YUCHENG TECHNOLOGIES LIMITED 
By BEIJING, Aug. 10, 2011 /PRNewswire-Asia-FirstCall / -- Yucheng Technologies Limited (Nasdaq: YTEC) ("Yucheng," the "Company," "we," "us" and "our"), a leading provider of IT Solutions to the financial services industry in China, today announced unaudited financial results for the second quarter ended June 30, 2011.
-- Second quarter software & solutions revenues of US$13.7 million, an
increase of 30.0% year over year;
-- Second quarter net revenue (Non-GAAP)(1) of US$15.8 million, an increase
of 28.2% year over year;
-- Second quarter operating income of US$2.0 million, an increase of 142.3%
year over year;
-- Second quarter operating margin of net revenue (Non-GAAP)(5) of 14.1%,
as compared to 6.9% in the year-ago period;
-- Second quarter net income (Non-GAAP)(6) of US$1.9 million, or US$0.10
per share, as compared to US$0.5 million, or US$0.03 per share in the
year-ago period excluding the gain from asset transfer to our joint
venture with NTT Data;
"We are pleased to report another solid quarter with results ahead of our expectations to continue our momentum of growth. Demand for our traditional products such as online banking and loan management has remained strong. At the same time, we are also one of the earliest movers in the new solutions such as e-commerce and mobile banking. With the competitive environment now more normal and rational, we expect to gain market share in the coming years. We are confident that we will be able to capitalize on market opportunities and further consolidate our leadership position in the industry," said Mr. Hong Weidong, CEO of Yucheng Technologies.
Second Quarter 2011 Financial Results
Total revenues for the second quarter of 2011 were US$15.8 million, an increase of 17.9% year over year and an increase of 37.5% sequentially. The year over year increase was due mainly to the increase of software & solutions revenues. Net revenues (non-GAAP) for the second quarter of 2011 were the same as total revenues, an increase of 28.2% year over year and an increase of 37.5% sequentially.
Gross margin for the second quarter of 2011 was 49.1%, compared to 46.3% in the year-ago period and 50.6% in the previous quarter. The increase in gross margin year over year was due mainly to the increase of resale services. Gross margin of net revenues (non-GAAP)(2) was the same as gross margin of total revenues in the first and second quarter of 2011 and gross margin of net revenues (non-GAAP) for the second quarter of 2010 was 50.3%.
Software & solutions revenues for the second quarter of 2011 were US$13.7 million, an increase of 30.0% year over year and an increase of 43.0% sequentially, the latter reflecting the inherent seasonality and higher demand for our products and solutions. Gross margin of the software & solutions business for the second quarter of 2011 was 46.1%, compared to 50.1% in the year-ago period and 48.3% in the previous quarter. The decrease in the gross margin was primarily due to the increase of labor costs as well as more subcontracting out to third party vendors where the margin is significant lower.
Platform & maintenance services revenues for the second quarter of 2011 were US$2.1 million, compared to US$2.8 million in the year-ago period and US$1.9 million in the previous quarter. Net revenues of platform & maintenance services (non-GAAP) were the same as platform & maintenance services revenues in the first and second quarter of 2011 and net revenues of platform & maintenance services (non-GAAP) in the second quarter of 2010 was US$1.8 million.
Gross margin of platform & maintenance services business for the second quarter of 2011 was 69.1%, compared to 31.9% in the year-ago period and 62.7% in the previous quarter. The increase in gross margin (non-GAAP) was due mainly to the increase of resale services. Gross margin of net revenues (non-GAAP)( )for platform maintenance services was the same as gross margin of platform & maintenance services business in the first and the second quarter of 2011 and gross margin of net revenues (non-GAAP)( )for platform maintenance services in second quarter of 2010 was 51.7%.
Total operating expenses for the second quarter of 2011 increased 7.5% year over year and increased 2.8% sequentially to US$5.8 million. Total operating expenses (non-GAAP)(3) for the second quarter of 2011 increased 3.3% year over year and increased 3.0% sequentially to US$5.5 million. The year-over-year increase was attributable mainly to stock-based compensation and the increase of labor costs.
Income from operations for the second quarter of 2011 was US$2.0 million, compared to US$0.8 million in the year-ago period and US$0.2 million in the previous quarter. Income from operations (non-GAAP)(4) for the second quarter of 2011 was US$2.2 million, compared to US$0.9 million in the year-ago period and US$0.5 million in the previous quarter.
Operating margin of total revenue was 12.4% for the second quarter of 2011, compared to 6.0% in the year-ago period and 1.6% in the previous quarter. Operating margin of net revenues (non-GAAP) was 14.1% for the second quarter of 2011, compared to 6.9% in the year-ago period and 3.9% in the previous quarter.
In the second quarter of 2011, net income from continuing operations was US$1.6 million, or US$0.08 per diluted share, compared to US$0.6 million, or US$0.03 per diluted share in the year-ago period excluding the gain from asset transfer to our joint venture with NTT Data (US$0.5 million) and US$28,000, or US$0.001 per diluted share in the previous quarter.
Net income from continuing operations (non-GAAP) was US$1.9 million in the second quarter of 2011 or US$0.10 per diluted share. Net income (non-GAAP) in the year-ago period was US$0.6 million or US$0.03 per diluted share excluding the gain from asset transfer to our joint venture with NTT Data. Net income from continuing operations (non-GAAP) in the previous quarter was US$0.3 million or US$0.02 per diluted share.
In the second quarter of 2011, the Company recorded net income of US$1.6 million, or US$0.08 per diluted share, compared to US$0.5 million, or US$0.03 per diluted share in the year-ago period excluding the gain from asset transfer to our joint venture with NTT Data and US$28,000, or US$0.001 per diluted share in the previous quarter.
Net income (non-GAAP) was US$1.9 million in the second quarter of 2011 or US$0.10 per diluted share. Net income (non-GAAP) in the year-ago period was US$0.5 million or US$0.03 per diluted share excluding the gain from asset transfer to our joint venture with NTT Data. Net income from continuing operations (non-GAAP) in the previous quarter was US$0.3 million or US$0.02 per diluted share.
As of June 30, 2011, Yucheng had cash and cash equivalents and restricted cash totaling US$20.0 million, compared to US$16.0 million as of March 31, 2011 and US$13.0 million as of June 30, 2010. Operating cash flow in the second quarter of 2011 was a net inflow of US$0.1million.
Business Outlook
For the quarter ending September 30, 2011, Yucheng expects net revenue (non-GAAP) to be approximately US$19.0 million and net income (non-GAAP) per share of US$0.13.
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets
Jun 30, 2011 and Mar 31, 2011
2011.06.30 2011.03.31
USD USD
Assets
Current assets:
Cash and cash equivalent 20,019,297 16,019,385
Trade accounts receivable, net 29,321,030 30,863,133
Costs and estimated earnings in
excess of billings on
uncompleted contracts 25,217,690 19,951,369
Amounts due from related
companies 961,912 1,957,584
Inventories 2,398,257 2,513,869
Pre-contract costs 6,593,760 6,049,800
Other current assets 7,403,712 12,419,944
--------- ----------
Total current assets 91,915,658 89,775,084
Investments in and advances to
affiliates 4,346,953 4,567,861
Properties and equipment 8,418,009 8,758,527
Less: Accumulated depreciation (3,833,286) (3,602,601)
---------- ----------
Properties and equipment, net 4,584,723 5,155,926
Intangible assets, net 3,859,830 3,601,910
Goodwill 29,206,007 28,828,259
Deferred taxes assets 1,508,117 1,619,859
--------- ---------
Total assets 135,421,288 133,548,899
=========== ===========
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
Jun 30, 2011 and Mar 31, 2011
2011.06.30 2011.03.31
USD USD
Liabilities and stockholders' equity
Current liabilities:
Short term loan 15,444,981 11,149,411
Obligations under capital leases 0 19,765
Trade accounts payables 11,051,240 11,110,119
Billings in excess of costs and
estimated earnings on
uncompleted contracts 1,555,736 1,639,512
Employee and payroll accruals 3,222,385 4,461,824
Dividends payable to ex-owners 11,896 11,742
Due to related parties 981,170 731,213
Outstanding payment in relation
to business acquisitions 0 0
Income taxes payable 1,478,814 1,780,974
Other current liabilities 5,712,125 9,417,244
Deferred taxes liabilities 112,901 126,354
------- -------
Total current liabilities 39,571,248 40,448,158
Deferred taxes liabilities 224,537 268,572
------- -------
Total liabilities 39,795,785 40,716,730
Stockholders' equity
Preferred stock, $0.0001 par
value, authorized 3,091,701 3,051,674
2,000,000 shares and none issued;
Common stock, $0.0001 par value,
authorized
60,000,000 shares; 18,560,014 shares and
18,943,217 shares issued and outstanding
as of
March 31,2011 and June 30, 2011
Additional paid-in capital 61,327,503 60,312,245
Reserves 7,792,201 7,691,417
Retained earnings 23,456,052 21,588,685
Accumulated other comprehensive
loss (472,339) (460,076)
Total YTEC stockholders' equity 95,195,118 92,183,945
---------- ----------
Non-controlling interests 430,385 648,224
------- -------
Total stockholders' equity 95,625,503 92,832,169
Liabilities and stockholders'
equity 135,421,288 133,548,899
=========== ===========
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Statements of Income
Three months ended June 30, 2011 and 2010
2011 Q2 2010 Q2
USD USD
Revenues:
Software & solutions 13,749,357 10,574,884
Platform & maintenance services 2,064,656 1,758,620
--------- ---------
Platform services (0) 71,873
Maintenance and ancillary services 2,064,656 1,686,748
Total revenues 15,814,013 13,418,697
Cost of revenues: (8,050,408) (6,124,948)
Total cost of revenues (8,050,408) (7,210,141)
Gross profit 7,763,605 6,208,556
Operating expenses:
Research and development (703,598) (455,228)
Selling and marketing (910,915) (1,270,587)
General and administrative (4,191,142) (3,674,700)
Total operating expenses (5,805,655) (5,400,515)
---------- ----------
Income from continuing operating 1,957,950 808,041
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Statements of Income (continued)
Three months ended June 30, 2011 and 2010
2011 Q2 2010 Q2
USD USD
Other income (expenses):
Interest income 12,858 9,167
Interest expense (180,894) (190,200)
Investment gain (loss) (280,763) (69,609)
Gain (loss) on disposal of
intangible assets and fixed assets 2,047 568,196
----- -------
Other income (expense), net (578) (2,302)
---- ------
Income (loss) before income tax and
non-controlling interests 1,510,620 1,123,293
Income tax benefit (expense) (152,472) (37,608)
Non-controlling interests 226,333 63,426
------- ------
Net income (loss) from continued
operations 1,584,481 1,149,111
Discontinued operations:
Loss from operations of discontinued
subsidiaries 0 (102,927)
Net income 1,584,481 1,046,184
========= =========
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months ended Jun 30, 2011 and 2010
2011 Q2 2010 Q2
USD USD
Cash flows from operating activities:
Net income (loss) 1,584,482 1,046,186
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 277,802 669,306
Amortization 391,690 393,542
Loss on disposal fixed assets 1,327 951,629
Loss (gain) on disposal of
affiliates 0 2,142
Non-controlling interests (226,333) 482,488
Loss from equity method investees 280,763 67,467
Decrease (increase) in trade
accounts receivable, net 1,946,515 (2,195,961)
Decrease (increase) in costs and
estimated earnings in excess of
billing on uncompleted contracts (5,004,891) (1,228,342)
Decrease (increase) in due from
related parties 23,491 (1,974,518)
Decrease (increase) in inventories 148,552 3,167,006
Decrease (increase) in pre-contract
costs (464,687) (1,318,962)
Decrease (increase) in other current
assets 5,545,435 (859,078)
Decrease (increase) in deferred
income taxes assets -Current 0 1,112
Decrease (increase) in deferred
income taxes assets - Non-current 132,968 (41,736)
Increase (decrease) in trade
accounts payable (204,459) (1,667,965)
Increase (decrease) in billings in
excess of costs and estimated
earnings on uncompleted contracts (105,259) (2,166,397)
Increase (decrease) in employee and
payroll accruals (1,298,548) 276,310
Increase (decrease) in income taxes
payable (325,497) (50,215)
Increase (decrease) in due to
related parties 1,154,704 0
Increase (decrease) in other current
liabilities (3,922,328) 616,352
Increase (decrease) in deferred
income taxes liabilities (62,663) 61,179
Share issued to independent
directors 455,978 0
Stock-based compensation (230,977) 0
-------- ---
Net cash provided by (used in)
operating activities 98,065 (3,768,455)
------ ----------
YUCHENG TECHNOLOGIES LIMITED AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
Three months ended Jun 30, 2011 and 2010
2011 Q2 2010 Q2
USD USD
Cash flows from investing activities:
Capital expenditures (182,025) (1,425,906)
Payment of purchase of subsidiaries 0 0
Advances to affiliates 83,505 0
Investment in equity method investments 0 (4,329,323)
Proceeds from disposal of fixed assets 23,941 (567,857)
Proceeds from disposal of investments
under equity method (154,521) 381,527
-------- -------
Net cash provided by (used in) investing
activities (229,100) (5,941,559)
Cash flows from financing activities:
Payment of capital leases (18,527) (81,734)
Proceeds from bank borrowings 7,394,422 2,945,118
Repayments of bank borrowings (3,244,947) 0
---------- ---
Net cash provided(used in) by financing
activities 4,130,948 2,863,384
Net increase (decrease) in cash and cash
equivalents 3,999,913 (6,846,630)
Cash at beginning of period 16,019,385 19,811,872
---------- ----------
Cash at end of period 20,019,298 12,965,242
========== ==========
Second quarter 2011 Conference Call Details
Yucheng Management will conduct a conference call to discuss the financial results for the three-month period ended June 30, 2011 on Wednesday, August 10, 2011 at 8:00AM EDT/ 8:00PM BJT.
To participate, please dial one of the local access numbers, listed below, ten minutes prior to the scheduled start of the call. The conference call identification number is 8652.
US +1 866 636 3243
China Toll Free Number: 800 888 0221
China Toll Number: 400 810 0025
Hong Kong Toll Number: +852 3005 1322
All Other Participants: +86 10 5851 1520
A recording of the call will be accessible within 48 hours on the Investor Relations section of the Yucheng's website at http://www.yuchengtech.com/english/success.php?classid=41.
About Yucheng Technologies Limited
Yucheng Technologies Limited (NASDAQ: YTEC) is a leading IT service provider to the Chinese financial service providers. Headquartered in Beijing, China, Yucheng services clients from its nationwide network in 23 cities and with approximately 2,500 employees. Yucheng provides a comprehensive suite of IT solutions to Chinese Banks including: (i) Channel Solutions, such as e-banking and call centers; (ii) Business Solutions, such as core banking systems and loan management; and (iii) Management Solutions, such as risk analytics and business intelligence. Yucheng has been ranked in the Global FinTech 100 survey of top technology partners to the financial services industry for three consecutive years. The independent research firm IDC also has named Yucheng one of the top three market share leaders in China's Banking IT solution market every year since 2007. For more information about Yucheng Technologies Limited, please visit www.yuchengtech.com.
Reconciliation of non-GAAP Measures
This earnings release presents the following "non-GAAP financial measures" as defined by applicable U.S. securities regulations. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. The non-GAAP financial measures are provided as additional information to help both management and investors compare business trends among different reporting periods on a consistent and more meaningful basis and enhance investors' overall understanding of the Company's current financial performance and prospects for the future. These non-GAAP measures have limitations, however, because they do not include all items of income and expenses that impact the Company's operations. Management compensates for these limitations by also considering the Company's GAAP results. The non-GAAP financial measures the Company uses are not prepared in accordance with, and should not be considered an alternative to measurements required by GAAP and should not be considered measures of the Company's liquidity. Pursuant to relevant regulatory requirements, we are providing the following reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures.
(1) Net revenue (non-GAAP)
Yucheng's net revenue (non-GAAP) represents total revenue net of third party hardware and software costs that are passed through to our customers. We believe total revenues net of third party hardware and software costs more accurately reflects our core business, which is the provision of software solutions and services, and provides transparency to our investors. It is also the same measure used by our management to evaluate the competitiveness and development of our business.
Reconciliation of net revenues (non-GAAP) to GAAP total revenues
----------------------------------------------------------------
2011 Q2 2010 Q2 2011 Q1
------- -------
(in US dollar thousands)
------------------------
Total Revenues (GAAP) 15,814 13,419 11,501
--------------------- ------ ------ ------
Third Party Hardware Costs 0 1,085 0
-------------------------- --- ----- ---
Net Revenue (non-GAAP) 15,814 12,334 11,501
---------------------- ------ ------ ------
Reconciliation of net revenues of platform & maintenance services
(non-GAAP) to GAAP total revenues of platform & maintenance
services
-----------------------------------------------------------------
2011 Q2 2010 Q2 2011 Q1
------- -------
(in US dollar thousands)
------------------------
Total Revenues of platform & maintenance
services(GAAP) 2,065 2,844 1,884
---------------------------------------- ----- ----- -----
Third Party Hardware Costs 0 1,085 0
-------------------------- --- ----- ---
Net Revenue of platform & maintenance
services(non-GAAP) 2,065 1,759 1,884
------------------------------------- ----- ----- -----
(2) Gross margin of net revenue (non-GAAP)
Gross margin of net revenues (non-GAAP) is calculated by dividing gross profit by net revenue (non-GAAP). We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance. Management uses the gross margin of net revenue (non-GAAP) measure to gain a better understanding of the Company's comparative operating performance from period-to-period and as a basis of planning and forecasting future periods. Management believes this non-GAAP measure, when read in conjunction with the Company's GAAP gross margin and other GAAP financial metrics, provides useful information to investors by offering: a) the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results; b) the ability to better identify trends in the Company's underlying business and perform related trend analysis; c) a better understanding of how management plans and measures the Company's underlying business; and d) an easier way to compare the Company's most recent results of operations against investor and analyst financial models.
Reconciliation of Gross margin (non-GAAP) to GAAP Gross margin
--------------------------------------------------------------
2011 Q2 2010 Q2 2011 Q1
------- -------
Gross margin (GAAP) 49.1% 46.3% 50.6%
------------------- ---- ---- ----
Third Party Hardware
Costs 0.0% 4.1% 0.0%
-------------------- --- --- ---
Gross margin (non-
GAAP) 49.1% 50.3% 50.6%
------------------ ---- ---- ----
Reconciliation of Gross margin (non-GAAP) for
platform & maintenance services to GAAP Gross
margin for platform & maintenance services
---------------------------------------------
2011 Q2 2010 Q2 2011 Q1
------- -------
Gross margin (GAAP) 69.1% 31.9% 62.7%
------------------- ---- ---- ----
Third Party Hardware
Costs 0.0% 19.7% 0.0%
-------------------- --- ---- ---
Gross margin (non-
GAAP) 69.1% 51.7% 62.7%
------------------ ---- ---- ----
(3) Operating expenses (non-GAAP)
Operating expenses (non-GAAP) excludes stock-based compensation and amortization of acquired intangible assets related to previous acquisitions. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses and income that may not be indicative of our operating performance. Management uses the operating expenses (non-GAAP) measure to gain a better understanding of the Company's comparative operating performance from period-to-period and as a basis of planning and forecasting future periods. Management believes this non-GAAP measure, when read in conjunction with the Company's GAAP operating expenses and other GAAP financial metrics, provides useful information to investors by offering: a) the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results; b) the ability to better identify trends in the Company's underlying business and perform related trend analysis; c) a better understanding of how management plans and measures the Company's underlying business; and d) an easier way to compare the Company's most recent results of operations against investor and analyst financial models.
Reconciliation of Operating expenses (non-GAAP) to GAAP Operating
expenses
-----------------------------------------------------------------
2011 Q2 2010 Q2 2011 Q1
------- -------
(in US dollar thousands)
------------------------
Operating expenses (GAAP) 5,806 5,401 5,645
------------------------- ----- ----- -----
Stock based compensation 225 - 228
------------------------ --- --- ---
Amortization of acquired
intangible assets 45 43 44
------------------------ --- --- ---
Operating expenses (non-GAAP) 5,536 5,358 5,373
----------------------------- ----- ----- -----
(4) Operating income (non-GAAP)
Operating income (non-GAAP) excludes stock-based compensation and amortization of acquired intangible assets related to previous acquisitions. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses and income that may not be indicative of our operating performance. Management uses the operating income (non-GAAP) measure to gain a better understanding of the Company's comparative operating performance from period-to-period and as a basis of planning and forecasting future periods. Management believes this non-GAAP measure, when read in conjunction with the Company's GAAP operating income and other GAAP financial metrics, provides useful information to investors by offering: a) the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results; b) the ability to better identify trends in the Company's underlying business and perform related trend analysis; c) a better understanding of how management plans and measures the Company's underlying business; and d) an easier way to compare the Company's most recent results of operations against investor and analyst financial models.
Reconciliation of Operating income (non-GAAP) to GAAP Operating
income
---------------------------------------------------------------
2011 Q2 2010 Q2 2011 Q1
------- -------
(in US dollar thousands)
------------------------
Operating income (GAAP) 1,958 808 179
----------------------- ----- --- ---
Stock based compensation 225 0 228
------------------------ --- --- ---
Amortization of acquired
intangible assets 45 43 44
------------------------ --- --- ---
Operating income (non-GAAP) 2,228 851 451
--------------------------- ----- --- ---
(5) Operating margin of net revenue (non-GAAP)
Operating margin of net revenue (non-GAAP) is calculated by dividing operating income, excluding amortization of acquired intangible assets and stock-based compensation expenses, divided by net revenue (non-GAAP). We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses and income that may not be indicative of our operating performance. Management uses the operating margin of net revenue (non-GAAP) measure to gain a better understanding of the Company's comparative operating performance from period-to-period and as a basis of planning and forecasting future periods. Management believes this non-GAAP measure, when read in conjunction with the Company's GAAP operating margin and other GAAP financial metrics, provides useful information to investors by offering: a) the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results; b) the ability to better identify trends in the Company's underlying business and perform related trend analysis; c) a better understanding of how management plans and measures the Company's underlying business; and d) an easier way to compare the Company's most recent results of operations against investor and analyst financial models.
Reconciliation of Operating margin (non-GAAP) to GAAP Operating
margin
---------------------------------------------------------------
2011 Q2 2010 Q2 2011 Q1
------- ------- -------
Operating margin (GAAP) 12.4% 6.0% 1.6%
----------------------- ---- --- ---
Stock based compensation 1.4% 0.0% 2.0%
------------------------ --- --- ---
Amortization of acquired
intangible assets 0.3% 0.3% 0.4%
------------------------ --- --- ---
Third Party Hardware Costs 0.0% 0.6% 0.0%
-------------------------- --- --- ---
Operating margin (non-GAAP) 14.1% 6.9% 3.9%
--------------------------- ---- --- ---
(6) Net income (non-GAAP)
Net income (non-GAAP) excludes stock-based compensation and amortization of acquired intangible assets related to the previous acquisitions. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses and income that may not be indicative of our operating performance. Management uses the net income (non-GAAP) measure to gain a better understanding of the Company's comparative operating performance from period-to-period and as a basis of planning and forecasting future periods. Management believes the Company's net income (non-GAAP) measure, when read in conjunction with the Company's GAAP net income measure and other GAAP financial metrics, provides useful information to investors by offering: a) the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results; b) the ability to better identify trends in the Company's underlying business and perform related trend analysis; c) a better understanding of how management plans and measures the Company's underlying business; and d) an easier way to compare the Company's most recent results of operations against investor and analyst financial models.
.
Reconciliation of net income from continuing operations attributable
to Yucheng (non-GAAP) to GAAP net income from continuing operations
--------------------------------------------------------------------
2011 2010 2011
Q2 Q2 Q1
---- ----
(in US dollar
thousands)
--------------
Net Income from continuing
operations(GAAP) 1,584 1,149 28
-------------------------- ----- ----- ---
- Stock based compensation 225 0 228
-------------------------- --- --- ---
-Amortization of acquired
intangible assets 45 43 44
------------------------- --- --- ---
Net Income from continuing
operations(non-GAAP) 1,854 1,192 300
-------------------------- ----- ----- ---
Reconciliation of net income attributable to Yucheng
(non-GAAP) to GAAP net income
----------------------------------------------------
2011 2010 2011
Q2 Q2 Q1
----- -----
(in US dollar
thousands)
--------------
Net Income (GAAP) 1,584 1,046 28
----------------- ----- ----- ---
- Stock based compensation 225 0 228
-------------------------- --- --- ---
-Amortization of acquired
intangible assets 45 43 44
------------------------- --- --- ---
Net Income (non-GAAP) 1,854 1,089 300
--------------------- ----- ----- ---
(7) Net income (non-GAAP) per diluted share
Net income (non-GAAP) per diluted share is calculated by dividing net income (non-GAAP) (which as discussed above excludes stock-based compensation expenses and amortization of acquired intangible assets) by the same number of weighted average shares outstanding used in the computation of net income per diluted share. Management believes that net income (non-GAAP) per diluted share, when used in conjunction with the Company's GAAP net income per diluted share, provides useful information to investors for the same reasons discussed above regarding net income (non-GAAP). In addition, net income (non-GAAP) per diluted share allows investors to evaluate the Company's operating performance from period to period on a per share basis, thus providing a useful basis for assessing the Company's value on a per share basis.
Reconciliation of net income from continuing operations (non-GAAP)
per diluted share to GAAP net income from continuing operations per
diluted share
-------------------------------------------------------------------
2011 2010
Q2 Q2 2011
---- ---- Q1
(in US dollar)
--------------
GAAP net income from continuing operations
Per diluted Share 0.08 0.06 0.00
------------------------------------------ ---- ---- ----
- Stock based compensation 0.01 - 0.01
-------------------------- ---- --- ----
- Amortization of acquired intangible assets 0.00 0.00 0.00
-------------------------------------------- ---- ---- ----
Non-GAAP net income from continuing
operations Per diluted Share 0.10 0.06 0.02
----------------------------------- ---- ---- ----
Reconciliation of net income (non-GAAP) per diluted share to
GAAP net income per diluted share
------------------------------------------------------------
2011 2010
Q2 Q2 2011
----- ---- Q1
(in US dollar)
--------------
GAAP net income Per diluted Share 0.08 0.06 0.00
--------------------------------- ---- ---- ----
- Stock based compensation 0.01 - 0.01
-------------------------- ---- --- ----
- Amortization of acquired intangible assets 0.00 0.00 0.00
-------------------------------------------- ---- ---- ----
Non-GAAP net income Per diluted Share 0.10 0.06 0.02
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Cautionary Note Regarding Forward-Looking Statements
The information contained in this document is as of August 10, 2011. Yucheng assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments.
This press release includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Forward looking statements are statements that are not historical facts. Forward-looking statements generally can be identified by the use of forward looking terminology, such as ''may,'' ''will,'' ''expect,'' ''intend,'' ''estimate,'' ''anticipate,'' ''believe,'' ''project'' or ''continue'' or the negative thereof or other similar words. Such forward-looking statements, based upon the current beliefs and expectations of Yucheng's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: current dependence on the PRC banking industry demand for the products and services of Yucheng; competition from other service providers in the PRC and international consulting firms; the ability to update and expand product and service offerings; retention and hiring of qualified employees; protection of intellectual property; creating and maintaining quality product offerings; and operating a business in the PRC with its changing economic and regulatory environment. A further list and description of these risks, uncertainties, and other matters can be found in our Annual Report on Form 20-F for the fiscal year ended December 31, 2010, and in our interim current reports on Form 6-K filed with the United States Securities and Exchange Commission and available at www.sec.gov.
For more information about Yucheng, please visit www.yuchengtech.com.
For investor and media inquiries, please contact:
In China:
Mr. Steve Dai
Yucheng Technologies Limited
Tel: +86-10-5913-7889
Email: investors@yuchengtech.com
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1 Net revenue (non-GAAP) measures used in this press release
represents total revenue net of third-party hardware and software
costs.
2 Gross margin of net revenue (non-GAAP) is calculated by dividing
gross profit by net revenue (non-GAAP).
3 Operating expenses (non-GAAP) is calculated by excluding stock-
based compensation expenses and amortization of acquired intangible
assets.
4 Income from operations (non-GAAP) is calculated by subtract
operating expenses (non-GAAP) from gross profits.
5 Operating margin of net revenue (non-GAAP) is calculated by
dividing operating income, excluding amortization of acquired
intangibles and stock-based compensation expenses, divided by net
revenue (non-GAAP)
6 Net income (non-GAAP) measures exclude stock-based compensation
expenses, amortization of acquired intangible assets, impairment loss
on investment, after-tax dividend income and non-recurring merger
related expenses
SOURCE Yucheng Technologies Limited
