Company Contacts:
Camelot Information Systems Inc.
Mr. Franklin King, Interim Chief Financial Officer
Tel: +86 (10) 8201 9008
E-mail: investors@camelotchina.com
Ms. Jojo Guo, Investor Relations Manager
Tel: +1 (646) 371-6533
E-mail: investors@camelotchina.com
|
Investor Relations Contacts:
CCG Investor Relations
Mr. Crocker Coulson, President
Tel: +1 (646) 213-1915
E-mail: crocker.coulson@ccgir.com
Mr. John Harmon, CFA, Sr. Acct. Mgr.
Tel: +86 (10) 6561 6886 x807 (Beijing)
E-mail: john.harmon@ccgir.com
|
·
|
Net revenues increased 1.9% year-over-year to $54.5 million in the third quarter of 2011, as compared to $53.5 million in the year-ago quarter
|
·
|
Adjusted operating loss1 was $0.3 million, as compared to operating income of $11.7 million in the year-ago quarter
|
·
|
U.S. GAAP net loss attributable to Camelot was $46.5 million, compared to U.S. GAAP net income attributable to Camelot of $6.9 million in the year-ago quarter
|
·
|
The Company performed impairment tests on intangible assets and goodwill in the quarter, resulting in non-cash charges of $8.6 million and $21.5 million, respectively. The Company also recorded a $2.7 million provision for accounts receivable in the quarter
|
·
|
Share-based compensation was $14.4 million in the quarter, with the increase primarily due to the repricing of employee stock options
|
·
|
In the third quarter, the Company repurchased a total of 1.9 million ADSs for a total price of $11.4 million
|
·
|
On September 1, 2011 the Company was presented the 2011 Best Ecosystem Partner Award by SAP AG, and Dimension, one of the Company’s subsidiaries, was presented the 2011 Best Business All-in-One High Tech Industry Solution Award
|
1.
|
For more information about the adjusted (i.e. non-GAAP) financial measures contained in this press release, please see “Use of Non-GAAP Financial Measures” below.
|
2.
|
Calculated by dividing average accounts receivable, net of deferred revenue, by rolling gross revenues before business tax and related surcharges, and multiplying by 360 days. Rolling gross revenues is for the 12 months ended September 30, 2011.
|
US Toll free:
|
866.314.4483
|
US Toll / International:
|
617.213.8049
|
Hong Kong toll free:
|
800.96.3844
|
HK Toll:
|
852.3002.1672
|
UK toll free:
|
08082347616
|
UK toll:
|
44.207.365.8426
|
South China toll free / China Telecom:
|
10 800 130 0399
|
South China toll free / China Netcom:
|
10 800 852 1490
|
North China toll free / China Telecom:
|
10 800 152 1490
|
China toll:
|
86 4008811630
|
Taiwan toll free:
|
00801148420
|
US Toll free:
|
888-286-8010
|
US Toll / International:
|
617-801-6888
|
September 30,
2011
|
December 31,
2010
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 54,287 | $ | 140,356 | ||||
Term deposits
|
34,920 | 160 | ||||||
Restricted cash
|
12,521 | 6,932 | ||||||
Billed accounts receivable
|
34,752 | 43,072 | ||||||
Unbilled accounts receivable
|
108,757 | 62,624 | ||||||
Other current assets
|
13,420 | 14,073 | ||||||
Total current assets
|
258,657 | 267,217 | ||||||
Property and equipment, net
|
4,779 | 4,680 | ||||||
Goodwill and other intangible assets
|
46,517 | 67,860 | ||||||
Other long-term assets
|
2,072 | 1,708 | ||||||
Total assets
|
312,025 | 341,465 | ||||||
Liabilities and shareholders' equity
|
||||||||
Consideration payable in connection with business acquisition and debt extinguishment
|
||||||||
– | 15,594 | |||||||
5,969 | – | |||||||
Other current liabilities
|
70,804 | 64,442 | ||||||
Total current liabilities
|
76,773 | 80,036 | ||||||
Contingent consideration in relation to acquisition
|
2,719 | 2,307 | ||||||
Other non-current liabilities
|
4,461 | 5,845 | ||||||
Total liabilities
|
83,953 | 88,188 | ||||||
Shareholders’ equity(a)
|
228,072 | 253,277 | ||||||
Total liabilities and shareholders' equity
|
312,025 | 341,465 | ||||||
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net revenues
|
$ | 54,462 | $ | 53,470 | $ | 167,430 | $ | 132,852 | ||||||||
Cost of revenues(1)(2)
|
(43,662 | ) | (33,985 | ) | (123,733 | ) | (91,174 | ) | ||||||||
Gross profit
|
10,800 | 19,485 | 43,697 | 41,678 | ||||||||||||
Selling and marketing(1)(2)
|
(6,704 | ) | (3,588 | ) | (15,944 | ) | (8,348 | ) | ||||||||
General and administrative(1)(2)
|
(18,718 | ) | (6,191 | ) | (32,853 | ) | (15,762 | ) | ||||||||
Research and development costs
|
(1,461 | ) | (632 | ) | (3,608 | ) | (1,587 | ) | ||||||||
Changes in fair value of contingent consideration for acquisition
|
(317 | ) | (802 | ) | (1,227 | ) | (2,108 | ) | ||||||||
Impairment of intangible assets
|
(8,552 | ) | – | (8,552 | ) | – | ||||||||||
Impairment of goodwill
|
(21,457 | ) | – | (21,457 | ) | – | ||||||||||
Total operating expense
|
(57,209 | ) | (11,213 | ) | (83,641 | ) | (27,805 | ) | ||||||||
Government subsidies
|
62 | – | 66 | – | ||||||||||||
Income (Loss) from operations
|
(46,347 | ) | 8,272 | (39,878 | ) | 13,873 | ||||||||||
Interest expenses
|
(251 | ) | (95 | ) | (746 | ) | (333 | ) | ||||||||
Interest income
|
257 | 190 | 718 | 250 | ||||||||||||
Income (Loss) before provisions for income tax
|
(46,341 | ) | 8,367 | (39,906 | ) | 13,790 | ||||||||||
Income tax expense
|
(236 | ) | (1,463 | ) | (1,492 | ) | (2,455 | ) | ||||||||
Net Income (loss)
|
(46,577 | ) | 6,904 | (41,398 | ) | 11,335 | ||||||||||
Noncontrolling interest
|
74 | 7 | 113 | (19 | ) | |||||||||||
Net Income (loss) attributable to Camelot Information Systems Inc.(3)
|
$ | (46,503 | ) | $ | 6,911 | $ | (41,285 | ) | $ | 11,316 | ||||||
Earnings (loss) per share
|
||||||||||||||||
Basic-ordinary shares
|
$ | (0.26 | ) | $ | 0.04 | $ | (0.23 | ) | $ | 0.08 | ||||||
Diluted-ordinary shares
|
$ | (0.26 | ) | $ | 0.04 | $ | (0.23 | ) | $ | 0.07 | ||||||
Earnings (loss) per ADS
|
||||||||||||||||
Basic-ADSs
|
$ | (1.05 | ) | $ | 0.18 | $ | (0.92 | ) | $ | 0.30 | ||||||
Diluted-ADSs
|
$ | (1.05 | ) | $ | 0.16 | $ | (0.92 | ) | $ | 0.28 | ||||||
Weighted average shares outstanding
|
||||||||||||||||
Basic-ordinary shares
|
177,600,079 | 155,970,950 | 180,272,281 | 112,611,866 | ||||||||||||
Diluted-ordinary shares
|
177,600,079 | 177,399,720 | 180,272,281 | 156,700,099 | ||||||||||||
Weighted average ADSs outstanding
|
||||||||||||||||
Basic-ADSs
|
44,400,020 | 38,992,738 | 45,068,070 | 28,152,966 | ||||||||||||
Diluted-ADSs
|
44,400,020 | 44,349,930 | 45,068,070 | 39,175,025 |
Three Months
Ended Sept. 30,
|
Nine Months
Ended Sept. 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Cost of revenues
|
$ | 1,379 | $ | 28 | $ | 1,435 | $ | 108 | ||||||||
Selling and marketing
|
3,463 | 98 | 6,603 | 198 | ||||||||||||
General and administrative
|
9,509 | 1,148 | 10,317 | 1,902 | ||||||||||||
Total share-based compensation expenses
|
$ | 14,351 | $ | 1,274 | $ | 18,355 | $ | 2,208 |
(2) |
Includes the following amounts of amortization expense related to intangible assets acquired for business combination for the periods indicated
|
Three Months
Ended Sept. 30,
|
Nine Months
Ended Sept. 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Cost of revenues
|
$ | 467 | $ | 364 | $ | 1,383 | $ | 1,406 | ||||||||
Selling and marketing
|
809 | 1,014 | 2,686 | 3,298 | ||||||||||||
General and administrative
|
70 | – | 207 | – | ||||||||||||
Total acquisition-related intangible amortization expenses
|
$ | 1,346 | $ | 1,378 | $ | 4,276 | $ | 4,704 |
(3) |
The following table sets forth the reconciliation of our adjusted net income attributable to Camelot Information Systems Inc. to the U.S. GAAP net income attributable to Camelot Information Systems Inc.
|
Three Months
Ended Sept. 30,
|
Nine Months
Ended Sept. 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net income(Loss) attributable to Camelot Information Systems Inc. (U.S. GAAP)
|
$ | (46,503 | ) | $ | 6,911 | $ | (41,285 | ) | $ | 11,316 | ||||||
Share-based compensation
|
14,351 | 1,274 | 18,355 | 2,208 | ||||||||||||
Acquisition-related intangible amortization
|
1,346 | 1,378 | 4,276 | 4,704 | ||||||||||||
Changes in fair value of contingent consideration
|
317 | 802 | 1,227 | 2,108 | ||||||||||||
Impairment of intangible assets
|
8,552 | – | 8,552 | – | ||||||||||||
Impairment of goodwill
|
21,457 | – | 21,457 | – | ||||||||||||
Total adjusted amounts
|
46,023 | 3,454 | 53,867 | 9,020 | ||||||||||||
Adjusted net income (loss)attributable to Camelot Information Systems Inc.
|
$ | (480 | ) | $ | 10,365 | $ | 12,582 | $ | 20,336 |
Three Month Periods
Ended Sept. 30,
|
Nine Month Periods
Ended Sept. 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Cash flow from operating activities:
|
||||||||||||||||
Net income (loss)
|
$ | (46,577 | ) | $ | 6,904 | $ | (41,398 | ) | $ | 11,335 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||||||
Depreciation of property and equipment
|
266 | 220 | 818 | 671 | ||||||||||||
Amortization of intangible assets
|
1,396 | 1,428 | 4,422 | 4,861 | ||||||||||||
Deferred income taxes
|
(1,718 | ) | (182 | ) | (2,126 | ) | (309 | ) | ||||||||
Impairment of intangible assets
|
8,552 | – | 8,552 | – | ||||||||||||
Impairment of goodwill
|
21,457 | – | 21,457 | – | ||||||||||||
Provision for account receivable
|
2,717 | – | 2,717 | 18 | ||||||||||||
Provision for other current assets
|
– | – | 1,231 | – | ||||||||||||
Share-based compensation
|
14,351 | 1,274 | 18,355 | 2,208 | ||||||||||||
Gains on disposal of property and equipment
|
2 | 3 | 9 | (1 | ) | |||||||||||
Change in fair value of contingent consideration for acquisition
|
317 | 802 | 1,227 | 2,108 | ||||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable
|
(12,022 | ) | (11,941 | ) | (32,236 | ) | (30,983 | ) | ||||||||
Other assets
|
1,140 | (858 | ) | (1,464 | ) | (1,934 | ) | |||||||||
Accounts payable
|
(2,095 | ) | (125 | ) | (2,084 | ) | 3,758 | |||||||||
Other liabilities
|
4,622 | 5,504 | 2,079 | 5,130 | ||||||||||||
Net cash used in operating activities
|
(7,592 | ) | 3,029 | (18,441 | ) | (3,138 | ) | |||||||||
Cash flows from investing activities:
|
||||||||||||||||
Term deposits
|
(34,403 | ) | (2 | ) | (34,443 | ) | 143 | |||||||||
Restricted cash
|
915 | 577 | (5,260 | ) | 432 | |||||||||||
Repayment of loan to unrelated parties
|
– | – | – | (55 | ) | |||||||||||
Proceeds from disposal of property and equipment
|
– | (106 | ) | 18 | (826 | ) | ||||||||||
Purchase of property and equipment
|
(146 | ) | (18 | ) | (664 | ) | (2 | ) | ||||||||
Purchase of intangible assets
|
(78 | ) | – | (78 | ) | (63 | ) | |||||||||
Purchase of businesses, net of cash acquired
|
– | (5,899 | ) | (11,430 | ) | (8,359 | ) | |||||||||
Net cash provided by (used in) investing activities
|
(33,712 | ) | (5,448 | ) | (51,857 | ) | (8,731 | ) | ||||||||
Cash flows from financing activities:
|
||||||||||||||||
Proceeds from bank borrowing
|
165 | 373 | 7,832 | 1,897 |
Repayment of bank borrowing
|
(318 | ) | (2,077 | ) | (3,758 | ) | (4,934 | ) | ||||||||
Repurchase of ordinary shares
|
(11,434 | ) | – | (14,415 | ) | – | ||||||||||
Proceeds from initial public offering
|
– | 93,367 | (964 | ) | 92,802 | |||||||||||
Payment of contingent consideration and deferred consideration for business acquisitions
|
(2,048 | ) | – | (6,773 | ) | (4,249 | ) | |||||||||
Payment and reimbursement of follow-on offering expenses, net
|
(223 | ) | – | 275 | – | |||||||||||
Proceeds from stock option exercises
|
91 | – | 1,294 | – | ||||||||||||
Net cash provided by (used in) financing activities
|
(13,767 | ) | 91,663 | (16,509 | ) | 85,516 | ||||||||||
Effect of foreign exchange rate changes
|
126 | 1,291 | 738 | 1,525 | ||||||||||||
Net increase (decrease) in cash and cash equivalents
|
(54,945 | ) | 90,535 | (86,069 | ) | 75,172 | ||||||||||
Cash and cash equivalents, beginning of period
|
109,232 | 18,457 | 140,356 | 33,820 | ||||||||||||
Cash and cash equivalents, end of period
|
$ | 54,287 | $ | 108,992 | $ | 54,287 | $ | 108,992 |
Three Months Ended
September 30, 2011
|
Three Months Ended
September 30, 2010
|
|||||||||||||||||||||||||
GAAP
|
Adjustments
|
Adjusted
|
GAAP
|
Adjustments
|
Adjusted
|
|||||||||||||||||||||
Cost of revenues
|
$ | 43,662 | (1,846 | ) |
(a)
|
$ | 41,816 | $ | 33,985 | (392 | ) |
(a)
|
$ | 33,593 | ||||||||||||
Gross profit
|
10,800 | 1,846 |
(a)
|
12,646 | 19,485 | 392 |
(a)
|
19,877 | ||||||||||||||||||
Operating expenses
|
57,209 | (44,177 | ) |
(a)
|
13,032 | 11,213 | (3,062 | ) |
(a)
|
8,151 | ||||||||||||||||
Operating income (loss)
|
(46,347 | ) | 46,023 |
(a)
|
(324 | ) | 8,272 | 3,454 |
(a)
|
11,726 | ||||||||||||||||
Net income (loss)
|
(46,503 | ) | 46,023 |
(a)(d)
|
(480 | ) | 6,911 | 3,454 |
(a)
|
10,365 | ||||||||||||||||
Net gross margin
|
19.8% | 3.4 | % |
(b)
|
23.2% | 36.4% | 0.7% |
(b)
|
37.2% | |||||||||||||||||
Net operating margin
|
(85.1% | ) | 84.5 | % |
(a)
|
(0.6% | ) | 15.5% | 6.5% |
(a)
|
22.0% | |||||||||||||||
Net margin
|
(85.4% | ) | 84.5 | % |
(a)
|
(0.9% | ) | 12.9% | 6.5% |
(a)
|
19.4% | |||||||||||||||
Diluted EPS
|
$ | (0.26 | ) | $ | 0.26 |
(c)
|
$ | 0.003 | $ | 0.04 | $ | 0.02 |
(c)
|
$ | 0.06 | |||||||||||
Nine Months Ended
September 30, 2011
|
Nine Months Ended
September 30, 2010
|
|||||||||||||||||||||||||
GAAP
|
Adjustments
|
Adjusted
|
GAAP
|
Adjustments
|
Adjusted
|
|||||||||||||||||||||
Cost of revenues
|
$ | 123,733 | (2,818 | ) |
(a)
|
$ | 120,915 | $ | 91,174 | (1,514 | ) |
(a)
|
$ | 89,660 | ||||||||||||
Gross profit
|
43,697 | 2,818 |
(a)
|
46,515 | 41,678 | 1,514 |
(a)
|
43,192 | ||||||||||||||||||
Operating expenses
|
83,641 | (51,049 | ) |
(a)
|
32,592 | 27,805 | (7,506 | ) |
(a)
|
20,299 | ||||||||||||||||
Operating income (loss)
|
(39,878 | ) | 53,867 |
(a)
|
13,989 | 13,873 | 9,020 |
(a)
|
22,893 | |||||||||||||||||
Net income (loss)
|
(41,285 | ) | 53,867 |
(a)(d)
|
12,582 | 11,316 | 9,020 |
(d)
|
20,336 | |||||||||||||||||
Net gross margin
|
26.1% | 1.7% |
(b)
|
27.8% | 31.4% | 1.1% |
(b)
|
32.5% | ||||||||||||||||||
Net operating margin
|
(23.8% | ) | 32.2% |
(a)
|
8.4% | 10.4% | 6.8% |
(a)
|
17.2% | |||||||||||||||||
Net margin
|
(24.7% | ) | 32.2% |
(a)
|
7.5% | 8.5% | 6.8% |
(a)
|
15.3% | |||||||||||||||||
Diluted EPS
|
$ | (0.23 | ) | $ | 0.29 |
(c)
|
$ | 0.06 | $ | 0.07 | $ | 0.06 |
(c)
|
$ | 0.13 | |||||||||||
(a)
|
The non-GAAP adjustments include share-based compensation expenses and amortization expense related to intangible assets acquired for business acquisition, where were presented in the notes (1) and (2) below Condensed Consolidated Statements of Operations (Unaudited) for the reconciliation process.
|
(b)
|
Adjustment to exclude acquisition-related intangible assets amortization expense and share-based compensation recorded in cost of sales, $1,846, $392, $2,818 and $1,514 for three-month periods ended September 30, 2011 and 2010, and the nine-month periods ended September 30, 2011 and 2010, respectively. In addition, adjustments for the three and nine-month periods ended September 30, 2011 exclude impairment of goodwill and intangible assets, amounting to $21,457 and $8,552, respectively.
|
(c)
|
Adjusted diluted EPS is computed by dividing adjusted net income attributable to Camelot Information Systems Inc. by the weighted average number of diluted ordinary shares outstanding used in computing the GAAP diluted EPS for the respective periods.
|
(d)
|
Net income refers to net income attributable to Camelot.
|
Camelot Information Systems Inc. | |||
By:
|
/s/ Yiming MA
|
||
Name:
|
Yiming MA
|
||
Title:
|
Chief Executive Officer
|