omniture

Camelot Information Systems Inc. Announces Unaudited Fourth-Quarter and Full-Year 2011 Financial Results

2012-03-23 18:17 2148

BEIJING, March 23, 2012 /PRNewswire-Asia-FirstCall/ -- Camelot Information Systems Inc. ("Camelot" or the "Company") (NYSE: CIS), a leading domestic provider of enterprise application services and financial industry IT services in China, today announced unaudited financial results for the fourth quarter and fiscal year ended December 31, 2011.

FOURTH-QUARTER 2011 FINANCIAL AND OPERATING HIGHLIGHTS

  • Net revenues decreased slightly year-over-year to $59.7 million in the fourth quarter of 2011, as compared to $60.0 million in the fourth quarter of 2010
  • Adjusted operating loss[1] was $934,000, as compared to adjusted operating income of $12.8 million in the year-ago quarter
  • U.S. GAAP operating loss was $3.2 million, compared to U.S. GAAP operating income of $8.9 million in the year-ago quarter
  • Adjusted net income[1] attributable to Camelot was $2.7 million as compared to adjusted net income attributable to Camelot of $11.2 million in the year-ago quarter. Adjusted diluted earnings per ADS[2] in the fourth quarter of 2011 were $0.06, as compared to diluted earnings per ADS of $0.24 in the year-ago quarter
  • U.S. GAAP net income attributable to Camelot was $0.5 million, compared to U.S. GAAP net income attributable to Camelot of $7.3 million in the year-ago quarter

FULL-YEAR 2011 FINANCIAL AND OPERATING HIGHLIGHTS

  • Net revenues increased 17.8% to $227.1 million in 2011, as compared to $192.9 million in 2010
  • Adjusted operating income[1] was $13.1 million, as compared to adjusted operating income of $35.7 million in 2010
  • U.S. GAAP operating loss was $43.1 million, compared to U.S. GAAP operating income of $22.8 million in 2010
  • Adjusted net income[1] attributable to Camelot was $15.3 million as compared to adjusted net income attributable to Camelot of $31.5 million in 2010. Adjusted diluted earnings per ADS[1] in 2011 were $0.34, as compared to diluted earnings per ADS of $0.76 in 2010
  • U.S. GAAP net loss attributable to Camelot was $40.8 million, compared to U.S. GAAP net income attributable to Camelot of $18.6 million in 2010
  • According to a report by International Data Corp. (IDC), Camelot was again ranked number-one in 2011 as the largest local SAP services provider in China, with 14.4% market share (versus 12.0% in 2010)
  • According to a report by IDC, Camelot was again ranked as number-one in 2011 in the banking testing service market, with 19.05% market share

Mr. Simon Ma, Camelot's Chairman and Chief Executive Officer, commented, "We are pleased with our results for the fourth quarter of 2011, during which we built team morale following the management changes we experienced in the third quarter. In the fourth quarter, we also began to centralize certain functions within the FIS business line, as well as to promote our FIS services through cross-selling. Over the coming months, we will further enhance our FIS team to focus on clients, technology, and markets in the BFSI (banking, financial services, and insurance) sector."

"I continue to believe that demand for IT services will continue to outpace GDP growth in China for the foreseeable future. We remain committed to continue to investing in the future development of our Company and in our business by developing additional solutions while preparing our team for the next level," concluded Mr. Ma.

Fourth-Quarter 2011 Financial Results

Net revenues for the fourth quarter ended December 31, 2011 decreased slightly to $59.7 million from $60.0 million in the year-ago quarter and increased 9.6% sequentially from $54.5 million in the third quarter of 2011. Enterprise Application Services (EAS) revenues increased 5.7% year-over-year to $39.9 million in the quarter but declined slightly from the prior quarter. EAS revenues amounted to 66.9% of net revenues in the quarter. Financial Industry IT Services (FIS) revenues decreased 11.1% year-over-year and rebounded 48.5% sequentially to $19.8 million, mainly due to the strong team effort of the reconstituted group. FIS accounted for 33.1% of the quarter's revenues.

GAAP cost of revenues increased 10.3% to $43.8 million from $39.7 million in the year-ago quarter. Adjusted cost of revenues increased 10.8% to $43.5 million from $39.3 million in the year-ago quarter. Adjusted cost of revenues excludes $28,000 of share-based compensation.

GAAP gross profit decreased 21.7% to $15.9 million from $20.3 million in the year-ago quarter. Adjusted gross profit decreased 22.1% to $16.1 million from $20.7 million in the year-ago quarter, primarily due to lower utilization of the Company's expanded IT professional team. The GAAP gross margin was 26.6% in the quarter, compared to 33.9% in the year-ago quarter. The adjusted gross margin was 27.0%, as compared to 34.5% in the year-ago quarter.

GAAP operating expenses were $19.3 million in the quarter, compared to $11.6 million in the year-ago quarter. GAAP operating expenses include $1.0 million of share-based compensation expense.

The Company reviewed accounts receivable and recorded a $0.5 million provision in the quarter. These impairments and provisions are included under GAAP operating expenses.

Adjusted operating expenses were $17.3 million, representing a 114.1% increase over the year-ago quarter. The increase was primarily attributable to higher legal and professional fees and additional senior-level hires. The GAAP operating loss was $3.2 million, compared to operating income of $8.9 million in the year-ago quarter. The adjusted operating loss was $934,000, compared an adjusted operating income of $12.8 million in the year-ago quarter.

The GAAP net income attributable to Camelot for the fourth quarter of 2011 was $0.5 million, or $0.01 per diluted ADS, compared to net income of $7.3 million in the year-ago quarter, or a net income of $0.15 per diluted ADS. Adjusted net income attributable to Camelot for the fourth quarter of 2011 was $2.7 million, or $0.06 per diluted ADS, versus adjusted net income of $11.2 million in the year-ago quarter, or $0.24 per diluted ADS.

Full-Year 2011 Financial Results

Net revenues for the year ended December 31, 2011 increased 17.8% to $227.1 million from $192.9 million in 2010. Enterprise Application Services (EAS) revenues increased 25.8% to $159.2 million, and accounted for 70.1% of net revenues. Financial Industry IT Services (FIS) revenues increased 2.5% to $67.9 million and accounted for 29.9% of net revenues.

GAAP cost of revenues increased 28.0% to $167.5 million from $130.9 million in 2010. Adjusted cost of revenues increased 27.5% to $164.5 million from $129.0 million in 2010. Adjusted cost of revenues excludes $19.4 million of share-based compensation, a $21.5 million charge for the impairment of goodwill, and an $8.6 million charge for the impairment of intangible assets.

GAAP gross profit decreased 3.9% to $59.6 million from $62.0 million in 2010. Adjusted gross profit decreased slightly to $62.7 million from $63.9 million in 2010. The GAAP gross margin was 26.2% in the year, compared to 32.1% in 2010. The adjusted gross margin was 27.6%, as compared to 33.1% in 2010.

GAAP operating expenses were $102.9 million in the year, compared to $39.4 million in 2010 and include the amounts mentioned above in cost of revenues.

The Company performed impairment tests of intangible assets and goodwill in the year, resulting in non-cash charges of $8.6 million and $21.5 million, respectively, primarily due to the disruption from a departure and subsequent return of a team of our FIS business line and the macro economic environment. The Company also reviewed accounts receivable and recorded a $3.2 million provision for the year. These impairments and provisions were also included under GAAP operating expenses.

Adjusted operating expenses were $49.9 million in the year, representing a 75.8% increase over 2010. The increase was primarily attributable to higher legal and professional fees and additional senior-level hires. The GAAP operating loss for the year was $43.1 million, compared to an operating income of $22.8 million in 2010. The adjusted operating profit was $13.1 million, compared an adjusted operating income of $35.7 million in 2010.

The GAAP net loss attributable to Camelot in 2011 was $40.8 million, or a loss of $0.91 per diluted ADS, compared to net income of $18.6 million in 2010, or a net income of $0.45 per diluted ADS. Adjusted net income attributable to Camelot in 2011 was $15.3 million, or $0.34 per diluted ADS, versus adjusted net income of $31.5 million in 2010, or $0.76 per diluted ADS.

For the full year, Camelot repurchased 2.1 million ADSs at an average price of $6.80 per ADS.

Balance Sheet and Cash Flow

As of December 31, 2011, the Company had $102.4 million in cash, cash equivalents and term deposits, compared to $140.5 million cash, cash equivalents and term deposits as of December 31, 2010. The decrease was mainly due to an operating cash outflow of $4.9 million and $19.4 million paid for the acquisition of Dimension, Tansun, Agree and Red River Valley, and $14.4 million used to repurchase ordinary shares of the Company.

In the fourth quarter of 2011, the Company did not repurchase any shares.

Days' sales outstanding[3] ("DSO") were 174 days for the fourth quarter of 2011, attributable to delays in invoicing due to the disruption in the FIS business line.

Employees

As of December 31, 2011, the Company's headcount totaled 4,718, which included 4,017 information technology (IT) professionals. Of the IT professionals, EAS employee headcount was 2,135, and FIS employee headcount was 1,882.

Recent Events

On February 22, 2012, independent director Claude Leglise resigned, for personal reasons.

On February 28, 2012, Camelot received an "Outstanding Project Implementation Award" to recognize its delivery quality for a "Banking Branch System" developed for China's Bank of Communications at the third-annual "China Sourcing" Conference.

On March 15, 2012, Camelot appointed Ms. Joanna Wang and Mr. David Wang as independent directors.

On March 23, 2012, Camelot announced the formation of a wholly owned, focused subsidiary, Camelot Financial Information Technology Services Co, Ltd, under its Financial Industry IT Services business, to accelerate the development of the Company's FIS business. Mr. Yuhui Wang, formerly CEO of Camelot's subsidiary, Agree, will serve as the Chief Executive Officer of the New Subsidiary.

Furthermore, Camelot established a high-end consulting practice focusing on Financial Industry IT Services in the first quarter of 2012.

Business Outlook

First Quarter of 2012

Camelot expects net revenues for the first quarter of 2012 to be approximately $57 million, representing a 6.4% increase from the first quarter of 2011.

In addition, Camelot expects first-quarter 2012 adjusted net loss attributable to Camelot to be approximately $5.9 million, representing a 215.9% decrease from the first quarter of 2011.

Full-Year 2012

For full-year 2012, Camelot expects net revenues of approximately $266 million, representing a 17.1% increase from the prior year.

In addition, Camelot expects full-year 2012 adjusted net income attributable to Camelot to be approximately $18 million, representing a 17.6% increase from the prior year.

Conference-Call Information

Camelot's management will host a conference call at 08:00 a.m. (U.S. Eastern Daylight Time) / 05:00 a.m. (U.S. Pacific Daylight Time) / 8:00 p.m. (Beijing / Hong Kong time) on Friday, March 23, 2012 to discuss the Company's fourth-quarter and full-year 2011 financial results and provide a business update.

The conference call may be accessed by calling:

US Toll free:

866.510.9661

US Toll / International:

617.614.3452

Hong Kong toll free:

800.96.3844

HK Toll:

852.3002.1672

UK toll free:

08082347616

UK toll:

44.207.365.8426

South China toll free / China Telecom:

10 800 130 1713

North China toll free / China Netcom:

10 800 713 1756

China toll:

86 4008811630

Taiwan toll free:

00801148420

Passcode: 62860413

Please dial in approximately 10 minutes before the scheduled time of the call.

A replay of the conference call may be accessed by phone at the following numbers until Friday, March 30, 2012:

US Toll free:

888-286-8010

US Toll / International:

617-801-6888

Passcode: 79095518

A live webcast of the conference call and recording of the conference call will be available on the investor relations page of Camelot's website at www.camelotchina.com.

USE OF NON-GAAP FINANCIAL MEASURES

To supplement the unaudited consolidated financial statements presented in accordance with U.S. GAAP, Camelot uses the non-GAAP ("adjusted") financial measures of gross profit and margin, operating expenses, operating income and margin, net income attributable to Camelot Information Systems Inc. and margin, and diluted earnings per share and diluted earnings per ADS, which are adjusted from results based on U.S. GAAP to exclude share-based compensation, acquisition-related intangible amortization, and changes in fair value of contingent consideration. The non-GAAP financial measures are provided as additional information to help our investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of our current financial performance and prospects for the future. The non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for or superior to U.S. GAAP results. In addition, our calculation of the non-GAAP financial measures may differ from the calculations used by other companies, and therefore comparability may be limited.

STATEMENT REGARDING UNAUDITED FINANCIAL INFORMATION

The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on the Company's year-end financial statements, which could result in significant differences from this unaudited financial information.

ABOUT CAMELOT INFORMATION SYSTEMS INC.

Camelot is a leading domestic provider of enterprise application services and financial industry information technology ("IT") services in China, focusing on the high end of the IT value chain. The Company is the largest domestic provider of SAP-based Enterprise Resource Planning services in China as measured by 2010 revenue and by the number of SAP consultants as of December 31, 2010. Camelot also ranked as number-one in the banking testing market in 2010, according to IDC. Camelot also operates in other areas of the Asia Pacific region, including Taiwan and Japan. The Company provides services to a wide range of industries, including financial services, resources and energy, manufacturing and automobile, technology, as well as telecommunication, media and education.

SAFE HARBOR

This press release contains statements that may constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties that could cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's growth strategies, the Company's ability to attract and retain skilled professionals, the market of IT services in China, the wages of IT professionals, the Company's ability to serve, retain, and attract customers. Further information regarding these and other risks is included in Camelot's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. Camelot 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.

- financial tables follow -

CAMELOT INFORMATION SYSTEMS INC.
Condensed Consolidated Balance Sheets (Unaudited)
(U.S. Dollars in Thousands, Except per Share Data)

December 31,
2011

December 31,
2010

Assets

Current assets

Cash and cash equivalents

$57,128

$140,356

Term deposits

45,318

160

Restricted cash

4,626

6,932

Billed accounts receivable

47,834

43,072

Unbilled accounts receivable

87,212

62,624

Other current assets

19,456

14,073

Total current assets

261,574

267,217

Property and equipment, net

4,673

4,680

Goodwill and other intangible assets

46,248

67,860

Other long-term assets

2,542

1,708

Total assets

315,037

341,465

Liabilities and shareholders' equity

Current liabilities

Consideration payable in connection with business

acquisition and debt extinguishment

5,132

15,594

Other current liabilities

70,740

64,442

Total current liabilities

75,872

80,036

Contingent consideration in relation to acquisition

2,822

2,307

Other non-current liabilities

4,255

5,845

Total liabilities

82,949

88,188

Shareholders' equity (a)

232,088

253,277

Total liabilities and shareholders' equity

315,037

341,465

Note: (a) As of December 31, 2011, there were 182,762,475 ordinary shares issued and 177,621,367 shares outstanding.

CAMELOT INFORMATION SYSTEMS INC.
Condensed Consolidated Statements of Operations (Unaudited)
(U.S. Dollars in Thousands, Except per Share Data)

Three Months Ended Dec. 31,

Twelve Months Ended Dec. 31,

2011

2010

2011

2010

Net revenues

$59,690

$60,011

$227,120

$192,863

Cost of revenues(1)(2)

(43,787)

(39,688)

(167,520)

(130,862)

Gross profit

15,903

20,323

59,600

62,001

Selling and marketing(1)(2)

(4,319)

(2,790)

(20,263)

(11,138)

General and administrative(1)(2)

(12,180)

(5,843)

(45,033)

(21,605)

Research and development costs

(2,348)

(1,154)

(5,956)

(2,741)

Changes in fair value of contingent consideration for acquisition

(442)

(1,772)

(1,669)

(3,880)

Impairment of intangible assets

-

-

(8,552)

-

Impairment of goodwill

-

-

(21,457)

-

Total operating expense

(19,289)

(11,559)

(102,930)

(39,364)

Government subsidies

189

123

255

123

Income (Loss) from operations

(3,197)

8,887

(43,075)

22,760

Interest expense

(189)

(142)

(935)

(475)

Interest income

476

248

1,194

498

Income (Loss) before provisions for income tax

(2,910)

8,993

(42,816)

22,783

Income tax expense(benefit)

3,283

(1,645)

1,791

(4,100)

Net Income (loss)

373

7,348

(41,025)

18,683

Noncontrolling interest

88

(67)

201

(86)

Net Income (loss) attributable to
Camelot Information Systems Inc.
(3)

$461

$7,281

(40,824)

18,597

Earnings (loss) per share

Basic-ordinary shares

$0.00

$0.04

($0.23)

$0.12

Diluted-ordinary shares

$0.00

$0.04

($0.23)

$0.11

Earnings (loss) per ADS

Basic-ADSs

$0.01

$0.17

($0.91)

$0.48

Diluted-ADSs

$0.01

$0.15

($0.91)

$0.45

Weighted average shares outstanding

Basic-ordinary shares

177,212,430

176,294,644

179,954,056

128,663,415

Diluted-ordinary shares

185,938,452

189,929,087

179,954,056

165,258,030

Weighted average ADSs outstanding

Basic-ADSs

44,303,108

44,073,661

44,998,514

32,165,854

Diluted-ADSs

46,484,613

47,482,272

44,998,514

41,314,508

(1) Includes the following amounts of share-based compensation expenses for the periods indicated

Three Months Ended Dec. 31,

Twelve Months Ended Dec. 31,

2011

2010

2011

2010

Cost of revenues

$28

$28

$1,463

$136

Selling and marketing

825

156

7,427

354

General and administrative

159

532

10,476

2,434

Total share-based compensation expenses

$1,012

$716

$19,366

$2,924

(2) Includes the following amounts of amortization expense related to intangible assets acquired for business combination for the periods indicated

Three Months Ended Dec. 31,

Twelve Months Ended Dec. 31,

2011

2010

2011

2010

Cost of revenues

$211

$370

$1,594

$1,776

Selling and marketing

527

1,034

3,213

4,332

General and administrative

71

-

278

-

Total acquisition-related intangible amortization expenses

$809

$1,404

$5,085

$6,108

(3) The following table sets forth the reconciliation of our adjusted net income attributable to Camelot Information Systems Inc. to the U.S. GAAP net income attributable to Camelot Information Systems Inc.

Three Months Ended Dec. 31,

Twelve Months Ended Dec. 31,

2011

2010

2011

2010

Net income(Loss) attributable to Camelot Information Systems Inc. (U.S. GAAP)

$461

$7,281

($40,824)

$18,597

Share-based compensation

1,012

716

19,366

2,924

Acquisition-related intangible amortization

809

1,404

5,085

6,108

Changes in fair value of contingent consideration

442

1,772

1,669

3,880

Impairment of intangible assets

-

-

8,552

-

Impairment of goodwill

-

-

21,457

-

Total adjusted amounts

2,263

3,892

56,129

12,912

Adjusted net income (loss)attributable to Camelot Information Systems Inc.

$2,724

$11,173

$15,305

$31,509

CAMELOT INFORMATION SYSTEMS INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(U.S. Dollars in Thousands)

Three Months
Ended Dec. 31,

Twelve Months
Ended Dec. 31,

2011

2010

2011

2010

Cash flow from operating activities:

Net income (loss)

$373

$7,348

$(41,025)

$18,683

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation of property and equipment

269

291

1,087

962

Amortization of intangible assets

863

1,448

5,285

6,309

Deferred income taxes

(1,669)

(1,015)

(3,795)

(1,324)

Impairment of intangible assets

-

-

8,552

-

Impairment of goodwill

-

-

21,457

-

Provision for account receivable

529

(3)

3,246

15

Share-based compensation

1,012

716

19,366

2,924

Gains on disposal of property and equipment

11

-

20

(1)

Change in fair value of contingent consideration for acquisition

442

1,772

1,669

3,880

Changes in operating assets and liabilities:

Accounts receivable

9,743

(2,954)

(22,493)

(33,937)

Other assets

(4,229)

(3,028)

(4,509)

(4,475)

Accounts payable

731

3,742

(1,353)

7,500

Other liabilities

5,509

4,716

7,636

9,359

Net cash used in operating activities

13,584

13,033

(4,857)

9,895

Cash flows from investing activities:

Term deposits

(10,342)

(4)

(44,785)

139

Restricted cash

8,003

(4,797)

2,743

(4,365)

Repayment of loan to unrelated parties

13

303

13

248

Proceeds from disposal of property and equipment

11

855

29

29

Purchase of property and equipment

(125)

(1,437)

(789)

(1,439)

Purchase of intangible assets

-

63

(78)

-

Purchase of businesses, net of cash acquired

-

-

(11,430)

(8,359)

Net cash provided by (used in) investing activities

(2,440)

(5,017)

(54,297)

(13,747)

Cash flows from financing activities:

Proceeds from bank borrowing

1,031

9,794

8,863

11,691

Repayment of bank borrowing

(8,472)

(4,377)

(12,230)

(9,311)

Repurchase of ordinary shares

-

-

(14,415)

-

Proceeds from initial public offering

-

973

-

93,775

Payment of issuance cost related to initial public offering

-

(2,957)

(964)

(2,957)

Proceeds from follow-on offering, net of issuance cost

-

19,949

-

19,949

Payment of reimbursed issuance cost related to follow-on offering

(73)

(141)

(464)

(141)

Reimbursement of issuance cost related to follow-on offering

-

-

666

-

Payment of contingent consideration and deferred consideration for business acquisitions

(1,188)

(3)

(7,961)

(4,252)

Proceeds from stock option exercises

101

-

1,395

-

Net cash provided by (used in) financing activities

(8,601)

23,238

(25,110)

108,754

Effect of foreign exchange rate changes

298

110

1,036

1,634

Net increase (decrease) in cash and cash equivalents

2,841

31,364

(83,228)

106,536

Cash and cash equivalents, beginning of period

54,287

108,992

140,356

33,820

Cash and cash equivalents, end of period

$57,128

$140,356

$57,128

$140,356


CAMELOT INFORMATION SYSTEMS INC.
Reconciliations of Adjusted Financial Measures to Comparable GAAP Measures
(U.S. Dollars in Thousands, Except per Share Data and Percentages)

Three Months Ended December 31, 2011

Three Months Ended December 31, 2010

GAAP

Adjustments

Adjusted

GAAP

Adjustments

Adjusted

Cost of revenues

$43,787

$(239)

(a)

$43,548

$39,688

$(398)

(a)

$39,290

Gross profit

15,903

239

(a)

16,142

20,323

398

(a)

20,721

Operating expenses

19,289

(2,024)

(a)

17,265

11,559

(3,494)

(a)

8,065

Operating income (loss)

(3,197)

2,263

(a)

(934)

8,887

3,892

(a)

12,779

Net income (loss)

461

2,263

(a)(d)

2,724

7,281

3,892

(a)

11,173

Net gross margin

26.6%

0.4%

(b)

27.0%

33.9%

0.6%

(b)

34.5%

Net operating margin

(5.4%)

3.8%

(a)

(1.6%)

14.8%

6.5%

(a)

21.3%

Net margin

0.8%

3.8%

(a)

4.6%

12.1%

6.5%

(a)

18.6%

Diluted EPS

$0.00

$0.01

(c)

$0.01

$0.04

$0.02

(c)

$0.06

Twelve Months Ended December 31, 2011

Twelve Months Ended December 31, 2010

GAAP

Adjustments

Adjusted

GAAP

Adjustments

Adjusted

Cost of revenues

$167,520

$(3,057)

(a)

$164,463

$130,862

$(1,912)

(a)

$128,950

Gross profit

59,600

3,057

(a)

62,957

62,001

1,912

(a)

63,913

Operating expenses

102,930

(53,073)

(a)

49,857

39,364

(11,000)

(a)

28,364

Operating income (loss)

(43,075)

56,129

(a)

13,054

22,760

12,912

(a)

35,672

Net income (loss)

(40,824)

56,129

(a)(d)

15,305

18,597

12,912

(d)

31,509

Net gross margin

26.2%

1.4%

(b)

27.6%

32.1%

1.0%

(b)

33.1%

Net operating margin

(19.0%)

24.7%

(a)

5.7%

11.8%

6.7%

(a)

18.5%

Net margin

(18.0%)

24.7%

(a)

6.7%

9.6%

6.7%

(a)

16.3%

Diluted EPS

($0.23)

$0.42

(c)

$0.09

$0.11

$0.08

(c)

$0.19

Notes:

(a) The non-GAAP adjustments include share-based compensation expenses and amortization expense related to intangible assets acquired for business acquisition, where were presented in the notes (1) and (2) below Condensed Consolidated Statements of Operations (Unaudited) for the reconciliation process.

(b) Adjustment to exclude acquisition-related intangible assets amortization expense and share-based compensation recorded in cost of revenues, $239, $398, $3,057 and $1,912 for the three-month periods ended December 31, 2011 and 2010, and the twelve-month periods ended December 31, 2011 and 2010, respectively. In addition, adjustments for twelve-month periods ended December 31, 2011 exclude impairment of goodwill and intangible assets, amounting to $21,457 and $8,552, respectively.

(c) Adjusted diluted EPS is computed by dividing adjusted net income attributable to Camelot Information Systems Inc. by the weighted average number of diluted ordinary shares outstanding used in computing the GAAP diluted EPS for the respective periods.

(d) Net income refers to net income attributable to Camelot.


[1] For more information about the adjusted (i.e. non-GAAP) financial measures contained in this press release, please see "Use of Non-GAAP Financial Measures" below.

[2] One American Depositary Share ("ADS") is equivalent to four ordinary shares.

[3] Calculated by dividing average accounts receivable, net of deferred revenue, by rolling gross revenues before business tax and related surcharges, and multiplying by 360 days. Rolling gross revenues is for the 12 months ended December 31, 2011.

Company Contacts:

Camelot Information Systems Inc.

Mr. Franklin King, Interim Chief Financial Officer

Tel: +86 (10) 8201 9008

E-mail: investors@camelotchina.com

Ms. Jojo Guo, Investor Relations Manager

Tel: +1 (646) 371-6533

E-mail: investors@camelotchina.com

Investor Relations Contacts:

CCG Investor Relations

Mr. Crocker Coulson, President

Tel: +1 (646) 213-1915

E-mail: crocker.coulson@ccgir.com

Mr. John Harmon, CFA, Sr. Acct. Mgr.

Tel: +86 (10) 8573 1014 (Beijing)

E-mail: john.harmon@ccgir.com

Source: Camelot Information Systems Inc.
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