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China Information Technology, Inc. Announces Third Quarter 2010 Results

(PRNewswire) — -- China Information Technology, Inc. (Nasdaq: CNIT), a leading total solutions provider of geographic information systems (GIS), digital public security technology (DPST) and digital hospital information systems (DHIS) in China, today announced its financial results for the third quarter ended September 30, 2010.

Third Quarter 2010 Financial Highlights


Commenting on the Company's third quarter earnings, Chairman and CEO, Jiang Huai Lin, said, "We are pleased to announce the results of another strong quarter."  

"We are fast becoming the IT partner of choice for many high profile government projects across China.  In this past quarter alone, we won a record number of contracts from clients in 25 provinces and cities.  Worth US$42 million in the aggregate, the contracts' value represents a 40% increase compared to the same period last year."

"The wins are indicative of both the continued demand for our unique technological expertise, as well as our brand's growth in our core markets of geographic information systems, healthcare, and public security technologies. In addition, our key role in numerous state-level high profile projects, including China's State-sponsored Web-based Map Service 'Map World' and the 2011 Shenzhen Universiade, further reinforced our unmatchable brand name and core competency in our fields."

"We own 110 software copyrights and 25 patents in China. Our technological expertise is further evidenced by the fact that six out of the seven operating entities under the CNIT umbrella enjoy the National High Tech Corporate status."

"We updated our corporate name and ticker symbol, for the purpose of re-aligning our brand to match our expanded business scope. We also renamed our digital information security technology segment as digital public security technology (DPST) to better reflect the business of the segment.   We are well positioned as a leading provider in China's high-growth information technology field and aim to create value for our shareholders over the long term."

Revenues

For the three months ended September 30, 2010, revenue was $43.81 million, compared to $28.68 million for the three months ended September 30, 2009, an increase of $15.13 million, or 52.7%. During the current quarter, Huipu Electronics (Shenzhen) Co., Ltd., or Huipu, which was acquired in October 2009, contributed $8.23 million to total revenue. Excluding the impact of Huipu, organic revenue growth was 24.0%.

Software sales increased by 46.1% to $29.47 million for the three months ended September 30, 2010, from $20.18 million for the three months ended September 30, 2009. Software sales constituted 67.3% of the total revenue, decreased from 70.4% for the same period in the prior year. Excluding the impact of Huipu, software sales were 82.9% of organic revenue, reflecting the Company's continued commitment to its core competency in software.

Product sales increased by $10.20 million, or 417.1% for the three months ended September 30, 2010, as compared to $2.44 million in the same period of 2009. Product sales constituted 28.9% of total revenue during the current period as compared with 8.5% during the same period in the prior year. Such an increase is due to the contribution from Huipu.

Sales of system integration services decreased by 77.3% for the three months ended September 30, 2010, as compared to the same period of 2009. As a percentage of revenue, it declined from 20.7% during the three months ended September 30, 2009 to 3.1% during the current quarter. Excluding the impact of Huipu, system integration was 3.8% of organic revenues.

Other revenue increased by 161.2%, from $0.13 million in the three months ended September 30, 2009 to $0.34 million in the same period of 2010. Other revenue mainly derived from maintenance services in the three months ended September 30, 2009, while in the same period of 2010, in addition to maintenance services, the Company also generated $0.18 million royalty income from Huipu by licensing other manufacturers to use the HPC trademark.

For the three months ended September 30, 2010, GIS accounted for 47.2% of the total revenue while DPST and DHIS represented 41.0% and 11.8% respectively. These compared to 34.3%, 52.5% and 13.2% of the total revenue for the three months ended September 30, 2009. The GIS segment increased by 109.9% compared with the same period of 2009, while the year-over-year growth ratios for DPST and DHIS segments were 19.3% and 37.1% respectively. The segment trends reflect the growth momentum in GIS and DHIS segments outpacing that of DPST. This is the direct result of our focus in the last few years on targeting areas with the highest barriers-to-entry and developing sustainable competitive advantages in the GIS and DHIS segments, in anticipation of accelerating market growth in the coming years. As such expectation starts to materialize, we believe we have been well positioned to capture the growth opportunities.  

Gross Profit and Gross Margin

Gross profit increased $5.97 million, or 39.5%, to $21.09 million for the three months ended September 30, 2010, from $15.12 million for the same period in 2009.  Gross margin was 48.1% in the third quarter of 2010, a decrease of 460 basis points, from 52.7% in the same period of 2009. Huipu yielded a gross margin of 9.7%. Excluding the impact of Huipu, gross margin of organic business was 57.0%.

Income from Operations

Income from operations increased $1.75 million, or 15.5%, to $13 million for the three months ended September 30, 2010, from $11.25 million in the corresponding period in 2009. Income from operations as a percentage of revenue decreased to 29.7% during the three months ended September 30, 2010, compared with 39.2% in 2009.  On a non-GAAP basis, adjusted income from operations was $14.55 million, which increased 24.5% year-over-year.

Income Tax Expense

Income tax expense for the three months ended September 30, 2010 was $2.36 million, up 31.3% from $1.80 million for the same period in 2009.

Net Income Attributable to the Company

As a result of the factors described above, net income increased $0.88 million, or 9.1%, to $10.61 million during the three months ended September 30, 2010, from $9.73 million for the same period in 2009.  On a non-GAAP basis, adjusted net income was $11.92 million, which increased 17.3% year-over-year.

Cash and Cash Equivalents

As of September 30, 2010, the Company had $25.84 million in cash and restricted cash, as compared to $14.46 million in the same period of 2009.

Net cash provided by operating activities was $20.42 million for the third quarter, making the total for the nine months ended September 30, 2010 $18.87 million, an increase of $10.54 million or 126.6% from $8.33 million net cash provided by operating activities for the same period of 2009. Such increase was attributable to the improvement in accounts receivable turnover as well as increases in accounts payable and advances from customers.

Financial Outlook

For fiscal year 2010, the Company reaffirms its guidance with projected revenue in the range of $141 million to $146 million and adjusted net income in the range of $35.5 million to $39.5 million. Additionally, with strong growth momentum and high visibility in its core business, the Company is issuing guidance for the full year 2011 with projected revenue in the range of $165 million to $172 million and adjusted net income in the range of $43 million to $45 million, excluding any non-cash expenses as a result of employee stock awards, amortization of intangible assets associated with acquisitions, and changes in fair value of contingent considerations.  

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for earnings that exclude non-cash charges. China Information Technology believes that these non-GAAP financial measures are useful to investors because they exclude non-cash charges that management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential operating activities of China Information Technology. Accordingly, management excludes the expense arising from certain non-cash charges when making operational decisions. China Information Technology believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand China Information Technology's financial performance in comparison to historical periods. In addition, it allows investors to evaluate China Information Technology's performance using the same methodology and information as that used by China Information Technology's management. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure. However, China Information Technology's management compensates for these limitations by providing the relevant disclosure of the items excluded.

The following table provides the non-GAAP financial measure and the related GAAP measure and provides a reconciliation of the non-GAAP measure to the equivalent GAAP measure.


Q3 2010 Reconciliation of Operating, Net Income and EPS

to Exclude SBC, Amortization of Intangible Assets and Contingent Consideration


3 Mos. Ended

3 Mos. Ended

9 Mos. Ended

9 Mos. Ended


30-Sep-10

30-Sep-09

30-Sep-10

30-Sep-09

Operating income

13,001,046

11,253,594

31,691,420

24,020,557

Stock based compensation ("SBC")

1,130,000

-

1,130,000

183,600

Amortization

422,697

439,840

1,349,745

1,305,550






Operating income (without SBC and amortization)

14,553,743

11,693,434

34,171,165

25,509,707






Net income Attributable to the Company

10,609,768

9,726,043

26,242,945

21,280,861

Stock based compensation ("SBC")

1,130,000

-

1,130,000

183,600

Amortization

422,697

439,840

1,349,745

1,305,550

Change in fair value of contingent consideration *

(240,718)

-

(940,986)

-






Net income (without SBC, amortization and contingent consideration)

11,921,747

10,165,883

27,781,704

22,770,011






Weighted Average Number of Shares Outstanding





Basic

51,466,927

47,536,883

51,377,933

47,531,327

Diluted

51,466,927

47,536,883

51,377,933

47,531,327






Earnings per share (without SBC, amortization and contingent consideration)





Basic

$0.23

$0.21

$0.54

$0.48

Diluted

$0.23

$0.21

$0.54

$0.48




* Represents a gain from the change of fair value of the contingent consideration for the acquisition of Huipu as at 09/30/2010, according to FASB ASC 805 – Business Combinations

Conference Call

China Information Technology will host a corresponding conference call and live webcast at 8:00 am Eastern Standard Time (EST) (9:00 pm, Beijing time).

The dial-in details for the live conference call are as follows:

- U.S. Toll Free Number:

+1-866-519-4004

- International Dial-in Number:

+65-6723-9381

- Mainland China Toll Free Number:

10-800-819-0121

- Hong Kong Toll Free Number:

80 093 0346

Conference ID: 22786180




A live and archived webcast of the call will be available on the Investor Relations section of China Information Technology's website at http://www.chinacnit.com.

A telephone replay of the call will be available from November 08, 2010 through November 16, 2010.

The dial-in details for the replay are as follows:

- U.S. Toll Free Number

+1-866-214-5335

- International Dial-in Number

+61-2-8235-5000

 Conference ID: 22786180




About China Information Technology, Inc.

China Information Technology, Inc., through its subsidiaries and other consolidated entities, specializes in geographic information systems (GIS), digital public security technology (DPST) and digital hospital information systems, with the goal of being the largest GIS software provider in China. Headquartered in Shenzhen, China, the Company's total solutions include specialized software, hardware, systems integration, and related services organized into three business segments - Geographic Information Systems (GIS), Digital Public Security Technology (DPST), and Digital Hospital Information Systems (DHIS). To learn more about the Company, please visit its corporate website at http://www.chinacnit.com.

Safe Harbor Statement

This press release may contain certain "forward-looking statements" relating to the business of China Information Technology, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding: the significance of the Company's new contract wins during the quarter; the ability of the Company to continue to strengthen its position in the industry by winning and successfully performing under national contracts; the ability of the Company to secure future opportunities in the market by leveraging its R&D capabilities and reputation; the continued support of the Chinese government for domestic GIS products; the general ability of the Company to achieve its commercial objectives, including the Company's plan to sustain the growth while creating shareholder value; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

For further information, please contact:

China Information Technology, Inc.

Iris Yan

Tel: +86-755-8370-4767  

Email: Email Contact

http://www.chinacnit.com

Christensen

Kathy Li

Tel: +1-480-614-3036

Email: Email Contact

Teal Willingham

Tel: +86-010-5971-2001

Email: Email Contact

CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009

Expressed in U.S. dollars

(Except for share and per share amounts)






September 30



December 31






2010



2009


ASSETS




(Unaudited)














CURRENT ASSETS









Cash and cash equivalents



$

18,001,834


$

13,478,633


Restricted cash




7,843,653



5,859,910


Accounts receivable:









Billed, net of allowance for doubtful accounts of $3,136,000 and $3,123,000, respectively




19,777,808



23,907,035


Unbilled




72,060,307



47,851,638


Bills receivable




568,860



-


Advances to suppliers




8,840,865



6,924,035


Amount due from related parties, net of allowance for doubtful accounts of $0 and $73,000, respectively




264,840



129,937


Inventories, net of provision of $320,000 and $184,000,respectively




23,498,795



10,936,004


Other receivables and prepaid expenses




6,772,698



15,405,089


Deferred tax assets




1,530,931



1,719,327


TOTAL CURRENT ASSETS




159,160,591



126,211,608











Deposit for software purchase




5,050,878



1,426,452


Deposit for purchase of land use rights




18,175,883



-


Long-term investments




2,055,195



2,862,016


Property, plant and equipment, net




75,218,112



53,586,514


Land use rights, net




1,914,475



1,907,611


Intangible assets, net




13,407,005



13,556,141


Goodwill




50,067,871



50,609,866


Deferred tax assets




554,747



668,730


TOTAL ASSETS



$

325,604,757


$

250,828,938











LIABILITIES AND EQUITY


















CURRENT LIABILITIES









Short-term bank loans



$

27,390,533


$

15,927,780


Accounts payable




18,033,514



20,159,317


Bills payable




26,795,017



12,658,029


Advances from customers




6,163,440



3,950,744


Amount due to related parties, current portion




678,008



583,736


Accrued payroll and benefits




1,935,712



3,142,240


Other payables and accrued expenses




7,931,283



14,252,918


Contingent consideration, current portion




1,468,901



1,857,994


Income tax payable




5,648,596



3,290,245


TOTAL CURRENT LIABILITIES




96,045,004



75,823,003











Long-term bank loans




8,592,780



1,907,100


Amount due to related parties, long-term portion




5,009,478



-


Contingent consideration, net of current portion




2,083,503



2,635,397


Deferred tax liabilities




1,863,638



2,564,604


TOTAL LIABILITIES




113,594,403



82,930,104











COMMITMENTS AND CONTINGENCIES




-



-





CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 (CONTINUED)

Expressed in U.S. dollars

(Except for share and per share amounts)


EQUITY









Common stock, par $0.01; authorized capital 200,000,000 shares; shares issued and outstanding 2010: 52,061,787: 2009: 49,905,141shares



 $

255,115


$

233,548


Treasury stock, 6,000 shares, at cost




(11,468)



(11,468)


Additional paid-in capital




90,381,445



78,495,062


Reserve




8,345,371



8,345,371


Retained earnings




86,705,220



60,462,275


Accumulated other comprehensive income




8,929,721



5,016,575


Total equity of the Company




194,605,404



152,541,363


Non-controlling interest




17,404,950



15,357,471


Total equity




212,010,354



167,898,834











TOTAL LIABILITIES AND EQUITY




325,604,757



250,828,938





CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 (Unaudited)

Expressed in U.S. dollars

(Except for share and per share amounts)




Three Months Ended



Nine Months Ended




September 30,



September 30,




2010



2009



2010



2009















Revenue - Products

$

12,643,172


$

2,444,969


$

26,462,653


$

9,055,386


Revenue - Software


29,474,263



20,178,136



67,059,131



45,111,089


Revenue - System integration


1,347,984



5,927,117



7,617,390



14,454,193


Revenue - Others


340,712



130,459



1,488,952



828,116


TOTAL REVENUE


43,806,131



28,680,681



102,628,126



69,448,784















Cost - Products sold


10,725,203



1,765,042



21,779,326



7,385,682


Cost - Software sold


11,314,585



7,365,142



27,973,686



16,059,719


Cost - System integration


621,310



4,402,388



3,667,840



10,943,151


Cost - Others


59,440



28,112



205,922



190,220


TOTAL COST


22,720,538



13,560,684



53,626,774



34,578,772















GROSS PROFIT


21,085,593



15,119,997



49,001,352



34,870,012















Administrative expenses


(5,449,209)



(2,462,872)



(10,840,741)



(6,983,595)


Research and development expenses


(937,774)



(687,580)



(2,067,854)



(1,911,844)


Selling expenses


(1,697,564)



(715,951)



(4,401,337)



(1,954,016)


INCOME FROM OPERATIONS


13,001,046



11,253,594



31,691,420



24,020,557















Subsidy income


6,521



158,520



438,201



674,379


Other income, net


350,874



2,654



992,973



167,174


Interest income


22,024



40,948



51,318



238,492


Interest expense


(548,184)



(109,204)



(960,832)



(225,858)


INCOME BEFORE INCOME TAXES


12,832,281



11,346,512



32,213,080



24,874,744















Income tax expense


(2,361,593)



(1,797,945)



(5,696,285)



(3,478,141)


NET INCOME


10,470,688



9,548,567



26,516,795



21,396,603















Add/(Less): Net income attributable to the non-controlling interest


139,080



177,476



(273,850)



(115,742)















NET INCOME ATTRIBUTABLE TO THE COMPANY

$

10,609,768


$

9,726,043


$

26,242,945


$

21,280,861















Weighted average number of shares













Basic


51,466,927



47,536,883



51,377,933



47,531,327


Diluted


51,466,927



47,536,883



51,377,933



47,531,327















Earnings per share - Basic and Diluted








 





Basic - Net income attributable to the Company's common stockholders

$

0.21


$

0.20


$

0.51


$

0.45


Diluted - Net income attributable to the Company's common stockholders

$

0.21


$

0.20


$

051


$

0.45





CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 (Unaudited)

Expressed in U.S. dollars

(Except for share and per share amounts)




Three Months Ended



Nine Months Ended




September 30,



September 30,




2010



2009



2010



2009















Net income

$

10,470,688


$

9,548,567


$

26,516,795


$

21,396,603


Other comprehensive income:













Foreign currency translation gain


2,948,257



208,129



3,972,752



643,508















Comprehensive income


13,418,945



9,756,696



30,489,547



22,040,111


Comprehensive income attributable to the non-controlling interest


99,972



174,004



(333,456)



(119,301)


Comprehensive income attributable to the Company

$

13,518,917


$

9,930,700


$

30,156,091


$

21,920,810





CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 (Unaudited)

Expressed in U.S. dollars

(Except for share and per share amounts)




Nine Months Ended




September 30,




2010



2009


OPERATING ACTIVITIES







Net income

$

26,516,795


$

21,396,603


Adjustments to reconcile net income to net cash provided by operating activities:







Depreciation


5,415,554



2,825,201


Amortization of intangible assets


1,349,745



1,305,550


Stock-based compensation


1,130,000



183,600


Loss on disposal of property and equipment


321,854



33,966


Loss on write-off of land use rights


231,615





Impairment of long-term investment


850,320



184,397


Loss on doubtful accounts receivable


1,060,348



576,832


Provision for obsolete inventories


130,328



-


Change in deferred income tax


162,900



(117,583)


Deemed interests in relation to shareholder's loan


125,000



-


Change in fair value of contingent consideration


(940,986)



-


Changes in operating assets and liabilities, net of effects of business acquisitions:







Increase in restricted cash


(658,872)



-


Increase in accounts receivable


(19,772,920)



(17,231,581)


Increase in advances to suppliers


(2,394,325)



(6,177,155)


Decrease / (increase) in other receivables and prepaid expenses


8,134,566



(1,315,827)


Increase in inventories


(12,431,677)



(620,005)


Increase in accounts payable and bills payable


11,143,415



5,944,128


Increase in advances from customers


2,100,476



439,436


Increase in amount due to related parties


75,244



67,081


Decrease in other payables and accrued expenses


(5,931,994)



(507,220)


Increase in income tax payable


2,253,344



1,338,726


Net cash provided by operating activities


18,870,730



8,326,149









INVESTING ACTIVITIES







Increase in restricted cash in relation to credit facilities


(1,172,663)



-


Proceeds from sales of property and equipment


55,925



100,299


Purchase of land use rights


(231,615)





Proceeds from sale of short-term investments


-



5,863,600


Refund of investment in former Joint Venture


-



4,397,700


Purchases of property and equipment


(24,332,630)



(3,682,753)


Capitalized and purchased software development costs


(899,204)



(435,494)


Deposit for software purchase


(4,963,154)



(6,822,826)


Deposit for business acquisition


-



(8,000,000)


Deposit for purchase of land use rights


(17,266,658)



-


Net cash used in investing activities


(48,809,999)



(8,579,474)












CHINA INFORMATION TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 (CONTINUED) (Unaudited)

Expressed in U.S. dollars

(Except for share and per share amounts)




Nine Months Ended




September 30,




2010



2009









FINANCING ACTIVITIES







Borrowing of short-term loans


37,198,374



6,296,041


Borrowing of share-holder's loan


6,029,700



-


Borrowing of long-term loans


8,443,540



-


Repayment of short-term loans


(26,150,419)



(1,172,720)


Repayment of shareholder's loan


(1,029,700)



-


Repayment of long-term loans


(1,912,300)



-


Issued common stock  


9,383,440



-


Repurchase of common stock


-



(11,468)


Capital injection to Geo by minority share-holders


1,734,309



-


Net cash provided by financing activities


33,696,944



5,111,853




Effect of exchange rate changes on cash and cash equivalents


765,526



40,325




NET INCREASE IN CASH AND CASH EQUIVALENTS


4,523,201



4,898,853


CASH AND CASH EQUIVALENTS, BEGINNING


13,478,633



9,565,252


CASH AND CASH EQUIVALENTS, ENDING

$

18,001,834


$

14,464,105




Supplemental disclosure of cash flow information:









Nine Months Ended




September 30,




2010



2009


Cash paid during the period







     Income taxes

$

3,288,052


$

2,256,998


     Interest paid

$

834,857


$

209,639









Supplemental disclosure of significant non-cash transactions:










On September 25, 2010, the Company granted eligible employees a total of 250,000 shares of the Company's common stock as compensation under the China Information Security Technology, Inc. 2007 Equity Incentive Plan ("The Plan"). The fair value of these shares of approximately $1.13 million based on quoted market price was recognized as stock-based compensation for the nine months ended September 30, 2010.

On January 12, 2010, the Company granted eligible employees a total of 213,363 shares of the Company's common stock as compensation under the China Information Security Technology, Inc. 2007 Equity Incentive Plan ("The Plan"). The fair value of these shares of approximately $1.3 million, based on the quoted market price, was accrued as of December 31, 2009 as the compensation was for services provided in 2009.

On February 2, 2009, the Company granted eligible employees a total of 60,000 shares of the Company's common stock as compensation under the Plan. The fair value of these shares of $183,600 based on quoted market price was recognized as stock-based compensation for the six months ended June 30, 2009.

Selected information by segment is presented in the following tables for the three and nine months ended September 30, 2010 and 2009.




Three months ended Sept 30



Nine months ended Sept 30



2010



2009



2010



2009



(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)













     Revenues(1)












     GIS Segment

$

20,654,401


$

9,839,180


$

46,969,457


$

23,673,159

     DPST Segment


17,963,935



15,058,561



44,019,021



37,800,499

     DHIS Segment


5,187,795



3,782,940



11,639,648



7,975,126


$

43,806,131


$

28,680,681


$

102,628,126


$

69,448,784

 (1)Revenues by operating segments exclude intercompany transactions.












Percentage to Revenue












     GIS Segment


47.2%



34.3%



45.8%



34.1%

     DPST Segment


41.0%



52.5%



42.9%



54.4%

     DHIS Segment


11.8%



13.2%



11.3%



11.5%




SOURCE China Information Technology, Inc.

Contact:
China Information Technology, Inc.
China Information Technology, Inc., Iris Yan, Tel: +86-755-8370-4767
Email Contact http://www.chinacnit.com; Christensen, Kathy Li, Tel: +1-480-614-3036, Email: Email Contact Teal Willingham, Tel: +86-010-5971-2001, Email: Email Contact