six
months ended September 30, 2008, of US$20.3 million or US$0.27 per
fully diluted share increased 36.6% as compared to US GAAP net
income of US$14.8 million in the corresponding year ago period.
Adjusted and US GAAP net income for the six months ended September
30, 2008 included $1.1 million in exchange losses on US dollar
denominated deposits which were in China pending conversion to
Renminbi, and included a $877,000 government subsidy (six months
end September 30, 2007: Nil) recorded as other income and a $1.9
million income tax refund (six months end September 30, 2007:
$795,000). Unrestricted cash balances at September 30, 2008, were
US$209.0 million giving the Company sufficient resources for
potential acquisitions in the still fragmented China financial IT
services sector. Commenting on the results, Derek Palaschuk, CFO of
Longtop said: "The outstanding results from the fiscal second
quarter further solidified Longtop's financial strength. The second
quarter's record revenues were supported by robust cash flow from
operations, which was US$19.5 million during the quarter. And
looking ahead, the strong US$36.0 million in software development
revenue backlog from having signed a record number of contracts
this quarter, has enabled us to boost once more our current
estimate for fiscal 2009 revenues to US$98.5 million and for
Adjusted Net Income per fully diluted share to US$0.94, which is up
substantially from our original guidance in May 2008 for revenues
of US$86.0 million and Adjusted Net Income per fully diluted share
of US$0.80." BUSINESS OUTLOOK Longtop anticipates for the quarter
ending December 31, 2008: i) Total revenues of US$29.0 million,
compared to previous guidance in August 2008 of US$26 million;
representing an increase of 55.9% YoY from revenues of US$18.6
million in the corresponding year ago period; ii) Adjusted Net
Income guidance of US$15.5 million or US$0.30 per diluted share,
representing an increase of 47.6% YoY from Adjusted Net Income of
US$10.5 million in the corresponding year ago period. Longtop
anticipates for its fiscal year ending March 31, 2009, i) Total
revenues of US$98.5 million, compared to previous guidance in
August 2008 of US$93.0 million, representing an increase of 47.7%
YoY from revenues of US$66.7 million in fiscal year 2008; ii)
Adjusted Net Income to be US$49.5 million, compared to previous
guidance in August 2008 of US$47.0 million, representing an
increase of 46.4% YoY from Adjusted Net Income of US$33.8 million;
iii)Adjusted Diluted Earnings Per Share of US$0.94 per share
compared to US$0.87 previously guided in August 2008. CONFERENCE
CALL AND WEBCAST Longtop's management team will host a conference
call at 7:00 AM ET, November 17, 2008 (or 4:00 AM U.S. Pacific Time
on November 17, 2008, and 8:00 PM on November 17, 2008,
Beijing/Hong Kong time). To participate in the conference call,
please use the dial in numbers below: U.S Toll Free: 1866 549 1292
China Toll Free: 800 701 1223 Hong Kong and International: +852
3005 2050 Passcode: 765115# A replay of the call will be available
for two weeks following the call and can be accessed on the Company
website or by dialing the numbers below: U.S Toll Free: 1866 753
0743 Hong Kong and International: +852 3005 2020 Passcode: 136397#
A live audio webcast of the conference call, as well as online
replay of the call, will be available on Longtop's website at
http://www.longtop.com/en . 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. Management believes these
non-GAAP financial measures enhance the user's overall
understanding of our current financial performance and our
prospects for the future and, additionally, uses these non-GAAP
financial measures for the general purpose of analyzing and
managing the Company's business. 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 Adjusted 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 and
goodwill impairment, and (3) 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: (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. Non-Cash
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. Further, the amount of
share-based compensation expense cannot be anticipated by
management and business line leaders and these expenses were not
built into the annual budgets and quarterly forecasts, which have
been the basis for information Longtop provides to analysts and
investors as guidance for future operating performance. 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.
Amortization of acquired intangibles is non-cash expenses 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 believe that since intangibles represent
costs incurred by the acquired company to build value prior to
acquisition, they were part of transaction costs. Acquisition
proceeds allocated to deferred compensation arises where a portion
of the purchase price paid to shareholders who continue to work
with Longtop as employees is considered compensation expense rather
than purchase price. We believe these costs are part of the
transaction costs and amortized within the service period. 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. 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 effectiveness, profitability, and marketability of the
company's solutions; the Company's limited operating history; its
reliance on a limited number of customers that continue to account
for a high percentage of the Company's revenues; risk of payment
failure by any of its large customers, which could significantly
harm the Company's cash flows and profitability; the ability of the
Company to operate effectively as a public company; future shortage
or availability of the supply of employees; general economic and
business conditions; the volatility of the company's operating
results and financial condition; the company's ability to attract
or retain qualified senior management personnel and research and
development staff; 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 ended September 30, 2008, 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 rapidly
growing 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
financial institutions in China. According to the independent
market research firm IDC, Longtop is positioned as the "most
competitive banking IT solutions provider" in China in 2007, as
measured by both development strategy and development capability in
the IDC MarketScape analysis model. Longtop has five solution
delivery centers, three research centers and thirty-nine service
centers located in 20 provinces throughout China. Longtop was
founded in 1996 by Xiaogong Jia, Chairman and Weizhou Lian, CEO, as
a system integration company focusing on the financial services
industry in China and made the transition to a software and
solutions provider in 2001. For more information, please visit:
http://www.longtop.com/ . CONSOLIDATED BALANCE SHEETS March June
September 31, 2008 30, 2008 30, 2008 (In U.S. dollar thousands,
except share and per share data) Assets Current assets: Cash and
cash equivalents $204,526 $201,528 $208,996 Restricted cash 6,733
2,207 10,926 Accounts receivable, net 21,254 26,375 37,488
Inventories 1,351 3,029 3,895 Deferred tax assets 1,517 698 106
Other current assets 3,843 4,844 6,313 Total current assets 239,224
238,681 267,724 Fixed assets, net 8,167 19,171 18,722 Intangible
assets, net 7,764 7,471 8,929 Goodwill 14,966 15,315 16,559 Long
term investment -- 2,613 2,171 Deferred tax assets 246 1,106 834
Other assets 524 488 1,192 Total assets $270,891 $284,845 $316,131
Liabilities, mezzanine equity and shareholders' equity Current
liabilities: Short-term borrowings $512 $633 $619 Accounts payable
4,143 9,196 12,801 Deferred revenue 9,487 11,608 17,037 Amounts due
to related parties 54 -- -- Deferred tax liabilities 491 501 504
Accrued and other current liabilities 18,773 12,824 17,513 Total
current liabilities 33,460 34,762 48,474 Long-term liabilities:
Obligations under capital leases, net of current portion 233 264
220 Deferred tax liabilities 1,863 1,938 2,331 Other non-current
liabilities 445 259 259 Total liabilities 36,001 37,223 51,284
Shareholders' equity: Ordinary shares $0.01 par value
(1,500,000,000 shares authorized, 50,274,126, 50,429,426 and
50,569,341 shares issued and outstanding as of March 31, June 30,
and September 30, 2008, respectively) $502 $504 $506 Additional
paid-in capital 234,771 236,596 238,287 Retained
earnings/(Accumulated deficit) (14,021) (7,934) 6,263 Accumulated
other comprehensive income 13,638 18,456 19,791 Total shareholders'
equity 234,890 247,622 264,847 Total liabilities, mezzanine equity
and shareholders' equity $270,891 $284,845 $316,131 CONSOLIDATED
STATEMENTS OF OPERATIONS Three Months Ended Six Months Ended
September September September September 30,2007 30,2008 30,2007
30,2008 (In U.S. dollar thousands, except share and per share data)
Revenues: Software development $18,126 $23,583 $26,332 $39,652
Other services 1,887 4,605 5,094 7,864 Total revenues 20,013 28,188
31,426 47,516 Cost of revenues: Software development 2,638 5,962
4,949 11,770 Other services 972 2,541 1,886 3,746 Total cost of
revenues 3,610 8,503 6,835 15,516 Gross profit 16,403 19,685 24,591
32,000 Operating expenses: Research and development 471 1,204 921
2,313 Sales and marketing 825 2,616 1,829 4,408 General and
administrative 1,933 2,339 3,616 4,436 Total operating expenses
3,229 6,159 6,366 11,157 Income from operations 13,174 13,526
18,225 20,843 Other income (expenses): Interest income 198 1,609
473 3,516 Interest expense (269) (25) (438) (292) Other income
(expense), net 32 717 66 (295) Total other income (39) 2,301 101
2,929 Income before income tax expense 13,135 15,827 18,326 23,772
Income tax expense (1,991) (1,630) (2,185) (3,488) Income from
continuing operations 11,144 14,197 16,141 20,284 Loss from
discontinued operations, net of tax (1,225) -- (1,293) -- Net
income 9,919 14,197 14,848 20,284 Net income (loss) per share:
Continuing operations $0.28 $0.28 $0.40 $0.40 Discontinued
operations $(0.03) $-- $(0.03) $-- Basic ordinary share $0.25 $0.28
$0.37 $0.40 Continuing operations $0.28 $-- $0.40 $-- Discontinued
operations $(0.03) $-- $(0.03) $-- Basic preferred share $0.25 $--
$0.37 $-- Continuing operations $0.27 $0.27 $0.40 $0.39
Discontinued operations $(0.03) $-- $(0.03) $-- Diluted $0.24 $0.27
$0.36 $0.39 Shares used in computation of net income (loss) per
share: Basic ordinary share 29,745,320 50,491,027 29,725,294
50,406,533 Basic preferred share 10,244,339 -- 10,231,172 --
Diluted 41,192,580 52,398,944 40,844,608 52,455,884 Includes
share-based compensation related to: Cost of revenues software
development $3 $419 $6 $779 Cost of revenues other services -- 63
-- 122 General and administrative expenses 166 473 414 945 Sales
and marketing expenses 11 371 22 713 Research and development
expenses -- 102 -- 183 UNAUDITED CONSOLIDATED ADJUSTED STATEMENTS
OF OPERATIONS Three Months Ended Six Months Ended September
September September September 30,2007 30,2008 30,2007 30,2008 (In
US dollar thousands, except share and per share data) Revenues:
Software development 18,126 23,583 26,332 39,652 Other services
1,887 4,605 5,094 7,864 Total revenues 20,013 28,188 31,426 47,516
Software development revenue adjustments: Adjusted revenues:
Software development 18,126 23,583 26,332 39,652 Other services
1,887 4,605 5,094 7,864 Total adjusted revenues 20,013 28,188
31,426 47,516 Cost of revenues: Software development 2,638 5,962
4,949 11,770 Other services 972 2,541 1,886 3,746 Total cost of
revenues 3,610 8,503 6,835 15,516 Cost of revenue adjustments:
Share-based compensation software development (3) (419) (6) (779)
Share-based compensation other services -- (63) -- (122)
Amortization of acquired intangible assets other services (244)
(283) (482) (532) Amortization of acquired intangible assets
software development -- (98) -- (140) Amortization of acquired
deferred compensation other services (39) -- (39) Amortization of
acquired deferred compensation software development (18) -- (18)
Adjusted cost of revenues: Software development 2,635 5,427 4,943
10,833 Other services 728 2,156 1,404 3,053 Total adjusted cost of
revenues 3,363 7,583 6,347 13,886 Gross profit 16,403 19,685 24,591
32,000 Adjusted gross profit 16,650 20,605 25,079 33,630 Operating
expenses: Research and development 471 1,204 921 2,313 Sales and
marketing 825 2,616 1,829 4,408 General and administrative 1,933
2,339 3,616 4,436 Total operating expenses 3,229 6,159 6,366 11,157
Operating expense adjustments: Share-based compensation research
and development -- (102) -- (183) Share-based compensation sales
and marketing (11) (371) (22) (713) Share-based compensation
general and administrative (166) (473) (414) (945) Amortization of
acquired intangible assets sales and marketing -- (136) -- (243)
Amortization of acquired intangible assets general and
administrative -- (39) -- (67) Adjusted operating expenses:
Research and development 471 1,102 921 2,130 Sales and marketing
814 2,109 1,807 3,452 General and administrative 1,767 1,827 3,202
3,424 Total adjusted operating expenses 3,052 5,038 5,930 9,006
Income from operations 13,174 13,526 18,225 20,843 Adjusted income
from operations 13,598 15,567 19,149 24,624 Other income
(expenses): Interest income 198 1,609 473 3,516 Interest expense
(269) (25) (438) (292) Other income (expenses), net 32 717 66 (295)
Total other income (expenses) (39) 2,301 101 2,929 Other income
(expenses) adjustments: Adjusted other income (expenses): Interest
income 198 1,609 473 3,516 Interest expense (269) (25) (438) (292)
Other income (expenses), net 32 717 66 (295) Total adjusted other
income (expenses) (39) 2,301 101 2,929 Income before income tax
expense 13,135 15,827 18,326 23,772 Adjusted income before income
tax expense 13,559 17,868 19,250 27,553 Income tax expense (1,991)
(1,630) (2,185) (3,488) Income from continuing operations 11,144
14,197 16,141 20,284 Adjusted income from continuing operations
11,568 16,238 17,065 24,065 Loss from discontinued operations
(1,225) -- (1,293) -- Net income 9,919 14,197 14,848 20,284
Adjusted net income 11,568 16,238 17,065 24,065 Net income (loss)
per share: Continuing operations $0.28 $0.28 $0.40 $0.28
Discontinued operations $(0.03) $0.00 $(0.03) $0.00 Basic ordinary
share $0.25 $0.28 $0.37 $0.28 Continuing operations $0.28 $0.00
$0.40 $0.00 Discontinued operations $(0.03) $0.00 $(0.03) $0.00
Basic preferred share $0.25 $0.00 $0.37 $0.00 Continuing operations
$0.27 $0.27 $0.40 $0.27 Discontinued operations $(0.03) $0.00
$(0.03) $0.00 Diluted $0.24 $0.27 $0.36 $0.27 Adjusted net income
per share: Basic ordinary share $0.29 $0.32 $0.57 $0.48 Diluted
$0.28 $0.31 $0.42 $0.46 Shares used in computation of net income
and adjusted net income per share: Basic ordinary share 29,745,320
50,491,027 29,725,294 50,406,533 Basic preferred share 10,244,339
-- 10,231,172 -- Diluted 41,192,580 52,398,944 40,844,608
52,455,884 CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended
Six Months Ended September September September September 30,2007
30,2008 30,2007 30,2008 (In US dollar thousands, except share and
per share data) Cash flows from operating activities: Net income
$9,919 $14,197 $14,848 $20,284 Adjustments to reconcile net income
to net cash provided by operating activities: Share-based
compensation 180 1,428 442 2,742 Depreciation 526 704 854 1,318
Amortization of intangibles 266 602 652 1,073 Provision for
doubtful accounts (133) 156 (4) 46 Impairment of intangible asset
393 -- 393 -- Gain (Loss) on disposal of fixed assets (7) 41 (2) 42
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable (2,238) (10,030) (1,762) (14,464) Inventories
(811) 694 (1,401) (929) Other current assets (1,153) (1,495)
(2,422) (2,354) Other non-current assets 36 95 69 194 Other
non-current liabilities 20 -- 20 (194) Accounts payable 849 3,373
(1,858) 8,262 Deferred revenue 444 5,159 881 7,032 Accrued and
other current liabilities (2,171) 3,767 289 (2,490) Deferred income
taxes 42 842 196 871 Net cash provided by operating activities
6,162 19,533 11,195 21,433 Cash flows from investing activities:
Change in restricted cash 3,106 (8,719) 3,148 (4,193) Proceeds from
sale of fixed assets 27 214 32 214 Purchase of fixed assets (181)
(1,167) (593) (12,036) Purchase of intangible assets (1) -- (3) (3)
Long term investment -- (2,171) -- (4,784) Acquisitions, net of
cash acquired (3,824) (1,378) (3,824) (1,378) Amounts due from
related parties (54) -- (54) -- Net cash used in investing
activities (927) (13,221) (1,294) (22,180) Cash flows from
financing activities: Proceeds from short-term borrowings 14,643 --
22,467 -- Repayment of short-term borrowings (6,629) -- (10,389) --
Dividend paid (6,105) -- (6,105) -- Stock options exercised -- 265
-- 778 Repayments of capital leases obligations (184) (149) (298)
(582) Amounts due to related parties -- -- -- (54) Net cash
provided by financing activities 1,725 116 5,675 142 Effect of
exchange rates differences 897 1,040 1,805 5,075 Net increase
(decrease) in cash and cash equivalents 7,857 7,468 17,381 4,470
Cash and cash equivalents, beginning of period 79,444 201,528
69,920 204,526 Cash and cash equivalents, end of period $87,301
$208,996 $87,301 $208,996 Supplemental disclosure of cash flow
information: Income taxes paid $828 $788 $444 $2,811 Interest paid
$255 $25 $410 $295 Supplemental disclosure of non-cash investing
and financing activities: Fixed assets purchased under capital
leases $227 $86 $355 $655 Dividends paid in form of assets $18,348
$-- $18,348 $-- Acquisition: Cash consideration $3,524 $3,549
$3,524 $6,162 Cash consideration payable $-- $1,140 $-- $1,140
Assets acquired $3,524 $4,689 $3,524 $7,302 For more information,
please contact: Longtop Financial Technologies Limited Charles
Zhang Phone: +86-10-8421-7758 Email: IR Inside BV Caroline
Straathof Phone: +31-6-5462-4301 Email: DATASOURCE: Longtop
Financial Technologies Limited CONTACT: Charles Zhang of Longtop
Financial Technologies Limited, +86-10-8421-7758, or ; Or Caroline
Straathof of IR Inside BV, +31-6-5462-4301, or Web site:
http://www.longtop.com/ http://www.longtop.com/en
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