China Security & Surveillance Technology Reports Third Quarter 2007 Financial Results

SHENZHEN, China , Nov. 12 /Xinhua-PRNewswire/ -- China Security & Surveillance Technology, Inc. (" China Security" or the "Company") (NYSE: CSR), a leading provider of digital surveillance technology in China , today reported its financial...


The Company's cash position in the third quarter was $79.8 million, down from $91.8 million at the end of the second quarter. Total debt at the end of the third quarter of 2007 was $130 million.

Financial Outlook

For the fourth quarter of 2007, the Company expects to achieve revenues between $80-85 million, including revenues from completed acquisitions. Excluding the non-cash charges related to the redemption amount payable on convertible notes, the accrual of performance based employee compensation and the amortization of intangible assets related to the Company's recent acquisitions, the Company expects to achieve an adjusted net income of at least $14 million in the fourth quarter of 2007.

The Company estimates that non-cash interest expenses associated with the redemption amount payable on convertible notes, the accrual of performance based employee compensation and the amortization of intangible assets related to the Company's recent acquisitions for the fourth quarter, will be approximately $4.4 million, $2.8 million and $1.7 million respectively. Non- cash expense related to the accrual of amounts payable on the offsetting convertible notes should total approximately $13 million for 2007 and approximately $17.6 million in 2008.

For the full year 2008, the Company targets to achieve revenues between $350-$370 million. Full year 2008 revenue estimates include contributions from completed acquisitions and eight announced letter of intents to date. The Company expects the manufacturing and systems integration businesses to continue to be the main revenue contributors in 2008. In addition, the Company expects to see an initial pick-up of business from operating services and international products during 2008.

Excluding the non-cash charges related to the redemption amount payable on convertible notes, the accrual of performance based employee compensation and the amortization of intangible assets related to the Company's recent acquisitions, the Company expects to achieve an adjusted net income of $65-$75 million and adjusted diluted earnings per share of $1.50 to $1.75.

Mr. Tu concluded, "We are excited about our opportunities in the security services market. Our three core operating divisions ¨C manufacturing, security systems and installation, and operating services are all showing signs of contributing significantly to future growth. We have shown substantial traction in the manufacturing and systems integration business, and with our recent first contract win for the operating services business, we are optimistic that the operating services division will also become a key component of our business. In the coming year, we plan to introduce an international product division, which will help non-Chinese security solutions providers enter the Chinese market by leveraging our distribution and sales network. This will also allow us the opportunity to introduce international providers' products into our total solutions. We believe that the new operating services division and the burgeoning international product division will not only begin to shift our revenue model from one strictly of project work to recurring revenue, it will also ensure continued growth of our business in China .

We believe we have built an infrastructure to optimally grow our security and surveillance business and we expect to continue to be a market leader and consolidator in our markets. Demand for our products and services continues to be strong and the healthy size of our new contracts is evidence of market confidence in our ability to deliver solutions. We believe we have put in place the best possible strategy for growing internally and through strategic acquisitions in order to position China Security as the leader in providing turnkey security solutions. Our ubiquitous brand name has made our products and services a natural choice for our customers in China . We expect that as the size of contracts continues to grow and we are increasing able to provide a full spectrum of security solutions to our customers, the benefits of our strategy will be reflected in our financial performance."