CDC Corporation (NASDAQ: CHINA), a leading global hybrid
enterprise software, IT services and new media company, today
announced financial results for the quarter ended March 31, 2010.
For the first quarter of 2010, CDC Corporation reported Adjusted
EBITDA(a) from continuing operations(b) or Adjusted EBITDA* of $8.4
million, a 17 percent increase from Adjusted EBITDA of $7.2 million
for the first quarter of 2009. For the first quarter of 2010,
Non-GAAP revenue(a) was $79.0 million compared to $78.8 million in
the first quarter of 2009.
“Overall, we are pleased with CDC Corporation’s first quarter
results, especially the double digit growth in revenue and
application sales from CDC Games and CDC Software, respectively,
compared to the first quarter 2009,” said Peter Yip, CEO of CDC
Corporation. “CDC Corporation’s improvement in Adjusted EBITDA
reflects the ongoing execution of our previously announced
strategic growth alternatives for all of our businesses. CDC
Software is making great progress in establishing itself as one of
the leading global providers of hybrid enterprise software
solutions offering on-premise and cloud deployments. CDC Global
Services is continuing the expansion of its offshore service
delivery capabilities in China, which it plans to accomplish both
organically and through acquisitions. CDC Games has recently
launched a new local game, with more planned throughout the year,
including The Lord of the Rings Online scheduled for release by the
end of the year. We believe these strategies will help position our
businesses for higher growth and improved metrics this year.”
The company's balance sheet as of March 31, 2010 remained solid,
with Non-GAAP Cash and Cash Equivalents(a) of $121.9 million.
Subsidiary Revenue and Operating Metrics Summary
CDC Software
On a standalone basis, CDC Software had the following results
for the three months ended March 31, 2010:
Q1 2009
Q1 2010 Non-GAAP Revenue: $ 50.4
million
$51.7 million
Adjusted EBITDA: $12.7 million $10.6 million Adjusted EBITDA
Margin(a): 25% 20%
First quarter 2010 application sales, which is comprised of
license revenue plus new Total Contract Value (TCV) for
Software-as-a-Service (SaaS) sales secured, increased 14 percent to
$8.2 million during the first quarter of 2010, from $7.2 million in
the first quarter of 2009. Total contracted and unrecognized
recurring revenue at the end of the first quarter of 2010 was $52.5
million compared to $49.2 million at the end of the fourth quarter
of 2009.
Total Non-GAAP recurring revenue(a), which CDC Software
defines as Non-GAAP maintenance(a) plus SaaS revenue, increased 14
percent to $27.5 million in the first quarter of 2010 from $24.2
million in the first quarter of 2009. Maintenance retention rate
continued to be strong at 90 percent for the first quarter of
2010.
“We saw solid growth in application sales and recurring
revenue,” said Bruce Cameron, president of CDC Software. “We are
currently focused on expanding our business as a pure-play
enterprise software company offering hybrid deployment options that
include on-premise and SaaS. As we have previously stated, our
growth strategy is to develop recurring revenue streams reaching
closer to 70 percent of total revenue over the next few years,
after completion of our planned SaaS acquisitions and our strategic
investments in SaaS companies. In fact, we expect our SaaS revenue
to reach close to 20 percent of total revenue by the end of 2011.
Already, we have been seeing solid SaaS sales momentum at this
early stage, and in fact, have already closed more than $800,000 in
SaaS business early in the second quarter. This week, we have just
completed the previously announced investment of eBizNET Solutions,
Inc., a provider of SaaS supply chain execution solutions. We are
also in final negotiations for completing the investment in
Marketbright, a SaaS marketing automation software company, and to
acquire a leading SaaS supply chain company, representing our
largest cloud acquisition to date.”
CDC Software is now trading as a separately listed public
company on the NASDAQ Global Market under the symbol: CDCS. For
more information regarding the financial performance of CDC
Software during the first quarter, please see CDC Software's First
Quarter press release located at the company's website:
www.cdcsoftware.com.
CDC Global Services
On a standalone basis, CDC Global Services had the following
results for the three months ended March 31, 2010:
Q1 2009
Q1 2010 GAAP Revenue: $19.8 million
$16.4 million Adjusted EBITDA: $0.7 million $1.5 million Adjusted
EBITDA Margin: 3% 9%
For the first quarter of 2010, CDC Global Services reported
Adjusted EBITDA of $1.5 million, an improvement of 114% as compared
to Adjusted EBITDA $0.7 million in the first quarter of 2009.
Adjusted EBITDA margin was 9 percent in the first quarter of 2010,
a 300% improvement as compared to Adjusted EBITDA margin of 3
percent in the first quarter of 2009.
Total staff utilization was 84 percent in each of the first
quarter of 2010 and the fourth quarter of 2009.
CDC Global Services plans to expand its offshore service
delivery capabilities in China through organic growth of its
existing engineering centers and the strategic acquisition of local
IT service firms in several of China’s key cities. These centers
are equipped to offer four categories of services to CDC Global
Services’ international and domestic clients. These service
categories are:
(i) consulting services in business process re-engineering, IT
strategic studies and system architecture design;
(ii) solution implementation and software development
services
(iii) offshore development center (ODC) services for product
R&D and maintenance work; and
(iv) staff augmentation services for selected domestic clients
in China.
Currently, one of CDC Global Services’ goals is to quickly
access high growth industry sectors of the China market, including
the oil and gas, automotive manufacturing and the healthcare and
pharmaceutical industries. The company has been evaluating several
potential acquisitions in the IT services industry in the cities of
Shenzhen, Shanghai, Guangzhou and Beijing. `
Some additional highlights in the CDC Global Services business
during the first quarter of 2010 included several significant new
engagements:
- A $6.0 billion mortgage
appraisal service company contracted with CDC Global Services to
provide IT consulting and staffing services.
- A multi-million dollar
U.K.-based diversified financial services company signed an
exclusive multi-year contract with CDC Global Services to provide
business process outsourcing services and solutions at multiple
operating centers and facilities globally.
- A $3.5 billion global producer
of data storage products contracted with CDC Global Services to
implement SAP supply chain management (SCM)/ Extended Warehouse
Management solutions (EWM) at its main distribution facility in
Shanghai, China.
- A $3.3 billion global food
processor, with dairy, pasta, and rice-milling operations,
contracted with CDC Global Services to perform a proof of concept
project to assess and recommend whether to implement SAP SCM EWM or
SAP warehouse management system.
- An $8.9 billion global producer
of bread, cookies, tortillas, snack foods and candies contracted
with CDC Global Services to implement Microsoft’s System Center
Operations Manager (SCOM) solution at its U.S. headquarters.
- Various Technical and Further
Education (TAFE) institutes in Australia, two located in Victoria
and two in New South Wales, have contracted with CDC Global
Services to develop a solution to improve their interactions with
their current and prospective students.
- An Australian city council, with
a population of more than 961,000 residents, contracted with CDC
Global Services to enhance their IT waste management system.
“We have been laying the groundwork for growing our business,
particularly in the offshore development market,” said CK Wong, CEO
of CDC Global Services. “As we have said previously, our goal is to
expand to 5,000 professional staff in China over the next few years
and derive at least 35 percent of CDC Global Services’ revenue from
the China domestic service market. CDC Global Services also
believes it can offer value to its customers through competitively
priced, high quality, IT services. With these strategies and our
planned acquisitions, we believe we are well positioned for
improved metrics and growth.”
CDC Games
On a standalone basis, CDC Games had the following results for
the three months ended March 31, 2010:
Q1 2009
Q1 2010 GAAP Revenue: $6.3 million $8.0
million Adjusted EBITDA: ($0.9) million $1.2 million Adjusted
EBITDA Margin: (15%) 15%
Adjusted EBITDA for the first quarter of 2010 was $1.2 million
compared to negative Adjusted EBITDA of ($0.9) million in the first
quarter of 2009. Adjusted EBITDA margin was 15 percent in the first
quarter of 2010 compared to negative Adjusted EBITDA margin of (15)
percent in the first quarter of 2009.
GAAP revenue for CDC Games during the first quarter of 2010 was
$8.0 million, an increase of approximately 27 percent from $6.3
million in the first quarter of 2009.
Total peak concurrent users (PCU) in the first quarter of 2010
was up approximately four percent from the fourth quarter of 2009,
and total average concurrent users (ACU) increased approximately
five percent in the first quarter compared to the fourth quarter of
2009.
In April 2010, CDC Games launched a new domestic game in China
called East Fantasy Online, a cartoon type 3D massive multiplayer
online action role playing game (MMOARPG). CDC Games plans to
launch another domestic game, Richman Universe Online, a casual
MMORPG, this summer. Another local game also is planned for later
this year.
In the first quarter of 2010, CDC Games launched a new version
of Yulgang, version 4.0. Since its launch, the game has shown
strong increases in PCU. Another new update for Yulgang is planned
for later this year, and major updates for Shaiya and Eve Online
are also planned later in the second quarter. We also believe that
LOTRO is on track for commercial launch later this year.
“We are very pleased with our double digit growth in revenue and
our strong improvement in Adjusted EBITDA in the first quarter,”
said Simon Wong, CEO of CDC Games. “We also are excited to hear
that Turbine, the developer of LOTRO, was acquired by Time Warner,
a leader in the publishing and entertainment industry, and look
forward to our partnership with them as we continue our progress
towards the commercial launch of LOTRO. We have exciting new
domestic games planned for the remainder of the year and we expect
to launch new updates for several of our existing games. With these
new upcoming games and updates planned for the rest of the year, we
believe we are well-positioned for continued improvement in our
metrics.”
China.com
Q1 2009
Q1 2010 GAAP Revenue: $2.4 million $2.9
million Earnings Per Share: ($0.0073) $0.0022
GAAP revenue for the first quarter of 2010 was $2.9 million,
compared to $2.4 million in the first quarter of 2009. China.com
reported first quarter 2010 earnings per share of $0.0022 compared
to loss per share of ($.0073) in the first quarter of 2009.
China.com’s Portal business continued to expand its Automobiles
and Games channels and added some major global brand clients.
During the first quarter, China.com’s portal won three awards at
the Internet Market China 2010 annual convention. The portal
received the “Innovative Enterprise of the Year (2009)” award,
while the Automobiles and Games channels won “Best New Media of the
Year for Integrated Broadcasting (2009)” and “Best Web Platform of
the Year for Network Operators (2009).”
TTG, China.com’s publishing business, managed the ASEAN Tourism
Forum (ATF) 2010 on behalf of the Ministry of Industry &
Primary Resources, Brunei Darussalam. In addition, TTG organized
several publishing projects that included ATF 2010 Daily in Brunei,
and ITB 2010 Daily in Berlin, Germany and the Hong Kong Tourism
Bureau and Meetings and Exhibitions Hong Kong advertorial.
Bbmf
CDC Corporation also holds a 20 percent equity interest in Bbmf,
one of the largest independent operators of 3G comics in Japan. CDC
Corporation expects Bbmf to continue to expand in this exciting 3G
mobile content/Internet social networking space.
CDC Corporation Consolidated
- Total Non-GAAP revenue for CDC
Corporation in the first quarter of 2010 was $79.0 million,
compared to $78.8 million in the first quarter of 2009.
- Adjusted EBITDA in the first
quarter of 2010 was $8.4 million, a 17 percent increase from
Adjusted EBITDA of $7.2 million in the third quarter of 2009.
- For the first quarter of 2010,
Non-GAAP net income(a) was $3.3 million compared to $16.7 million
in the first quarter of 2009. Non-GAAP earnings per share(a) (EPS)
for the first quarter of 2010 was $0.03 compared to Non-GAAP
earnings per share of $0.16 in the first quarter of 2009. Non-GAAP
earnings per share in first quarter of 2009 included $17.2 million
or $0.16 per share in other income. This other income was
attributed to the company’s ability to redeem convertible notes
below par during the first quarter of 2009, creating an adjustment
to the value of the derivative.
Concluding Remarks
Peter Yip, CEO of CDC Corporation concluded, “Overall, we are
pleased that all our business units reported either positive EPS or
have posted strong positive EBITDA margin. We believe that CDC
Corporation has a sum-of-parts valuation and that the current
market price of its shares is not reflective of the value contained
in the company’s business units. As we announced last quarter, we
are carefully evaluating the most tax efficient and orderly manner
to distribute shares of our underlying publicly listed subsidiaries
as dividends on a regular basis to our shareholders and plan to
seek the necessary approvals to proceed with that plan.
“Finally, I have been very pleased with the outstanding
performance of our recent appointments of Simon Wong as CEO of CDC
Games and CK Wong as CEO of CDC Global Services. Under their
respective leadership, as compared to the same period last year,
CDC Games has seen double digit growth in revenue and major
improvement in EBITDA margin in the first quarter of this year,
while CDC Global Services’ has posted over 114 percent in EBITDA
improvement also in the first quarter. We continue to remain
cautiously optimistic with regard to our long-term prospects since
we believe we now have an optimal business and technology platform
in place for all of our key businesses.”
Conference Call
The company's senior management will host a conference call for
financial analysts and investors on Tuesday, May 11, at 9:00AM
EDT.
USA-based Toll Free Number: +1-(888) 603-6873International: +1
973 582 2706
Pass code: #: 68538655Call Leader: Monish Bahl
Investors are invited to listen to a live webcast of the
conference call which can be accessed through the investor section
of the CDC Corporation website at www.cdccorporation.net. The call
can also be accessed through www.streetevents.com. To listen to the
call, please go to the website at least 15 minutes prior to the
call and download any necessary audio software.
Instant Replay
For those unable to call in, a digital instant replay will be
available after the call until May 18, 2010. U.S. based Toll Free
Number: +1 800 642 1687, U.S.-based Toll Number: +1 706 645 9291
Passcode or PIN #: #68538655
Footnotes:
All dollar amounts are in U.S. dollars
* CDC Corporation has recently changed the composition of its
Adjusted EBITDA measurement, as provided herein, to be consistent
with the presentation of Adjusted EBITDA for its subsidiary, CDC
Software Corporation. CDC Corporation believes this revised
presentation is a useful measure of operating performance. A
reconciliation of this revised Adjusted EBITDA measurement to our
historical Adjusted EBITDA measurement is provided below.
(a) Adjusted Financial Measures
This press release includes Non-GAAP Revenue, Adjusted EBITDA
from continuing operations, Adjusted EBITDA Margin, Non-GAAP Cash
and Cash Equivalents, Non-GAAP Net Income, and Non-GAAP Earnings
Per Share, which are not prepared in accordance with generally
accepted accounting principles in the United States of America
(“GAAP”) (collectively, the "Non-GAAP Financial Measures").
Non-GAAP Financial Measures are not alternatives for measures such
as revenue, net income, earnings per share and cash and cash
equivalents prepared under GAAP. These Non-GAAP Financial measures
may also be different from non-GAAP measures used by other
companies. Non-GAAP Financial Measures should not be used as a
substitute for, or considered superior to, measures of financial
performance prepared in accordance with GAAP.
Investors should be aware that these Non-GAAP Financial Measures
have inherent limitations, including their variance from certain of
the financial measurement principals underlying GAAP, should not be
considered as a replacement for GAAP performance measures, and
should be read in conjunction with our consolidated financial
statements prepared in accordance with GAAP. These supplemental
Non-GAAP Financial Measures should not be construed as an inference
that the Company's future results will be unaffected by similar
adjustments to net earnings determined in accordance with GAAP.
Reconciliations of Non-GAAP Financial Measures to GAAP are provided
herein immediately following the financial statements included in
this press release.
(b) Adjustment for Discontinued Businesses
During the second and first quarter of 2008, the mobile value
added business of China.com and operations of CDC Games
International, respectively, were discontinued. The operations of
CDC Games International, a subsidiary of CDC Games Corporation,
included operations in the U.S., Japan and Korea. All historical
results related to these two businesses have been included in
discontinued operations.
(c) SFAS 160 Adoption
As of January 2009, the company adopted SFAS 160,
Non-controlling Interests in Consolidated Financial Statements.
After the adoption of SFAS 160, net income (loss) is now referred
to as net income (loss) attributable to controlling interest on the
consolidated statement of operations.
(d) 2009 Revised Quarterly Information
Results provided herein for certain quarters of 2009 may be
different than those previously reported in our press releases due
to certain year-end adjustments required to be made in connection
with the audit of our financial statements for the year ended
December 31, 2009.
About CDC Corporation
The CDC family of companies includes CDC Software (NASDAQ: CDCS)
focused on hybrid enterprise software and services, CDC Global
Services focused on IT consulting services, and outsourced R&D
and application development, CDC Games focused on online games, and
China.com, Inc. (HKGEM:8006) focused on portals for the greater
China markets. For more information about CDC Corporation (NASDAQ:
CHINA), please visit www.cdccorporation.net.
About CDC Software
CDC Software (NASDAQ: CDCS), The Customer-Driven Company™, is a
hybrid enterprise software provider of on-premise and cloud
deployments. Leveraging a service-oriented architecture (SOA), CDC
Software offers multiple delivery options for their solutions
including on-premise, hosted, cloud-based SaaS or blended-hybrid
deployment offerings. CDC Software’s solutions include enterprise
requirements planning (ERP), manufacturing operations management,
enterprise manufacturing intelligence, supply chain management
(demand management, order management and warehouse and
transportation management), e-Commerce, human capital management,
customer relationship management (CRM), complaint management and
aged care solutions.
CDC Software’s recent acquisitions are part of its “acquire,
integrate, innovate and grow” strategy. Fueling the success of this
strategy is the company’s global scalable business and
technology infrastructure featuring multiple complementary
applications and services, domain expertise in vertical markets,
cost effective product engineering centers in India and China, a
highly collaborative and fast product development process utilizing
Agile methodologies, and a worldwide network of direct sales and
channel operations. This strategy has helped CDC Software deliver
innovative and industry-specific solutions to more than 6,000
customers worldwide within the manufacturing, distribution,
transportation, retail, government, real estate, financial
services, health care, and not-for-profit industries. For more
information, please visit www.cdcsoftware.com
About CDC Global Services
CDC Global Services, a business unit of CDC Corporation,
provides IT consulting services, including platform-specific
services for Microsoft and SAP, as well as project management, IT
staffing, managed help desk solutions and a full range of
outsourced service offerings. CDC Global Services provides hardware
for data collection and RFID, through partnerships with some of the
industry's most reputable vendors. CDC Global Services customers
benefit from streamlined vendor management and the ability to
control project costs, while being able to access the right IT
resources through a singular point of contact. For more information
on CDC Global Services, visit: www.cdcglobalservices.com.
About CDC Games
CDC Games is a market leader in online and mobile games in China
with more than 160 million registered users. The company pioneered
the "free-to-play, pay-for-merchandise" online games model in China
with Yulgang and launched the first free-to-play, pay for
merchandise FPS (first person shooter) game in China with Special
Force. For more information on CDC Games, visit:
www.cdcgames.net
About China.com Inc.
China.com is a leading operator of Internet portals, serving a
broad range of audiences in China. In 2006, it was chosen as the
second company to host Google's Video Adsense which serves video
ads targeted at China's English-speaking audience. China.com also
was appointed by the Jilin government as the exclusive web sponsor
of the 2007 Asian Winter Games. China.com was listed on the GEM of
the Stock Exchange of Hong Kong Limited on March 9, 2000. In
December 2000, China.com Inc. was admitted as a constituent stock
of the Hang Seng IT and IT Portfolio Indices.
Cautionary Note Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
statements regarding our beliefs and expectations about our
strategic growth alternatives at our businesses and our progress
with respect thereto, our beliefs regarding sales momentum and the
continuation thereof, our plans for expansion and the consummation
of strategic investments and acquisitions, our beliefs regarding
the potential for improved metrics, our beliefs, plans and
expectations regarding the launch of additional games and upgrades
in the future, our beliefs regarding CDC Corporation’s value as a
sum of its parts and the value of our shares, our beliefs and plans
regarding any distributions to shareholders, our beliefs regarding
any trends we may see and the continuation thereof, the performance
of our core businesses, our beliefs about strategic alternatives we
are considering and the potential benefits related thereto,
including strategies related to CDC Global Services, our beliefs
about anticipated future growth and the competitive position of our
businesses, our beliefs about unlocking shareholder value at our
subsidiaries, our beliefs regarding our plans for growth both
organically and through acquisitions, our beliefs and plans
relating to our expansion in China for CDC Global Services and the
utilization of IT outsourcing firms, our plans to leverage CDC
Software’s customer base for CDC Global Services, our beliefs
regarding value that can be provided to our customers and potential
customers, our expectations regarding future expansion in China and
the potential benefits to us, our customers and shareholders, our
beliefs regarding the current performance of our games and the
continuation any increases we may have experienced, our plans with
respect to updates for our games and the timing thereof, our
beliefs and expectations regarding continued improvement in our
operating metrics at CDC Games during 2010, our beliefs regarding
our business and technology platform, our beliefs regarding our
“sum-of-parts” valuation, our expectations regarding any of our
strategies to help unlock shareholder value, our plans with respect
to any matters to be put to our shareholders, and the expected
benefits thereof, our beliefs regarding our competitive positioning
in the event of a recovery in the global economy, our beliefs
regarding the utility of the pro forma financial information
provided herein, our beliefs regarding staff utilization rates at
CDC Global Services, our beliefs regarding factors that may have
negatively affected performance at our businesses, our expectations
and estimates regarding our financial performance for future
periods including those related to revenue and Adjusted EBITDA, and
other statements that are not historical fact, the achievement of
which involve risks, uncertainties and assumptions. These
statements are based on management's current expectations and are
subject to risks and uncertainties and changes in circumstances.
There are important factors that could cause actual results to
differ materially from those anticipated in the forward looking
statements, including the following: (a) the ability to realize
strategic objectives by taking advantage of market opportunities in
targeted geographic markets; (b) the ability to make changes in
business strategy, development plans and product offerings to
respond to the needs of current, new and potential customers,
suppliers and strategic partners; (c) the effects of restructurings
and rationalization of operations in our companies; (d) the ability
to address technological changes and developments including the
development and enhancement of products; (e) the ability to develop
and market successful products and services; (f) the entry of new
competitors and their technological advances; (g) the need to
develop, integrate and deploy enterprise software applications to
meet customer's requirements; (h) the possibility of development or
deployment difficulties or delays; (i) the dependence on customer
satisfaction with the company's games, software products and
services; (j) continued commitment to the deployment of the
products, including enterprise software solutions; (k) risks
involved in developing software solutions and integrating them with
third-party software and services; (l) the continued ability of the
company's products and services to address client-specific
requirements; (m) demand for and market acceptance of new and
existing enterprise software and services and the positioning of
the company's solutions; (n) risks associated with our convertible
debt; and (o) the ability of staff to operate the enterprise
software and extract and utilize information from the company's
products and services. If any such risks or uncertainties
materialize or if any of the assumptions proves incorrect, our
results could differ materially from the results expressed or
implied by the forward-looking statements we make. Also, the
results and benefits experienced by customers and users set forth
in this press release may differ from those of other users and
customers. Further information on risks or other factors that could
cause results to differ is detailed in filings or submissions with
the United States Securities and Exchange Commission made by CDC
Corporation in its Annual Report for the year ended December 31,
2008 on Form 20-F filed on June 30, 2009. All forward-looking
statements included in this press release are based upon
information available to management as of the date of the press
release, and you are cautioned not to place undue reliance on any
forward looking statements which speak only as of the date of this
press release. The company assumes no obligation to update or alter
the forward looking statements whether as a result of new
information, future events or otherwise. Historical results are not
indicative of future performance.
CDC Corporation Unaudited Consolidated Balance Sheets
(Amounts in thousands of U.S. dollars except share and per share
data) December 31, March 31,
2009 2010 ASSETS Current
assets:
Cash
$ 115,290 $ 108,067 Restricted cash 790 726 Accounts receivable
(net of allowance of $8,375 and $7,568 at December 31, 2009 and
March 31, 2010, respectively) 59,347 59,072 Available-for-sale
securities 2,418 1,765 Deferred tax assets 5,356 5,444 Prepayments
and other current assets 13,219 17,557
Total current assets 196,420 192,631 Property and equipment,
net 13,500 12,313 Goodwill 177,858 181,127 Intangible assets, net
95,803 90,829 Investments 12,863 11,904 Equity investments 11,798
11,798 Deferred tax assets 36,764 36,986 Other assets 4,599
4,972 Total assets $ 549,605 $ 542,560
LIABILITIES AND SHAREHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 22,513 $ 20,660 Purchase
consideration payables 2,457 4,022 Income tax payable 2,867 974
Accrued liabilities 37,957 36,405 Restructuring accruals, current
portion 2,061 1,828 Short-term loans 11,964 9,421 Convertible notes
51,729 53,236 Deferred revenue 59,975 58,951 Deferred tax
liabilities 1,797 1,647 Total current
liabilities 193,320 187,144 Deferred tax liabilities 23,985
23,973 Purchase consideration payables, net of current portion 810
2,601 Other liabilities 14,584 14,955
Total liabilities 232,699 228,673 Contingencies and
commitments Shareholders’ equity: Preferred shares, $0.001
par value; 5,000,000 shares authorized, no shares issued - - Class
A common shares, $0.00025 par value; 800,000,000 shares authorized;
118,478,970 and 118,478,970 shares issued as of December 31, 2009
and March 31, 2010, respectively; 105,761,946 and 105,726,946
shares outstanding as of December 31, 2009 and March 31, 2010,
respectively 28 28 Additional paid-in capital 740,209 741,261
Common stock held in treasury; 12,717,024 and 12,752,024 shares at
December 31, 2009 and March 31, 2010, respectively (58,091 )
(58,191 ) Accumulated deficit (423,937 ) (427,498 ) Accumulated
other comprehensive income 18,741 19,204
Total shareholders’ equity 276,950 274,804
Noncontrolling interest 39,956 39,083
Total equity 316,906 313,887 Total
liabilities and shareholders’ equity $ 549,605 $ 542,560
CDC Corporation Unaudited
Consolidated Statement of Operations (Amounts in thousands
of U.S. dollars except share and per share data)
Three months ended December 31, March 31,
2009 (d)
2010 REVENUE: Software $ 54,326 $
50,528 Global Services 17,568 16,441 CDC Games 7,011 7,968
China.com 4,068 2,904 Total revenue
82,973 77,841
COST OF REVENUE: Software 23,857 23,968
Global Services 14,137 12,996 CDC Games 5,821 5,585 China.com
1,397 1,685 Total cost of revenue
45,212 44,234 Gross profit
37,761 33,607 Gross margin %
46%
43%
OPERATING EXPENSES: Sales and marketing expenses
11,930 12,564 Research and development expenses 5,311 6,689 General
and administrative expenses 16,860 14,786 Exchange (gain) loss on
deferred tax assets (1,395 ) 624 Amortization expenses 2,033 2,159
Restructuring and other charges 4,352 211
Total operating expenses 39,091 37,033
Operating loss from continuing operations (1,330 )
(3,426 ) Operating margin %
-2%
-4%
Other income (loss), net 4,331 (1,097 )
Income (loss) before income taxes 3,001 (4,523 ) Income tax
benefit (expense) (3,581 ) 1,185 Loss
from continuing operations (580 ) (3,338 ) Income (loss) from
operations of discontinued subsidiaries, net of tax 409
- Net loss (171 ) (3,338 ) Net income
attributable to noncontrolling interest (1,274 ) (223
) Net loss attributable to controlling interest $ (1,445 ) $
(3,561 ) Basic and diluted earnings (loss) per share from
continuing operations attributable to controlling interest (1) $
(0.02 ) $ (0.03 ) Basic and diluted earnings (loss) per
share attributable to controlling interest (1) $ (0.01 ) $ (0.03 )
Weighted average number of common shares outstanding - basic
106,051,269 105,741,279 Weighted average number of common
shares outstanding - diluted 108,319,773 105,741,279 (1)
Refer to "Unaudited Basic and Diluted Earnings (Loss) Per Share
Calculation" schedule for calculation of earnings per share
amounts.
CDC Corporation Unaudited
Consolidated Statement of Operations (Amounts in thousands
of U.S. dollars except share and per share data)
Three months ended
March 31,
2009 2010 REVENUE:
Software $ 50,353 $ 50,528 Global Services 19,830 16,441 CDC Games
6,259 7,968 China.com 2,400 2,904 Total
revenue 78,842 77,841
COST OF REVENUE: Software
24,176 23,968 Global Services 16,203 12,996 CDC Games 5,305 5,585
China.com 1,209 1,685 Total cost of
revenue 46,893 44,234 Gross
profit 31,949 33,607 Gross margin %
41%
43%
OPERATING EXPENSES: Sales and marketing expenses
11,304 12,564 Research and development expenses 4,531 6,689 General
and administrative expenses 16,887 14,786 Exchange (gain) loss on
deferred tax assets 228 624 Amortization expenses 1,967 2,159
Restructuring and other charges 660 211
Total operating expenses 35,577 37,033
Operating loss from continuing operations (3,628 ) (3,426 )
Operating margin %
-5%
-4%
Other income (loss), net 15,324 (1,097
) Income (loss) before income taxes 11,696 (4,523 ) Income
tax benefit (expense) (3,947 ) 1,185
Income (loss) from continuing operations 7,749 (3,338 ) Loss from
operations of discontinued subsidiaries, net of tax (203 )
- Net income (loss) 7,546 (3,338 ) Net
(income) loss attributable to noncontrolling interest 160
(223 ) Net income (loss) attributable to
controlling interest $ 7,706 $ (3,561 ) Basic and
diluted earnings (loss) per share from continuing operations
attributable to controlling interest (1) $ 0.06 $ (0.03 )
Basic and diluted earnings (loss) per share attributable to
controlling interest (1) $ 0.06 $ (0.03 ) Weighted
average number of common shares outstanding - basic 106,720,359
105,741,279 Weighted average number of common shares
outstanding - diluted 106,730,225 105,741,279 (1) Refer to
"Unaudited Basic and Diluted Earnings (Loss) Per Share Calculation"
schedule for calculation of earnings per share amounts.
CDC Corporation Unaudited Consolidated Statement
of Cash Flows (Amounts in thousands of U.S. dollars)
Three months ended December 31,
March 31,
2009 (d)
2010 OPERATING ACTIVITIES: Net loss $
(171 ) $ (3,338 ) Adjustments to reconcile net income to net cash
provided by operating activities Loss on disposal of property and
equipment 65 - Gain on disposal of available-for-sale securities
(2,202 ) (878 ) Bad debt expense 110 (48 ) Amortization expense
7,099 7,092 Depreciation expense 1,710 1,598 Stock compensation
expenses 2,061 1,113 Deferred income tax provision 1,058 - Exchange
(gain) loss on deferred tax assets (1,395 ) 624 Intangible assets
impairment 3,118 - Cost investments impairment 185 - Amortization
of debt issuance costs and debt discount on convertible notes 523
121 Fair market value adjustment on convertible notes (2,972 ) -
Interest income 51 - Interest expense 754 1,595 Changes in
operating assets and liabilities: Accounts receivable (8,340 ) 156
Deposits, prepayments and other receivables 1,707 (3,184 ) Other
assets (454 ) (474 ) Accounts payable (414 ) (1,822 ) Accrued
liabilities (716 ) (2,081 ) Deferred revenue 2,485 (692 ) Income
tax payable 1,800 (1,993 ) Other liabilities (648 )
310 Net cash provided by operating activities 5,414
(1,901 )
INVESTING ACTIVITIES:
Acquisition, net of cash acquired (25,532 ) (2,246 ) Purchase of
property, plant & equipment (349 ) (287 ) Purchases of
intangible assets 202 (257 ) Payment for capitalized software (556
) - Disposal (acquisition) of cost method investments - 1,476
Purchase of available-for-sale securities (803 ) (297 ) Proceeds
from disposal of available-for-sale securities 7,225 1,427 Change
in restricted cash (160 ) 80 Net cash used in
investing activities (19,973 ) (104 )
FINANCING ACTIVITIES: Issuance of share capital, net of
offering costs 184 - Short-term borrowings (repayments) (4,149 )
(2,812 ) Repayment of convertible notes (475 ) - Payment for
capital lease obligations (109 ) (118 ) Purchase of CDC Software
shares (969 ) (1,314 ) Purchases of treasury stock (623 ) (129 )
Dividend distribution by China.com (5,454 ) -
Net cash used in financing activities (11,595 )
(4,373 ) Effect of exchange differences on cash (119
) (845 ) Net increase in cash and cash equivalents
(26,273 ) (7,223 ) Cash at beginning of period 141,563
115,290 Cash at end of period $ 115,290
$ 108,067
CDC Corporation
Unaudited Consolidated Statement of Cash Flows (Amounts
in thousands of U.S. dollars) Three
months ended March 31, 2009
2010 OPERATING ACTIVITIES: Net income (loss) $
7,546 $ (3,338 ) Adjustments to reconcile net income to net cash
provided by operating activities Loss (gain) on disposal of
property and equipment (13 ) - Loss (gain) on disposal of
available-for-sale securities 616 (878 ) Bad debt expense 292 (48 )
Amortization expense 7,168 7,092 Depreciation expense 1,824 1,598
Stock compensation expenses 1,023 1,113 Deferred income tax
provision 4,016 - Exchange gain on deferred tax assets 228 624
Amortization of debt issuance costs and debt discount on
convertible notes 2,931 121 Fair market value adjustment on
convertible notes (19,916 ) - Interest income (31 ) - Interest
expense - 1,595 Changes in operating assets and liabilities:
Accounts receivable 4,599 156 Deposits, prepayments and other
receivables (393 ) (3,184 ) Other assets (274 ) (474 ) Accounts
payable 2,451 (1,822 ) Accrued liabilities (6,610 ) (2,081 )
Deferred revenue (2,472 ) (692 ) Income tax payable (1,001 ) (1,993
) Other liabilities 161 310 Net cash
provided by operating activities 2,145 (1,901
)
INVESTING ACTIVITIES: Acquisition, net of cash
acquired - (2,246 ) Purchase of property, plant & equipment
(623 ) (287 ) Payment for capitalized software (892 ) - Disposal
(acquisition) of cost method investments (828 ) 1,476 Purchase of
available-for-sale securities - (297 ) Investment in cost method
investees (franchise partners) (38 ) - Proceeds from disposal of
available-for-sale securities 15,094 1,427 Change in restricted
cash 7 80 Net cash provided (used) in
investing activities 12,720 (104 )
FINANCING ACTIVITIES: Issuance of share capital, net of
offering costs 376 - Short-term borrowings (repayments) (2,654 )
(2,812 ) Repayment of convertible notes (62,540 ) - Payment for
capital lease obligations - (118 ) Purchase of CDC Software shares
- (1,314 ) Purchases of treasury stock (962 ) (129 ) Dividend
distribution by China.com (10,665 ) - Net cash
used in financing activities (76,445 ) (4,373 )
Effect of exchange differences on cash (327 )
(845 ) Net increase in cash and cash equivalents (61,907 )
(7,223 ) Cash at beginning of period 165,693
115,290 Cash at end of period $ 103,786 $
108,067
CDC Corporation Unaudited
Reconciliation From GAAP Results to Adjusted EBITDA (Amounts
in thousands of U.S. dollars) Three months
ended December 31, March 31,
2009 2010 (a) Reconciliation
from GAAP results to Adjusted EBITDA from continuing operations
Operating loss from continuing operations $ (1,330 ) $ (3,426 ) Add
back restructuring and other charges 4,352 211 Add back
depreciation expense 1,785 1,598 Add back amortization expense
2,033 2,159 Add back amortization expense included in cost of
revenue 5,066 4,933 Add back stock compensation expenses 2,152
1,113 Add back exchange (gain) loss on deferred taxes (1,395 ) 624
Add back deferred revenue grind 632 1,203
Adjusted EBITDA from continuing operations (1) $ 13,295
$ 8,415 Adjusted EBITDA margin % 16 % 11 %
CDC Software Unaudited Reconciliation From GAAP Results
to Adjusted EBITDA (Amounts in thousands of U.S.
dollars) Three months ended December 31,
March 31, 2009
2010 (a) Reconciliation from GAAP results to
Adjusted EBITDA from continuing operations Operating income
from continuing operations $ 5,889 $ 1,904 Add back restructuring
and other charges 1,176 573 Add back depreciation expense 750 699
Add back amortization expense 1,151 1,280 Add back amortization
expense included in cost of revenue 3,585 3,825 Add back stock
compensation expenses 910 444 Add back exchange (gain) loss on
deferred taxes (39 ) 623 Add back deferred revenue grind 632
1,203 Adjusted EBITDA from continuing
operations (1) $ 14,054 $ 10,551 Adjusted EBITDA
margin % 26 % 20 %
CDC Global Services Unaudited
Reconciliation From GAAP Results to Adjusted EBITDA (Amounts
in thousands of U.S. dollars) Three months ended
December 31, March 31, 2009
2010 (a) Reconciliation from GAAP
results to Adjusted EBITDA from continuing operations Operating
loss from continuing operations $ (2,144 ) $ (1,255 ) Add back
restructuring and other charges 1,523 1,937 Add back depreciation
expense 99 87 Add back amortization expense 645 643 Add back
amortization expense included in cost of revenue 2 1 Add back stock
compensation expenses 263 95 Add back exchange loss on deferred
taxes - 1 Add back deferred revenue grind - -
Adjusted EBITDA from continuing operations $ 388 $
1,509 Adjusted EBITDA margin % 2 % 9 %
CDC Games
Corporation Unaudited Reconciliation From GAAP Results to
Adjusted EBITDA (Amounts in thousands of U.S. dollars)
Three months ended December 31,
March 31, 2009 2010
(a) Reconciliation from GAAP results to Adjusted EBITDA
from continuing operations Operating income (loss) from
continuing operations $ (5,320 ) $ (343 ) Add back restructuring
and other charges 3,138 (453 ) Add back depreciation expense 793
742 Add back amortization expense - - Add back amortization expense
included in cost of revenue 1,479 1,107 Add back stock compensation
expenses 366 157 Add back exchange (gain) loss on deferred taxes -
- Add back deferred revenue grind - -
Adjusted EBITDA from continuing operations $ 456 $ 1,210
Adjusted EBITDA margin % 7 % 15 %
CDC
China.com Unaudited Reconciliation From GAAP Results to
Adjusted EBITDA (Amounts in thousands of U.S. dollars)
Three months ended December 31,
March 31, 2009 2010
(a) Reconciliation from GAAP results to Adjusted EBITDA
from continuing operations Operating income (loss) from
continuing operations $ 1,876 $ (415 ) Add back restructuring and
other charges - - Add back depreciation expense 129 57 Add back
amortization expense - - Add back amortization expense included in
cost of revenue - - Add back stock compensation expenses 161 90 Add
back exchange (gain) loss on deferred taxes (1,356 ) - Add back
deferred revenue grind - - Adjusted
EBITDA from continuing operations $ 810 $ (268 ) Adjusted
EBITDA margin % 20 % -9 %
Corporate Unaudited
Reconciliation From GAAP Results to Adjusted EBITDA (Amounts
in thousands of U.S. dollars) Three months ended
December 31, March 31, 2009
2010 (a) Reconciliation from GAAP
results to Adjusted EBITDA from continuing operations Operating
loss from continuing operations $ (1,631 ) $ (3,317 ) Add back
restructuring and other charges (1,485 ) (1,846 ) Add back
depreciation expense 14 13 Add back amortization expense 237 236
Add back amortization expense included in cost of revenue - - Add
back stock compensation expenses 452 327 Add back exchange (gain)
loss on deferred taxes - - Add back deferred revenue grind -
- Adjusted EBITDA from continuing operations $
(2,413 ) $ (4,587 ) (1) Adjusted EBITDA does not
include the adjustment related to capitalized software costs which
are credited against research and development expenses in CDC
Software statement of operations. Below is a summary of capitalized
software credits for the three months ended:
Three months
ended December 31, March 31,
2009 2010 Capitalized
software credits $ (556 ) $ -
CDC
Corporation Unaudited Reconciliation From GAAP Results to
Adjusted EBITDA (Amounts in thousands of U.S. dollars)
Three months ended
March 31,
2009 2010 (a)
Reconciliation from GAAP results to Adjusted EBITDA from continuing
operations Operating loss from continuing operations $ (3,628 )
$ (3,426 ) Add back restructuring and other charges 660 211 Add
back depreciation expense 1,784 1,598 Add back amortization expense
1,967 2,159 Add back amortization expense included in cost of
revenue 5,201 4,933 Add back stock compensation expenses 1,004
1,113 Add back exchange loss on deferred taxes 228 624 Add back
deferred revenue grind - 1,203 Adjusted
EBITDA from continuing operations (1) $ 7,216 $ 8,415
Adjusted EBITDA margin % 9 % 11 %
CDC Software
Unaudited Reconciliation From GAAP Results to Adjusted
EBITDA (Amounts in thousands of U.S. dollars)
Three months ended
March 31,
2009 2010 (a)
Reconciliation from GAAP results to Adjusted EBITDA from continuing
operations Operating income from continuing operations $ 5,858
$ 1,904 Add back restructuring and other charges 431 573 Add back
depreciation expense 823 699 Add back amortization expense 1,259
1,280 Add back amortization expense included in cost of revenue
3,892 3,825 Add back stock compensation expenses 181 444 Add back
exchange loss on deferred taxes 228 623 Add back deferred revenue
grind - 1,203 Adjusted EBITDA from
continuing operations (1) $ 12,672 $ 10,551 Adjusted
EBITDA margin % 25 % 20 %
CDC Global Services
Unaudited Reconciliation From GAAP Results to Adjusted
EBITDA (Amounts in thousands of U.S. dollars)
Three months ended
March 31,
2009 2010 (a)
Reconciliation from GAAP results to Adjusted EBITDA from continuing
operations Operating loss from continuing operations $ (2,203 )
$ (1,255 ) Add back restructuring and other charges 2,099 1,937 Add
back depreciation expense 72 87 Add back amortization expense 469
643 Add back amortization expense included in cost of revenue 5 1
Add back stock compensation expenses 219 95 Add back exchange loss
on deferred taxes - 1 Add back deferred revenue grind -
- Adjusted EBITDA from continuing operations $
661 $ 1,509 Adjusted EBITDA margin % 3 % 9 %
CDC Games Corporation Unaudited Reconciliation From GAAP
Results to Adjusted EBITDA (Amounts in thousands of U.S.
dollars) Three months ended
March 31,
2009 2010 (a)
Reconciliation from GAAP results to Adjusted EBITDA from continuing
operations Operating loss from continuing operations $ (3,076 )
$ (343 ) Add back restructuring and other charges (24 ) (453 ) Add
back depreciation expense 774 742 Add back amortization expense - -
Add back amortization expense included in cost of revenue 1,304
1,107 Add back stock compensation expenses 108 157 Add back
exchange (gain) loss on deferred taxes - - Add back deferred
revenue grind - - Adjusted EBITDA from
continuing operations $ (914 ) $ 1,210 Adjusted EBITDA
margin % -15 % 15 %
CDC China.com Unaudited
Reconciliation From GAAP Results to Adjusted EBITDA (Amounts
in thousands of U.S. dollars) Three months ended
March 31,
2009 2010 (a)
Reconciliation from GAAP results to Adjusted EBITDA from continuing
operations Operating loss from continuing operations $ (890 ) $
(415 ) Add back restructuring and other charges - - Add back
depreciation expense 102 57 Add back amortization expense - - Add
back amortization expense included in cost of revenue - - Add back
stock compensation expenses 257 90 Add back exchange (gain) loss on
deferred taxes - - Add back deferred revenue grind -
- Adjusted EBITDA from continuing operations $ (531 )
$ (268 ) Adjusted EBITDA margin % -22 % -9 %
Corporate Unaudited Reconciliation From GAAP Results to
Adjusted EBITDA (Amounts in thousands of U.S. dollars)
Three months ended
March 31,
2009 2010 (a)
Reconciliation from GAAP results to Adjusted EBITDA from continuing
operations Operating loss from continuing operations $ (3,317 )
$ (3,317 )
Add back restructuring and other
charges
(1,846 ) (1,846 ) Add back depreciation expense 13 13 Add back
amortization expense 239 236 Add back amortization expense included
in cost of revenue - - Add back stock compensation expenses 239 327
Add back exchange loss on deferred taxes - - Add back deferred
revenue grind - - Adjusted EBITDA from
continuing operations $ (4,672 ) $ (4,587 ) (1)
Adjusted EBITDA does not include the adjustment related to
capitalized software costs which are credited against research and
development expenses in CDC Software statement of operations. Below
is a summary of capitalized software credits for the three months
and twelve months:
Three months ended
March 31,
2009 2010 Subtract
capitalized software credit $ (892 ) $ -
CDC Corporation Unaudited Consolidated Statement of
Operations (Amounts in thousands of U.S. dollars except
share and per share data)
Three Months Ended March 31,
2009 Three Months Ended December 31, 2009 Three
Months Ended March 31, 2010 GAAP
Results
Non-GAAP Adjustments Non-GAAP Results GAAP
Results
Non-GAAP Adjustments Non-GAAP Results GAAP
Results
Non-GAAP Adjustments Non-GAAP Results REVENUE:
Software $ 50,353 $ - $ 50,353 $ 54,326 $ 632 $ 54,958 $ 50,528 $
1,203 $ 51,731 Global Services 19,830 - 19,830 17,568 - 17,568
16,441 - 16,441 CDC Games 6,259 - 6,259 7,011 - 7,011 7,968 - 7,968
China.com 2,400 - 2,400
4,068 - 4,068
2,904 - 2,904 Total revenue
78,842 - 78,842 82,973 632 83,605 77,841 1,203 79,044
COST OF REVENUE: Software 24,176 (3,892 ) 20,284 23,857
(3,585 ) 20,272 23,968 (3,825 ) 20,143 Global Services 16,203 (5 )
16,198 14,137 (2 ) 14,135 12,996 (1 ) 12,995 CDC Games 5,305 (1,304
) 4,001 5,821 (1,479 ) 4,342 5,585 (1,107 ) 4,478 China.com
1,209 - 1,209 1,397
- 1,397 1,685
- 1,685 Total cost of revenue
46,893 (5,201 ) 41,692 45,212
(5,066 ) 40,146 44,234
(4,933 ) 39,301 Gross profit 31,949
5,201 37,150 37,761 5,698 43,459 33,607 6,136 39,743 Gross margin %
41 % 47 % 46 % 52 % 43 % 50 %
OPERATING EXPENSES:
Sales and marketing expenses 11,304 - 11,304 11,930 - 11,930 12,564
- 12,564 Research and development expenses 4,531 892 5,423 5,311
556 5,867 6,689 - 6,689 General and administrative expenses 16,887
(1,004 ) 15,883 16,860 (2,152 ) 14,708 14,786 (1,113 ) 13,673
Exchange (gain) loss on deferred tax assets 228 (228 ) - (1,395 )
1,395 - 624 (624 ) - Amortization expenses 1,967 (1,967 ) - 2,033
(2,033 ) - 2,159 (2,159 ) - Restructuring and other charges
660 (660 ) - 4,352
(4,352 ) - 211 (211 ) -
Total operating expenses 35,577 (2,967
) 32,610 39,091 (6,586 )
32,505 37,033 (4,107 ) 32,926
Operating income (loss) from continuing operations
(3,628 ) 8,168 4,540 (1,330 ) 12,284 10,954 (3,426 ) 10,243 6,817
Operating margin % -5 % 6 % -2 % 13 % -4 % 9 % Other income
(loss), net 15,324 - 15,324
4,331 - 4,331
(1,097 ) - (1,097 ) Income
(loss) before income taxes 11,696 8,168 19,864 3,001 12,284 15,285
(4,523 ) 10,243 5,720 Income tax benefit (expense) (3,947 )
578 (3,369 ) (3,581 ) (1,419 )
(5,000 ) 1,185 (3,397 ) (2,212 )
Income (loss) from continuing operations 7,749 8,746 16,495
(580 ) 10,865 10,285 (3,338 ) 6,846 3,508 Income (loss) from
operations of discontinued
subsidiaries, net of tax
(203 ) 203 - 409
(409 ) - - -
- Net income (loss) 7,546 8,949 16,495 (171 )
10,456 10,285 (3,338 ) 6,846 3,508 Net (income) loss attributable
to noncontrolling interest 160 -
160 (1,274 ) - (1,274 )
(223 ) - (223 ) Net income (loss)
attributable to controlling interest $ 7,706 $ 8,949
$ 16,655 $ (1,445 ) $ 10,456 $ 9,011 $ (3,561
) $ 6,846 $ 3,285 Net income (loss) as a % of revenue
10 % 21 % -2 % 11 % -5 % 4 %
CDC Corporation
Unaudited Reconciliation From GAAP Results to Non-GAAP Net
Income (Amounts in thousands of U.S. dollars)
Three months ended March 31,
December 31, March 31, 2009
2009 2010 (a)
Reconciliation from GAAP net income attributable to controlling
interest to Non-GAAP net income and Non-GAAP net income per
share Net income (loss) attributable to controlling interest $
7,706 $ (1,445 ) $ (3,561 ) Add back loss (gain) from operations of
discontinued subsidiaries, net of tax 203 (409 ) - Add back
restructuring 660 4,352 211 Add back amortization expense 1,967
2,033 2,159 Add back amortization expense included in cost of
revenue 5,201 5,066 4,933 Add back stock based compensation 1,004
2,152 1,113 Subtract capitalized software credits (892 ) (556 ) -
Add back exchange (gain) loss on deferred tax assets 228 (1,395 )
624 Add back deferred revenue grind - 632 1,203 Add back non cash
tax expense 2,960 2,686 (415 ) Tax affect on all reconciling items
@ 30% (2,382 ) (4,105 ) (2,982 ) Non-GAAP net
income $ 16,655 $ 9,011 $ 3,285 Non-GAAP net
income as % of revenue 21 % 11 % 4 % Weighted average number
of common shares outstanding - basic 106,720,359 106,051,269
105,741,279 Weighted average number of common shares outstanding -
diluted 106,730,225 108,319,773 105,741,279
Non-GAAP net
income per share - basic $ 0.16 $
0.08 $ 0.03 Non-GAAP net income per share -
diluted $ 0.16 $ 0.08 $
0.03 CDC Corporation Unaudited
Reconciliation From GAAP Cash to Non GAAP Cash (Amounts in
thousands of U.S. dollars) March 31, (a) Non
GAAP Cash and Cash Equivalents Reconciliation
2010 Cash $ 108,067 Add restricted cash 726 Add available
for sale securities - current 1,765 Investments (1) 11,334
Non GAAP cash and cash equivalents $ 121,892 (1) - Excludes
investments in franchise partners of $570 at March 31, 2010.
CDC Corporation Unaudited Revenue Details
(Amounts in thousands of U.S. dollars)
Three months ended December 31, March 31,
2009 (d)
2010 Segment revenue from external customers:
Software: Licenses $ 10,511 $ 7,923 Maintenance 25,343 24,870
Professional services 15,800 15,298 Hardware 2,056 907 SaaS
implementation and support 616 1,530 Total
Software 54,326 50,528 Global Services: Licenses 106 7
Consulting services 15,971 15,312 Hardware 1,491
1,122 Total Global Services 17,568 16,441 CDC Games
7,011 7,968 China.com 4,068 2,904 Total
consolidated revenue $ 82,973 $ 77,841
Three months ended
March 31,
2009 2010 Segment revenue from
external customers: Software: Licenses $ 7,129 $ 7,923 Maintenance
24,198 24,870 Professional services 18,681 15,298 Hardware 345 907
SaaS implementation and support - 1,530 Total
Software 50,353 50,528 Global Services: Licenses 787 7
Consulting services 17,895 15,312 Hardware 1,148
1,122 Total Global Services 19,830 16,441 CDC Games
6,259 7,968 China.com 2,400 2,904 Total
consolidated revenue $ 78,842 $ 77,841
CDC
Corporation Unaudited Basic and Diluted Earnings (Loss) Per
Share Computation (Amounts in thousands of U.S. dollars
except share and per share data) Three
months ended March 31, 2009
2010 Numerator for earnings (loss) from continuing
operations attributable to controlling interest per common
share: Net income (loss) from continuing operations $ 7,749 $
(3,338 ) Net adjustments for (income) loss attributable to
noncontrolling interest and
dilutive effect of subsidiary
issued stock (1)
79 (224 ) Adjusted income (loss) from
continuing operations 7,828 (3,562 ) Amount allocated to
convertible notes (2) (911 ) - Net income
(loss) from continuing operations attributable to controlling
interest
$ 6,917 $ (3,562 )
Numerator for earnings (loss)
attributable to controlling interest per common share: Net
income (loss) from continuing operations attributable to
controlling
interest
$ 6,917 $ (3,562 ) Loss income from operations of discontinued
subsidiaries, net of tax (203 ) - Income from operations of
discontinued subsidiaries allocated to
convertible notes (2)
24 - Net income (loss) attributable to
controlling interest $ 6,738 $ (3,562 )
Denominator: Weighted average number of common shares
outstanding - basic 106,720,359 105,741,279 Employee compensation
related to common shares including stock
options
9,866 - Weighted average number of
common shares outstanding - diluted 106,730,225
105,741,279
Per share amounts: Earnings
(loss) from continuing operations attributable to controlling
interest per common share -
basic
$ 0.06 $ (0.03 ) Earnings (loss) from continuing operations
attributable to controlling
interest per common share -
dilutive
$ 0.06 $ (0.03 ) Earnings (loss) attributable to controlling
interest per common share -
basic
$ 0.06 $ (0.03 ) Earnings (loss) attributable to controlling
interest per common share -
dilutive
$ 0.06 $ (0.03 )
(1
) Includes the dilutive effects of subsidiary-issued stock-based
awards, if any, and adjustments for discontinued operations.
(2 ) Income has been allocated to common stock and convertible
notes based on their respective rights to share in dividends. In
accordance with FASB Accounting Standards Codification 260,
"Earnings Per Share" the Company's convertible notes meet the
definition of participating securities and are included in the
basic earnings per share using the two-class stock method and in
diluted earnings per share using the more dilutive of the
if-converted method or two-class stock method.
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