Acorn International Reports Fourth Quarter and Full Year 2009 Financial Results
SHANGHAI, March 12 /PRNewswire-Asia-FirstCall/ -- Acorn International, Inc. (NYSE: ATV) ("Acorn" or the "Company"), a leading integrated multi-platform marketing company in China engaged in developing, promoting and selling consumer products and services through an extensive distribution network, today announced its unaudited financial results for the quarter and full year ended December 31, 2009.
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Highlights for the Fourth Quarter 2009:
-- Net revenues were $59.7 million, an increase of 2.6% compared to
$58.2 million in the fourth quarter of 2008.
-- Gross profit was $28.9 million, an increase of 20.7% compared to
$23.9 million in the fourth quarter of 2008.
-- Gross margin was 48.3%, compared to 41.1% in the same period of 2008.
-- Operating loss was $14.7 million, compared to an operating loss of
$12.3 million in the fourth quarter of 2008. Excluding share-based
compensation expenses and impairment of intangible assets (non-GAAP),
income from operations for the fourth quarter of 2009 was $0.6 million
compared to an operating loss of $12.6 million for the same period last
year.
-- Impairment losses of $15.2 million was recognized for the intangibles
assets from the acquisition of Yiyang Yukang, which was primarily
caused by (i) overall under-performance in the mobile handsets business
and (ii) a change in business strategy to launching proprietary "Uking"
brand and changes incurred in the acquired distribution network.
-- Net loss from continuing operations was $10.0 million compared to a net
loss of $10.4 million for the fourth quarter of 2008. After eliminating
the effects of share-based compensation expenses, a non-cash charge for
the impairment of intangible assets and a reversal of deferred tax
liability of $3.3 million due to the Yiyang Yukang intangible assets
impairment charge (non-GAAP), net income from continuing operations was
$2.0 million in the fourth quarter of 2009 compared to a non-GAAP net
loss of $10.7 million in the same period last year.
-- Net loss attributable to Acorn was $10.1 million compared to a
$9.4 million net loss for the fourth quarter of 2008.
-- Share-based compensation expenses were $7,873 for the fourth quarter of
2009, compared to a net negative $0.3 million for the same period last
year.
-- Diluted loss per American Depositary Shares ("ADS") from continuing
operations was $0.34. Excluding share-based compensation and non-cash
impairment expenses and related deferred tax benefits (non-GAAP),
diluted income per ADS from continuing operations was $0.06.
Highlights for Full Year 2009:
-- Net revenues were $287.6 million, an increase of 22.8% compared to
$234.1 million for full year 2008.
-- Gross profit was $137.0 million, an increase of 20.7% compared to
$113.5 million for full year 2008.
-- Gross margin was 47.6%, compared to 48.5% in for full year 2008.
-- Operating loss was $7.5 million (including an impairment of
$15.2 million for intangible assets recognized from the acquisition of
Yiyang Yukang), compared to an operating loss of $29.6 million for full
year 2008 (including an impairment of goodwill and intangible assets of
$8.7 million). After eliminating share-based compensation expenses and
impairment losses on goodwill and intangible assets (non-GAAP),
operating income for 2009 was $9.6 million, compared to an operating
loss of $17.6 million for 2008.
-- Net loss from continuing operations was $2.7 million compared to a
$30.2 million net loss for full year 2008. After eliminating the
effects of share-based compensation expenses, a non-cash charge for the
impairment of goodwill and intangible assets and a reversal of deferred
tax liability due to the Yiyang Yukang intangible assets impairment
charge (non-GAAP), net income from continuing operations was
$11.1 million in 2009 compared to an $18.3 million net loss in 2008.
-- Net income attributable to Acorn was $12.4 million compared to a
$25.6 million net loss for full year 2008.
-- Share-based compensation expenses were $1.8 million for full year 2009,
compared to $3.3 million for full year 2008.
-- Diluted loss per ADS from continuing operations was $0.08. Excluding
share-based compensation, non-cash impairment expenses and related
deferred tax benefits (non-GAAP), diluted income per ADS from
continuing operations was $0.38.
"2009 marked a significant turnaround for our business as we grew top line sales by 22.8% to reach $287.6 million and achieved $11.1 million in non-GAAP net income from continuing operations. The healthy turnaround was largely attributed to the successful implementation of our renewed focus to grow our proprietary branded products and expand the proportion of our non-TV direct sales business such as outbound calls, e-commerce, catalog and third party bank channel sales. While our mobile phone sales tracked slower than expected, we reported strong performance across our other major product lines. Ozing and Meijin both reported double digit growth in 2009 while sales of cosmetics products as a featured product category grew quarter over quarter and contributed favorably towards our profit. Finally, we made a positive breakthrough in autocare products as we began cooperation with two internationally acclaimed products in China in the fourth quarter 2009," said Mr. James Hu, Chairman and CEO of Acorn. "Our financial achievements in 2009 testify as to our resilience in an intensely competitive industry and our prospects for continued growth in 2010."
Business Highlights for the Fourth Quarter of 2009:
-- Cosmetics sales accounted for a larger percentage of our total sales
for the fourth quarter 2009 compared with same period last year.
Cosmetics sales reached $14.5 million, accounting for 24.2% of our
total sales, compared to $4.7 million, or 7.6% of total sales in the
same period in 2008. The growth was mainly due to the strong
performance of the Company's Softto branded hair treatment shampoo
product, launched in the third quarter 2009.
-- Autocare products were also a major revenue contributor in the fourth
quarter 2009. Sales from autocare products reached $5.6 million, or
9.4% of total sales, compared to $1.1 million, or 1.8% of total sales
in the same period in 2008. The growth primarily driven by the launch
of Austin and Quixx branded products, both of which are used for paint
protection and scratch removal. We introduced our Austin product,
licensed from the United Kingdom, in November 2009 and our Quixx
product, developed in and licensed from Germany, in December 2009.
-- Non-TV direct sales accounted for 46% of total direct sales for the
fourth quarter of 2009 compared with 29% for the same period last year.
The Company's third-party bank channel sales as part of non-TV direct
sales revenues continued to expand from the third quarter of 2009. With
a total of 26 bank partners as of December 31, 2009 (compared to 12 as
of December 31, 2008), revenue generated from third-party bank channel
sales was $10.6 million in the fourth quarter of 2009, an increase of
71.0% from $6.2 million in the same period last year. The Company will
continue to expand its non-TV direct sales revenues, including its
third party bank channel sales, e-commerce, outbound calls and catalog
business.
Financial Results Highlights for the Fourth Quarter of 2009:
For the fourth quarter of 2009, total net revenues grew 2.6% to $59.7 million from $58.2 million for the fourth quarter of 2008.
Direct sales contributed 71.4% to total net revenue, or $42.6 million, and decreased 8.3% from $46.5 million for the fourth quarter of 2008. Gains from increased cosmetic sales and recently introduced autocare products were offset by decreased mobile phone and posture correction product sales.
Distribution sales net revenue increased 45.6% year-over-year to $17.1 million from $11.7 million in the fourth quarter of 2008, primarily reflecting strong sales of the Company's Ozing electronic learning products and consolidation of Yiyang Yukang's mobile handset sales into the Company's financial results.
The table below summarizes the gross revenues from the three best selling product categories for the direct sales platform, distribution network and total direct and distribution sales, respectively:
Three Months Ended December 31, 2009
(in US dollars)
Direct sales
Cosmetics 14,141,076
Mobile handsets 7,395,785
Autocare product (Energy) 5,292,673
Distribution sales
Electronic learning product (Ozing) 7,837,456
Electronic dictionary (Meijin) 2,824,120
Mobile handsets (Yiyang Yukang) 2,485,533
Total direct and distribution sales
Cosmetics 14,452,761
Mobile handsets 9,881,318
Electronic learning product (Ozing) 9,264,986
Cost of sales for the fourth quarter 2009 was $30.8 million, a 10.0% decrease from $34.3 million for the fourth quarter of 2008, primarily due to the change of the composition of the products sold in the fourth quarter of 2009.
Gross profit for the fourth quarter of 2009 was $28.9 million, up 20.7% compared to $23.9 million for the fourth quarter of 2008. Gross margin was 48.3% in the fourth quarter of 2009, up from 41.1% in the same period in 2008.
Gross profit from direct sales for the fourth quarter 2009 increased 18.1% to $23.9 million from $20.3 million for the fourth quarter of 2008. Gross margin for direct sales for the fourth quarter of 2009 was 56.2%, up from 43.6% in the same period last year. The increase in gross margin was largely due to greater contribution from sales of higher margin cosmetics and autocare products in the fourth quarter 2009.
Gross profit from distribution sales for the fourth quarter of 2009 was $4.9 million, an increase of 35.3% from $3.6 million for the fourth quarter of 2008. Gross margin for distribution sales for the fourth quarter of 2009 was 28.9%, down from 31.0% for the same period last year. The decrease in gross margin was due to the addition of lower margin mobile handset sales from the consolidation of Yiyang Yukang into the Company's financial statements.
Advertising expenses were $14.0 million for the fourth quarter of 2009, compared to $19.0 million for the fourth quarter of 2008 due to continued reduction in the fixed portion of advertising spending in 2009. Gross profit over advertising expenses, a benchmark Acorn uses to measure return on multiple sales platforms, was 2.07 in the fourth quarter of 2009, up from 1.26 in the fourth quarter of 2008.
Other selling and marketing expenses decreased 0.2% to $10.5 million from $10.6 million for the fourth quarter of 2008.
General and administrative expenses were $5.8 million for the fourth quarter of 2009, a 28.5% decrease from $8.1 million in the fourth quarter of 2008. The decrease was largely due to the decline in bad debts in the fourth quarter of 2009.
During the fourth quarter 2009, impairment loss of $15.2 million was recognized for the intangible assets from the acquisition of Yiyang Yukang. No such impairment charges occurred in the fourth quarter 2008. In addition, as result of the Yiyang Yukang intangible assets impairment charge, the Company reversed a $3.3 million deferred tax liability in the fourth quarter 2009.
Other operating income, net, was $2.0 million for the fourth quarter of 2009, up from $1.4 million in the fourth quarter of 2008.
As a result, operating loss for the fourth quarter of 2009 was $14.7 million, compared to an operating loss of $12.3 million for the corresponding period last year.
Share-based compensation expenses for the fourth quarter 2009 were $7,873, compared to a net negative $0.3 million share-based compensation expenses as a result of the adjustments for the forfeited share options and share appreciation rights for the fourth quarter of 2008.
After eliminating share-based compensation expenses and impairment of intangible assets (non-GAAP), income from operations for the fourth quarter of 2009 was $0.6 million compared to an operating loss of $12.6 million for the same period last year.
Net loss from continuing operations was $10.0 million compared to a $10.4 million net loss for the fourth quarter of 2008.
Non-GAAP net income from continuing operations, after eliminating the effects of share-based compensation expenses, a non-cash charge for the impairment of intangible assets and a reversal of deferred tax liability due to impairment of intangible assets for Yiyang Yukang, was $2.0 million in the fourth quarter of 2009 compared to a $10.7 million net loss for the same period last year.
Diluted loss per ADS from continuing operations was $0.34, compared to a diluted loss per ADS from continuing operations of $0.35 in the same period last year. Non-GAAP diluted income per ADS from continuing operations was $0.06, compared to a diluted loss per ADS from continuing operations of $0.36 in the same period last year.
As of December 31, 2009, Acorn's cash and cash equivalents totaled $143.0 million, a decrease of $7.4 million from September 30, 2009.
Other Updates:
In December 2009, the Company's board of directors approved and declared a one-time special cash dividend of $0.33 per ordinary share on its outstanding shares to shareholders of record as of the close of trading on December 31, 2009 directly from the share premium account of the Company. Holders of ADS, each representing three ordinary shares of Acorn, are accordingly entitled to the one-time special cash dividend of $0.99 per ADS. Citibank, depositary for Acorn's ADR program, paid out dividends to ADS holders on January 20, 2010.
In November 2009, Acorn reached an exclusive distribution agreement with Guthy-Renker to market Sheer Cover(R) cosmetics in China. Under the distribution agreement, Acorn is Guthy-Renker's exclusive agent to market and distribute Sheer Cover branded cosmetics products in China. Acorn is authorized to distribute the Sheer Cover branded cosmetics products through all its available distribution channels including both TV and non-TV direct sales. The distribution agreement initially lasts one year and, subject to first-year sales performance, may be extended.
Fiscal Year 2009 Financial Results:
Total net revenues for 2009 were $287.6 million, up 22.8% from $234.1 million in 2008.
Direct sales net revenues in 2009 were $160.4 million, down 3.9% from $166.9 million in 2008. The decrease reflects a decline in TV direct sales following a reduction in advertising expenditures across products partially offset by growth in non-TV direct sales.
Distribution net revenues in 2009 reached $127.2 million, up 89.4% from $67.2 million in 2008, primarily because of the strong sales performance of the Company's Ozing electronic learning products and consolidation of Yiyang Yukang's mobile handset sales into the Company's financial results.
The table below summarizes the gross revenues from the three best selling product categories for the direct sales platform, distribution network and total direct and distribution sales, respectively:
Year Ended December 31, 2009
(in US dollars)
Direct sales
Cosmetics 44,182,210
Mobile handsets 33,178,583
Electronic learning product (Ozing) 21,861,689
Distribution sales
Electronic learning product (Ozing) 65,102,545
Mobile handsets (Yiyang Yukang) 28,097,927
Electronic dictionary (Meijin) 18,223,486
Total direct and distribution sales
Electronic learning product (Ozing) 86,964,234
Mobile handsets 61,276,510
Cosmetics 45,149,282
Cost of sales for 2009 was $150.6 million, an increase of 24.9% from $120.6 million for 2008. The increase in cost of sales was primarily driven by increased costs for distribution sales, reflecting a larger percentage of mobile phone sales which generally have higher products costs.
Gross profit for 2009 was $137.0 million, an increase of 20.7% compared to $113.5 million for 2008. Gross margin was 47.6% for 2009, down from 48.5% for 2008.
Gross profit from direct sales for 2009 increased 11.0% to $92.8 million from $83.6 million for 2008. Gross margin for direct sales for 2009 was 57.9%, an increase from 50.1% for 2008. The increase in gross margin was largely due to increased sales of higher margin cosmetics products in 2009.
Gross profit from distribution sales for 2009 was $44.1 million, up 47.8% from $29.9 million for 2008. Gross margin for distribution sales for 2009 was 34.7%, down from 44.4% for 2008. The decrease in gross margin primarily reflects (i) margin compression of Ozing and Meijin products due to increased discounts to Acorn's distributors in 2009 and increased flash memory costs beginning in the third quarter of 2009 (flash is a key Ozing component) and (ii) lower margin mobile handset sales from the consolidation of Yiyang Yukang into the Company's financial statements.
Advertising expenses were $61.0 million for 2009 compared to $73.4 million for 2008. The lower advertising expenses reflect the Company's strategy in 2009 to grow proprietary branded products and improve media efficiency by reducing the fixed portion of advertising spending. Gross profit over advertising expenses was 2.24 for 2009, up from 1.55 in 2008.
Other selling and marketing expenses increased 12.1% to $43.0 million for 2009 from $38.3 million for 2008. The increase was mainly due to increased amortization of acquired intangibles assets following the Yiyang Yukang acquisition.
General and administrative expenses were $31.2 million for 2009, a 12.4% increase from $27.7 million for 2008, primarily reflecting an increase in employee payroll and R&D expenses in 2009.
Goodwill and intangible assets impairment loss totaled $15.2 million for 2009 compared to $8.7 million in 2008. In 2009, the Company also reversed $3.3 million deferred tax liability due to the impairment charge of goodwill and intangible assets.
Other operating income, net, was $6.0 million for 2009, up 19.2% from $5.0 million for 2008.
Operating loss for 2009 was $7.5 million (including the $15.2 million Yiyang Yukang intangible assets impairment charge), compared to an operating loss of $29.6 million for 2008 (including $8.7 million impairment losses on goodwill and intangible assets).
Share-based compensation expenses for 2009 were $1.8 million, compared to $3.3 million for 2008.
After eliminating share-based compensation expenses and impairment losses on goodwill and intangible assets (non-GAAP), income from operations for 2009 was $9.6 million, compared to an operating loss of $17.6 million for 2008.
Net loss from continuing operations was $2.7 million compared to a $30.2 million net loss for 2008.
Non-GAAP net income from continuing operations, after eliminating the effects of share-based compensation expenses, a non-cash charge for the impairment of goodwill and intangible assets and a reversal of deferred tax liability due to impairment of intangible assets for Yiyang Yukang, was $11.1 million for 2009 compared to a $18.3 million net loss for 2008.
Diluted loss per ADS from continuing operations was $0.08, compared to a diluted loss per ADS from continuing operations of $1.03 in 2008. Non-GAAP diluted income per ADS from continuing operations was $0.38, compared to a diluted loss per ADS from continuing operations of $0.62 in 2008.
Full Year 2010 Business Outlook:
"Our financial achievements in 2009 demonstrated we took the right direction in growing our business. Despite the shortfall in our mobile phone business, which we expect to slowly improve in 2010, we are pleased with our financial performance in 2009. Taking advantage of continued recovery from the economic crisis and strong retails sales in China, we expect to continue to focus on growing our proprietary branded products such as Ozing and Meijin, developing our continuity business led by cosmetics, expanding non-TV direct sales to lessen reliance on advertising expenditures and, lastly, improving sales in the autocare product segment," said Mr. James Hu, Chairman and CEO of Acorn International. "While there will be challenges ahead, we are well positioned to deliver consistent growth in 2010 and to remain a market leader in the marketing and distribution of branded products in China."
For fiscal year 2010, the Company expects to reach revenue between $290 million and $310 million and net income from continuing operations (excluding share-based compensation expenses) to be between $12 million and $14 million.
These estimates are subject to change. Also, Acorn reminds investors that its operating results in each period are impacted significantly by the mix of products and services sold in the period and the platforms through which they are sold. Consequently, in evaluating the overall performance of Acorn's multiple sales platforms in any period, management also considers metrics such as operating margin and gross profit return on advertising expenses.
Conference Call Information
The Company will host a conference call at 8:00 a.m. ET on March 12, 2010 (9:00 p.m. Beijing Time) to review the Company's financial results and answer questions. You may access the live interactive call via:
-- +1 800 230 3019 (U.S. Toll Free)
-- +1 617 597 5413 (International)
-- Passcode: 989 153 47
Please dial-in approximately 10 minutes in advance to facilitate an on-time start.
A replay will be available for 14 days after the call and may be accessed via:
-- +1 888 286 8010 (U.S. Toll Free)
-- +1 617 801 6888 (International)
-- Passcode: 327 870 02
A live and archived webcast of the call will be available on the Company's website at http://www.ir-site.com/acorn/index.asp . To listen to the live webcast, please go to the Company's website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software.
About Acorn International, Inc.
Acorn is a leading integrated multi-platform marketing company in China, operating one of China's largest TV direct sales businesses in terms of revenues and TV air time and a nationwide off-TV distribution network. Acorn's TV direct sales platform consists of airtime purchased from both national and local channels. In addition to marketing and selling through its TV direct sales programs and its off-TV nationwide distribution network, Acorn also offers consumer products and services through catalogs, third-party bank channels, outbound telemarketing center and an e-commerce website. Leveraging its integrated multiple sales and marketing platforms, Acorn has built a proven track record of developing and selling proprietary-branded consumer products, as well as products and services from established third parties. For more information, please visit http://www.chinadrtv.com .
Use of Non-GAAP Financial Measures
Acorn has reported the fourth quarter and full year 2009 and 2008 income from operations, operating margin, net income from continuing operations and income per ADS from continuing operations on a non-GAAP basis, excluding share-based compensation expenses and non-cash charges for the impairment of goodwill and intangible assets and a related reversal of a deferred tax liability. Acorn believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Acorn's financial performance and liquidity and when planning and forecasting future periods. These non-GAAP operating measures are useful for understanding and assessing Acorn's underlying business performance and operating trends and Acorn expects to report income from operations, operating margin, net income from continuing operations and income per ADS from continuing operations on a non-GAAP basis using a consistent method on a quarterly basis going forward.
Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the following reconciliation of GAAP results with non-GAAP results for the three and twelve months ended December 31, 2009 and 2008, respectively.
The table below sets forth the reconciliation of non-GAAP measures to GAAP measures for the indicated periods:
ACORN INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP TO GAAP
(in US dollars)
Three Months Ended Years Ended
December 31, December 31,
2008 2009 2008 2009
GAAP net revenues 58,193,549 59,700,692 234,137,421 287,585,620
GAAP loss from
operations (12,306,501) (14,653,833) (29,563,602) (7,486,057)
GAAP operating
margin (21.1)% (24.5)% (12.6)% (2.6)%
Impairment of
goodwill and
intangible assets -- 15,247,873 8,667,961 15,247,873
Reversal of
deferred tax
liability due to
impairment of
intangible assets -- 3,268,472 -- 3,268,472
Share-based
compensation
expenses (273,173) 7,873 3,289,232 1,845,885
Non-GAAP income
(loss) from
operations (12,579,674) 601,913 (17,606,409) 9,607,701
Non-GAAP
operating
margin (21.6)% 1.0% (7.5)% 3.3%
GAAP net loss
from continuing
operations
attributable to
Acorn (9,995,894) (10,098,351) (29,810,919) (2,435,224)
GAAP loss per ADS
from continuing
operations -
basic (0.35) (0.34) (1.03) (0.08)
GAAP loss per ADS
from continuing
operations -
diluted (0.35) (0.34) (1.03) (0.08)
Non-GAAP net
income (loss)
from continuing
operations
attributable to
Acorn (10,269,067) 1,888,923 (17,853,726) 11,390,062
Non-GAAP income
(loss) per ADS
from continuing
operations -
basic (0.36) 0.06 (0.62) 0.39
Non-GAAP income
(loss) per ADS
from continuing
operations -
diluted (0.36) 0.06 (0.62) 0.38
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains "forward-looking statements," including, among other things, Acorn's anticipated operating results for 2010; benefits of continuing focus on Acorn's proprietary branded products, ability of Acorn's profits to continue to recover from previous quarters; continued success of Acorn's Ozing electronic learning products and Meijin electronic dictionary; expectations regarding development and increasing cosmetics revenues and developing a continuity business, the anticipated benefits of the Gunthy-Renker distribution and Softto distribution arrangements, increasing non-TV direct sales revenues; and expectation regarding improved sales in the newly launched autocare products. These forward-looking statements are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside of our control. Our actual results and financial condition and other circumstances may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. In particular, our operating results for any period are impacted significantly by the mix of products and services sold by us in the period and the platforms through which they are sold, causing our operating results to fluctuate and making them difficult to predict.
Other factors that could cause forward-looking statements to differ materially from actual future events or results include risks and uncertainties related to: our ability to effectively consolidate our distribution channels, our ability to successfully introduce new products and services, including to offset declines in sales of existing products and services; our ability to stay abreast of consumer market trends and maintain our reputation and consumer confidence; continued access to and effective usage of TV advertising time and pricing related risks; relevant government policies and regulations relating to TV media time and TV direct sales programs, including the new SARFT regulations and actions that may make TV media time unavailable to us or require we suspend or terminate a particular TV direct sales program; rising costs in key components of our products, such as flash memory, potential unauthorized use of our intellectual property; potential disruption of our manufacturing process; increasing competition in China's consumer market; our U.S. tax status as a passive foreign investment company; and general economic and business conditions in China. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in our 2008 annual report on Form 20-F filed with Securities and Exchange Commission on April 24, 2009. For a discussion of other important factors that could adversely affect our business, financial condition, results of operations and prospects, see "Risk Factors" beginning on page 6 of our Form 20-F for the fiscal year ended December 31, 2008. Our actual results of operations for the fourth quarter and full year 2009 are not necessarily indicative of our operating results for any future periods. Any projections in this release are based on limited information currently available to us, which is subject to change. Although such projections and the factors influencing them will likely change, we will not necessarily update the information. Such information speaks only as of the date of this release.
For further information, please contact:
Acorn International, Inc.
Ms. Chen Fu, IR Director
Phone: +86-21-51518888 Ext. 2228
Email: [email protected]
Web: http://www.chinadrtv.com
CCG Investor Relations
Mr. Crocker Coulson, President
Phone: +1-646-213-1915 (New York)
Email: [email protected]
Web: http:// www.ccgirasia.com
ACORN INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In US dollars, except share data)
Three Months Ended Years Ended
December 31, December 31,
2008 2009 2008 2009
Revenues:
Direct sales,
net 46,452,107 42,608,865 166,947,475 160,357,948
Distribution
sales, net 11,741,442 17,091,827 67,189,946 127,227,672
Total revenues,
net 58,193,549 59,700,692 234,137,421 287,585,620
Cost of revenues:
Direct sales 26,181,263 18,678,392 83,300,736 67,530,966
Distribution
sales 8,096,196 12,160,099 37,326,214 83,096,932
Total cost of
revenues 34,277,459 30,838,491 120,626,950 150,627,898
Gross profit 23,916,090 28,862,201 113,510,471 136,957,722
Operating income
(expenses):
Advertising
expenses (18,950,708) (13,959,426) (73,381,193) (61,048,515)
Other selling
and marketing
expenses (10,565,714) (10,546,160) (38,317,161) (42,955,923)
General and
administrative
expenses (8,126,052) (5,812,510) (27,746,833) (31,195,949)
Impairment of
goodwill and
intangible -- (15,247,873) (8,667,961) (15,247,873)
assets
Other operating
income, net 1,419,883 2,049,935 5,039,075 6,004,481
Total operating
income
(expenses) (36,222,591) (43,516,034)(143,074,073)(144,443,779)
Loss from
operations (12,306,501) (14,653,833) (29,563,602) (7,486,057)
Other income
(expenses), net 617,075 1,038,070 (667,297) 2,216,006
Loss before
income taxes (11,689,426) (13,615,763) (30,230,899) (5,270,051)
Income tax
(expenses)
benefits 1,297,271 3,626,202 (4,968) 2,539,265
Net loss from
continuing
operations (10,392,155) (9,989,561) (30,235,867) (2,730,786)
Net income from
discontinued
operations 1,151,980 -- 8,273,629 15,362,689
Net income
(loss) (9,240,175) (9,989,561) (21,962,238) 12,631,903
Net (income)
loss attributable
to non-
controlling
interests (168,209) (108,790) (3,629,131) (184,019)
Net income (loss)
attributable to
Acorn
International,
Inc. (9,408,384) (10,098,351) (25,591,369) 12,447,884
Income (loss)
per ADS
- Continuing
operations (0.35) (0.34) (1.03) (0.08)
- Discontinued
operations 0.02 -- 0.15 0.50
Basic (0.33) (0.34) (0.88) 0.42
- Continuing
operations (0.35) (0.34) (1.03) (0.08)
- Discontinued
operations 0.02 -- 0.15 0.50
Diluted (0.33) (0.34) (0.88) 0.42
Weighted average
number of shares
used in calculating
income (loss) per
ADS
- Basic 86,211,991 88,855,795 86,856,467 88,174,675
- Diluted 86,211,991 88,855,795 86,856,467 89,466,957
ACORN INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In US dollars)
December 31, 2008 December 31, 2009
Assets
Current assets:
Cash and cash equivalents 147,648,774 142,952,944
Restricted cash 1,425,102 2,394,213
Short-term investments 19,745,444 18,572,790
Accounts receivable, net 27,708,460 17,030,857
Notes receivable 150,607 2,242,641
Inventory 29,521,680 26,180,629
Prepaid advertising expenses 16,756,954 9,968,493
Other prepaid expenses and
current assets, net 13,362,528 7,789,921
Deferred tax assets, net 3,355,151 2,960,194
Total current assets 259,674,700 230,092,682
Land use rights, net -- 7,349,957
Property and equipment, net 15,641,434 14,818,404
Acquired intangible assets, net 21,313,949 3,181,596
Long-term investments 5,275,000 8,020,069
Investment in affiliates 1,159,134 8,881,830
Other long-term assets 1,121,100 1,673,755
Total assets 304,185,317 274,018,293
Liabilities and equity
Current liabilities:
Accounts payable 20,734,493 15,528,580
Accrued expenses and other
current liabilities 19,652,820 14,838,142
Notes payable 3,657,859 3,253,005
Income taxes payable 3,327,869 4,057,304
Deferred revenue 12,797,716 --
Dividend payable -- 29,322,782
Total current liabilities 60,170,757 66,999,813
Deferred tax liabilities 3,581,569 889,625
Business combination liability 11,107,375 1,103,015
Total liabilities 74,859,701 68,992,453
Acorn International Inc.
shareholders' equity:
Ordinary shares 935,435 935,447
Additional paid-in capital 205,651,072 178,176,225
Retained earnings 9,737,468 19,137,916
Accumulated other comprehensive
income 15,113,507 16,997,941
Treasury stock, at cost (15,676,206) (11,612,546)
Total Acorn International Inc.
shareholders' equity 215,761,276 203,634,983
Non-controlling interest 13,564,340 1,390,857
Total equity 229,325,616 205,025,840
Total liabilities and equity 304,185,317 274,018,293
SOURCE Acorn International, Inc.
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