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Jingwei International Limited Reports Third Quarter 2010 Financial Results

SHENZHEN, China, Nov. 12, 2010 /PRNewswire via COMTEX/ -- Jingwei International Limited (Nasdaq: JNGW) ("Jingwei" or "the Company"), a leading provider of data-mining, interactive marketing and software services in China, today announced its financial results for the third quarter ended September 30, 2010.

Third Quarter 2010 Highlights: Total revenue increased 18.8% year-over-year to $10.4 million Software Services segment revenue rose 54.2% year-over-year to $5.1 million Data Mining segment revenue declined 2.7% year-over-year to $5.3 million, due to period-to-period fluctuations in the timing of new contracts Gross profit climbed 45.1% year-over-year to $4.8 million Gross margin was 46.5%, up 8.4% from 38.1% a year ago Net income increased 96% year-over-year to $2.7 million, or $0.13 per basic share and per diluted share Cash and equivalents at end of the third quarter was $10.1 million, compared to $10.2 million at the end of 2009 Subsequent Events: On November 9, 2010, Jingwei closed the acquisition of a 100% equity interest in acquisition of Shanghai Haicom Limited ("Haicom"), a Shanghai-based Internet and mobile value added service platform provider with business operations covering ten provinces in the People's Republic of China.

Key financial results for the third quarter 2010 versus the third quarter 2009 and the first nine months 2010 versus first nine months 2009 are as follows (in US dollars thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2010 2009 % change 2010 2009 % change ---- ---- -------- ---- ---- -------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Data Mining Revenue 5,306 5,452 -2.7% 12,805 10,222 25.3% Software Services Revenue 5,104 3,311 54.2% 10,944 6,572 66.5% Total Revenue 10,410 8,763 18.8% 23,749 16,794 41.4% Gross Profit 4,840 3,335 45.1% 12,089 6,333 90.9% Net Income 2,744 1,402 95.7% 6,242 2,810 122.1% Earnings per Basic Share $0.13 $0.08 62.5% $0.34 $0.16 112.5% Earning per Diluted Share $0.13 $0.08 62.5% $0.31 $0.16 93.8% "Our solid year-over-year growth in the third quarter of 2010 was driven by robust Software Services sales, which benefited from strong demand for our business support software by telecom and cable operators who are deploying IPTV and DTV in China," commented Mr. Rick Luk, Chief Executive Officer of Jingwei International. "During the quarter, we continue to advance our APP store offering and also received new Software Services orders in the power sector to support the smart grid program. Our Data Mining segment revenues fell slightly this period, reflecting quarter-to-quarter variation in the timing of new contracts, but we continue to see strong demand for our bundled mobile value-added service (VAS) offerings and interactive marketing services. As well, we are glad to report that the Company signed two framework agreements with China Unicom in Zhejiang province in October, to partner with China Unicom to provide mobile Internet and interactive marketing services in the region." Business Outlook Given Jingwei's strong performance during the first nine months of 2010 and the outlook for the remainder of the year, the Company reaffirms its previous guidance for fiscal year 2010 of total revenues between $37.5 million and $42.0 million and net income between $8.8 million and $9.8 million. The Company expects this year's diluted share count to reach approximate 20.6 million on a weighted average basis, and diluted earnings per share to range from $0.43 to $0.48 in 2010.

"We are very pleased with our recent acquisition of Haicom, which is accretive to earnings immediately and an important part of our strategy to strengthen Jingwei's mobile value added service offerings and technologies in the 3G space.

Heading into 2011, we intend to extend the geographic reach of our interactive marketing services, replicate and deploy our high-margin BSS solutions in support of ITPV / DTV in new provinces and cities, and selectively pursue acquisitions that dovetail well with our growth strategy, including opportunities to build up our capabilities in the smart grid space," Mr. Luk concluded.

About Jingwei International Limited: Jingwei International Limited ("Jingwei") is a leading provider of data mining, interactive marketing and software services in China. By leveraging its proprietary database of over 400 million consumer profiles, Jingwei helps companies to more effectively reach their target audiences. To capitalize on China's rapid growth in mobile, Internet and e-Commerce applications, Jingwei has focused on enhanced data mining offerings that encompass interactive marketing, bundled mobility solutions and mobile value added services. The Company's software services include business intelligence ("BI"), billing, operations support ("BSS/OSS") and customer relationship management ("CRM") solutions for Chinese telecom operators and power companies.

Business Risks and Forward-Looking Statements This report includes forward-looking statements. Generally, the words "believes," "anticipates," "may," "will," "should," "expect," "intend," "estimate," "continue," and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

Financial Tables Follow-

Jingwei International Limited and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income

(in US dollars thousands, except per share data)

Nine Months Ended

September 30

------------

2010 2009

---- ----

(Unaudited) (Unaudited)

Sales $23,749 $16,794

Cost of sales 11,660 10,461

Gross profit 12,089 6,333

------ -----

Operating expenses

Selling, general and

administrative expenses 4,023 2,758

Research and development

costs 1,867 836

5,890 3,594

----- -----

Income from operations 6,199 2,739

----- -----

Other income (expenses)

Subsidy income 392 552

Interest income 46 175

Interest expense (5) -

Other expense (74) (42)

359 685

--- ---

Income before income taxes 6,558 3,424

Income tax expense 316 614

--- ---

Net income 6,242 2,810

Less: Net income

attributable to

noncontrolling interest - -

--- ---

Net income attributable to

the Company's stockholders 6,242 2,810

----- -----

Foreign currency translation

adjustment 936 89

--- ---

Comprehensive income $7,178 $2,899

====== ======

Comprehensive income

attributable to

noncontrolling interest 156 18

Comprehensive income

attributable to the

Company's stockholders 7,022 2,881

===== =====

Basic earnings per share $0.34 $0.16

===== =====

Diluted earnings per share $0.31 $0.16

===== =====

Weighted average common

shares outstanding

Basic 18,156,763 17,049,000

========== ==========

Diluted 20,015,271 17,049,000

========== ==========

Three Months Ended

September 30

------------

2010 2009

---- ----

(Unaudited) (Unaudited)

Sales $10,410 $8,763

Cost of sales 5,570 5,428

Gross profit 4,840 3,335

----- -----

Operating expenses

Selling, general and

administrative expenses

1,462 1,640

Research and development

costs 536 393

1,998 2,033

----- -----

Income from operations 2,842 1,302

----- -----

Other income (expenses)

Subsidy income 71 197

Interest income 13 167

Interest expense (1) -

Other expense (14) (15)

69 349

--- ---

Income before income taxes 2,911 1,652

Income tax expense 167 250

--- ---

Net income 2,744 1,402

Less: Net income

attributable to

noncontrolling interest - -

--- ---

Net income attributable to

the Company's stockholders 2,744 1,402

----- -----

Foreign currency translation

adjustment 748 41

--- ---

Comprehensive income $3,492 $1,443

====== ======

Comprehensive income

attributable to

noncontrolling interest 124 8

Comprehensive income

attributable to the

Company's stockholders 3,368 1,435

===== =====

Basic earnings per share $0.13 $0.08

===== =====

Diluted earnings per share $0.13 $0.08

===== =====

Weighted average common

shares outstanding

Basic 20,336,167 17,049,000

========== ==========

Diluted 20,642,134 17,049,000

========== ==========

Jingwei International Limited and Subsidiaries

Consolidated Consolidated Balance Sheets

(in US dollars thousands, except par value)

As of September As of December

30, 31,

2010 2009

--- ---

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents $10,103 $10,239

Accounts receivable, less allowance of

doubtful accounts of $1,379 and $1,266,

respectively 32,272 23,457

Other receivables, prepayments and

deposits, less allowance for doubtful

accounts of $441 and $176, respectively 2,252 3,219

Inventories 4,606 2,316

Deferred tax assets 285 258

--- ---

Total current assets 49,518 39,489

Non-current assets

Property, plant and equipment, net 1,334 1,385

Intangible assets, net 15,453 17,451

Long-term investment 1,774 1,737

Total assets $68,079 $60,062

======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable $4,122 $4,154

Accruals and other payable 1,514 1,279

Income tax payable 1,688 1,719

Loan from a stockholder 369 369

--- ---

Total current liabilities 7,693 7,521

----- -----

Non-current liabilities

Deferred tax liabilities 820 803

--- ---

Total liabilities 8,513 8,324

----- -----

- -

Commitments and contingencies

Equity

Common stock, ($0.001 par value;

75,000,000 shares authorized, 17,049,000

shares issued and outstanding) 17 17

Additional paid-in capital 19,426 18,931

Statutory and other reserves 2,916 2,916

Retained earnings 25,980 19,738

Accumulated other comprehensive income 3,593 2,658

Total Company's stockholders' equity 51,932 44,260

Noncontrolling interest 7,634 7,478

----- -----

Total equity 59,566 51,738

------ ------

Total liabilities and equity $68,079 $60,062

======= =======

Jingwei International Limited and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in US dollars thousands)

Nine Months Ended

September 30

-----------------

2010 2009

---- ----

(Unaudited) (Unaudited)

Cash flows from operating activities

Net income $6,242 $2,810

Adjustments to reconcile net income

to net

cash (used in) provided by operating

activities:

Depreciation & amortisation 2,625 1,943

Share-based compensation expense 495 109

Changes in operating assets and

liabilities:

Accounts receivable, net (8,815) (4,707)

Other receivables, prepayments and

deposits 967 443

Inventories (2,290) 463

Deferred tax asset (27) 154

Accounts payable (31) 117

Accruals and other payables 235 (360)

Income tax payable (31) 247

--- ---

Net cash (used in) provided by

operating activities (630) 1,219

---- -----

Cash flows from investing activities

Acquisition of property and

equipment (223) (344)

Acquisition of intangible assets (187) (3,589)

---- ------

Net cash used in investing

activities (410) (3,933)

---- ------

Cash flows from financing activities

Repayment of stockholder loans - (72)

--- ---

Net cash used in financing

activities - (72)

--- ---

Effect of foreign currency

translation on cash and cash

equivalents 904 196

--- ---

Net decrease in cash and cash

equivalents (136) (2,590)

---- ------

Cash and cash equivalents -

beginning of period 10,239 5,472

------ -----

Cash and cash equivalents -end of

period $10,103 $2,882

======= ======

Supplemental Disclosure of Cash Flow

Information

Income tax paid $404 $269

==== ====

Interest paid $- $-

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