VisionChina Media Inc. Announces Second Quarter 2010 Results
Total revenues grow 36% sequentially to $31.8 million, exceeding previously provided guidance
Non-GAAP net loss narrowed to US$2.3 million, compared to a non-GAAP net loss of US$8.1 million in the first quarter of 2010
Non-recurring, non-cash impairment charge taken for certain acquired assets
BEIJING, July 27 /PRNewswire-Asia/ -- VisionChina Media Inc. ("VisionChina Media" or the "Company") (Nasdaq: VISN), one of China's largest out-of-home digital television advertising networks on mass transportation systems, today announced its unaudited financial results for the second quarter ended June 30, 2010.
Key Quarterly Financial and Operating Data for the Second Quarter of 2010
-- Total revenues in the second quarter of 2010 were $31.8 million, an
increase of 3.3% from $30.8 million in the second quarter of 2009 and
an increase of 36.0% from $23.4 million in the first quarter of 2010;
the Company had previously provided guidance that its advertising
service revenues for the second quarter of 2010 were expected to be no
less than $29.5 million.
-- Gross profit in the second quarter of 2010 was $3.1 million, compared
to a gross loss in the first quarter of 2010 of $4.5 million.
-- Operating loss in the second quarter of 2010 was $95.5 million due to a
non-recurring, non-cash impairment charge of $89.1 million, as the
result of a write-down of goodwill and intangibles associated with
three of the six agencies acquired by the Company in 2008. The
remaining three agencies continue to perform in line with expectations
and are not subject to this impairment charge.
-- Net loss attributable to VisionChina Media shareholders in the second
quarter of 2010 was $93.2 million, compared to $11.6 million in the
first quarter of 2010.
-- Net loss attributable to VisionChina Media shareholders in the second
quarter of 2010, excluding share-based compensation expenses,
amortization of intangible assets, impairment loss and income tax
credit in connection with the impairment loss (non-GAAP), was $2.3
million, compared to $8.1 million in the first quarter of 2010.
-- Net operating cash outflow was $14.0 million in the second quarter of
2010. The Company had cash and cash equivalents of $65.6 million as of
June 30, 2010.
-- Network capacity, as measured by total broadcasting hours in the
Company's network, reached 47,928 hours in the second quarter of 2010,
compared to 47,400 hours in the first quarter of 2010.
-- As of June 30, 2010, the Company's advertising network covered 23
cities and included 125,269 digital displays on buses, subway trains
and platforms as well as other platforms.
-- Average advertising revenue per broadcasting hour in the second quarter
of 2010 was $636, an increase of 34.8% from $472 per broadcasting hour
in the first quarter of 2010.
-- The Company sold an average of 6.34 advertising minutes per
broadcasting hour in the Company's network in the second quarter of
2010, compared to 5.01 advertising minutes per broadcasting hour in the
first quarter of 2010.
Mr. Limin Li, VisionChina Media's chairman and chief executive officer, commented, "I am very proud of our sales teams, whose diligent efforts enabled us to surpass our total revenue guidance this quarter. We saw particular improvement in Shanghai, where our sales teams were able to more than double revenue from the previous quarter and continue to increase average price per minute of advertising sold. Our strong growth this quarter also reflects an overall shift in revenue contribution, as revenues from advertising on our subway trains and platforms is becoming an increasingly larger share of our business. During this quarter, almost half of our revenue was generated from advertising on subway trains and platforms, compared to approximately 20% in the same period of 2009. We also expect revenues from subway trains and platforms to continue to increase as a result of the recently announced renewal of our exclusive five-year contract with Beijing's subway system."
Scott Chen, VisionChina Media's chief financial officer, added, "The second quarter marked a strong rebound for VisionChina Media. We generated gross profit of $3.1 million and narrowed our quarterly net loss to $2.3 million on a non-GAAP basis, reflecting the continued ramp up of advertising networks from our acquisition of Digital Media Group in 2009 as well as stronger overall advertising sales. On a GAAP basis, we recorded a non-recurring, non-cash impairment charge of $89.1 million as a result of a write-down of goodwill and intangibles associated with three of the six agencies acquired by the company in 2008. As we further develop our advertising network on subway trains and platforms, we are optimistic about continued growth in the third quarter of this year."
Second Quarter 2010 Results
VisionChina Media's total revenues were $31.8 million in the second quarter of 2010, an increase of 3.3% from $30.8 million in the second quarter of 2009 and an increase of 36.0% from $23.4 million in the first quarter of 2010. The Company had previously provided guidance that its advertising service revenues for the second quarter of 2010 were expected to be no less than $29.5 million.
Total broadcasting hours in the Company's network in the second quarter of 2010 increased to 47,928 hours, compared to 34,399 hours in the second quarter of 2009 and 47,400 hours in the first quarter of 2010.
Average advertising revenue per broadcasting hour was $636 in the second quarter of 2010, compared to $865 per broadcasting hour in the second quarter of 2009 and $472 per broadcasting hour in the first quarter of 2010. On average, the Company sold 6.34 advertising minutes per broadcasting hour in the second quarter of 2010, compared to 6.40 advertising minutes per broadcasting hour in the second quarter of 2009 and 5.01 advertising minutes per broadcasting hour in the first quarter of 2010.
During the second quarter of 2010, 614 advertisers purchased advertising time on the Company's advertising network either directly or through advertising agents, compared to 274 advertisers in the second quarter of 2009 and 419 advertisers in the first quarter of 2010. In the second quarter of 2010, the Company sold a total of 303,812 advertising minutes in its network compared to 220,063 minutes in the second quarter of 2009 and 237,563 minutes in the first quarter of 2010.
Media cost, the most significant component of advertising service costs, was $23.3 million in the second quarter of 2010, representing 81.2% of total advertising service costs, compared to $11.7 million, or 81.4% of total advertising service costs in the second quarter of 2009 and $22.8 million, or 81.8% of total advertising service costs in the first quarter of 2010.
Gross profit in the second quarter of 2010 was $3.1 million, compared to gross profit of $16.4 million in the second quarter of 2009 and a gross loss of $4.5 million in the first quarter of 2010. Advertising service gross margin was 9.8% in the second quarter of 2010, compared to 53.3% in the second quarter of 2009 and negative 19.4% in the first quarter of 2010.
Selling and marketing expenses were $7.0 million in the second quarter of 2010, an increase of 5.3% from $6.7 million in the second quarter of 2009 and an increase of 17.2% from $6.0 million in the first quarter of 2010. Selling and marketing expenses represented 22.2% of the Company's advertising service revenues in the second quarter of 2010 compared to 21.7% in the second quarter of 2009 and 25.7% in the first quarter of 2010.
General and administrative expenses were $2.4 million in the second quarter of 2010, an increase of 10.5% from $2.1 million in the second quarter of 2009 and an increase of 16.9% from $2.0 million in the first quarter of 2010.
Loss from equity method investments amounted to $0.09 million in the second quarter of 2010, compared to a $0.23 million loss in the second quarter of 2009 and a $0.03 million gain in the first quarter of 2010.
Operating loss was $95.5 million in the second quarter of 2010, compared with operating profit of $7.4 million in the second quarter of 2009 and operating loss of $12.5 million in the first quarter of 2010. The operating loss in the second quarter of 2010 was primarily due to a non-recurring, non-cash impairment loss of $89.1 million as the result of the write-down of goodwill and intangibles assets in connection with three of the six agencies acquired by the Company in 2008. The Company has identified uncertainty in future revenue from these acquired agencies which has led to this impairment charge. The remaining three acquired agencies are not subject to this impairment charge.
The Company recorded net interest expenses of $0.7 million in the second quarter of 2010, compared to net interest income of $0.3 million in the second quarter of 2009 and net interest expenses of $0.8 million in the first quarter of 2010.
Net loss attributable to VisionChina Media shareholders was $93.2 million in the second quarter of 2010. The net loss in the second quarter of 2010 was primarily due to the non-recurring, non-cash impairment charge of $89.1 million. Basic and diluted net losses per share (GAAP) attributable to VisionChina Media shareholders in the second quarter of 2010 were both $1.15.
Net loss attributable to VisionChina Media shareholders excluding share-based compensation expenses, amortization of intangible assets, impairment loss and income tax credit in connection with the impairment loss (non-GAAP) in the second quarter of 2010 was $2.3 million compared to a net profit of $8.9 million in the second quarter of 2009 and net loss of $8.0 million in the first quarter of 2010.
The Company recorded an income tax credit of $3.5 million in the second quarter of 2010, including a $1.8 million tax credit arising from impairment loss.
As of June 30, 2010, the Company had 125,269 digital television displays in its network, compared to 123,592 as of March 31, 2010.
As of June 30, 2010, the Company had 785 employees, compared to 808 employees as of March 31, 2010.
The Company had cash and cash equivalents of $65.6 million as of June 30, 2010, a decrease of $23.5 million from $89.1 million as of March 31, 2010. The Company's net cash used in operating activities was $14.0 million in the second quarter of 2010.
Depreciation and amortization was $4.4 million and capital expenditures were $1.1 million in the second quarter of 2010.
Recent Developments
On July 2, 2010, the Company completed the previously announced issuance and sale of an aggregate of 4,006,474 common shares of the Company at an aggregate subscription price of US$12.9 million to Mr. Limin Li, the chairman and chief executive officer of the Company, Ms. Yanqing Liang, a director of the Company, certain employees of the Company and other investors, including affiliates of Milestone Capital Partners, an existing investor in the company.
On July 14, 2010, the Company announced the renewal and extension of its exclusive contract with Beijing's subway system, which enables the Company to continue to operate its subway mobile digital television and advertising network in Beijing on an exclusive basis for the next five years.
Business outlook
The Company estimates total revenues, which consist of advertising service revenues only, in the third quarter of 2010 to be between $36.7 million and $39.7 million. Third quarter 2010 net income attributable to VisionChina Media shareholders excluding share-based compensation expenses and amortization of intangible assets (non-GAAP) is expected to be between a net loss of $1.1 million and a profit of $0.8 million.
These estimates are based on an exchange rate of RMB6.8086 per US$1.00.
The Company noted that its guidance is based on its current network of 23 cities that, as of the date of this press release, have already been secured by contracts. If the Company's network expands to additional cities, either organically or through acquisitions, management's forecast could be affected.
Conference Call
VisionChina's management will hold an earnings conference call at 8:00 PM U.S. Eastern Time on July 27, 2010 (8:00 AM Beijing/Hong Kong Time on July 28, 2010).
Dial-in details for the earnings conference call are as follows:
U.S. Toll Free: +1-866-788-0543
Hong Kong: +852-3002-1672
International: +1-857-350-1681
Passcode for all regions: VisionChina Earnings Call
A replay of the conference call may be accessed by phone at the following numbers until August 26, 2010.
U.S. Toll Free: +1-888-286-8010
International: +1-617-801-6888
Passcode: 27902491
Additionally, a live and archived webcast of this conference call will be available on the Investor Relations section of VisionChina Media's website at http://www.visionchina.cn/ .
About VisionChina Media Inc.
VisionChina Media Inc. (Nasdaq: VISN) operates an out-of-home advertising network on mass transportation systems, including buses and subways, that reaches over 40 million viewers each day in China, according to CTR Market Research. As of June 30, 2010, VisionChina Media's advertising network included 125,269 digital television displays on mass transportation systems in 23 of China's economically prosperous cities, including Beijing, Shanghai, Guangzhou and Shenzhen. VisionChina Media has the ability to deliver real-time, location-specific broadcasting, including news, stock quotes, weather and traffic reports and other entertainment programming. For more information, please visit http://www.visionchina.cn .
Use of Non-GAAP Financial Measures
In addition to VisionChina Media's consolidated financial results under GAAP, the Company also provides non-GAAP financial measures, including non-GAAP net income, excluding non-cash share-based compensation, amortization of intangible assets, impairment loss and income tax credit in connection with the impairment loss. The Company believes that the non-GAAP financial measures provide investors with another method for assessing VisionChina Media's operating results in a manner that is focused on the performance of its ongoing operations. 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. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of VisionChina Media's liquidity and when planning and forecasting future periods. The Company computes its non-GAAP financial measures using the same consistent method from quarter to quarter.
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statement on its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
Mrs. Helen Plummer
Investor Relations Officer
VisionChina Media Inc.
Phone: +86-139-1167-2124
Email: [email protected]
Mr. Derek Mitchell
Ogilvy Financial, Beijing
Phone: +86-10-8520-6284
Email: [email protected]
In the United States:
Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Phone: +1-646-460-9989
Email: [email protected]
VISIONCHINA MEDIA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in U.S. dollars)
June March December
30, 2010 31, 2010 31, 2009
ASSETS (Unaudited) (Unaudited) (Note 1)
Current Assets:
Cash and cash equivalents 65,603,428 89,129,219 68,834,087
Restricted cash 68,213,854 79,739,409 64,368,455
Accounts receivable, net 37,537,576 32,552,008 37,050,076
Amounts due from related parties 4,221,908 4,294,676 4,334,472
Inventories 1,330,645 586,468 --
Prepaid expenses and other
current assets 32,340,436 15,483,128 10,049,007
Deferred tax assets 1,742,232 1,063,462 41,309
Total current assets 210,990,079 222,848,370 184,677,406
Non-current Assets:
Restricted cash 293,746 -- --
Fixed assets, net 15,337,976 15,268,650 9,192,741
Investments under equity method 6,653,524 6,701,963 6,670,189
Other investments 2,671,363 2,660,617 2,660,189
Long-term prepayments and
deposits 14,873,085 36,931,579 65,241,570
Intangible assets 88,939,025 99,486,621 11,455,972
Goodwill 139,006,604 215,267,001 109,017,669
Total non-current assets 267,775,323 376,316,431 204,238,330
TOTAL ASSETS 478,765,402 599,164,801 388,915,736
LIABILITIES AND EQUITY
Current Liabilities:
Short-term bank loan 64,137,461 79,192,715 40,800,000
Accounts payable 4,839,654 9,786,927 2,311,224
Amounts due to related parties 1,553,018 1,252,255 213,029
Consideration payable 46,697,676 42,910,017 47,873,901
Income tax payable 417,392 1,356,685 2,411,156
Accrued expenses and other
current liabilities 12,925,945 11,773,028 9,326,208
Total current liabilities 130,571,146 146,271,627 102,935,518
Non-current Liabilities:
Long-term bank loan 58,749,229 58,512,895 731,294
Consideration payable 29,446,977 39,994,078 9,330,085
Deferred tax liabilities 22,108,608 24,549,845 2,503,125
Total non-current liabilities 110,304,814 123,056,818 12,564,504
Total liabilities 240,875,960 269,328,445 115,500,022
Equity:
Common shares 7,996 7,992 7,214
Common shares to be issued 85 85 --
Additional paid-in capital 260,583,520 260,301,617 192,362,565
Accumulated (losses)/profits -34,668,215 58,505,851 70,112,299
Accumulated other comprehensive
income 11,522,509 10,582,580 10,499,278
Total VisionChina Media Inc.
shareholders' equity 237,445,895 329,398,125 272,981,356
Non-controlling interest 443,547 438,231 434,358
Total equity 237,889,442 329,836,356 273,415,714
TOTAL LIABILITIES AND EQUITY 478,765,402 599,164,801 388,915,736
Note 1: Information extracted from the audited financial statements
included in the 2009 Form 20-F of the Company filed with the
Securities and Exchange Commission on June 23, 2010.
VISIONCHINA MEDIA INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousand U.S. Dollars, except number of shares and
per share data)
For three months ended
June 30, March 31, June 30,
2010 2010 2009
(Unaudited) (Unaudited) (Unaudited)
Revenues:
Advertising service revenue 31,811 23,396 30,806
Total revenues 31,811 23,396 30,806
Cost of revenues:
Advertising service cost -28,690 -27,939 -14,401
Total cost of revenues -28,690 -27,939 -14,401
Gross profit/(loss) 3,121 -4,543 16,405
Operating expenses:
Selling and marketing -7,049 -6,014 -6,692
General and administrative -2,354 -2,013 -2,131
Impairment loss -89,125 -- --
Total operating expenses -98,528 -8,027 -8,823
(Loss)/gain from equity
method investees -91 31 -230
Operating profit (loss) -95,498 -12,539 7,352
Interest income 542 556 343
Interest expense -1,203 -1,363 --
Other (loss)/income -457 7 -3
Net (loss) income before income
taxes -96,616 -13,339 7,692
Income tax benefits/(expenses) 3,448 1,734 -640
Net (loss) income -93,168 -11,605 7,052
Net (income)/loss attributable
to non-controlling interest -5 -1 24
Net (loss) income attributable to
VisionChina Media Inc. shareholders -93,173 -11,606 7,076
Net (loss) income attributable to
VisionChina
Media Inc. shareholders per share:
Basic -1.15 -0.14 0.10
Diluted -1.15 -0.14 0.10
Shares used in computation of net
income (loss) attributable to
VisionChina Media Inc.
shareholders per share:
Basic 80,781,208 80,544,635 71,468,554
Diluted 81,166,850 81,325,320 72,383,487
Share-based compensation expenses
during the related periods
included in:
Cost of revenues -26 -26 -7
Selling and marketing expenses -85 -154 -988
General and administrative
expenses -130 -121 -129
Total -241 -301 -1,124
Reconciliation from GAAP net
(loss) income attributable to
VisionChina Media Inc. shareholders
to Adjusted Non-GAAP net income
(loss) attributable to VisionChina
Media Inc. shareholders:
Net (loss) income attributable to
VisionChina Media
Inc. shareholders (GAAP) -93,173 -11,606 7,076
Add back share-based compensation
expenses during the related periods 241 301 1,124
Add back intangible assets
amortization expenses during the
related periods 3,252 3,251 689
Add back impairment losses of
goodwill and intangible assets
in the related period 89,125 -- --
Subtract tax credit in connection
to impairment of intangible assets -1,763 -- --
Net (loss) income attributable to
VisionChina Media
Inc. shareholders (Non-GAAP) -2,318 -8,054 8,889
SOURCE VisionChina Media Inc.
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