China TransInfo Anticipates Robust Growth for 2010

[newsroom]

BEIJING, March 22 - China TransInfo Technology Corp., (NASDAQ:CTFO) , ("China TransInfo" or "the Company"), a leading provider of public transportation information systems technology and comprehensive solutions in the People's Republic of China ("PRC"), today reported its unaudited financial results for the fourth quarter and year ended December 31, 2009.

Fourth Quarter 2009 Highlights
-- Revenue increased 166.1% year-over-year to $28.4 million
-- Gross profit expanded 64.9% year-over-year to $10.0 million
-- Operating income grew 26.1% year-over-year to $5.1 million
-- Adjusted net income increased 22.3% year-over-year to $5.1 million, or $0.23 per fully diluted share
-- Appointed BDO Guangdong Dahua Delu as New Independent Auditor
-- Launched three new real-time traffic mobile phone applications and expanded real-time traffic application coverage to Shenzhen, Tianjin
and Changzhou
-- Awarded a provincial highway toll settlement and billing system contract in Shanxi Province valued at approximately RMB 26 million, or approximately USD $3.8 million
-- Awarded an intelligent transportation system contract in Hubei Province valued at approximately RMB 114 million, or approximately USD $16.7 million

Fiscal 2009 Highlights
-- Revenue increased 116.8% year-over-year to a record $63.7 million
-- Gross profit expanded 53.8% year-over-year to $25.4 million
-- Operating income grew 20.0% year-over-year to $13.7 million
-- Adjusted net income increased 19.7% to $13.6 million, or $0.60 per
fully diluted share
-- As of December 31, 2009, cash and cash equivalents totaled $27.4
million


"During 2009, we generated record revenue and earnings results, solidified our industry leading market position with numerous successful new product launches, and completed a highly accretive acquisition," commented Mr. Shudong Xia, Chief Executive Officer of China TransInfo. "Our acquisition of UNISITS, a leader in China's intelligent transportation systems industry, marked a major milestone for us in 2009, as we now leverage UNISITS' technology, market share and customer relationships to further drive new market opportunities."

Unaudited Fourth Quarter 2009 Results

For the quarter ended December 31, 2009, revenue increased 166.1% to $28.4 million, as compared to $10.7 million in the comparable period of 2008. Products and applications in the transportation business sector accounted for 91.7% of total revenue in the quarter with the remainder derived from the digital city, land & resources, and other sectors.

The Company's gross profit increased 64.9% to $10.0 million in the fourth quarter of 2009, compared to $6.1 million in the same period of 2008. Gross margin was 35.2%, compared to 56.9% during the same period of 2008. The decrease in gross margin resulted from the consolidation of UNISITS' financials into those of China TransInfo, since UNISITS' business involves more hardware components, which have much lower margin than does the Company's legacy transportation business.

Selling, general and administrative expenses were $4.9 million, as compared to $2.0 million in the fourth quarter of 2008. The increase was primarily due to the Company's expansion initiatives, including higher marketing, staffing, and professional fees.

Operating income increased 26.1% to $5.1 million, as compared to $4.1 million in the fourth quarter of 2008.

Other income was $1.4 million, as compared to $0.2 million in the fourth quarter of 2008. The significant increase is mostly attributable to a $1.4 million increase in governmental subsidy income.

Net income attributable to the Company increased 15.3% to $4.8 million, or $0.21 per fully diluted share, as compared to net income of $4.2 million, or $0.20 per fully diluted share, in the same period in 2008. Adjusted net income attributable to the Company excluding non-cash stock based compensation expense and amortization expense of intangibles from acquisitions increased 22.3% to $5.1 million, or $0.23 per fully diluted share, as compared to $4.2 million, or $0.20 per fully diluted share, in the comparable period of 2008. Weighted average fully diluted shares outstanding increased to 22.5 million shares in the fourth quarter of 2009 from 20.9 million shares in the fourth quarter of 2008.

Unaudited Full Year 2009 Results

Revenue for 2009 increased 116.8% to $63.7 million, as compared to $29.4 million in 2008. Gross profit expanded 53.8% to $25.4 million from $16.5 million in 2008. Operating income grew 20.0% to $13.7 million from $11.4 million in 2008. Net income attributable to the Company increased 17.0% to $13.0 million, or $0.58 per fully diluted share, as compared to net income of $11.1 million, or $0.53 per fully diluted share, in 2008. Adjusted net income attributable to the Company excluding non-cash expenses increased 19.7% to $13.6 million, or $0.60 per fully diluted share, as compared to $11.3 million, or $0.54 per fully diluted share, in 2008. Weighted average fully diluted shares outstanding increased to 22.5 million shares in 2009 from 20.9 million shares in 2008.

Financial Condition

As of December 31, 2009, cash and cash equivalents totaled $27.4 million, up from $16.1 million at December 31, 2008. Working capital increased to $44.4 million, as compared to $32.7 million at the end of 2008. Stockholders' equity was $77.8 million, as compared to $47.6 million at the end of 2008. Cash flow from operating activities increased 251.7% to $8.8 million from $2.5 million in 2008, primarily as a result of the increase in sales and net profit for 2009 as well as the Company receiving customer payments on some contracts ahead of schedule.

Recent Events

On March 22, 2010, the Company and the Company's variable interest entity, China TransInfo Technology Group Co., Ltd. (the "Group Company") entered into equity transfer agreements (the "Equity Transfer Agreements") with several individual shareholders (the "Transferors") of Beijing UNISITS Technology Co. Ltd. ("UNISITS"), pursuant to which the Group Company acquired 30.85% equity interest in UNISITS from the Transferors. Pursuant to the Equity Transfer Agreements, the Group Company purchased approximately 16.23 million shares of UNISITS from the Transferors in exchange for RMB 4.41 million (approximately USD $0.65 million) in cash (the "Cash Consideration"), 40% of which is payable within seven days after the effective date of the Equity Transfer Agreements, and approximately 1.16 million shares of the Company's common stock, which are issuable within 30 days of the effective date of the Equity Transfer Agreements. The Equity Transfer Agreements contain "make good" provisions, under which the Transferors agree to deposit a total of 697,162 shares of the Company's common stock with an escrow agent designated by the Company that they will receive as partial consideration for the acquisition. Specifically, if UNISITS' 2010 after-tax net income under Chinese GAAP is less than RMB 37.50 million (approximately USD $5.50 million) or its 2011 after-tax net income under Chinese GAAP is less than RMB 46.88 million (approximately USD $6.86 million), then 50% of the shares of the Company's common stock deposited by the Transferors in escrow will be returned to the Company for cancellation for each applicable year. In addition, for each applicable year as described above, the Company will not be required to pay the remainder of the Cash Consideration, which represents RMB 1.323 million (approximately USD $0.19 million), or 30% of the total Cash Consideration, per year if UNISITS fails to meet the respective performance targets.

On February 24, 2010, the Company issued and sold 1,564,945 shares of its common stock at a price of $6.39 per share to SAIF Partners III L.P. for an aggregate purchase price of $10 million. The Company intends to use the net proceeds from the offering for general corporate purposes, expansion of current business development and potential acquisitions.

On January 25, 2010, China TransInfo announced that the Company was awarded an intelligent transportation system contract in Zhejiang Province valued at approximately RMB 156 million, or approximately USD $22.9 million, through its VIE subsidiary Beijing UNISITS Technology Co., Ltd. ("UNISITS").

On January 21, 2010, the Company announced that it was ranked 11th on the 2010 Forbes China list of small-to-medium sized Chinese companies with the most potential. China TransInfo was the only transportation information technology company selected.

Business Outlook

"We remain very confident that intelligent transportation systems, our core business, will provide us with strong prospects in 2010, given China's extensive expressway construction plans, rapidly expanding automobile market, and growing traffic density," commented Mr. Xia. "As a result, we believe that the Company will continue to generate organic growth from winning follow-on contracts from existing clients, while bringing in new revenue sources from strategic acquisition opportunities. In addition, by leveraging UNISITS' large presence in China's expressway market with our leadership in the urban transportation market, we expect to further penetrate China's inter-city information services segment, which offers a significantly larger market for our products and services."

For 2010, the Company expects revenues to increase to approximately $120 million and adjusted net income attributable to the Company excluding non-cash expenses to be approximately $18 million. GAAP net income attributable to the Company is projected to be approximately $16 million.