China Information Technology, Inc. Announces Second Quarter 2011 Results

Conference Call

China Information Technology will host a corresponding conference call and live webcast before the market opens on Wednesday, August 10, 2011 at 8:00 am Eastern Daylight Time (EDT) (which is also 8:00 pm in Beijing and Hong Kong).

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:        

800 819 0121

- Hong Kong Toll Free Number:

8 0093 0346

 Conference ID: 88481325




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 beginning two hours after the conclusion of the conference call through 11:00am Eastern Daylight Time, August 17, 2011.

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: 88481325




About China Information Technology, Inc.

China Information Technology, Inc., through its subsidiaries and other consolidated entities, specializes in information technologies and display technologies.  Headquartered in Shenzhen, China, the Company's integrated solutions include specialized software, hardware, systems integration, and related services.  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 significance of the Company's business segments, the ability of the Company to secure future opportunities in the market by leveraging its R&D capabilities and reputation; 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.

Margie Ma

Tel: + 86 755 8370 4734

Email: IR@chinacnit.com

Web: http://www.chinacnit.com


Christensen

Kathy Li

Tel: +1 480 614 3036

Email: Email Contact


Teal Willingham

Tel: +86 10 5826 4939

Email: Email Contact




CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 30, 2011 AND DECEMBER 31, 2010

Expressed in U.S. dollars (Except for share amounts)



June  30,


December  31,



2011


2010



(Unaudited)



ASSETS   










CURRENT ASSETS





Cash and cash equivalents

$

9,631,618

$

18,166,857

Restricted cash


11,801,481


8,344,147

Accounts receivable:





Billed, net of allowance for doubtful accounts of $ 5,548,000 and $6,073,000, respectively


35,714,301


31,172,599

Unbilled


71,988,882


67,622,656

Bills receivable


35,581


201,003

Advances to suppliers


11,129,156


9,246,437

Amounts due from related parties


62,588


330,876

Inventories, net of provision of $955,000 and $578,000, respectively


24,869,787


19,931,866

Other receivables and prepaid expenses


4,226,119


2,463,562

Deferred tax assets


1,229,363


1,565,006

TOTAL CURRENT ASSETS


170,688,876


159,045,009






Deposit for software purchase


2,552,550


3,034,000

Deposit for purchase of land use rights


27,091,750


26,566,377

Long-term investments


2,461,695


3,296,252

Property, plant and equipment, net


85,114,427


79,348,883

Land use rights, net


1,945,199


1,929,194

Intangible assets, net


13,931,788


13,725,274

Goodwill


53,005,334


51,918,275

Deferred tax assets


757,900


538,460

TOTAL ASSETS

$

357,549,519

$

339,401,724






LIABILITIES AND EQUITY










CURRENT LIABILITIES





Short-term bank loans

$

43,215,288

$

35,326,566

Accounts payable


15,070,939


17,249,334

Bills payable


21,546,474


20,536,475

Advances from customers


5,593,614


7,480,686

Amounts due to related parties


609,746


1,293,866

Accrued payroll and benefits


2,700,731


4,304,988

Other payables and accrued expenses


10,924,076


6,953,561

Contingent consideration, current portion


616,724


3,267,087

Income tax payable


2,867,350


3,809,708

TOTAL CURRENT LIABILITIES


103,144,942


100,222,271






Long-term bank loans


707,212


5,863,205

Amounts due to related parties, long-term portion


5,012,408


5,014,949

Contingent consideration, net of current portion


359,776


901,171

Deferred tax liabilities


1,452,592


1,824,434

TOTAL LIABILITIES


110,676,930


113,826,030






COMMITMENTS AND CONTINGENCIES


-


-






EQUITY










Common stock, par $0.01; authorized capital 200,000,000 shares; shares issued and outstanding 2011: 52,642,365, 2010: 52,061,787 shares


260,921


255,115

Treasury stock, 6,000 shares, at cost


(11,468)


(11,468)

Additional paid-in capital


95,280,855


92,294,350

Reserve


12,968,985


12,968,985

Retained earnings


104,064,685


90,240,665

Accumulated other comprehensive income


16,059,316


11,325,040

Total equity of the Company


228,623,294


207,072,687

Non-controlling interest


18,249,295


18,503,007

Total equity


246,872,589


225,575,694






TOTAL LIABILITIES AND EQUITY

$

357,549,519

$

339,401,724




CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010

Expressed in U.S. dollars (Except for share amounts)

(Unaudited)




Three Months Ended



Six Months Ended









June  30,



June  30,



June  30,



June  30,



2011



2010



2011



2010













Revenue - Products

$

11,113,382


$

7,471,511


$

19,120,375


$

13,819,481

Revenue - Software


9,255,633



22,406,236



23,147,158



37,584,868

Revenue - System integration


7,135,217



3,485,523



12,055,717



6,269,406

Revenue - Others


383,547



153,618



513,277



1,148,240

TOTAL REVENUE


27,887,779



33,516,888



54,836,527



58,821,995













Cost - Products sold


8,785,131



5,813,701



14,595,154



11,054,123

Cost - Software sold


2,137,286



10,257,690



6,386,892



16,659,101

Cost - System integration


4,971,036



570,721



8,114,193



3,046,531

Cost - Others


71,770



76,470



162,892



146,481

TOTAL COST


15,965,223



16,718,582



29,259,131



30,906,236













GROSS PROFIT


11,922,556



16,798,306



25,577,396



27,915,759













Administrative expenses


(3,375,472)



(2,621,501)



(5,879,779)



(5,391,532)

Research and development expenses


(1,150,407)



(560,649)



(1,883,737)



(1,130,080)

Selling expenses


(1,936,744)



(1,489,212)



(3,438,894)



(2,703,774)

INCOME FROM OPERATIONS


5,459,933



12,126,944



14,374,986



18,690,373













Subsidy income


87,064



268,898



117,504



431,680

Other income(loss), net


757,471



(324,700)



1,591,251



642,099

Interest income


39,940



10,403



134,946



29,294

Interest expense


(776,947)



(263,756)



(1,476,653)



(412,647)

INCOME BEFORE INCOME TAXES


5,567,461



11,817,789



14,742,034



19,380,799













Income tax expense


(239,440)



(2,163,609)



(1,319,958)



(3,334,692)

NET INCOME


5,328,021



9,654,180



13,422,076



16,046,107













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


273,666



(302,111)



401,944



(412,930)













NET INCOME ATTRIBUTABLE TO THE COMPANY

$

5,601,687


$

9,352,069


$

13,824,020


$

15,633,177













Weighted average number of shares












Basic


52,636,365



51,450,623



52,583,879



51,332,698

Diluted


52,636,365



51,450,623



52,583,879



51,332,698













Earnings per share - Basic and Diluted












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

$

0.11


$

0.18


$

0.26


$

0.30

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

$

0.11


$

0.18


$

0.26


$

0.30



CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010

Expressed in U.S. dollars (Except for share amounts)

(Unaudited)




Three Months Ended



Six Months Ended











June  30,



June  30,



June  30,



June  30,




2011



2010



2011



2010















Net income

$

5,328,021


$

9,654,180


$

13,422,076


$

16,046,107


Other comprehensive income:













Foreign currency translation gain


3,309,989



787,465



4,882,508



1,024,495


Comprehensive income


8,638,010



10,441,645



18,304,584



17,070,602


Comprehensive loss (income) attributable to the non-controlling interest


175,894



(322,572)



253,712



(433,428)


Comprehensive income attributable to the Company

$

8,813,904


$

10,119,073


$

18,558,296


$

16,637,174






CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2011 AND 2010

Expressed in U.S. dollars

(Unaudited)



Six Months Ended



June  30 ,
20 11


June  30,
20 10

OPERATING ACTIVITIES





Net income

$

13,422,076

$

16,046,107

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





(Reverse) provide provision for losses on accounts receivable and other receivables


(578,489)


267,716

Depreciation


5,161,401


3,441,071

Amortization of intangible assets and land use rights


882,055


927,048

Loss on disposal of property, plant and equipment, net


143,149


320,957

Provide (reverse) provision for obsolete inventories


361,384


(1,362)

Change in fair value of contingent consideration


(1,469,446)


(700,268)

Change in deferred income tax


(311,254)


215,192

Impairment of long-term investments


890,438


-

Imputed interests in relation to shareholder ' s loan


125,000


-

Changes in operating assets and liabilities





(Increase) decrease in restricted cash


(249,697)


457,202

Increase in accounts receivable


(6,125,482)


(10,656,507)

(Increase) decrease in advances to suppliers


(1,777,253)


2,091,453

(Increase) decrease in other receivables and prepaid expenses


(1,815,261)


313,302

Increase in inventories


(4,826,735)


(10,164,333)

Decrease in accounts payable


(1,888,310)


(5,209,216)

Decrease in advances from customers


(2,008,268)


(695,808)

(Decrease) increase in amounts due to related parties


(363,537)


5,311,077

Increase in accrued expenses and other liabilities


3,271,516


921,098

(Decrease) increase in income tax payable


(941,434)


569,611

Net cash provided by operating activities


1,901,853


3,454,340






INVESTING ACTIVITIES





Purchase of land use rights


-


(230,970)

Purchases of property, plant and equipment


(3,331,779)


(11,038,575)

Capitalized and purchased software development costs


(795,894)


(432,547)

Proceeds from sales of property and equipment


-


44,007

Deposit for purchase of land use rights


-


(165,093)

Deposit for software purchase


(5,358,500)


(4,777,693)

Net cash (used in) investing activities


(9,486,173)


(16,600,871)






FINANCING ACTIVITIES





Borrowings under short-term loans


50,286,201


21,003,299

Borrowings under long-term loans


-


4,019,306

Repayment of short-term loans


(47,281,885)


(14,887,816)

Repayment of long-term loans


(1,157,117)


(1,906,970)

Issued common stock


-


9,383,440

Increase in restricted cash in relation to bank borrowings


(3,008,573)


(368,895)

Net cash (used in)/ provided by financing activities


(1,161,374)


17,242,364






Effect of exchange rate changes on cash and cash equivalents


210,455


170,806






NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS


(8,535,239)


4,266,639

CASH AND CASH EQUIVALENTS, BEGINNING


18,166,857


13,478,633

CASH AND CASH EQUIVALENTS, ENDING

$

9,631,618

$

17,745,272






Supplemental disclosure of cash flow information:





Cash paid during the year





Income taxes

$

2,640,260

$

2,547,020

Interest paid

$

1,332,230

$

449,494





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