BEIJING, Aug. 16, 2011 /PRNewswire-Asia/ -- VanceInfo
Technologies Inc. (NYSE:VIT) ("VanceInfo" or the "Company"), an IT
service provider and one of the leading offshore software
development companies in China,
today reported its unaudited financial results for the second
quarter ended June 30, 2011.
Second Quarter 2011 Financial and Operating
Highlights
- Net revenues for the second quarter 2011 increased to
$68.2 million, up 31.8 % from
$51.8 million for the second quarter
2010.
- Gross profit for the second quarter 2011 was $24.8 million, up 21.1% from $20.5 million for the same period in 2010. Gross
margin for the second quarter 2011 was 36.4%.
- Net income in the second quarter 2011 was $7.1 million, compared to $7.2 million in the second quarter 2010. Non-GAAP
net income(1) for the second quarter 2011 was $9.5 million, up 10.8% from the same period in
2010.
- Diluted earnings per share ("EPS") were $0.16 and non-GAAP diluted EPS(1) were
$0.21 for the second quarter 2011,
reflecting weaker than expected performance from the Japanese
business and the newly acquired Lifewood business process
outsourcing ("BPO") business.
- Employees totaled 12,542, including 11,227 billable
professionals, as of June 30,
2011.
"Our business remained solid in the second quarter, as we
delivered strong top-line performance despite macroeconomic
weakness that has caused uncertainty within our industry. The
growth we achieved was largely driven by our ongoing efforts to
diversify our business through the addition of new customers and
expansion of our operations into new vertical markets," said
Chris Chen, Chairman and Chief
Executive Officer of VanceInfo. "While we have accomplished a great
deal in the first half of 2011, we are faced with several
challenges as well, with unprecedented margin pressure from the
impact of broad-based wage inflation as a result of the rising
inflationary environment in China.
We remain committed to expanding our business through organic
growth, complemented by selective acquisitions in key areas of our
business, with a focus on keeping VanceInfo at the forefront of the
industry and ahead of prevailing market trends. Although the
near-term outlook for our industry lacks clarity, we are confident
in the strength and potential of our business and believe that
VanceInfo is well positioned for 2012 and beyond."
Second Quarter 2011 Financial Results
Due to the seasonal nature of its business, the Company presents
its financial analysis on a year-over-year basis, comparing the
second quarter of 2011 and the second quarter of 2010.
Net Revenues
Net revenues were $68.2 million in
the second quarter of 2011, up 31.8 % from $51.8 million for the second quarter 2010.The
increase in net revenues was primarily driven by continued growth
of the Company's business in the U.S., Europe and Greater
China (including Mainland China, Hong Kong, Taiwan and Macau) markets.
Net Revenues by Service Lines
The Company provides three broad sets of services: R&D
Outsourcing Services, IT Services and Other Solutions &
Services. R&D Outsourcing Services consists of research &
development service line and globalization & localization
service line. IT Services consists of enterprise solutions,
application development & maintenance ("ADM"), and quality
assurance & testing service lines. Other Solutions &
Services consists of BPO and system integration ("SI") services and
other solutions.
Net revenues from IT Services represented 41.3% of the revenues,
up 62.6% from the year-ago quarter. Net revenues from Other
Solutions & Services accounted for 4.6% of the total revenues
during the second quarter of 2011 and grew 174.8% compared to the
second quarter of 2010. The growth in Other Solutions &
Services was fueled by the recent strengthening of the BPO business
through the Lifewood acquisition in April
2011.
|
Three Months Ended
June
30, 2011
|
Three Months Ended
June
30, 2010
|
|
(in
thousands, except percentages)
|
|
R&D
Outsourcing Services
|
|
Research & development
services
|
$34,886
|
51.1%
|
$31,975
|
61.8%
|
|
Globalization &
localization
|
2,034
|
3.0%
|
1,328
|
2.6%
|
|
IT Services
|
|
Enterprise solutions
|
5,508
|
8.1%
|
5,036
|
9.7%
|
|
Application
development & maintenance
|
17,195
|
25.2%
|
9,647
|
18.6%
|
|
Quality assurance &
testing
|
5,447
|
8.0%
|
2,626
|
5.1%
|
|
Other Solutions
& Services
|
3,177
|
4.6%
|
1,156
|
2.2%
|
|
Total net
revenues
|
$68,247
|
100.0%
|
$51,768
|
100.0%
|
|
|
|
|
|
|
Net Revenues by Geographic Markets
Based on the location of our clients' headquarters, Greater China is the Company's largest
geographic market, accounting for $33.0
million or 48.4% of the net revenues in the second quarter
of 2011, followed by 32.0% from clients headquartered in
the United States, 16.1% in
Europe and 2.8% in Japan.
Measuring the Company's revenues by geographic markets based on
the location of the contract signing entities, rather than the
location of the clients' headquarters, Greater China accounted for 73.7% of net
revenues in the second quarter of 2011, while the United States accounted for 21.6%,
Europe accounted for 2.2% and
Japan accounted for 1.4% in the
same period.
Net Revenues by Industries
Starting in 2011 the Company has begun disclosing its net
revenue contribution by industry. The Company classifies its
clients into four broad industry segments: Telecommunications
("Telecom"), High Technology ("High Tech"), Banking, Financial
Services and Insurance ("BFSI"), and Others (including
manufacturing, retail, distribution, travel and transportation and
public services, etc.).
|
Three Months Ended
June
30, 2011
|
Three Months Ended
June
30, 2010
|
|
(in
thousands, except percentages)
|
|
Telecom
|
$28,527
|
41.8%
|
$24,899
|
48.1%
|
|
High Tech
|
22,644
|
33.2%
|
17,553
|
33.9%
|
|
BFSI
|
7,594
|
11.1%
|
3,459
|
6.7%
|
|
Others
|
9,482
|
13.9%
|
5,857
|
11.3%
|
|
Total net
revenues
|
$68,247
|
100.0%
|
$51,768
|
100.0%
|
|
|
|
|
|
|
Largest Clients
Revenues from the top five clients totaled 53.5% of net revenues
in the quarter, compared to 57.7% in the second quarter of
2010.
Gross Profit and Gross Margin
Gross profit in the second quarter 2011 was $24.8 million, an increase of 21.1% from
$20.5 million in the second quarter
of 2010. Gross margin was 36.4% in the second quarter 2011,
compared to 39.7% in the second quarter of 2010. Excluding
government subsidies of $0.3 million
and $0.8 million, respectively, in
the second quarter 2011 and 2010, gross margin declined 223 basis
points in the second quarter of 2011, mainly attributable to the
increasing pressure from wage inflation in the first half of
2011.
Operating Expenses
Selling, general and administrative expenses totaled
$18.0 million for the second quarter
2011, up 46.4% from $12.3 million a
year ago. The increase in selling, general and administrative
expenses was due to continued investments in building
solution-based capabilities and our newly acquired BPO business as
well as higher share-based compensation due to substantially higher
unit costs associated with the high strike price stock options
granted in late 2010.
Operating Income and Operating Margin
Operating income in the second quarter 2011 was $7.7 million, compared to $8.3 million in the second quarter 2010. Non-GAAP
operating income(1) in the second quarter 2011 was $10.0 million, compared to $9.7 million in the same period a year ago.
Non-GAAP operating margin (1) was 14.7% in the second quarter 2011,
compared to 18.7% in the second quarter 2010. Of the margin
decline, approximately 200 basis points were attributable to (1) a
weaker than expected operating loss from the Japanese unit due to
the slower business activities after the earthquake, and (2) below
average operating margin of our domestic financial services
business and our newly acquired BPO business, both of which are
still in the heavy investment phase.
Provision for Income Taxes
The provision for income taxes was $0.9
million in the second quarter of 2011, compared to
$1.1 million in the second quarter of
2010. The effective tax rate was 10.7% for the second quarter 2011,
compared to 13.1% for the corresponding period in 2010.
Net Income and EPS
Net income in the second quarter 2011 was $7.1 million, compared to $7.2 million in the second quarter 2010. Non-GAAP
net income(1) was $9.5 million, up
10.8% from $8.6 million a year ago.
Non-GAAP net margin(1) was 13.9% in the second quarter 2011,
compared with 16.5% in the year-ago quarter.
Diluted EPS and Non-GAAP diluted EPS (1) were $0.16 and $0.21,
respectively, based on 45.8 million total ADS-equivalent average
shares outstanding, for the second quarter 2011, compared with
$0.17 and $0.20, respectively, for the second quarter
2010.
The non-GAAP measures and related reconciliations to GAAP
measures are described in the accompanying sections of "About
Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP
Financial Measures to Comparable GAAP Measures."
Cash and Cash Flow
Starting in earlier 2011, the Company began disclosing its cash
flow statement. As of June 30, 2011,
VanceInfo had cash and cash equivalents, restricted cash, term
deposits and short-dated(2) investments totaling $153.4 million. Operating cash flow in the second
quarter of 2011 was a net inflow of approximately $9.6 million, compared with $4.8 million in the second quarter 2010. The
Company spent approximately $21
million in cash under the share repurchase program during
the second quarter of 2011.
Days sales outstanding ("DSO") was 128 days for the second
quarter of 2011, improved from 136 days in the first quarter of
2011. DSO was 124 days for the trailing twelve months ended
June 30, 2011, compared with 119 days
for the trailing twelve months ended March
31, 2011. Unbilled accounts receivable was 63% of the
total receivable as of June 30, 2011,
improved from 69% as of December 31,
2010.
DSO was calculated by dividing average accounts receivable, net
of average advance from clients and average deferred revenues, by
the period's gross revenues before business tax, and multiplying by
the number of days in the corresponding period.
|
Three Months Ended
|
Twelve Months Ended
|
|
June 30,
2011
|
March 31,
2011
|
June 30,
2011
|
March 31,
2011
|
|
( in
thousands)
|
|
Gross revenues before
business tax
|
$69,663
|
$58,690
|
$246,443
|
$229,807
|
|
Average advance from
clients
|
$1,374
|
$1,146
|
$1,190
|
$1,112
|
|
Average deferred
revenues
|
$954
|
$1,146
|
$1,166
|
$1,522
|
|
|
|
|
|
|
First Half 2011 Financial
Results
Net Revenues
Net revenues for the first half of 2011 were $125.7 million, up 30.8% from $96.1 million in the first half of 2010.
Net Revenues by Service Lines
|
Six Months Ended
June
30, 2011
|
Six Months Ended
June
30, 2010
|
|
(in
thousands, except percentages)
|
|
R&D Outsourcing
Services
|
|
Research & development
services
|
$66,443
|
52.9%
|
$60,169
|
62.6%
|
|
Globalization &
localization
|
3,567
|
2.8%
|
3,009
|
3.1%
|
|
IT Services
|
|
Enterprise solutions
|
10,175
|
8.1%
|
8,459
|
8.8%
|
|
Application
development & maintenance
|
31,433
|
25.0%
|
17,026
|
17.7%
|
|
Quality assurance &
testing
|
9,848
|
7.8%
|
5,162
|
5.4%
|
|
Other Solutions
& Services
|
4,189
|
3.4%
|
2,267
|
2.4%
|
|
Total net
revenues
|
$125,655
|
100.0%
|
$96,092
|
100.0%
|
|
|
|
|
|
|
Net Revenues by Geographic Markets
Based on the location of our clients' headquarters, Greater China is the Company's largest
geographic market, accounting for $59.2
million or 47.1% of the net revenues in the first half of
2011, followed by 32.6% from clients headquartered in the United States, 16.2% in Europe and 3.2% in Japan.
Measuring the Company's revenues by geographic markets based on
the location of the contract signing entities, rather than the
location of the clients' headquarters, Greater China accounted for 73.7% of net
revenues in the first half of 2011, while the United States accounted for 21.8%,
Europe accounted for 2.2% and
Japan accounted for 1.6% in the
same period.
Net Revenues by Industries
|
Six Months Ended
June
30, 2011
|
Six Months Ended
June
30, 2010
|
|
(in
thousands, except percentages)
|
|
Telecom
|
$53,342
|
42.4%
|
$44,761
|
46.6%
|
|
High Tech
|
41,614
|
33.1%
|
33,761
|
35.1%
|
|
BFSI
|
14,016
|
11.2%
|
6,495
|
6.8%
|
|
Others
|
16,683
|
13.3%
|
11,075
|
11.5%
|
|
Total net
revenues
|
$125,655
|
100.0%
|
$96,092
|
100.0%
|
|
|
|
|
|
|
Largest Clients
Revenues from the top five clients totaled 54.7% of the
Company's net revenues in the first half of 2011, compared to 57.9%
in the same period in 2010.
Gross Profit and Gross Margin
Gross profit for the first half of 2011 was $46.3 million, an increase of 20.7% from
$38.4 million in the first half of
2010. Gross margin was 36.9% in the first half of 2011, compared to
40.0% in the prior year period. Gross profit includes $1.5 million and $2.4
million of government subsidies in the first half of 2011
and 2010, respectively.
Operating Income and Operating Margin
Operating income in the first half of 2011 was $14.5 million, compared with 15.4 million in the
same period last year. Non-GAAP operating income(1) in the first
half of 2011 was $19.0 million,
compared with $17.9 million in the
same period last year. Non-GAAP operating margin(1) was 15.1% in
the first half of 2011, compared to 18.7% in the year-ago
period.
Net Income and EPS
Net income for the first half of 2011 was $14.1 million, compared to $13.8 million for the same period of 2010.
Non-GAAP net income(1) was $18.6
million for the first half of 2011, up 14.0% from
$16.3 million a year ago. Non-GAAP
net margin(1) was 14.8%, compared with 16.9% in the first half of
2010. Diluted EPS for the first half of 2011 was $0.31, compared to $0.32 in the year-ago period. Non-GAAP diluted
EPS(1) was $0.40 for the first half
of 2011, compared to $0.38 for the
first half of 2010.
Recent Developments
Acquisition of Remaining Equity in VanceInfo
Australia
As disclosed previously, in September
2010, VanceInfo acquired a 20% equity interest in VanceInfo
Technologies Australia Pty Ltd, or VanceInfo Australia (formerly
named Salsatec Corporation Pty. Ltd.), an Australia-based IT services and solution
provider for telecom and technology companies. In July 2011, VanceInfo completed the purchase of
the remaining 80% equity interest in VanceInfo Australia. Under the
terms of the acquisition agreement, VanceInfo will pay an initial
consideration of approximately $0.64
million in cash. Contingent consideration will be paid based
on VanceInfo Australia's financial performance in the next 24
months. The acquisition is expected to strengthen VanceInfo's
business development and onshore delivery capabilities in the
Asia Pacific markets.
Acquisition of DPC
In August 2011, VanceInfo acquired
100% equity interest in Beijing Data Pioneer Company Limited, or
DPC, a China-based company
providing IT consulting and services to Chinese domestic financial
institutions. Under the terms of the acquisition agreement,
VanceInfo paid an initial consideration of approximately
$1.9 million in cash. Contingent
consideration will be paid based on DPC's financial performance in
the next 12 to 24 months. The acquisition is expected to strengthen
VanceInfo's position in the domestic financial services sector.
Over 120 professionals of DPC joined the Company in connection with
the transaction.
Share Repurchase Program
In March 2011, the Company
announced that its Board of Directors approved a share repurchase
program, under which VanceInfo has been authorized, but is not
obligated, to repurchase up to $40
million worth of outstanding American Depositary Shares
("ADSs") representing the ordinary shares of VanceInfo from time to
time over the next 12 months. As of June 30,
2011, 865,955 ordinary shares had been repurchased through
open market transactions for a total consideration of approximately
$21 million under this program. The
Company intends to resume the buyback activities following
completion of the second quarter earnings process.
Outlook for the Third Quarter and Full Year
2011
For the third quarter of 2011, the Company expects:
- Third quarter 2011 net revenues to be between $69 million and $72 million, representing a 24%
to 29% increase from the corresponding period in 2010.
- Third quarter 2011 non-GAAP diluted EPS(1) to be between
$0.19 and $0.21, based on 45.4
million total ADS-equivalent average shares outstanding.
For the full year 2011, the Company expects:
- 2011 net revenues to be at least $275
million, up at least 30% from 2010.
- 2011 non-GAAP diluted EPS(1) to be between $0.84 and $0.90, based on 45.6 million total
ADS-equivalent average shares outstanding.
- The EPS outlook assumes an effective income tax rate of
approximately 11% for full year 2011.
- The EPS outlook reflects continued uncertainties in the wage
inflation environment and the timing of certain government
subsidies due to a change in application process.
- The above guidance does not reflect the potential business tax
exemption as discussed in our February earnings release. We have
not seen any implementation details of the new policy directives,
and the effective date of such exemption remains uncertain.
Conference Call
The Company will host a corresponding conference call and live
webcast to discuss the results at 8:00 AM
Eastern Daylight Time (EDT) on Tuesday, August 16, 2011 (8:00 PM Beijing/Hong
Kong time). Please dial-in five minutes prior to the call to
register and receive further instruction.
The dial-in details for the live conference call are as
follows:
- U.S. Toll Free Dial-in
Number: + 1.800.291.5365
|
|
- International Dial-in
Number: +1.617.614.3922
|
|
- Hong Kong
Dial-in Number: +852 3002 1672
|
|
|
|
Passcode:
74601977
|
|
|
The conference call will be available live via webcast on the
Investors section of VanceInfo Technologies website at
http://ir.vanceinfo.com. The archive replay will be available on
VanceInfo's website shortly after the call.
A dial-in replay of the conference call will be available until
August 23, 2011 at
- U.S. Toll Free Dial-in
Number: +1 888.286.8010
|
|
- International Dial-in
Number: +1 617.801.6888
|
|
|
|
Passcode:
62265463
|
|
|
About VanceInfo
VanceInfo Technologies Inc. is an IT service provider and one of
the leading offshore software development companies in China.
The Company ranked number one among Chinese offshore software
development service providers for the North American and European
markets as measured by 2010 revenues, according to International
Data Corporation (IDC). This marks the fourth consecutive year that
VanceInfo has been ranked number one by IDC in this category.
VanceInfo's comprehensive range of IT services includes research
& development services, enterprise solutions, application
development & maintenance, quality assurance & testing,
globalization & localization and other solutions and services.
VanceInfo provides these services primarily to corporations
headquartered in the United
States, Europe,
Japan and Greater China, targeting high-growth
industries such as telecommunications, technology, financial
services, travel and transportation services, manufacturing, retail
and distribution.
Safe Harbor
This news release includes statements that may constitute
forward-looking statements made pursuant to the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995. These forward-looking statements can be identified by
terminology such as will, should, expects, anticipates, future,
intends, plans, believes, estimates, and similar
statements. Among other things, the management's quotations
and "Outlook for the Third Quarter and Full Year 2011" contain
forward-looking statements. Such statements are subject to risks
and uncertainties that could cause actual results to differ
materially from those projected. Potential risks and uncertainties
include, but are not limited to, the company's dependence on a
limited number of clients for a significant portion of its
revenues, the economic slowdown in its principal geographic
markets, the quality and portfolio of its services lines and
industry expertise, and the availability of a large talent pool in
China and supply of qualified
professionals, as well as the PRC government's investment in
infrastructure construction and adoption of various incentives in
the IT service industry. Further information regarding these
and other risks is included in VanceInfo's filings with the U.S.
Securities and Exchange Commission. All information provided
in this news release and in the attachments is as of August 16, 2011, and VanceInfo does not undertake
any obligation to update any forward-looking statement as a result
of new information, future events or otherwise, except as required
under applicable law.
About Non-GAAP Financial Measures
To supplement VanceInfo's consolidated financial results
presented in accordance with GAAP, VanceInfo uses the following
measures defined as non-GAAP financial measures by the SEC: income
from operations, net income and diluted EPS excluding share-based
compensation expense, amortization of acquired intangible assets
and change in fair value of contingent consideration payable for
business acquisition. The non-GAAP income from operations, net
income and diluted EPS for prior periods have been reclassified so
that the presentations are consistent. The presentation of these
non-GAAP financial measures is not intended to be considered in
isolation or as a substitute for the financial information prepared
and presented in accordance with GAAP. For more information on
these non-GAAP financial measures, please see the tables captioned
"Reconciliations of non-GAAP financial measures to comparable GAAP
measures" set forth at the end of this release.
VanceInfo believes that these non-GAAP financial measures
provide meaningful supplemental information regarding its
performance by excluding certain expenses and expenditures that may
not be indicative of its operating performance. The Company
believes that both management and investors benefit from referring
to these non-GAAP financial measures in assessing the Company's
performance and when planning and forecasting future periods. A
limitation of using non-GAAP net income and diluted EPS is that
these non-GAAP measures exclude the share-based compensation
charges, amortization of acquired intangible assets and change in
fair value of contingent consideration payable for business
acquisition that have been and will continue to be for the
foreseeable future a significant recurring expense in the business.
Management compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from each non-GAAP
measure. The accompanying tables have more details on the
reconciliations between GAAP financial measures that are comparable
to non-GAAP financial measures. The reconciliations of the
forward-looking guidance for non-GAAP financial measures to the
most directly comparable GAAP financial measures in the
accompanying table include all information reasonably available to
VanceInfo at the date of this press release. The table includes
adjustments that the Company can reasonably predict.
(1) Non-GAAP income from
operations, net income, diluted EPS and related margins exclude
share-based compensation expense, amortization of acquired
intangible assets, and change in fair value of contingent
consideration payable for business acquisition. The non-GAAP
measures and related reconciliations to GAAP measures are described
in the accompanying section of "About Non-GAAP Financial Measures"
and the accompanying table of "Reconciliations of Non-GAAP
Financial Measures to Comparable GAAP Measures at the end of the
press release."
|
|
(2) Short-dated
investments refer to investments that will mature within
14 months.
|
|
|
VANCEINFO
TECHNOLOGIES INC.
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
(US dollars
in thousands, except share data)
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2011
|
|
2010
|
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash
equivalents
|
$130,221
|
|
$161,265
|
|
Term deposits
|
5,000
|
|
5,000
|
|
Restricted cash
|
464
|
|
679
|
|
Held-to-maturity
securities-current
|
15,676
|
|
13,208
|
|
Accounts receivable, net of
allowance for doubtful accounts
of $2,011 as of June 30,
2011 and $1,956 as of
December 31, 2010,
respectively
|
104,167
|
|
85,437
|
|
Other current assets
|
8,624
|
|
8,603
|
|
Total current assets
|
264,152
|
|
274,192
|
|
|
|
|
|
|
Property and equipment,
net
|
21,085
|
|
20,344
|
|
Held-to-maturity securities-non
current
|
2,080
|
|
1,558
|
|
Long-term investment
|
159
|
|
193
|
|
Goodwill and other intangible
assets
|
54,892
|
|
34,908
|
|
Other long-term
assets
|
20,872
|
|
20,444
|
|
Total assets
|
$363,240
|
|
$351,639
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current liabilities
|
$45,684
|
|
$49,678
|
|
Non-current
liabilities
|
17,943
|
|
5,794
|
|
Total liabilities
|
63,627
|
|
55,472
|
|
|
|
|
|
|
Equity (a)
|
299,613
|
|
296,167
|
|
|
|
|
|
|
Total liabilities and
equity
|
$363,240
|
|
$351,639
|
|
|
|
|
|
|
Note:
|
|
|
|
|
(a) As of June 30, 2011, there
were 44,556,910 ordinary shares issued and outstanding.
|
|
|
|
|
|
VANCEINFO
TECHNOLOGIES INC.
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
(US dollars
in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$68,247
|
|
$51,768
|
|
$125,655
|
|
$96,092
|
|
Cost of revenues
(a)
|
(43,399)
|
|
(31,241)
|
|
(79,308)
|
|
(57,679)
|
|
Gross profit
|
24,848
|
|
20,527
|
|
46,347
|
|
38,413
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses (a)
|
(17,954)
|
|
(12,260)
|
|
(33,713)
|
|
(23,400)
|
|
Change in fair value of
contingent consideration
payable for
business acquisition
|
513
|
|
(87)
|
|
602
|
|
(165)
|
|
Other operating
income
|
278
|
|
152
|
|
1,230
|
|
566
|
|
Income from
operations
|
7,685
|
|
8,332
|
|
14,466
|
|
15,414
|
|
Interest income, net
|
669
|
|
139
|
|
1,136
|
|
325
|
|
Exchange difference
|
(346)
|
|
(327)
|
|
(330)
|
|
(418)
|
|
Gain on re-measurement of fair
value of
noncontrolling equity investment
in connection with business acquisition
|
-
|
|
-
|
|
514
|
|
-
|
|
Income before income taxes and
earnings in equity
method
investment
|
8,008
|
|
8,144
|
|
15,786
|
|
15,321
|
|
Provision for income
taxes
|
(856)
|
|
(1,066)
|
|
(1,688)
|
|
(1,726)
|
|
Income before earnings in equity
method investment
|
7,152
|
|
7,078
|
|
14,098
|
|
13,595
|
|
(Loss)earnings in equity method
investment
|
(15)
|
|
109
|
|
(35)
|
|
157
|
|
Net income
|
$7,137
|
|
$7,187
|
|
$14,063
|
|
$13,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
Basic - ordinary
shares
|
$0.16
|
|
$0.18
|
|
$0.32
|
|
$0.35
|
|
Diluted - ordinary
shares
|
0.16
|
|
0.17
|
|
0.31
|
|
0.32
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (in thousands)
|
|
|
|
|
|
|
|
|
Basic - ordinary
shares
|
43,687
|
|
39,697
|
|
43,754
|
|
39,568
|
|
Diluted - ordinary
shares
|
45,827
|
|
43,055
|
|
45,993
|
|
42,989
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
|
|
|
|
|
|
|
(a) Depreciation and
amortization expenses included in cost of revenues and selling,
general and administrative expenses totaled $2,463 and $1,791 for
the three months ended June 30, 2011 and 2010, respectively and
$4,611 and $3,532 for the six months ended June 30, 2011 and 2010,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VanceInfo
Technologies Inc.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
( U.S.
dollars in thousands)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June 30, 2011
|
|
June 30, 2010
|
|
June 30, 2011
|
|
June 30, 2010
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
7,137
|
|
7,187
|
|
14,063
|
|
13,752
|
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
2,118
|
|
774
|
|
3,862
|
|
1,358
|
|
|
Depreciation and amortization of
property and equipment
|
1,719
|
|
1,278
|
|
3,373
|
|
2,527
|
|
|
Loss on disposal of office
rental
|
0
|
|
0
|
|
0
|
|
1,081
|
|
|
Amortization of intangible
assets
|
744
|
|
513
|
|
1,238
|
|
1,004
|
|
|
Loss (gain) on foreign currency
exchange forward contracts
transfer to statements of
operations
|
247
|
|
160
|
|
238
|
|
106
|
|
|
Loss on disposal of property and
equipment
|
4
|
|
(248)
|
|
7
|
|
(214)
|
|
|
Allowance for doubtful
accounts
|
(348)
|
|
359
|
|
(294)
|
|
485
|
|
|
Change in fair value of
contingent consideration payable for
acquisition
|
(513)
|
|
87
|
|
(602)
|
|
165
|
|
|
Earnings in equity method
investment
|
15
|
|
(110)
|
|
35
|
|
(157)
|
|
|
Gain on remeasurement of fair
value of noncontrolling
equity investment in
connection with business acquisition
|
-
|
|
-
|
|
(514)
|
|
-
|
|
|
Accrued interest income of
available-for-sale investment
|
-
|
|
(9)
|
|
-
|
|
(13)
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
Rental deposits and prepaid
rentals
|
(105)
|
|
(195)
|
|
(154)
|
|
(582)
|
|
|
Accounts receivable
|
(5,652)
|
|
(8,503)
|
|
(15,880)
|
|
(8,218)
|
|
|
Prepaid expenses and other
current assets
|
(1)
|
|
(753)
|
|
(892)
|
|
(429)
|
|
|
Deferred income tax
assets-current
|
(242)
|
|
(281)
|
|
727
|
|
(84)
|
|
|
Deferred income tax assets-non
current
|
26
|
|
(12)
|
|
19
|
|
(48)
|
|
|
Accounts payable
|
(149)
|
|
(9)
|
|
(588)
|
|
(202)
|
|
|
Deferred revenue
|
(135)
|
|
(1,139)
|
|
(399)
|
|
(1,202)
|
|
|
Accrued expenses and other
payables
|
3,745
|
|
4,507
|
|
(1,526)
|
|
1,743
|
|
|
Income tax payable
|
1,190
|
|
1,361
|
|
289
|
|
1,053
|
|
|
Deferred income
|
(72)
|
|
(69)
|
|
640
|
|
(146)
|
|
|
Deferred income tax
liability-non current
|
(118)
|
|
(128)
|
|
(209)
|
|
(317)
|
|
Net cash (used in) provided by
operating activities
|
9,610
|
|
4,770
|
|
3,433
|
|
11,662
|
|
|
|
|
|
|
|
|
|
|
VanceInfo
Technologies Inc.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS -continued
|
|
(in U.S.
dollars in thousands)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June 30, 2011
|
|
June 30, 2010
|
|
June 30, 2011
|
|
June 30, 2010
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
|
|
|
Purchase of property and
equipment
|
(2,190)
|
|
(3,527)
|
|
(3,580)
|
|
(4,956)
|
|
|
Consideration paid for business
acquisitions
|
(7,322)
|
|
(975)
|
|
(9,086)
|
|
(1,095)
|
|
|
Cash received upon maturity of
term deposit
|
0
|
|
0
|
|
5,000
|
|
0
|
|
|
Purchase of term
deposit
|
0
|
|
0
|
|
(5,000)
|
|
0
|
|
|
Restricted cash
|
231
|
|
0
|
|
231
|
|
0
|
|
|
Purchase of non-current
investment - held-to-maturity
|
0
|
|
(2,704)
|
|
(6,079)
|
|
(2,704)
|
|
|
Purchase of current investment -
held-to-maturity
|
(2,097)
|
|
(3,012)
|
|
(5,253)
|
|
(11,488)
|
|
|
Proceeds from maturity of
investments
|
7,272
|
|
1,964
|
|
8,293
|
|
8,069
|
|
|
Purchase of long-term
investment
|
0
|
|
0
|
|
0
|
|
(440)
|
|
|
Proceeds from disposal of
property and equipment
|
1
|
|
378
|
|
1
|
|
378
|
|
Net cash (used in) provided by
investing activities
|
(4,105)
|
|
(7,876)
|
|
(15,473)
|
|
(12,236)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of
options
|
381
|
|
711
|
|
2,804
|
|
2,142
|
|
|
Payment for issuance costs of
ordinary shares upon share
offering in
2009
|
0
|
|
(220)
|
|
0
|
|
(220)
|
|
|
Payment for issuance costs of
ordinary shares upon share
offering in
2010
|
0
|
|
0
|
|
(52)
|
|
0
|
|
|
Repurchase of ordinary
shares
|
(21,031)
|
|
0
|
|
(21,031)
|
|
0
|
|
|
Proceeds of short-term bank
loan
|
0
|
|
1,463
|
|
0
|
|
1,463
|
|
|
Repayments of short-term bank
loan
|
(1,542)
|
|
0
|
|
(1,542)
|
|
0
|
|
Net cash provided by financing
activities
|
(22,192)
|
|
1,954
|
|
(19,821)
|
|
3,385
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash
|
480
|
|
94
|
|
817
|
|
90
|
|
Net increase (decrease) in cash
and cash equivalents
|
(16,687)
|
|
(1,152)
|
|
(31,861)
|
|
2,811
|
|
Cash and cash equivalents,
beginning of period
|
146,428
|
|
68,016
|
|
161,265
|
|
64,057
|
|
Cash and cash equivalents, end
of period
|
130,221
|
|
66,958
|
|
130,221
|
|
66,958
|
|
|
|
|
|
|
|
|
|
|
VANCEINFO
TECHNOLOGIES INC.
|
|
Reconciliations of Non-GAAP
Financial Measures to Comparable GAAP Measures
|
|
(US dollars
in thousands, except per share data and percentages)
|
|
|
|
|
Three Months Ended June 30, 2011
|
|
Three Months Ended June 30, 2010
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
$7,685
|
|
$2,349
|
(a)
|
$10,034
|
|
$8,332
|
|
$1,373
|
(b)
|
$9,705
|
|
Operating margin
|
11.3%
|
|
3.4%
|
(a)
|
14.7%
|
|
16.1%
|
|
2.6%
|
(b)
|
18.7%
|
|
Net income
|
$7,137
|
|
$2,349
|
(a)
|
$9,486
|
|
$7,187
|
|
$1,373
|
(b)
|
$8,560
|
|
Net margin
|
10.5%
|
|
3.4%
|
(a)
|
13.9%
|
|
13.9%
|
|
2.6%
|
(b)
|
16.5%
|
|
Diluted EPS
|
$0.16
|
|
$0.05
|
(e)
|
$0.21
|
|
$0.17
|
|
$0.03
|
(e)
|
$0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2011
|
|
Six Months Ended June 30, 2010
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
$14,466
|
|
$4,499
|
(c)
|
$18,965
|
|
$15,414
|
|
$2,527
|
(d)
|
$17,941
|
|
Operating
margin
|
11.5%
|
|
3.6%
|
(c)
|
15.1%
|
|
16.0%
|
|
2.7%
|
(d)
|
18.7%
|
|
Net income
|
$14,063
|
|
$4,499
|
(c)
|
$18,562
|
|
$13,752
|
|
$2,527
|
(d)
|
$16,279
|
|
Net margin
|
11.2%
|
|
3.6%
|
(c)
|
14.8%
|
|
14.3%
|
|
2.6%
|
(d)
|
16.9%
|
|
Diluted EPS
|
$0.31
|
|
$0.09
|
(e)
|
$0.40
|
|
$0.32
|
|
$0.06
|
(e)
|
$0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
(a) Adjustment to exclude
acquisition related intangible assets amortization expense of $744,
change in fair value of contingent consideration payable for
business acquisition of $(513) and share-based compensation of
$2,118 from the unaudited condensed consolidated statements of
operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Adjustment to exclude
acquisition related intangible assets amortization expense of $513,
change in fair value of contingent consideration payable for
business acquisition of $87 and share-based compensation of $773
from the unaudited condensed consolidated statements of
operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Adjustment to exclude
acquisition related intangible assets amortization expense of
$1,239, change in fair value of contingent consideration payable
for business acquisition of $(602) and share-based compensation of
$3,862 from the unaudited condensed consolidated statements of
operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Adjustment to exclude
acquisition related intangible assets amortization expense of
$1,005,
|
|
change in fair value of
contingent consideration payable for business acquisition of
$165,
|
|
|
|
and share-based compensation of
$1,357 from the unaudited condensed consolidated statements of
operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) Non-GAAP diluted EPS is
computed by dividing non-GAAP net income attributable to
VanceInfo
|
|
|
Technologies Inc. by the
weighted average number of diluted ordinary shares outstanding used
in
|
|
|
computing the GAAP diluted EPS
for the respective periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VANCEINFO
TECHNOLOGIES INC.
|
|
Reconciliations of
Forward-Looking Guidance for
|
|
Non-GAAP
Financial Measures to Comparable GAAP Measures
|
|
(US dollars
in thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ending September 30, 2011
|
|
Year Ending December 31, 2011
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
|
Range
of
Estimate
|
|
|
|
Range
of
Estimate
|
|
Range
of
Estimate
|
|
|
|
Range
of
Estimate
|
|
|
From
|
To
|
|
|
|
From
|
To
|
|
From
|
To
|
|
|
|
From
|
To
|
|
Diluted EPS (a)
|
$0.13
|
$0.15
|
|
$0.06
|
(b)
|
$0.19
|
$0.21
|
|
$0.61
|
$0.67
|
|
$0.23
|
(b)
|
$0.84
|
$0.90
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Based on 45.4 million and
45.6 million total ADS-equivalent average shares outstanding for
the third quarter 2011 and full year 2011, respectively.
|
|
(b) Reflects estimated
adjustment for acquisition related intangible assets amortization
expense and share-based compensation expenses of approximately $2.9
million for the third quarter 2011 and $10.4 million for the full
year 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For further
information, please contact:
In China
Anny Xu
Investor Relations
VanceInfo Technologies
Inc.
Tel: +86-10-8282-5330
E-mail: ir@vanceinfo.com
Wendy Sun
The Piacente Group,
Inc.
Investor Relations
Tel: +86-10-6590-7991
Email: vanceinfo@tpg-ir.com
In the US:
The Piacente Group,
Inc.
Investor Relations
Brandi Floberg or Lee
Roth
Tel: +1-212-481-2050
Email: vanceinfo@tpg-ir.com
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SOURCE VanceInfo Technologies Inc.