INTN Intac Intl (MM)

INTAC International Announces Continued Strong Earnings in the Third Quarter of 2004 HONG KONG, Nov. 15 /PRNewswire-FirstCall/ -- INTAC International, Inc. (NASDAQ:INTN) (FSE: WKN 805768), a provider of a full range of career development services to students in China through Beijing Intac Purun Educational Development Ltd. ("Intac Purun"), its joint venture with China's Ministry of Education, today announced continued strong earnings for the three and nine months ended September 30, 2004. Revenues for the three and nine months ended September 30, 2004 were $33.3 million and $64.5 million, respectively, compared to $32.3 million and $66.5 million for the same periods last year. The majority of the Company's current revenues are generated by the handset distribution business. Intac Purun has currently entered into several contracts to provide career development and guidance type services. Revenues from these contracts must be deferred and recognized over the life of the contract. As of September 30, 2004, $406,000 of revenue related to these contracts has been deferred and will be recognized over the contract life. Gross profit increased by $1.1 million to $2.4 million for the three months ended September 30, 2004 from $1.3 million for the same quarter in 2003. Gross profit increased by $2.5 million to $5.1 million for the nine months ended September 30, 2004 from $2.6 million for the same period in 2003. The gross margin increased by 3.3% to 7.1% for the three months ended September 30, 2004 from 3.8% for the same quarter in 2003. The gross margin increased by 3.9% to 7.8% for the nine months ended September 30, 2004 from 3.9% for the same period in 2003. Income from operations for the three months ended September 30, 2004 was $624,000 as compared to $213,000 for the three months ended September 30, 2003. The income from operations for the nine months ended September 30, 2004 was $788,000 as compared to the loss of ($73,000) for the nine months ended September 30, 2003. Income (loss) before income taxes for the three and nine months ended September 30, 2004 was income of $822,000 and $1.3 million, respectively, compared to income of $211,000 and a loss of ($57,000) for the same periods last year. Net income increased by $445,000 to $620,000 ($0.03 per share) for the three months ended September 30, 2004 from $175,000 ($0.01 per share) for the same quarter in 2003. Net income increased by $1.1 million to $974,000 ($0.05 per share) for the nine months ended September 30, 2004 from a net loss of ($93,000) ($0.00 per share) for the same period in 2003. The increase in revenues for the three months ended September 30, 2004 was accomplished despite concentrating on higher margin wireless handset products for profitability as opposed to sales volume. The decrease for the nine months ended September 30, 2004 is principally due to lower wireless handset unit sales earlier in the year while concentrating on higher margin products. We continue to focus our time, resources and management on Intac Purun, our career development joint venture with China's Ministry of Education, and its Internet portals, phrbank.com and joyba.com. Phrbank.com (http://www.phrbank.com/ ) integrates recruiting and professional training services in China for large companies with their increasing demands for new employees. The redirected emphasis for joyba.com (http://www.joyba.com/ ) is lifestyle and entertainment information for Chinese students. We presently have approximately 230 employees, representing approximately 90% of our workforce, dedicated to our career development business in China. The improvement in profitability in the third quarter of 2004 is primarily attributable to greatly improved gross margins without a proportionate increase in operating expenses. Our income from operations for the three and nine months September 30, 2004 included net operating costs of approximately $682,000 and $1.3 million, respectively, relating to the Internet portal business. Excluding these additional costs relating to Intac Purun, operating results would have improved even further in comparison to the same periods in 2003. "We are now signing contracts relating to our full-range of career development and guidance services offered through Intac Purun," said Wei Zhou, Chairman and CEO of INTAC. "With the introduction of phrbank.com, we believe that the prospects for rapid growth are tremendously enhanced." "We continue to experience tangible expansion and growth in our career development and guidance business while at the same time being able to support this business with profits from our distribution business," said J. David Darnell, Senior Vice President and Chief Financial Officer. "With contract service revenue from Intac Purun being deferred and recognized over future periods, the true profitability and cash flow from this business segment is not apparent without taking this into consideration." The Company's annual report on Form 10-KSB for the year ended December 31, 2003 and quarterly report on Form 10-Q for the quarter ended June 30, 2004 may be viewed at the SEC's website http://www.sec.gov/ . About INTAC International, Inc. INTAC International, Inc. is focused on the exploitation of strategic business opportunities available in China and the Asia-Pacific Rim. INTAC is refocusing its business plan from the traditional distribution of premium brand wireless handsets to Beijing Intac Purun Educational Development Ltd., its new Internet portal business in mainland China. INTAC maintains offices in China (Hong Kong, Beijing and Tianjin), Germany (Frankfurt) and the United States (Dallas). Forward-Looking Statements This press release contains certain "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements expressed or implied by such forward-looking statements to differ materially from those projected or implied. Factors that could cause or contribute to such differences include, among other things: changes in general business conditions; the impact of competition in our industry, especially in the Asia- Pacific Rim; the fact that we are an early stage company with an unproven business model; our need for additional working capital, particularly to the extent that we are able to locate a suitable business opportunity; the added expense structure assumed by us as a U.S. public company; political and economic events and conditions in jurisdictions in which we operate; PRC Internet laws and regulations that are unclear and will likely change in the near future; restrictions on foreign investment in the PRC Internet sector that are imposed by the PRC government; the PRC government that may prevent us from distributing; regulation and censorship of information distribution in China which may adversely affect our business; political and economic policies of the PRC government; the risk of the loss of the agreements, or the exclusivity terms, with the Education Management Information Center; the high cost of Internet access that may limit the growth of the Internet in China and impede our growth; advertising and e-commerce customers that have only limited experience using the Internet for advertising or commerce purposes; the acceptance of the Internet as a commerce platform in China which depends on the resolution of problems relating to fulfillment and electronic payment; concerns about security of e-commerce transactions and confidentiality of information on the Internet that may increase our costs, reduce the use of our Internet portal and impede our growth; our network operations that may be vulnerable to hacking, viruses and other disruptions, which may make our products and services less attractive and reliable; changes in interest rates, foreign currency fluctuations and capital market conditions; and other factors including those detailed under the heading "Business Risk Factors" and elsewhere in the Company's annual report on Form 10-KSB for the year ended December 31, 2003 and quarterly report on Form 10-Q for the quarter ended June 30, 2004, as filed with the Securities and Exchange Commission. We disclaim any intention or obligation to revise any forward-looking statements whether as a result of new information, future events or otherwise. INTAC undertakes no obligation to update any forward-looking statements made in this media release. Contact: J. David Darnell, Senior Vice President and Chief Financial Officer, 469-916-9891, for further information. DATASOURCE: INTAC International, Inc. CONTACT: J. David Darnell, Senior Vice President and Chief Financial Officer of INTAC International, Inc., +1-469-916-9891 Web site: http://www.sec.gov/ Web site: http://www.intac.cn/ http://www.phrbank.com/ http://www.joyba.com/

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