China Security & Surveillance Technology Reports Fourth Quarter and Full Year 2008 Financial Results

SHENZHEN, China, March 5 /PRNewswire-Asia/ -- -- 4Q08 Revenue Increases 70.5% to $143.5 Million -- 4Q08 Adjusted Net Income Increases 47.1% to $23.7 Million -- 4Q08 Adjusted EPS Increases 28.9% to $0.49 -- Full Year 2008 Revenue...


SHENZHEN, China, March 5 /PRNewswire-Asia/ -- -- 4Q08 Revenue Increases 70.5% to $143.5 Million -- 4Q08 Adjusted Net Income Increases 47.1% to $23.7 Million -- 4Q08 Adjusted EPS Increases 28.9% to $0.49 -- Full Year 2008 Revenue Increases 77.9% to $427.4 Million -- Full Year Adjusted Net Income Increases 62.1% to $75.6 Million -- Full Year Adjusted EPS Increases 39.2% to $1.67

China Security & Surveillance Technology, Inc. ("China Security" or "CSST" or the "Company") (NYSE: CSR) (Nasdaq Dubai: CSR), a leading provider of digital surveillance technology in the PRC, today reported its financial results for the fourth quarter and full year ending December 31, 2008 .

Fourth Quarter 2008

Fourth quarter 2008 revenue increased 70.5% to $143.5 million, from $84.2 million in the fourth quarter of 2007, as demand for security solutions remains strong in both the government and private sectors. Organic revenue was approximately $124.3 million, or 86.6% of total revenue, while revenue from acquisitions was approximately $19 million or 13.4% of total revenue. As a result, organic revenues grew by $55.0 million, or 79.4% from $69.3 million in the same period of 2007.

In the fourth quarter, gross profits increased $11.0 million, or 44.5%, to $35.8 million, versus $24.8 million in the prior year's fourth quarter. However, in this challenging environment, more corporate customers insisted on price discounts, and therefore, gross margin decreased to 25.0%, from 29.5% for the same period of 2007. Correspondingly, operating margin decreased to 11.7%, from 16.1% a year ago, while net income decreased to $11.2 million from $14.8 million in the same quarter last year.

GAAP earnings per diluted share for the fourth quarter of 2008 was $0.23, as compared to $0.35 for the fourth quarter of 2007. GAAP results include: (1) approximately $5.6 million, or $0.12 per diluted share, of non-cash expense related to the redemption accretion on convertible notes; (2) approximately $2.7 million, or $0.06 per diluted share, of non-cash expense related to depreciation and amortization of long-lived assets due to our acquisition of subsidiaries, and (3) approximately $4.2 million, or $0.09 per diluted share, of non-cash expense related to employee stock compensation recognized pursuant to SFAS 123 (R).

Excluding these non-cash expenses, adjusted net income grew 47.1% to $23.7 million, versus $16.1 million in the fourth quarter of 2007. Adjusted earnings per diluted share was $0.49, a 28.9% increase from $0.38 per diluted share in the fourth quarter of 2007 (see ''About Non-GAAP Financial Measures" toward the end of this release). Diluted share count increased 14% to $48.2 million from $42.2 million in the fourth quarter of 2007.

The Company's cash position at the end of 2008 was $47.8 million as compared to $65.9 million at the end of the third quarter. Working capital increased to $231.0 million, versus $207.1 million at the end of the previous quarter, and total debt was $163.1 million, up from $157.6 million at the end of the third quarter of 2008.

Mr. Guo Shen Tu , Chief Executive Officer of China Security, commented, ''In the fourth quarter, we continued to see significant demand from government Safe-City contracts, and we continue to have excellent success in winning ever larger contracts, due to our strong brand and comprehensive product and services offerings. While our pricing and profitability remain firm in the government sector, we nevertheless experienced price erosions in our corporate segment, due to higher emphasis on cost controls by many of our corporate customers. As such, while we continue to project healthy demand and revenue growth over the next 12 months, we are focused on further integrating our operations and generating greater synergies across our portfolio of technologies, products, and subsidiaries. We are also focused on increasing our manufacturing and administrative efficiencies through targeted cost savings initiatives.''

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