Longtop Financial Technologies Limited Announces Unaudited Financial Results for the Fiscal Quarter and Full Year Ended March 31

- Fourth Quarter Total Revenues of US$25.9 million, an Increase of 60.3% Year-on-Year;




HONG KONG, May 27  /PRNewswire-Asia/ -- Longtop Financial Technologies Limited ("Longtop") (NYSE: "LFT"), a leading software developer and solutions provider targeting the financial services industry in China, announced today unaudited financial results for the fiscal fourth quarter and fiscal year ended March 31, 2009.

"I am very pleased to report that we have concluded fiscal 2009 with another quarter of solid results. We look back at a great year in which we enjoyed significant business expansion despite a challenging economic environment and capitalized on the market opportunity for IT development in China's financial services sector to extend our software and solutions and further diversify our customer base," commented Weizhou Lian, CEO of Longtop. "We are off to a promising start in fiscal 2010 with our agreement to acquire Sysnet which will make Longtop the second largest IT service provider in China's insurance industry by market share. Our outlook for 2010 is positive based on our sound business fundamentals and ongoing strong demand from our customers."

  FISCAL FOURTH QUARTER AND FULL YEAR DETAILED FINANCIAL RESULTS

  Revenue

  2008 Q4 and 2009 Q4 Revenue-US$000s

                          Three months ended             Year ended
                      March 31, March 31,        March 31,  March 31,
                         2008     2009   % Change   2008      2009  % Change
  Software Development $13,516  $21,050    55.7%  $55,147   $89,559   62.4%
  Other Services        $2,628   $4,832    83.9%  $10,769   $16,737   55.4%
  Total Revenue        $16,144  $25,882    60.3%  $65,916  $106,296   61.3%




Total revenues for the quarter ended March 31, 2009, were US$25.9 million, an increase of 60.3% year-on-year (YoY) from US$16.1 million in the corresponding year ago period, and exceeded Company guidance of US$24.0 million. Software development revenues of US$21.1 million contributed 81.3% of total revenues, a YoY increase of 55.7%, and exceeded Company guidance of US$20.0 million.

Total revenues for the fiscal year ended March 31, 2009, were US$106.3 million, an increase of 61.3% YoY from US$65.9 million in the corresponding year ago period. Software development revenues, which were 84.3% of total revenues for the fiscal year ended March 31, 2009, amounted to US$89.6 million, a YoY increase of 62.4%. The YoY increase in our revenues resulted in part from the appreciation of the RMB in fiscal 2009 from an average US dollar to RMB exchange rate of 6.87 in fiscal 2009 compared to 7.46 in fiscal 2008. Excluding the impact of this appreciation, our total revenues would have increased by approximately 48% YoY.

  Software Development Revenue by Customer Type-US$000s

                       Three months ended                Year ended
                 March 31, March 31, % Change   March 31, March 31, % Change
                    2008     2009   (Decrease)     2008      2009  (Decrease)
  Big Four Banks    5,975    7,974     33.5%      27,482    42,002    52.8%
  Other Banks       5,357    9,464     76.7%      17,648    34,563    95.8%
  Insurance           952    2,986    213.7%       5,401     9,854    82.4%
  Enterprises       1,232      626    (49.2%)      4,616     3,140   (32.0%)
    Total          13,516   21,050     55.7%      55,147    89,559    62.4%




Software development revenue from the Big Four Banks in the fourth quarter was US$8.0 million, an increase of 33.5% YoY. Big Four banks accounted for 37.9% of software development revenues for the fourth quarter, as compared to 44.2% in the corresponding year ago period. Software development revenue from the Big Four Banks for the fiscal year ended March 31, 2009, was US$42.0 million, an increase of 52.8% YoY due to strong demand from two of our three Big Four Bank customers. Big Four Banks accounted for 46.9% of software development revenues for the year ended March 31, 2009, as compared to 49.8% in the corresponding year ago period.

Software development revenue from Other Banks in the fourth quarter was US$9.5 million, a YoY increase of 76.7%. Other Banks accounted for 45.0% of software development revenues for the three months ended March 31, 2009, as compared to 39.6% in the corresponding year ago period.  Software development revenue from Other Banks for the fiscal year ended March 31, 2009, was US$34.6 million, an increase of 95.8% YoY due largely to more revenue per Other Bank customer. Other Banks accounted for 38.6% of software development revenues for the fiscal year ended March 31, 2009, as compared to 32.0% in the corresponding year ago period.

Insurance finished the year strongly with Q4 2009 revenue growing YoY by 213.7% and full fiscal year insurance revenue up 82.4% due to more new insurance customers.

  Gross Margins

                      Three months ended                Year ended
                 March 31, March 31,  Change   March 31, March 31,   Change
                    2008     2009   (Decrease)     2008      2009  (Decrease)
  Adjusted Software
   Development
   Gross Margin %   70.7%    68.6%    (2.1%)       76.1%     72.9%   (3.2%)
  Adjusted Other
   Services Gross
   Margin %         65.7%    42.0%   (23.7%)       69.1%     49.0%  (20.1%)
  Adjusted Total
   Gross Margin %   69.9%    63.6%    (6.3%)       75.0%     69.2%   (5.8%)




Adjusted Software Development Gross Margin was 68.6% in the fourth quarter as compared to 70.7% a year ago due to the acquisition of Jactus which closed in the fourth quarter, inflationary increases in salary and a higher mix of customized revenue which has a lower gross margin than standardized revenue with 73.3% of software development revenue coming from customized solutions in the quarter as compared to 70.0% in the corresponding year ago period. Meeting Company guidance, Adjusted Software Development Gross Margin for the fiscal year ended March 31, 2009 was 72.9% as compared to 76.1% in the previous year primarily due to: (i) 65.1% of software development revenue coming from customized solutions in the 2009 fiscal year as compared to 58.3% in the corresponding year ago period; and (ii) inflationary increases in salary. Adjusted Other Services Gross Margin for the fiscal year ended March 31, 2009 declined to 49.0% from 69.1% a year ago due to investment in additional headcount, inflationary increases in salary and a higher mix of lower gross margin ATM revenues resulting from our acquisition during the 2009 fiscal year of Huayuchang, a provider of ATM maintenance services. Adjusted Total Gross Margin of 69.2% for the fiscal year ended March 31, 2009 was in line with Company guidance.

  Operating Expenses

                            Three months ended           Year ended
                      March 31, March 31,      March 31, March 31,  % Change
                        2008    2009  % Change   2008     2009     (Decrease)
  Adjusted Operating
   Expenses - US$000s   3,840   5,895   53.5%   13,480   21,014      55.9%
  Adjusted Operating
   Expenses - % of
   revenue              23.7%   22.8%      --    20.4%    19.8%         --




Adjusted Operating Expenses, which were 22.8% and 19.8% of revenue for the three months and fiscal year ended March 31, 2009, are in line with full year Company guidance of 20.0%.  The YoY increase in total Adjusted Operating Expenses of 55.9% for the full fiscal year 2009 is less than total revenue growth of 61.3%, which we believe demonstrates the scalability of our business model.

  Operating and Net Income

                             Three months ended          Year ended
                     March 31, March 31,        March 31, March 31, % Change
                       2008      2009  % Change   2008     2009
  Adjusted Operating
   Income - US$000s    7,441    10,572   42.1%   35,942   52,495     46.1%
  Adjusted Operating
   Income - % of
   revenue             46.1%     40.8%      --    54.5%    49.4%        --




Adjusted Operating Income was US$10.6 million for the fourth quarter which was $600,000 higher than Company guidance and US$52.5 million for the fiscal year ended March 31, 2009, a YoY increase of 42.1% and 46.1%, respectively. Adjusted Operating Margin for the three months ended March 31, 2008, of 46.1% was higher than the three months ended March 31, 2009 of 40.8% primarily because Q4 2008 operating income included a $662,000 gain on fixed assets with no corresponding gain in Q4 2009. Adjusted Operating Margin for the fiscal year ended March 31, 2009, was 49.4%, in line with Company guidance of 50.0%.

                             Three months ended          Year ended
                     March 31, March 31,        March 31, March 31, % Change
                        2008     2009  % Change   2008      2009   (Decrease)
  Adjusted Net Income
   - US$000s            6,219   10,983   76.6%   33,765    51,580     52.8%
  Adjusted Net income
   per Diluted Share     0.12     0.21   75.0%     0.73      0.98     34.2%
  Adjusted Net Income
   - % of revenue       38.5%    42.4%      --    51.2%     48.5%        --
  US GAAP Net Income
   - US$000s            4,606    8,832   91.7%    2,927    43,472  1,385.2%
  US GAAP Net income
   per Diluted Share     0.09     0.17   88.9%    (0.04)     0.83        --
  US GAAP Net Income
   - % of revenue       28.5%    34.1%      --     4.4%     40.9%        --



  Reconciliation between US GAAP Net Income and Adjusted Net Income

                         Three months ended            Year ended
                     March 31, March 31,       March 31, March 31, % Change
                        2008     2009  % Change   2008     2009   (Decrease)
  Adjusted Net Income
   - US$000s           $6,219  $10,983   76.6%  $33,765  $51,580     52.8%
  Stock compensation   $1,200   $1,443   20.3%  $28,188   $5,648    (80.0%)
  Amortization of
   acquired intangible
   assets                $413     $644   55.9%   $1,357   $2,287     68.5%
  Amortization of
   acquired deferred
   compensation           $--      $64      --      $--     $173        --
  Loss from
   discontinued
   operations             $--      $--      --   $1,293      $--   (100.0%)
  Sub-total            $1,613   $2,151   33.4%  $30,838   $8,108    (73.7%)

  US GAAP Net Income   $4,606   $8,832   91.7%   $2,927  $43,472  1,385.2%




Adjusted Net Income for the quarter ended March 31, 2009, of US$11.0 million or US$0.21 per fully diluted share increased 76.6% as compared to Adjusted Net Income of US$6.2 million in the corresponding year ago period, and exceeded Company guidance of US$9.2 million and US$0.18 per fully diluted share.  The YoY increase in Adjusted Net Income was primarily attributable to higher operating income in Q4 2009, and also resulted from Q4 2008 including a $1.6 million foreign exchange loss compared to a Q4 2009 foreign exchange gain of $5,000. US GAAP net income for the quarter ended March 31, 2009, of US$8.8 million or US$0.17 per fully diluted share increased 91.7% as compared to US GAAP net income of US$4.6 million in the corresponding year ago period.

Adjusted Net Income for the fiscal year ended March 31, 2009, of US$51.6 million or US$0.98 per fully diluted share increased 52.8% as compared to Adjusted Net Income of US$33.8 million in the corresponding year ago period, and exceeded Company guidance of US$50.0 million and US$0.96 per fully diluted share. US GAAP net income for the year ended March 31, 2009, was US$43.5 million or US$0.83 per fully diluted share, an increase of 1,385.2% from US GAAP net income of US$2.9 million in the corresponding year ago period. Included in the US GAAP net income for the year ago period were US$24.8 million in one-time share-based compensation expenses related to the forgiveness of promissory notes delivered in payment for ordinary shares that prior to the Initial Public Offering were sold to Longtop's employees. Adjusted and US GAAP net income for the year ended March 31, 2009, included US$1.1 million in exchange losses on US dollar denominated deposits which were in China pending conversion to RMB, and included a US$1.7 million government subsidy (year ended March 31, 2008: US$ 551,000).

Unrestricted cash balances at March 31, 2009, were US$238.3 million giving the Company significant resources for potential acquisitions in the still fragmented China financial IT services sector.

Commenting on the results, Derek Palaschuk, CFO of Longtop said: "In the fourth quarter and fiscal 2009 Longtop reported revenue and Adjusted Net Income results which substantially exceeded the guidance we gave at the beginning of the fiscal year. Our strong results underscore the sales momentum, recurring revenue structure and operating leverage of our Company's business model, as well as our solid execution. Looking ahead, the attractive market opportunity calls for continuing our strategy of investing back into the business and grasping consolidation opportunities through acquisitions that will help make Longtop the leading IT service provider in China's financial services industry."

  BUSINESS OUTLOOK
  Longtop anticipates for the quarter ending June 30, 2009, excluding Sysnet:



i) Total revenues of US$27.0 million, representing an increase of 39.9% YoY from revenues of US$19.3 million in the corresponding year ago period. Software development revenues are expected to be US$23.0 million, a YoY increase of 42.9% from US$16.1 million in the corresponding year ago period;

ii) Adjusted Operating Income of US$11.0 million, representing an increase of 20.9% YoY from Adjusted Operating Income of US$9.1 million in the corresponding year ago period.

iii) Adjusted Net Income of US$10.0 million or US$0.20 per diluted share, representing an increase of 28.2% YoY from Adjusted Net Income of US$7.8 million in the corresponding year ago period.

Longtop anticipates for its fiscal year ending March 31, 2010, including Sysnet:

i) Total revenues of US$142.0 million, representing an increase of 33.6% YoY from revenues of US$106.3 million in fiscal 2009. Software development revenues are expected to be US$122.0 million, a YoY increase of 36.2% from US$89.6 million in fiscal 2009;

ii) Adjusted Operating Income of US$67.0 million, an increase of 27.6% YoY from Adjusted Operating Income of US$52.5 million in fiscal 2009.

iii) Adjusted Net Income of US$63.0 million or US$1.20 per diluted share, an increase of 22.1% YoY from Adjusted Net Income of US$51.6 million in fiscal 2009.

CONFERENCE CALL AND WEBCAST

Longtop's senior management team will host a conference call and audio web cast at 8:00 pm U.S. Eastern Time/ 5:00 pm U.S. Pacific Time on May 27, 2009 (8:00 am Beijing/Hong Kong time on May 28, 2009). The conference call will last for approximately one hour.

  The dial-in numbers for the conference call are as follows:
  U.S. Toll Free: 1866 549 1292
  China Toll Free: 800 701 1223
  Hong Kong and International: [phone]
  Passcode: 765115#



A replay will be available right after the conference call for 30 days by dialing one of the following numbers:

  U.S. Toll Free: 1866 753 0743
  Hong Kong and International: [phone]
  Passcode: 136397#



Additionally, a live and archived web cast of this call will be available on Longtop's website at http://www.longtop.com/en .

NON-GAAP DISCLOSURE ("ADJUSTED")

To supplement the unaudited consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Longtop's management reports and uses non-GAAP ("Adjusted") measures of revenues, cost of revenues, operating expenses, net income and net income per share, which are adjusted from results based on GAAP.  To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures to exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation that we believe are helpful in understanding our past financial performance and our future results. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures.  Management believes these non-GAAP financial measures enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP financial measures provide useful information to both management and investors by excluding certain items that we believe are not indicative of our core operating results. The presentation of this additional information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with US GAAP. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures contained in this release and which we discuss below.  Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies.

Definitions of Non-GAAP Measures

Adjusted Cost of Revenue is defined as cost of revenue excluding, if applicable: (1) non-cash compensation expense and (2) amortization of acquired intangibles.

Adjusted Gross Margin is defined as Adjusted Revenue less Adjusted Cost of Revenue.

Adjusted Operating Expenses is defined as operating expenses excluding, if applicable: (1) non-cash compensation expense, (2) amortization of acquired intangibles, deferred compensation arising on acquisition and goodwill impairment, and (3) one-time items.

Adjusted Operating Income is defined as Adjusted Gross Margin less Adjusted Operating Expenses.

Adjusted Net Income is defined as Adjusted Operating Income plus/minus other income/(expenses), less income taxes, excluding: (1) one-time items and (2) discontinued operations.

Adjusted EPS is defined as Adjusted Net Income divided by diluted shares.

One-Time Items, if applicable, are excluded from Adjusted Operating Income and Adjusted Net Income.  These items are one-time in nature and non-recurring, infrequent or unusual, and have not occurred in the past two years or are not expected to recur in the next two years. GAAP results include one-time items.

Expenses That Are Excluded From Our Non-GAAP Measures

Non-cash compensation expense consists principally of expense associated with the grants, including unvested grants assumed in acquisitions, of restricted stock, restricted stock units and stock options. These expenses are not paid in cash, and we include the related shares in our fully diluted shares outstanding, which, for restricted stock units and stock options, are included on a treasury method basis. Longtop's management believes excluding the share-based compensation expense from its non-GAAP financial measure is useful for itself and investors. Further, the amount of share-based compensation expense cannot be anticipated by management and business line leaders and these expenses were not built into the annual budgets and quarterly forecasts, which have been the basis for information Longtop provides to analysts and investors as guidance for future operating performance. Although share-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, and as share-based compensation expense does not involve any upfront or subsequent cash outflow, Longtop does not factor this in when evaluating and approving expenditures or when determining the allocation of its resources to its business segments. As a result, the monthly financial results for internal reporting and any performance measure for commission and bonus are based on non-GAAP financial measures that exclude share-based compensation expense.

Amortization of acquired intangibles is a non-cash expense relating to acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as backlog, customer relationships, and intellectual property, are valued and amortized over their estimated lives. While it is likely that we will have significant intangible amortization expense as we continue to acquire companies, we have excluded the effect of amortization of intangible assets from our non-GAAP financial measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.

Acquisition proceeds allocated to deferred compensation arises where a portion of the purchase price paid to shareholders is considered compensation expense rather than purchase price under US GAAP. Deferred compensation arising on acquisition is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of deferred compensation arising on acquisition contributed to revenues earned during the periods presented and will contribute to future period revenues as well.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

It is currently expected that the Business Outlook will not be updated until the release of Longtop's next quarterly earnings announcement; however, Longtop reserves the right to update its Business Outlook at any time for any reason.

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include the growth of the financial services industry in China; the amount and seasonality of IT spending by banks and other financial services companies; competition and potential pricing pressures; our revenue growth and solution and service mix; our ability to successfully develop, introduce and market new solutions and services; our ability to effectively manage our operating costs and expenses; our reliance on a limited number of customers that account for a high percentage of our revenues; a possible future shortage or limited availability of employees; general economic and business conditions; the volatility of our operating results and financial condition; our ability to attract or retain qualified senior management personnel and research and development staff; the outbreak of health epidemics; the planned relocation of our headquarters; People's Republic of China, or PRC, regulatory changes and interpretations;  and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Our actual results of operations for the quarter and year ended March 31, 2009 are not necessarily indicative of our operating results for any future periods. Any projections in this release are based on limited information currently available to us, which is subject to change.

About Longtop Financial Technologies Limited

Longtop is a leading software development and solutions provider targeting the financial services industry in China. Longtop develops and delivers a comprehensive range of software applications and solutions with a focus on meeting the rapidly growing IT needs of the financial services institutions in China.  Longtop has six solution delivery centers, three research and development centers and seventy-five ATM service centers located in 27 provinces throughout China. For more information, please visit: http://www.longtop.com/en

  (1)  Explanation of the Company's Adjusted (i.e. non-GAAP) financial
       measures and the related reconciliations to GAAP financial measures
       are included in the accompanying "Non-GAAP Disclosure" and the
       "Consolidated Adjusted Statements of Operations".



  For more information, please contact:

  For Investors:
   Longtop Financial Technologies Limited
   Charles Zhang, CFA
   Email: 
   Phone: [phone]

  For Media:
   IR Inside BV
   Caroline Straathof
   Email: 
   Phone: [phone]



                       CONSOLIDATED BALANCE SHEETS

                                          March 31, 2008    March 31, 2009

                                         (In U.S. dollar thousands, except
                                             share and per share data)
  Assets
  Current assets:
    Cash and cash equivalents                   $204,526          $238,295
    Restricted cash                                6,733               463
    Accounts receivable, net                      21,254            29,861
    Inventories                                    1,351             4,982
    Amounts due from related parties                  --               682
    Deferred tax assets                            1,517               979
    Other current assets                           3,843             4,712
    Total current assets                         239,224           279,974
  Fixed assets, net                                8,167            14,858
  Prepaid land use right                              --             5,167
  Intangible assets, net                           7,764            11,526
  Goodwill                                        14,966            24,837
  Deferred tax assets                                246             1,479
  Other assets                                       524               632
    Total assets                                $270,891          $338,473

  Liabilities, mezzanine equity and
   shareholders' equity
  Current liabilities:
    Short-term borrowings                           $512              $486
    Accounts payable                               4,143             3,299
    Deferred revenue                               9,487            16,010
    Amounts due to related parties                    54                17
    Deferred tax liabilities                         491               867
    Accrued and other current liabilities         18,773            23,810
    Total current liabilities                     33,460            44,489
  Long-term liabilities:
    Obligations under capital leases, net
     of current portion                              233                98
    Deferred tax liabilities                       1,863             1,242
    Other non-current liabilities                    445               286
    Total liabilities                             36,001            46,115

  Shareholders' equity:
  Ordinary shares $0.01 par value
   (1,500,000,000 shares authorized,
   50,274,126 and 51,034,916 shares
   issued and outstanding as of March
   31, 2008 and 2009, respectively)                 $502              $510
  Additional paid-in capital                     234,771           243,194
  Retained earnings/(Accumulated deficit)        (14,021)           29,451
  Accumulated other comprehensive income          13,638            19,203
  Total shareholders' equity                     234,890           292,358
  Total liabilities, mezzanine equity
   and shareholders' equity                     $270,891          $338,473



                  CONSOLIDATED STATEMENTS OF OPERATIONS

                                 Three Months Ended         Year Ended
                                 March       March       March       March
                               31, 2008    31, 2009    31, 2008    31, 2009
                  (In U.S. dollar thousands, except share and per share data)

  Revenues:
    Software development        $13,516     $21,050     $55,147     $89,559
    Other services                2,628       4,832      10,769      16,737
    Total revenues               16,144      25,882      65,916     106,296

  Cost of revenues:
    Software development          4,283       7,178      21,138      26,294
    Other services                1,208       3,243       4,517      10,123
    Total cost of revenues        5,491      10,421      25,655      36,417
  Gross profit                   10,653      15,461      40,261      69,879

  Operating expenses:
    Research and development        745       1,541       3,838       5,172
    Sales and marketing           2,476       3,160      10,393      10,961
    General and administrative    1,604       2,339      19,633       9,359
    Total operating expenses      4,825       7,040      33,864      25,492
  Income from operations          5,828       8,421       6,397      44,387

  Other income (expenses):
    Interest income               1,442       1,151       3,597       5,589
    Interest expense               (130)         55        (886)       (250)
    Other income (expense), net  (1,595)        123      (1,349)       (169)
    Total other income (expense)   (283)      1,329       1,362       5,170
  Income before income tax
   expense                        5,545       9,750       7,759      49,557
    Income tax expense             (939)       (918)     (3,539)     (6,085)
  Income from continuing
   operations                     4,606       8,832       4,220      43,472
    Loss from discontinued
     operations, net of tax          --          --      (1,293)         --
  Net income                      4,606       8,832       2,927      43,472

  Net income (loss) per share:
      Continuing operations       $0.09       $0.17      $(0.01)      $0.86
      Discontinued operations     $0.00       $0.00      $(0.03)      $0.00
    Basic ordinary share          $0.09       $0.17      $(0.04)      $0.86
      Continuing operations       $0.00       $0.00       $0.81       $0.00
      Discontinued operations     $0.00       $0.00      $(0.06)      $0.00
    Basic preferred share         $0.00       $0.00       $0.75       $0.00
      Continuing operations       $0.09       $0.17      $(0.01)      $0.83
      Discontinued operations     $0.00       $0.00      $(0.03)      $0.00
    Diluted                       $0.09       $0.17      $(0.04)      $0.83

  Shares used in computation of
   net income (loss) per share:
    Basic ordinary share     50,274,126  50,777,180  38,692,405  50,545,151
    Basic preferred share            --          --   5,767,286          --
    Diluted                  52,497,525  52,488,337  38,692,405  52,368,317

  Includes share-based
   compensation related to:
  Cost of revenues software
   development                     $281        $438      $7,832      $1,649
  Cost of revenues other services    65          67         229         252
  General and administrative
   expenses                         542         449      13,964       1,871
  Sales and marketing expenses      253         389       4,712       1,491
  Research and development
   expenses                          59         100       1,451         385



         UNAUDITED CONSOLIDATED ADJUSTED STATEMENTS OF OPERATIONS

                               Three Months Ended         Year Ended
                               March       March       March       March
                             31, 2008    31, 2009    31, 2008    31, 2009
                  (In U.S. dollar thousands, except share and per share data)
  Revenues:
    Software development       13,516      21,050      55,147      89,559
    Other services              2,628       4,832      10,769      16,737
    Total revenues             16,144      25,882      65,916     106,296

  Cost of revenues:
    Software development        4,283       7,178      21,138      26,294
    Other services              1,208       3,243       4,517      10,123
    Total cost of revenues      5,491      10,421      25,655      36,417

  Cost of revenue adjustments:
    Share-based compensation
     software development        (281)       (438)     (7,832)     (1,649)
    Share-based compensation
     other services               (65)        (67)       (229)       (252)
    Amortization of acquired
     intangible assets other
     services                    (242)       (341)       (957)     (1,236)
    Amortization of acquired
     intangible assets
     software development         (40)        (96)       (143)       (320)
    Amortization of acquired
     deferred compensation
     other services                --         (33)         --        (106)
    Amortization of acquired
     deferred compensation
     software development          --         (31)         --         (67)

  Adjusted cost of revenues:
    Software development        3,962       6,613      13,163      24,258
    Other services                901       2,802       3,331       8,529
    Total adjusted cost
     of revenues                4,863       9,415      16,494      32,787

  Gross profit                 10,653      15,461      40,261      69,879

  Adjusted gross profit        11,281      16,467      49,422      73,509


  Operating expenses:
    Research and development      745       1,541       3,838       5,172
    Sales and marketing         2,476       3,160      10,393      10,961
    General and administrative  1,604       2,339      19,633       9,359
    Total operating expenses    4,825       7,040      33,864      25,492

  Operating expense adjustments:
    Share-based compensation
     research and development     (59)       (100)     (1,451)       (385)
    Share-based compensation
     sales and marketing         (253)       (389)     (4,712)     (1,491)
    Share-based compensation
     general and administrative  (542)       (449)    (13,964)     (1,871)
    Amortization of acquired
     intangible assets sales
     and marketing               (104)       (150)       (204)       (545)
    Amortization of acquired
     intangible assets general
     and administrative           (27)        (57)        (53)       (186)

  Adjusted operating expenses:
    Research and development      686       1,441       2,387       4,787
    Sales and marketing         2,119       2,621       5,477       8,925
    General and administrative  1,035       1,833       5,616       7,302
    Total adjusted
     operating expenses         3,840       5,895      13,480      21,014

  Income from operations        5,828       8,421       6,397      44,387

  Adjusted income from
   operations                   7,441      10,572      35,942      52,495

  Other income (expenses):
    Interest income             1,442       1,151       3,597       5,589
    Interest expense             (130)         55        (886)       (250)
    Other (income)
     expense, net              (1,595)        123      (1,349)       (169)

    Total other income
     (expense)                   (283)      1,329       1,362       5,170

  Adjusted other income
   (expenses):
    Interest income             1,442       1,151       3,597       5,589
    Interest expense             (130)         55        (886)       (250)
    Other (expenses)
     income, net               (1,595)        123      (1,349)       (169)
    Total adjusted other
     income                      (283)      1,329       1,362       5,170

  Income before income tax
   expense                      5,545       9,750       7,759      49,557

  Adjusted income before
   income tax expense           7,158      11,901      37,304      57,665

    Income tax expense           (939)       (918)     (3,539)     (6,085)

  Income from continuing
   operations                   4,606       8,832       4,220      43,472

  Adjusted income from
   continuing operations        6,219      10,983      33,765      51,580

    Loss from discontinued
     operations                    --          --      (1,293)         --

  Net income                    4,606       8,832       2,927      43,472

  Adjusted net income           6,219      10,983      33,765      51,580

  Net income (loss) per share:
      Continuing operations     $0.09       $0.17      $(0.01)      $0.86
      Discontinued operations   $0.00       $0.00      $(0.03)      $0.00
    Basic ordinary share        $0.09       $0.17      $(0.04)      $0.86
      Continuing operations     $0.00       $0.00       $0.81       $0.00
      Discontinued operations   $0.00       $0.00      $(0.06)      $0.00
    Basic preferred share       $0.00       $0.00       $0.75       $0.00
      Continuing operations     $0.09       $0.17      $(0.01)      $0.83
      Discontinued operations   $0.00       $0.00      $(0.03)      $0.00
    Diluted                     $0.09       $0.17      $(0.04)      $0.83

  Adjusted net income per share:
    Basic ordinary share        $0.12       $0.22       $0.76       $1.02
    Diluted                     $0.12       $0.21       $0.73       $0.98

  Shares used in computation of
   net income and adjusted net
   income per share:
    Basic ordinary share   50,274,126  50,777,180  38,692,405  50,545,151
    Basic preferred share          --          --   5,767,286          --
    Diluted                52,497,525  52,488,337  46,424,993  52,368,317



                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                                     Three Months Ended     Year Ended
                                      March     March     March     March
                                    31, 2008  31, 2009  31, 2008  31, 2009

                                    (In U.S. dollar thousands, except share
                                              and per share data)
  Cash flows from operating activities:
  Net income                           $4,606    $8,832    $2,927   $43,472

  Adjustments to reconcile net
   income to net cash provided by
   operating activities:
    Share-based compensation            1,200     1,443    28,188     5,648
    Depreciation of fixed assets          574       699     1,798     2,808
    Amortization of intangible assets     458       724     1,615     2,513
    Provision for doubtful accounts       358        33       498       134
    Impairment of intangible asset         --        --       393        --
    Gain (Loss) on disposal of fixed
     assets                              (662)       61      (626)      268

  Deferred income taxes                  (150)     (389)     (707)   (1,354)

  Changes in assets and liabilities,
   net of effects of acquisitions:
    Accounts receivable                 7,107     3,751    (1,856)   (6,930)
    Inventories                           295    (1,505)     (120)   (2,026)
    Other current assets                  851     1,283    (3,117)      165
    Amounts due from related parties       --      (682)       --      (682)
    Prepaid land use right                 --        28        --    (5,165)
    Other non-current assets               46      (180)      129      (755)
    Other non-current liabilities         (75)      (65)      (55)     (253)
    Accounts payable                   (1,356)     (398)      230    (1,473)
    Deferred revenue                   (4,032)   (5,994)    3,794     6,049
    Amounts due to related parties         --        17        --        17
    Accrued and other current
     liabilities                          953        72     1,293      (582)

  Net cash provided by (used in)
   operating activities                10,173     7,730    34,384    41,854

  Cash flows from investing activities:
    Change in restricted cash           5,825       710    (3,338)    6,270
    Proceeds from sale of fixed assets  1,228        --     1,260       225
    Purchase of fixed assets           (3,769)   (2,370)   (4,575)  (10,136)
    Purchase of intangible assets          --       (46)      (85)      (49)
    Acquisitions, net of cash acquired     --    (5,577)   (3,824)  (10,885)
    Amounts due from related parties       50        --        --        --

  Net cash provided by (used in)
   investing activities                 3,334    (7,283)  (10,562)  (14,575)

  Cash flows from financing
   activities:
    Proceeds from short-term
     borrowings                        25,968        --    54,544        --
    Repayment of short-term
     borrowings                       (38,151)       --   (63,921)       --
    Dividend paid                          --        --   (36,105)       --
    Stock options exercised                --     1,580       478     2,783
    Sale of ordinary shares, net of
     issue costs                           --        --   146,470        --
    Repayments of capital leases
     obligations                          (47)     (116)     (473)     (837)
    Amounts due to related parties    (11,771)       --        54       (54)

  Net cash provided by (used in)
   financing activities               (24,001)    1,464   101,047     1,892

  Effect of exchange rates
   differences                          5,388       (48)    9,737     4,598

  Net increase (decrease) in cash
   and cash equivalents                (5,106)    1,863   134,606    33,769

  Cash and cash equivalents,
   beginning of period                209,632   236,432    69,920   204,526
  Cash and cash equivalents, end
   of period                         $204,526  $238,295  $204,526  $238,295

  Supplemental disclosure of cash
   flow information:
    Income taxes paid                  $2,628    $3,377    $3,876    $9,703
    Interest paid                        $130       $--      $886      $308
  Supplemental disclosure of
   non-cash investing and
   financing activities:
    Fixed assets purchased under
     capital leases                      $324       $--      $771      $655
  Dividends paid in form of assets        $--       $--   $18,348       $--
  Acquisition:
  Fair value of ordinary shares
   issued                                 $--       $--    $3,062       $--
  Cash consideration                      $--    $5,577    $3,524   $10,885
  Cash consideration payable           $2,404    $4,724    $2,404    $4,724
  Assets acquired                      $2,404   $10,301    $8,990   $15,609


DATASOURCE: Longtop Financial Technologies Limited



CONTACT:  Investors, Charles Zhang, CFA of Longtop Financial Technologies

Limited, [phone], ; or Media, Caroline Straathof of IR

Inside BV, [phone], 

Copyright