Jingwei International Reports Fourth Quarter and Full Year 2007 Financial Results

SHENZHEN, China--(BUSINESS WIRE)--Jingwei International Limited (OTC Bulletin Board: JNGW.OB) (“Jingwei”) today announced financial results for the three month and full year ending December 31, 2007. The Company plans to file its Annual Report on Form 10-K during this week.

Please note that for the purpose of comparison, the financial results for the periods ended December 31, 2007 and 2006 are presented on a pro forma basis as if the Company had acquired its primary Chinese operating company, Jingwei Communications, at the beginning of the respective periods. The Company acquired Jingwei Communications as a variable interest entity in February of 2007. Please refer to the attached table for a reconciliation of pro forma net income, which includes approximately $761,611 for the month of January 2007, as well as Jingwei Communications’ operating results for the full year of 2006.

Recent Financial Highlights Include:

• Revenue in 2007 increased 77% to $24.1 million from $13.6 million in 2006
• Operating income in 2007 increased 139% to $8.9 million from $3.7 million in 2006
• Net income in 2007 increased 122% to $8.4 million from $3.8 million in 2006
• Fourth quarter 2007 revenue increased 119% to $7.9 million in 2007 from $3.6 million in the fourth quarter of 2006, and up 52% from $5.2 million in the third quarter of 2007
• Fourth quarter 2007 operating income increased 860% to $3.2 million in 2007 from $331,000 in the fourth quarter of 2006, and compared to $1.7 million in the third quarter of 2007
• Fourth quarter 2007 net income increased 767% to $3.2 million from $373,000 in the fourth quarter of 2006, and up 150% from $1.3 million from the third quarter of 2007

Regis Kwong, Chief Executive Officer of Jingwei International, stated “The fourth quarter of 2007 was an exceptional quarter for Jingwei and we are extremely pleased with our financial results for the full year 2007. Our data mining services continued to build traction with new and existing clients, and our software services business remains a high margin revenue generator. One of our key goals in 2007 was to expand the data mining business outside of telecom and we successfully achieved this by delivering data mining and direct marketing services, including SMS text campaigns, for clients in the utility, real estate, financial and retail sectors.”

Three Months Ended December 31, 2007

Fourth quarter 2007 revenue increased 119% to $7.9 million from $3.6 million in the fourth quarter of 2006, and increased 52% from $5.2 million in the third quarter of 2007. Revenue from software services increased 71% to $4.0 million from the prior year’s period, and 345% from $0.9 million in the previous quarter, primarily due to extended testing periods for several large contracts. Data mining services continued to generate strong growth, up 82% year over year to $2.3 million, from $1.3 million in the prior year’s period and compared to $2.0 million in the third quarter of 2007.

Consumer electronics sales were $1.6 million compared to $2.3 million in third quarter of 2007. Jingwei opted to reduce low margin consumer electronic sales in the third and fourth quarters of 2007 and focus on higher margin revenue in the data mining and software businesses. Consumer electronic sales reflect the sales of mobile handsets identified by data mining capabilities. Beginning in 2008, the Company intends to record consumer electronic sales on a net basis, which could cause the segment’s net revenues to decline, but could have a positive impact on the Company’s gross margin.

Gross profit increased 326% to $4.6 million from $1.1 million in the fourth quarter of 2006. Gross margins were 58% compared to 30% in the prior year’s period, and compared to 46% in the third quarter of the year. The increase is due to the revenue mix shift into higher margin services, comparatively.

For the three months ended December 31, 2007, gross margin related to data mining revenue was approximately 65%, and gross margin related to software services was approximately 69%.

		Data mining			Consumer Electronic Sales			Software Services			Total
Revenue ($ million)		2.3			1.6			4.0			7.9
Cost of Sales ($ million)		0.8			1.3			1.2			3.3
Gross Profit ($ million)		1.5			0.3			2.8			4.6
Gross margin		65%			18%			69%			58%

Income from operations increased to $3.2 million from $331,000 in the fourth quarter of 2006, and increased 860% sequentially. Increase in operating expense is attributable to headcount increases during the year, as well as research and development investments to enhance the data mining platform.

Operating margin was 40%, compared to 9% in the fourth quarter of 2006 and 33% in the previous quarter. The increase in operating margin is due to the intentional shift away from consumer electronic sales in the fourth quarter, as well as the completion of several outstanding contracts in the software services business.

In the fourth quarter of 2007, Jingwei realized tax savings of $166,114 as a result of the government’s preferential tax policy as a high-technology company.

Net income increased $2.9 million to $3.2 million compared to $373,000 in the fourth quarter of 2006. Earnings per share for the fourth quarter of 2007 was $0.19, compared to $0.03 in the prior year’s period.

Full Year Ended December 31, 2007

For the full year ended December 31, 2007, revenue increased 77% to $24.1 million from $13.6 million in 2006. During this same time period, gross profit improved 114% to $11.8 million from $5.5 million. Please refer to the table below for a breakdown of gross margin performance for the full year 2007.

For the full year 2007, gross margin related to data mining revenue was approximately 71% and gross margin related to software services revenue was approximately 72%.

		Data mining			Consumer Electronic Sales			Software Services			Total
Revenue ($ million)		8.7			9.0			6.4			24.1
Cost of Sales ($ million)		2.4			8.1			1.8			12.3
Gross Profit ($ million)		6.2			1.0			4.6			11.8
Gross margin		71%			11%			72%			49%

Income from operations increased 139% to $9.0 million from $3.7 million in 2006, and net income improved 122% to $8.4 million, or $0.53 per diluted share, from $3.8 million, or $0.28 per diluted share in the prior year.

Balance Sheet

As of December 31, 2007, the Company had a cash balance of $10.8 million. Jingwei had working capital of approximately $24.2 million as of December 31, 2007. The Company had no long term debt as of December 31, 2007.

Business Update

• In February 2008, Jingwei entered into an agreement with Tsinghua University Graduate School, Shenzhen Campus (“GST”), to establish a joint data mining laboratory. The joint laboratory will focus on optimizing data acquisition, refreshing, cross reference, filtration and classification models and will develop technology to further enhance consumer targeting efforts. Over time, the Company intends to create the leading technology to access up-to-date, relevant customer data as well as the ability to execute effective and measurable advertising campaigns based on this customer data.
• Jingwei expects that its growth will be driven by the broad adoption of its data mining and data marketing services outside of the telecom sector, continued geographic expansion and potentially new areas of opportunity in the outdoor media market.
• On February 5, 2008, Jingwei announced its intention to acquire a leading Chinese outdoor advertising company, Henan Red Flag (“Red Flag”). The acquisition is expected to be accretive to earnings upon closing. The acquisition of Red Flag is part of Jingwei’s ongoing development and evolution of its consumer marketing platform. Red Flag specializes in digital outdoor media, specifically LED/LCD panels placed at bus stands, operating roughly 2,000 outdoor advertising panels, of which 1,000 are LED displays, throughout the capital city of Zhengzhou. Red Flag’s strong market position and unique capabilities will complement Jingwei’s existing data mining and targeted marketing solutions, enabling Jingwei to provide more comprehensive services to new and existing customers.

Conference Call

The Company will hold a conference call at 8:00 am ET to review current business initiatives. Listeners may access the call by dialing 1-800-762-8795 or 1-480-248-5085 for international callers. A replay of the call will be available through March 20, 2008. Listeners may access the replay by dialing 1-800-406-7325 or 1-303-590-3030 for international callers, access code: 3855246.

About Jingwei International

Jingwei International (“Jingwei”) is one of the leading providers of data mining and customer relationship marketing services in China. With a customer database of over 300 million Chinese consumers, Jingwei enables leading Chinese companies to reach their target audience. The Company’s services include market segmentation, customer trend and churn analysis, fraud detection and direct marketing services such as telemarketing and WVAS. The Company also operates a software services business, which provides a broad range of billing systems, provisioning solutions, decision support and customer relationship management systems for China’s leading mobile telecommunication carriers. The software services business strengthens sales opportunities for Jingwei’s higher margin data mining platform, and allows the Company to enhance its customer database. Jingwei plans to evolve into an integrated marketing platform with targeted outbound sales campaigns via mobile phone advertising, and customer service/order fulfillment at call centers throughout the country.

Safe Harbor Statement

Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding our future plans, objectives or performance. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.

Jingwei International Limited And Subsidiaries
Reconciliation of Proforma Net Income (loss)
For The Three and Twelve Months Ended December 31, 2007
		Three Months			Three Months				Twelve Months				Twelve Months
		Ended December 31			Ended December 31				Ended December 31				Ended December 31
		2007			2006				2007				2006
		(Unaudited)			(Unaudited)				(Unaudited)				(Unaudited)
Proforma Net Income		$	3,235,718		$	373,361			$	8,422,521			$	3,797,588
Effect of Acquisition
	Loss (Income) of VIE Prior to Acquisition		-			(374,480	)			(761,611	)			(3,799,905	)
Net Income (loss)		$	3,235,718		$	(1,119	)		$	7,660,910			$	(2,317	)

Jingwei International Limited And Subsidiaries
Pro Forma Consolidated Statements of Income And Comprehensive Income
		Quarter Ended								Year Ended
		December 31,								December 31,
			2007				2006				2007				2006
Sales		$	7,905,589			$	3,605,495			$	24,102,168			$	13,640,833
Cost of sales			(3,306,757	)			(2,526,372	)			(12,296,404	)			(8,115,977	)
Gross profit			4,598,832				1,079,123				11,805,764				5,524,856
Expenses
Selling, General and Administrative expenses			(827,446	)			(949,107	)			(1,943,712	)			(1,610,680	)
Research and development costs			(591,813	)			201,219				(913,677	)			(171,459	)
Total Expenses			(1,419,259	)			(747,888	)			(2,857,389	)			(1,782,139	)
Income (loss) from operations			3,179,573				331,235				8,948,375				3,742,717
Other income (expenses)
Subsidy income			100,760				34,379				191,956				44,149
Interest income			10,751				1,207				159,437				2,621
Finance costs			(3,627	)			(832	)			(51,585	)			(832	)
Other income (expense)			(217,853	)			162,924				(145,277	)			164,487
Total other income			(109,969	)			197,678				154,531				210,425
Income (loss) from operations & other income			3,069,604				528,913				9,102,906				3,953,142
Income (loss) before income taxes			3,069,604				528,913				9,102,906				3,953,142
Income taxes			166,114				(155,552	)			(680,385	)			(155,554	)
Net income (loss)		$	3,235,718			$	373,361			$	8,422,521			$	3,797,588
Other Comprehensive Income
Foreign Currency Translation gain			906,551				47,303				1,494,996				189,212
Comprehensive Income		$	4,142,269			$	420,664			$	9,917,517			$	3,986,800
Earnings Per Share (Basic)			0.19				0.03				0.53				0.28
Earnings Per Share (Diluted)			0.19				0.03				0.53				0.28
Weighted Average Common Shares Outstanding
Basic			17,049,000				13,654,000				15,811,918				13,654,000
Diluted			17,292,399				13,654,000				15,972,335				13,654,000

Jingwei International Limited And Subsidiaries
Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31,2007
And The Period May 15, 2006 (Inception) Through December 31, 2006
		Three Months Ended December 31				Three Months Ended December 31				Twelve Months Ended December 31				May 15, 2006 through December 31
			2007				2006				2007				2006
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Sales		$	7,905,591							$	23,007,491			$	-
Cost of sales			(3,306,758	)							(11,996,305	)			-
Gross profit			4,598,833								11,011,186				-
Expenses
Selling, General and Administrative expenses			(827,446	)			(1,119	)			(1,802,747	)			(2,317	)
Research and development costs			(591,813	)							(907,281	)			-
Total Expenses			(1,419,259	)			(1,119	)			(2,710,028	)			(2,317	)
Income (loss) from operations			3,179,574				(1,119	)			8,301,158