MORRIS TOWNSHIP, N.J., May 17, 2012 /PRNewswire-Asia/ -- Honeywell (NYSE: HON) announced today that it has introduced its third-generation laminate film designed to protect solar power panels from harsh environments while helping them maintain power output over their 25-year lifespans.
The product, PowerShield® 3W, is a cost-effective backsheet for photovoltaic panels that helps protect the electrical circuits in solar panel modules, preventing moisture from entering the module and keeping electrical charges within the module. These features help the module retain maximum power output while maintaining electrical safety.
PowerShield 3W is a laminate that is bound by a proprietary adhesive specifically designed for photovoltaic applications. The adhesive helps make the laminate the most durable backsheet available from Honeywell to date.
“We are committed to developing solutions that increase the performance and overall lifetime of solar panels. Honeywell’s latest innovative backsheet, PowerShield 3W, provides solar panel manufacturers with cost-effective and reliable protection for their modules,” said Jerry Buchanan, global business manager for Honeywell’s photovoltaic backing systems business. “This backsheet has been proven to perform in some of the most rigorous conditions.”
PowerShield 3W is available now, and leading module manufacturers are already including it in module designs.
Independent photovoltaic-industry laboratory tests show that PowerShield 3W can withstand more than 3,000 hours of accelerating aging exposure at 85°C (185°F) and 85 percent relative humidity without losing structural integrity.
The backsheet’s superior adhesive offers excellent resistance to discoloration due to aging, which helps solar modules retain their appearance and reflectivity. Like all PowerShield backsheets, PowerShield 3W offers high resistance to environmental degradation from sunlight, heat, cold and humidity; strong resistance to acids, bases, solvents, salts and other chemicals; and resistance to excessive moisture infiltration within a module.
The technology behind PowerShield 3W is based on Honeywell’s more than 30 years of experience as the world’s leading manufacturer of high-barrier films for food packaging, industrial and healthcare applications, including packaging that protects drugs sold by the world’s leading pharmaceutical companies.
Honeywell has an active and global research and development program for photovoltaic backsheets, with laboratories in Morris Township, New Jersey, and Shanghai, China.
The Honeywell PowerShield supply chain provides module makers with a single point of contact for every component of their backsheet, helping ensure a reliable supply and quality.
Honeywell also offers printable dopants and chemicals for the manufacture of solar cells, the SOLARC™ anti-reflective coating for solar panels, and solar panel installation sales and services.
For more information on Honeywell’s PowerShield backing systems, visit www.honeywellpowershield.com.
Honeywell Performance Materials and Technologies is a global leader in developing and manufacturing advanced materials and process technologies. These materials and technologies are used by people every day in a wide range of industries and applications, from petroleum refining to environmentally friendlier refrigerants to bullet-resistant vests. Our advanced materials are critical in the manufacture of products ranging from nylon to computer chips to pharmaceutical packaging. Process technologies developed by our UOP business form the foundation for most of the world’s refiners, efficiently producing gasoline, diesel, jet fuel and petrochemicals. UOP is now pioneering technology to produce real fuels from renewable energy sources.
Honeywell (www.honeywell.com) is a Fortune 100 diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; turbochargers; and specialty materials. Honeywell has a long history in China that goes back to 1935 when it established the first franchise in Shanghai. Today, all of Honeywell’s four Strategic Business Groups are represented in China, and all of them have relocated their Asia Pacific headquarters to China. Over the years, Honeywell has set up subsidiaries and joint ventures in over 20 cities across the country. Honeywell employs approximately 12,000 people in China. For more news and information on Honeywell, please visit www.honeywell.com.cn .
This release contains certain statements that may be deemed “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in this release are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements.
]]>To enable the global food and beverage suppliers to access this high-growth market, leading event organiser, UBM Live, today announced that it is expecting to gather over 2,200 local and global exhibitors and over 45,000 industry professionals at its annual event Food ingredients Asia-China, Health ingredients & Natural ingredients China. Held on 26-28th June at the Shanghai International Expo Centre, Fi Asia-China, Hi & Ni China will be co-located with Natural & Nutraceutical Products China and CPhI China, and is set to be biggest event in the region dedicated to food ingredients and health/nutraceutical markets.
Over 3 days key industry stakeholders will look to build unique strategic partnerships and discuss development opportunities in China and across the globe. UBM Live can also confirm that over 80% of visitors are senior level decision makers ready to purchase quality ingredients. And over 15% of visitors are specifically looking for health related ingredients and products, giving the health ingredients suppliers a dynamic chance to immediately benefit from this inspiring growth market.
New exhibition zones highlighting high-growth potential health sector
Along with the increasing interest in health preservation, many functional foods aiming to increase the life wellness are in top demand. Particularly, the Traditional Chinese Medicine (TCM) based functional foods play an important role in shaping the industry.
Fi Asia-China, Hi & Ni China has therefore developed a Traditional Chinese Medicine (TCM) Zone and Vita Zone to create a centralised area showcasing the industry. They will highlight the latest product development in these industries and reveal potential opportunities for the future. A high class forum will also unite key industry players to discuss relevant market initiatives that will drive development, showcase cutting-edge innovations and look to forge new strategic business partnerships.
To receive free entry to the show, please register at www.fiasiachina.ingredientsnetwork.com/register
Contact:
UBM Sinoexpo
Ms. Lydia Ma
Marketing Executive
T: +86 21 6437 1178 Ext. 396
E: Lydia.Ma@UBMSinoexpo.com
W: www.fiasiachina.ingredientsnetwork.com
"IGT is proud to introduce our newest Asian market-attuned games and industry-leading systems products that are designed to deliver performance and profitably for our customers," said Craig Churchill, IGT senior vice president International. "Our innovative line-up at G2E Asia highlights our continued commitment to customers in these rapidly expanding markets."
More than half of IGT games at this year's show are designed to focus on local markets with the themes, dual languages (Chinese and English), and math models that Asian casinos and players are seeking. The array of games contains legendary Chinese themes such as West Journey Treasure Hunt™ and Golden Three Kingdom™, as well as appealing titles such as Four Great Chinese Beauties®, Big Dragon Lounge™ and Pearl Dragon™.
The Company will spotlight the industry's first community play five-reel slot, Fast-Hit Progressives™, which is available in Chinese. Also showcased at G2E Asia are blockbusters The Dark Knight and Ghostbusters™ on the eye-catching Center Stage™. After installing Center Stage™, Operators can refresh content with the latest games featuring big, bold titles. These entertaining titles join a full lineup of IGT's games including MegaJackpots® Premium Products favorites, Sex and the City Fabulous™ MultiPLAY and Elvis The King® Multi-Level Progressives.
Industry-leading IGT cabinet designs will include the exclusive G23 and the Universal Slant models, which allow for personalised playing experiences and flexibility for Operators.
IGT's Systems products at G2E Asia 2012 include leading server-based gaming tools offering dynamic ways to communicate with players, unmatched flexibility and connectivity, and the critical tools needed to manage the floor, players, promotions and operations. Highlighted products include IGT's sbX™ server-based experience, IGT Advantage®, IGT Casinolink™. With more than 50 installs in 11 countries, G2E Asia attendees will experience the power a server-based floor can create.
Visit IGT at stand No. 700 at G2E Asia to see how IGT's global strength and locally focused solutions help customers succeed in Asian markets. For more information, visit www.igt.com.
About IGT
International Game Technology (NYSE: IGT) is a global leader in the design, development and manufacture of gaming machines and systems products, as well as online and mobile gaming solutions for regulated markets. More information about IGT is available at www.IGT.com or follow IGT on Twitter at @IGTNews or Facebook at www.facebook.com/IGT.
THE DARK KNIGHT and all related characters and elements are trademarks of and © DC Comics.
(s12)
Ghostbusters: TM & © 2012 Columbia Pictures Industries Inc. All Rights Reserved.
Official HBO Licensed Product. © 2012 Home Box Office, Inc. All Rights Reserved. HBO and related trademarks are the property of Home Box Office, Inc.
© EPE, Reg. U.S. Pat & TM O_.
]]>William Ding, Chief Executive Officer and Director of NetEase, stated, "The growing popularity of our self-developed games continues to drive our revenues. For the first quarter, our total online games revenue increased 31.4% year-over-year, with dynamic growth from our newer games Ghost and Tianxia III and increasing contribution from several of our flagship games, Fantasy Westward Journey, Westward Journey Online II and Heroes of Tang Dynasty."
"Our online games revenue has been driven by the successful execution of our strategy to continuously improve user experience and has been further demonstrated by Ghost's rapid growth since the launch of its full scale closed beta testing in September 2011. In the second quarter, we introduced a series of new features for Ghost in its open beta testing, which has been well received by users. Benefiting from the innovative game play mode, our newest game, Tianxia III, achieved record high revenue in the first quarter. We plan to continue developing new exciting content and launch open beta testing for Tianxia III in the second quarter."
"Moreover, players continue to respond enthusiastically to expansion packs for our long running self-developed games, Fantasy Westward Journey and Westward Journey Online II. We plan to launch new expansion packs combined with large-scale promotional activities for these games in the second and third quarters. Other expansion packs or new versions planned for the second quarter include Heroes of Tang Dynasty, Westward Journey Online III and Warsong of Westward Journey."
"Diversification through the introduction of self-developed games is a key theme in 2012. We are on track to commercialize a number of new titles this year that showcase innovative content and leading technology. In the second and third quarters of 2012, we plan to initiate beta testing of several highly anticipated games in our pipeline, including 3D ARPG, Soul of Warrior, 2.5D MMORPG, Wu Hun, 3D action real-time strategy (or DotA) game, Heroes of Three Kingdoms, and a next generation 3D action MMORPG, Dragon Sword. With respect to our licensed games, we are pleased to have renewed our contract with Blizzard Entertainment to continue our existing cooperation on Blizzard Entertainment's World of Warcraft® in mainland China. We look forward to releasing Mists of Pandaria™, the fourth expansion to World of Warcraft, in mainland China as soon as possible."
"Our advertising revenue grew 13.1% year-over-year, with automobile, Internet services and food and beverage services as the top performing sectors. Advertising revenues declined 48.5% quarter-over-quarter, which reflects the typical industry seasonality. We expect the usual uptick in advertising revenues in the second quarter and through the second half of 2012. We remain committed to increasing our appeal to users by offering content innovation, synthesizing user feedback and providing service integration between different mobile device platforms. To leverage the opportunities offered by the upcoming 2012 London Olympics, we have secured a number of partnerships with content providers to offer comprehensive, accurate and in-depth reporting to our portal and mobile Internet users."
Mr. Ding concluded, "Portal traffic grew steadily in the first quarter as we continued to optimize our user experience and mobile access by introducing leading applications and cutting edge technology. Usage of our micro-blogging services is also expanding. In the first quarter, the number of micro-blogging users reached 121.0 million, up 24.0% from December 31, 2011. As the leading free email provider in China, our mailbox services also performed well as we continued to optimize services through mobile access and upgrades to enhance users' experience. As of March 31, 2012, we had approximately 480 million registered email users, up 6.7% quarter-over-quarter. In addition, the number of users and paying subscribers for our corporate mailbox services have grown in their third year of operation. During the first quarter, we were named one of the top corporate mailbox service providers in China.
"With continued execution on expanding and diversifying our game portfolio and user base, as well as driving innovation in content, technology and entertainment across all demographics in China, we look forward to another great year for NetEase in 2012," Mr. Ding concluded.
First Quarter 2012 Financial Results
Revenues
Total revenues for the first quarter of 2012 were RMB2.0 billion (US$318.2 million), compared to RMB2.1 billion and RMB1.5 billion for the preceding quarter and the first quarter of 2011, respectively.
Revenues from online games were RMB1.8 billion (US$289.2 million) for the first quarter of 2012, compared to RMB1.8 billion and RMB1.4 billion for the preceding quarter and the first quarter of 2011, respectively.
Revenues from advertising services were RMB143.5 million (US$22.8 million) for the first quarter of 2012, compared to RMB278.5 million and RMB126.8 million for the preceding quarter and the first quarter of 2011, respectively.
Revenues from e-mail, wireless value-added services and others ("E-mail, WVAS and others") were RMB39.6 million (US$6.3 million) for the first quarter of 2012, compared to RMB37.2 million and RMB25.7 million for the preceding quarter and the first quarter of 2011, respectively.
Gross Profit
Gross profit for the first quarter of 2012 was RMB1.3 billion (US$211.4 million), compared to RMB1.5 billion and RMB985.0 million for the preceding quarter and the first quarter of 2011, respectively. The quarter-over-quarter decrease in gross profit was primarily attributable to a seasonal decline in advertising revenue.
The year-over-year increase in gross profit was primarily attributable to increased revenues from the Company's self-developed games, Ghost, Tianxia III and Fantasy Westward Journey, which were partially offset by a decline in revenue from Blizzard Entertainment's World of Warcraft. Revenue from Ghost has grown rapidly since the launch of its full scale closed beta testing in September 2011, coupled with successful promotional activities. Tianxia III was released in late October of 2011, and its significant growth was leveraged from the strong Tianxia II user base as well as its attractive and innovative game play mode. The year-over-year increase in cost of revenues was primarily due to increased headcount-related costs and server custody costs.
Gross Profit (Loss) Margin
Gross profit margin for the online game business for the first quarter of 2012 was 73.0%, compared to 72.6% and 70.0% for the preceding quarter and the first quarter of 2011, respectively.
Gross profit margin for the advertising business for the first quarter of 2012 was 19.8%, compared to 54.5% and 33.4% for the preceding quarter and the first quarter of 2011, respectively. The quarter-over-quarter decrease in gross profit margin was primarily due to a decrease in advertising revenues as explained above. The year-over-year decrease in gross profit margin was primarily due to increased headcount-related costs and content purchase costs in the first quarter of 2012.
Gross loss margin for the E-mail, WVAS and others business for the first quarter of 2012 was 18.0%, compared to gross profit margin of 2.2% and gross loss margin of 21.6% for the preceding quarter and the first quarter of 2011, respectively. The quarter-over-quarter change was mainly due to increased customer services costs and technology support costs in the first quarter of 2012.
Operating Expenses
Total operating expenses for the first quarter of 2012 were RMB355.7 million (US$56.5 million), compared to RMB529.0 million and RMB292.0 million for the preceding quarter and the first quarter of 2011, respectively. The quarter-over-quarter decrease in operating expenses was mainly due to the fact that there were less selling and marketing promotional activities in the first quarter of 2012. In addition, an impairment provision of RMB50.3 million on the initial online game license fee for Blizzard Entertainment's StarCraft® II was recorded in the fourth quarter of 2011. The year-over-year increase in operating expenses was primarily due to increased headcount-related costs and increased research and development costs related to product development.
Net Profit
Net profit for the first quarter of 2012 totaled RMB941.7 million (US$149.5 million), compared to RMB898.6 million and RMB737.4 million for the preceding quarter and the first quarter of 2011, respectively.
During the first quarter of 2012, the Company reported a net foreign exchange gain of RMB17.6 million (US$2.8 million), compared to a net foreign exchange loss of RMB36.4 million and a net foreign exchange gain of RMB25.3 million for the preceding quarter and the first quarter of 2011, respectively. The quarter-over-quarter and year-over-year changes in foreign exchange gains and losses were mainly due to the unrealized exchange gains and losses arising from the Company's Euro-denominated bank deposit balances as of March 31, 2012 as the exchange rate of the Euro against the RMB fluctuated over the periods.
NetEase reported basic and diluted earnings per ADS of US$1.14 each for the first quarter of 2012. The Company reported basic and diluted earnings per ADS of US$1.09 for the preceding quarter, and reported basic and diluted earnings per ADS of US$0.90 and US$0.89, respectively, for the first quarter of 2011.
Income Taxes
The Company recorded a net income tax charge of RMB163.1 million (US$25.9 million) for the first quarter of 2012, compared with RMB122.6 million and RMB37.2 million for the preceding quarter and the first quarter of 2011, respectively. The effective tax rate for the first quarter of 2012 was 14.9%, compared to 11.8% and 4.8% for the preceding quarter and the first quarter of 2011, respectively.
The Company's various principal subsidiaries have renewed their qualifications as High and New Technology Enterprises in 2011, and enjoy the preferential enterprise income tax rate of 15% from 2011 to 2013, subject to annual review by the relevant tax authorities in China.
The quarter-over-quarter increase in effective tax rate was mainly due to the expiration of the enterprise income tax exemption period for certain subsidiaries that were qualified as Software Enterprises, which resulted in an increase in their applicable tax rate from 0% to 12.5%. The year-over-year increase in effective tax rate was primarily due to the recognition of a tax benefit of RMB47.1 million upon receipt of the Key Software Enterprise status by certain subsidiaries during the first quarter of 2011.
Other Information
As of March 31, 2012, the Company's total cash and time deposits balance was RMB13.1billion (US$2.1 billion), compared to RMB11.9 billion as of December 31, 2011. Cash flow generated from operating activities was RMB1.3 billion (US$212.3 million) for the first quarter of 2012, compared to RMB1.2 billion and RMB969.3 million for the preceding quarter and the first quarter of 2011, respectively.
** The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.2975 on the last trading day of March 2012 (March 30, 2012) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on March 30, 2012, or at any other certain date. The percentages stated are calculated based on RMB.
Conference Call
NetEase's management team will host a conference call at 9:00 p.m. Eastern Time on Wednesday, May 16, 2012 (Beijing/Hong Kong Time: 9:00 a.m., Thursday, May 17, 2012). NetEase's management will be on the call to discuss the quarterly results and answer questions.
Interested parties may participate in the conference call by dialing 1-877-941-2068 (international: 1-480-629-9712), 10-15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-800-406-7325 (international: 1-303-590-3030), and entering passcode 4533318#. The replay will be available through June 7, 2012.
This call is being webcast live and the replay will be available for 12 months. Both will be available on NetEase's Investor Relations website at http://ir.netease.com.
About NetEase, Inc.
NetEase, Inc. is a leading China-based Internet technology company that pioneered the development of applications, services and other technologies for the Internet in China. NetEase's online communities and personalized premium services have established a large and stable user base for the NetEase websites, which are operated by its affiliates. In particular, NetEase provides online game services to Internet users through the in-house development or licensing of massively multi-player online role-playing games, including Fantasy Westward Journey, Westward Journey Online II, Westward Journey Online III, Tianxia III, Heroes of Tang Dynasty, Datang and Ghost, as well as the licensed games, Blizzard Entertainment's World of Warcraft® and StarCraft® II.
NetEase also offers online advertising on its websites, which enables advertisers to reach its substantial user base. In addition, NetEase has paid listings on its search engine and web directory and classified advertising services, as well as an online mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet. NetEase also offers wireless value-added services such as news and information content, matchmaking services, music and photos from the web that are sent over SMS, MMS, WAP, IVR and Color Ring-back Tone technologies.
Other community services that the NetEase websites offer include instant messaging, online personal advertisements, matchmaking, alumni clubs and community forums. The Company believes that it is also the largest provider of free e-mail services in China. Furthermore, the NetEase websites as well as its micro-blogging services provide various channels of content. NetEase aggregates news content on world events, sports, science and technology, and financial markets, as well as entertainment content such as cartoons, games, astrology and jokes, from over one hundred international and domestic content providers.
Forward Looking Statements
This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans,""believes," "estimates" and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the online game market will not continue to grow or that NetEase will not be able to maintain its leading position in that market, which could occur if, for example, its new online games such as Ghost, Tianxia III and Legend of Fairy or expansion packs and other improvements to its existing games, including its current and planned expansion packs for Heroes of Tang Dynasty, Warsong of Westward Journey and Fairyland Village, do not become as popular as management anticipates; the ability of NetEase to effectively market its games and other services and achieve a positive return on its marketing expenditures; the risk that Shanghai EaseNet will not be able to continue operating World of Warcraft, StarCraft II or other games licensed by it for a period of time or permanently due to possible governmental actions or the risk that such games will not be popular with game players in China; the risk that changes in Chinese government regulation of the online game market may limit future growth of NetEase's revenue or cause revenue to decline; competition in the online advertising business and the risk that investments by NetEase in its content and services may not increase the appeal of the NetEase websites among Internet users or result in increased advertising revenue; the risk that NetEase may not be able to continuously develop new and creative online services, including its ability to maintain and enhance the popularity of its micro-blogging services; the risk that NetEase will not be able to control its expenses in future periods; competition in NetEase's existing and potential markets; governmental uncertainties (including possible changes in the effective tax rates applicable to NetEase and its subsidiaries and affiliates and the ability of NetEase to receive and maintain approvals of the preferential tax treatments and general competition and price pressures in the marketplace); the risk that fluctuations in the value of the Renminbi with respect to other currencies could adversely affect NetEase's business and financial results; and other risks out lined in NetEase's filings with the Securities and Exchange Commission. NetEase does not undertake any obligation to update this forward-looking information, except as required under the applicable law.
Contact for Media and Investors:
Brandi Piacente
Investor Relations
brandi@corp.netease.com
Tel: (+1) 212-481-2050
Cassia Curran
NetEase, Inc.
cassia@corp.netease.com
Tel: (+86) 571-8985-2076
NETEASE, INC. | ||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(RMB and USD in thousands) | ||||||
December 31, | March 31, | March 31, | ||||
2011 | 2012 | 2012 | ||||
RMB | RMB | USD (Note 1) | ||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | 2,214,618 | 2,012,449 | 319,563 | |||
Time deposits | 9,704,777 | 10,671,235 | 1,694,519 | |||
Restricted cash | 318,684 | 239,338 | 38,005 | |||
Accounts receivable, net | 230,047 | 201,016 | 31,920 | |||
Prepayments and other current assets | 900,464 | 815,105 | 129,433 | |||
Short-term investments | 993,606 | 1,214,989 | 192,933 | |||
Deferred tax assets | 111,990 | 128,167 | 20,352 | |||
Total current assets | 14,474,186 | 15,282,299 | 2,426,725 | |||
Non-current assets: | ||||||
Property, equipment and software, net | 848,469 | 814,897 | 129,400 | |||
Land use right, net | 11,788 | 11,723 | 1,862 | |||
License right, net | 48,962 | 31,956 | 5,074 | |||
Deferred tax assets | 2,586 | 2,579 | 410 | |||
Time deposits | - | 428,000 | 67,963 | |||
Other long-term assets | 58,940 | 69,199 | 10,988 | |||
Total non-current assets | 970,745 | 1,358,354 | 215,697 | |||
Total assets | 15,444,931 | 16,640,653 | 2,642,422 | |||
Liabilities and Shareholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | 134,217 | 142,554 | 22,637 | |||
Salary and welfare payables | 244,398 | 179,484 | 28,501 | |||
Taxes payable | 391,769 | 412,508 | 65,503 | |||
Deferred revenue | 1,014,073 | 1,085,450 | 172,362 | |||
Accrued liabilities and other payables | 498,120 | 642,271 | 101,988 | |||
Total current liabilities | 2,282,577 | 2,462,267 | 390,991 | |||
Long-term payable: | ||||||
Other long-term payable | 63,890 | 52,081 | 8,270 | |||
Total liabilities | 2,346,467 | 2,514,348 | 399,261 | |||
Total NetEase, Inc.'s equity | 13,126,701 | 14,164,494 | 2,249,225 | |||
Noncontrolling interests | (28,237) | (38,189) | (6,064) | |||
Total shareholders' equity | 13,098,464 | 14,126,305 | 2,243,161 | |||
Total liabilities and shareholders' equity | 15,444,931 | 16,640,653 | 2,642,422 | |||
The accompanying notes are an integral part of this press release. | ||||||
NETEASE, INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
(RMB and USD in thousands, except per share data) | ||||||||
Quarter Ended | ||||||||
March 31, | December 31, | March 31, | March 31, | |||||
2011 | 2011 | 2012 | 2012 | |||||
RMB | RMB | RMB | USD (Note 1) | |||||
Revenues: | ||||||||
Online game services | 1,385,643 | 1,833,269 | 1,821,029 | 289,167 | ||||
Advertising services | 126,828 | 278,474 | 143,451 | 22,779 | ||||
E-mail, wireless value-added | ||||||||
services and others | 25,680 | 37,249 | 39,630 | 6,293 | ||||
Total revenues | 1,538,151 | 2,148,992 | 2,004,110 | 318,239 | ||||
Business taxes | (38,200) | (49,809) | (38,481) | (6,111) | ||||
Total net revenues | 1,499,951 | 2,099,183 | 1,965,629 | 312,128 | ||||
Total cost of revenues | (514,990) | (646,086) | (634,407) | (100,739) | ||||
Gross profit | 984,961 | 1,453,097 | 1,331,222 | 211,389 | ||||
Operating expenses: | ||||||||
Selling and marketing expenses | (130,345) | (280,680) | (130,497) | (20,722) | ||||
General and administrative expenses | (63,332) | (105,787) | (70,284) | (11,161) | ||||
Research and development expenses | (98,306) | (142,514) | (154,961) | (24,607) | ||||
Total operating expenses | (291,983) | (528,981) | (355,742) | (56,490) | ||||
Operating profit | 692,978 | 924,116 | 975,480 | 154,899 | ||||
Other income: | ||||||||
Investment income | 82 | 9,954 | 13,926 | 2,211 | ||||
Interest income | 51,363 | 78,624 | 86,490 | 13,734 | ||||
Exchange gains (losses) | 25,274 | (36,394) | 17,597 | 2,794 | ||||
Other, net | 2,084 | 62,544 | 1,298 | 207 | ||||
Net income before tax | 771,781 | 1,038,844 | 1,094,791 | 173,845 | ||||
Income tax | (37,208) | (122,621) | (163,063) | (25,893) | ||||
Net income after tax | 734,573 | 916,223 | 931,728 | 147,952 | ||||
Net loss (gain) attributable to noncontrolling interests | 2,814 | (17,598) | 9,952 | 1,580 | ||||
Net income attributable to the Company's shareholders | 737,387 | 898,625 | 941,680 | 149,532 | ||||
Comprehensive income | 734,573 | 916,223 | 931,728 | 147,952 | ||||
Comprehensive loss (income) attributable to noncontrolling interests | 2,814 | (17,598) | 9,952 | 1,580 | ||||
Comprehensive income attributable to the | 737,387 | 898,625 | 941,680 | 149,532 | ||||
Earnings per share, basic | 0.23 | 0.27 | 0.29 | 0.05 | ||||
Earnings per ADS, basic | 5.66 | 6.86 | 7.18 | 1.14 | ||||
Earnings per share, diluted | 0.23 | 0.27 | 0.29 | 0.05 | ||||
Earnings per ADS, diluted | 5.63 | 6.85 | 7.17 | 1.14 | ||||
Weighted average number of ordinary shares outstanding, basic | 3,255,764 | 3,272,617 | 3,278,157 | 3,278,157 | ||||
Weighted average number of ADS outstanding, basic | 130,231 | 130,905 | 131,126 | 131,126 | ||||
Weighted average number of ordinary shares outstanding, diluted | 3,273,909 | 3,279,404 | 3,284,428 | 3,284,428 | ||||
Weighted average number of ADS outstanding, diluted | 130,956 | 131,176 | 131,377 | 131,377 | ||||
The accompanying notes are an integral part of this press release. | ||||||||
NETEASE, INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(RMB and USD in thousands) | ||||||||
Quarter Ended | ||||||||
March 31, | December 31, | March 31, | March 31, | |||||
2011 | 2011 | 2012 | 2012 | |||||
RMB | RMB | RMB | USD (Note 1) | |||||
Cash flows from operating activities: | ||||||||
Net income | 734,573 | 916,223 | 931,728 | 147,952 | ||||
Adjustments to reconcile net profit to net cash | ||||||||
Depreciation and amortization | 65,706 | 76,323 | 71,677 | 11,382 | ||||
Impairment loss for license right | - | 50,316 | - | - | ||||
Share-based compensation cost | 38,238 | 45,143 | 68,273 | 10,842 | ||||
Allowance for (reversal of) provision for doubtful debts | (1,366) | (6,212) | 921 | 146 | ||||
Loss (gain) on disposal of property, equipment | 4 | (35) | (122) | (19) | ||||
Unrealized exchange (gains) losses | (31,077) | 41,263 | (18,719) | (2,972) | ||||
Deferred income taxes | (8,401) | 22,054 | (16,170) | (2,568) | ||||
Net equity share of loss from associated companies | 330 | 1,010 | 256 | 41 | ||||
Others | (162) | (9,272) | 2,894 | 460 | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 75,613 | 6,603 | 20,720 | 3,290 | ||||
Prepayments and other current assets | 54,987 | 79,852 | 180,825 | 28,714 | ||||
Accounts payable | (18,560) | 14,477 | 14,857 | 2,359 | ||||
Salary and welfare payables | (64,934) | 48,575 | (64,930) | (10,310) | ||||
Taxes payable | (30,719) | (2,706) | (19,620) | (3,116) | ||||
Deferred revenue | 91,107 | (3,777) | 71,378 | 11,334 | ||||
Accrued liabilities and other payables | 63,976 | (36,144) | 92,897 | 14,751 | ||||
Net cash provided by operating activities | 969,315 | 1,243,693 | 1,336,865 | 212,286 | ||||
Cash flows from investing activities: | ||||||||
Purchase of property, equipment and software | (141,157) | (171,422) | (23,280) | (3,697) | ||||
Proceeds from sale of property, equipment and software | 1 | 43 | 182 | 29 | ||||
Purchase of other intangible assets | - | (1,042) | - | - | ||||
Net change in short-term investments with terms | ||||||||
of three months or less | - | - | (500,000) | (79,397) | ||||
Purchase of short-term investments | - | (407,863) | (154,277) | (24,498) | ||||
Proceeds from maturities of short-term investments | - | 20,000 | 430,000 | 68,281 | ||||
Transfer (to) from restricted cash | - | (44,885) | 79,346 | 12,600 | ||||
Net change in time deposits with terms | ||||||||
of three months | 231,682 | (125,205) | 117,997 | 18,737 | ||||
Placement/rollover of matured time deposits | (2,863,899) | (3,743,262) | (4,429,917) | (703,441) | ||||
Proceeds from maturities of time deposits | 2,157,008 | 3,497,811 | 2,933,775 | 465,863 | ||||
Net change in other assets | (5,844) | 4,681 | (14,158) | (2,248) | ||||
Net cash used in investing activities | (622,209) | (971,144) | (1,560,332) | (247,771) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from employees exercising stock options | 30,252 | 9,877 | 21,033 | 3,340 | ||||
Payment of other long-term payable | (10) | (10) | - | - | ||||
Net cash provided by financing activities | 30,242 | 9,867 | 21,033 | 3,340 | ||||
Effect of exchange rate changes on cash held in | ||||||||
foreign currencies | 7,112 | (11,327) | 265 | 42 | ||||
Net increase (decrease) in cash and cash equivalents | 384,460 | 271,089 | (202,169) | (32,103) | ||||
Cash and cash equivalents, beginning of the period | 1,285,137 | 1,943,529 | 2,214,618 | 351,666 | ||||
Cash and cash equivalents, end of the period | 1,669,597 | 2,214,618 | 2,012,449 | 319,563 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for income tax, net of tax refund | 91,682 | 129,437 | 145,625 | 23,124 | ||||
Supplemental schedule of non-cash investing and | ||||||||
financing activities: | ||||||||
Fixed asset purchases financed by accounts payable | 64,347 | 37,614 | 35,393 | 5,620 | ||||
The accompanying notes are an integral part of this press release. | ||||||||
NETEASE, INC. | ||||||||
UNAUDITED SEGMENT INFORMATION | ||||||||
(RMB and USD in thousands) | ||||||||
Quarter Ended | ||||||||
March 31, | December 31, | March 31, | March 31, | |||||
2011 | 2011 | 2012 | 2012 | |||||
RMB | RMB | RMB | USD (Note 1) | |||||
Revenues: | ||||||||
Online game services | 1,385,643 | 1,833,269 | 1,821,029 | 289,167 | ||||
Advertising services | 126,828 | 278,474 | 143,451 | 22,779 | ||||
E-mail, wireless value-added services and others | 25,680 | 37,249 | 39,630 | 6,293 | ||||
Total revenues | 1,538,151 | 2,148,992 | 2,004,110 | 318,239 | ||||
Business taxes: | ||||||||
Online game services | (25,392) | (23,161) | (23,566) | (3,742) | ||||
Advertising services | (12,198) | (25,850) | (14,009) | (2,225) | ||||
E-mail, wireless value-added services and others | (610) | (798) | (906) | (144) | ||||
Total business taxes | (38,200) | (49,809) | (38,481) | (6,111) | ||||
Net revenues: | ||||||||
Online game services | 1,360,251 | 1,810,108 | 1,797,463 | 285,425 | ||||
Advertising services | 114,630 | 252,624 | 129,442 | 20,554 | ||||
E-mail, wireless value-added services and others | 25,070 | 36,451 | 38,724 | 6,149 | ||||
Total net revenues | 1,499,951 | 2,099,183 | 1,965,629 | 312,128 | ||||
Cost of revenues: | ||||||||
Online game services | (408,201) | (495,506) | (484,894) | (76,998) | ||||
Advertising services | (76,316) | (114,949) | (103,827) | (16,487) | ||||
E-mail, wireless value-added services and others | (30,473) | (35,631) | (45,686) | (7,254) | ||||
Total cost of revenues | (514,990) | (646,086) | (634,407) | (100,739) | ||||
Gross profit (loss): | ||||||||
Online game services | 952,050 | 1,314,602 | 1,312,569 | 208,427 | ||||
Advertising services | 38,314 | 137,675 | 25,615 | 4,067 | ||||
E-mail, wireless value-added services and others | (5,403) | 820 | (6,962) | (1,105) | ||||
Total gross profit | 984,961 | 1,453,097 | 1,331,222 | 211,389 | ||||
Gross profit (loss) margin: | ||||||||
Online game services | 70.0% | 72.6% | 73.0% | 73.0% | ||||
Advertising services | 33.4% | 54.5% | 19.8% | 19.8% | ||||
E-mail, wireless value-added services and others | (21.6%) | 2.2% | (18.0%) | (18.0%) | ||||
The accompanying notes are an integral part of this press release. | ||||||||
NETEASE, INC. | ||||||||
NOTES TO UNAUDITED FINANCIAL INFORMATION | ||||||||
Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00 = RMB6.2975 on the last trading day of March 2012 (March 30, 2012)as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. | ||||||||
Note 2: Share-based compensation cost reported in the Company's unaudited condensed consolidated statements of comprehensive income is set out as follows in RMB and USD (in thousands): | ||||||||
Quarter Ended | ||||||||
March 31, | December 31, | March 31, | March 31, | |||||
2011 | 2011 | 2012 | 2012 | |||||
RMB | RMB | RMB | USD (Note 1) | |||||
Share-based compensation cost included in: | ||||||||
Cost of revenue | 13,602 | 21,030 | 33,215 | 5,274 | ||||
Operating expenses | ||||||||
- Selling and marketing expenses | 3,255 | 3,897 | 4,680 | 743 | ||||
- General and administrative expenses | 11,237 | 7,661 | 11,926 | 1,894 | ||||
- Research and development expenses | 10,144 | 12,555 | 18,452 | 2,931 | ||||
BEIJING, May 17, 2012 /PRNewswire-Asia/ -- KongZhong Corporation (NASDAQ: KONG), a leading provider of digital entertainment services for consumers in the PRC, today announced its unaudited financial results for the first quarter 2012 financial results.
First Quarter 2012 Financial Highlights:
Commenting on the results, the Company's Chairman and Chief Executive Officer, Leilei Wang said, "The Company achieved record revenues and non-GAAP Net Profit After Tax ("NPAT") in the first quarter of 2012 and more importantly, we continue to build a strong foundation for future growth in our Internet and mobile game businesses."
Business Highlights:
Financial Results:
For the Three (US$ thousands) | For the Three 2011 (US$ in thousands) | For the Three 2012 (US$ in thousands) | |
Revenues | $40,127 | $39,285 | $43,841 |
WVAS | 21,358 | 18,442 | 19,116 |
Mobile Games | 12,269 | 7,612 | 5,560 |
Internet Games | 6,500 | 13,231 | 19,165 |
Sales Tax | $839 | $1,062 | $1,381 |
WVAS | 381 | 272 | 277 |
Mobile Games | 178 | 124 | 86 |
Internet Games | 280 | 666 | 1,018 |
Cost of Revenue | $22,753 | $21,553 | $23,713 |
WVAS | 13,111 | 11,276 | 12,699 |
Mobile Games | 7,760 | 4,565 | 3,133 |
Internet Games | 1,882 | 5,712 | 7,881 |
Gross profit | $16,535 | $16,670 | $18,747 |
WVAS | 7,866 | 6,894 | 6,140 |
Mobile Games | 4,331 | 2,923 | 2,341 |
Internet Games | 4,338 | 6,853 | 10,266 |
Gross profit ratio | 41% | 42% | 43% |
WVAS | 37% | 37% | 32% |
Mobile Games | 35% | 38% | 42% |
Internet Games | 67% | 52% | 54% |
Revenues
WVAS Revenues
WVAS revenues in 1Q12 were US$ 19.12 mn, a 4% increase from 4Q11. WVAS revenues were relatively stable compared to prior periods although the WVAS operating environment remains difficult.
WVAS made up 43.6% of total revenues in 1Q12.
Mobile Games Revenues
Total mobile game revenues in 1Q12 were US$ 5.56 mn, a 27% decrease from 4Q11. Mobile games continued to underperform our expectations as our mobile operator partners implemented more strict operating policies and continued to adjust its mobile game marketing strategies. We see these difficulties continuing in 2Q12 for our legacy feature-phone mobile game business.
However, with the acquisition of Noumena, the Company will begin new efforts to develop our mobile game business on new, less mobile operator dependent smartphone mobile game platforms and expect to break out mobile game revenues which come from smartphone mobile game platforms separate from feature-phone mobile game revenues in future periods.
Mobile game revenues made up 12.7% of total revenues in 1Q12.
Internet Games Revenues
Internet Game ("Net Game") revenues were US$ 19.17 mn in 1Q12, a 45% increase from 4Q11. Net Game revenues were driven by the continued strong performance of World of Tanks ("WoT").
Domestic Net game revenues were US$ 18.11 mn, a 48% increase from 4Q11 due to the continued growth of the WoT community. Overseas Net game revenues were US$ 1.06 mn, a 13% increase from 4Q11. Total overseas revenues as a percentage of total Net game revenues in 1Q12 were 6% compared to 7% in 4Q11.
For the 1Q12 3-month period, domestic mainland China online game operations achieved average concurrent users ("ACUs") of 228k and aggregate paying accounts ("APAs") of 744k with quarterly average revenue per user ("ARPU") of RMB153.
For the Three | For the Three | For the Three | |
ACU | 145k | 194k | 228k |
APA | 218k | 570k | 744k |
ARPU(RMB/Q) | 150 | 137 | 153 |
Net game revenues made up 43.7% of total revenues in 1Q12.
Gross Profit
Total gross profit was US$18.75 mn in 1Q12, a 12% increase compared to 4Q11. Total gross margin was 43% in 1Q12 and an increase compared to 42% in 4Q11.
WVAS Gross Profit
WVAS gross profit in 1Q12 was US$ 6.14 mn, an 11% decrease from 4Q11. 1Q12 WVAS gross margin was 32%.
Mobile Game Gross Profit
Mobile games gross profit in 1Q12 was US$ 2.34 mn, a 20% decrease from 4Q11 as policies from our mobile operator partners in our mobile game monthly subscription business continued to lead to higher churn and lower profitability. 1Q12 mobile games gross margin was 42%.
Internet Game Gross Profit
Internet game gross profit in 1Q12 was US$ 10.27 mn, a 50% increase from 4Q11. 1Q12 internet game gross margin was 54%.
Operating Expenses
For the Three | For the Three | For the Three | |||
Months Ended | Months Ended | Months Ended | |||
March 31, | December 31, | March 31, | |||
2011 | 2011 | 2012 | |||
(US$ thousands) | (US$ in thousands) | (US$ in thousands) | |||
Product development | $3,606 | $3,899 | $4,080 | ||
Sales and marketing | 4,831 | 5,636 | 5,712 | ||
General and administrative | 2,939 | 2,738 | 2,862 | ||
Total operating expenses | $11,376 | $12,273 | $12,654 |
Total operating expenses in 1Q12 were US$ 12.65 mn compared to US$12.27 mn in 4Q11 or a 3% increase.
Product development expenses in 1Q12 were US$ 4.08 mn compared to US$3.90 mn in 4Q11 or a 5% increase.
Sales and marketing expenses in 1Q12 were US$ 5.71 mn compared to US$ 5.64 mn in 4Q11 and US$ 4.83 mn in the same period last year. The increase in sales and marketing was driven by activities related to the marketing of World of Tanks and the small scale public test for Kung Fu Hero. We expect to see increases in our marketing activities for WoT, Hero and other new Net games in the following quarters.
General and administrative ("G&A") expenses in 1Q12 were US$ 2.86 mn compared to US$ 2.74 mn in 4Q11. We expect G&A expenses to be maintained at the 1Q12 levels in the coming periods.
The Company's total headcount remained relatively stable in 1Q12 at 982 compared to 961 at the end of 4Q11.
Operating income
Operating income for 1Q12 was US$ 6.09 mn compared to operating profit US$ 4.72 mn in 4Q11.
Earnings
Net income and Non-GAAP net income in 1Q12 were US$ 6.86 mn and US$ 8.66 mn, respectively. Diluted income per ADS and diluted Non-GAAP earnings per ADS were US$ 0.16 and US$ 0.21 in 1Q12, respectively.
Total ADS on a diluted basis outstanding during 1Q12 were 41.91 mn, compared to 41.58 mn outstanding during 4Q11.
For the purpose of earnings per share calculation | Number during three | Number during three |
ADS (in mns) | 41.08 | 41.03 |
Add: Dilution impact from options and nonvested shares | 0.50 | 0.50 |
Convertible senior notes issued to Nokia Growth Partners ("NGP") | - | 0.38 |
ADS on diluted basis | 41.58 | 41.91 |
Note 1: The convertible senior notes outstanding were excluded from the computation of diluted net loss per share for three months ended December 31, 2011 because their effect would be anti-dilutive.
Balance Sheet
As of March 31, 2012, the Company had $178.19 mn in cash and cash equivalents, held-to-maturity and trading securities or US$ 4.34 per basic ADS in cash and cash equivalents, held-to-maturity and trading securities compared to US$ 154.57 mn at the end of 4Q11.
In March 2012, NGP converted the convertible senior notes into 22,800,000 ordinary shares.
Stock Repurchase Program:
The Company began to repurchase its ADSs in the open market on September 30, 2011. As of May 16, 2012, 964k ADSs, representing 38.58 mn ordinary shares of the Company, were repurchased at an average price of $4.4408 per ADS.
Business Outlook (For the 3-month period ending June 30, 2012):
The Company expects total revenues for 2Q12 to be within the range of US$ 49 mn to US$ 50 mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$ 20.5 mn, mobile game revenues of US$ 6.0 mn and Net Game revenues of US$ 23 mn.
The Company expects total gross profit to be within the range of US$ 21.5 mn to US$ 22.5 mn, total operating profit to be US$ 6.5 mn to US$ 7.5 mn, net profit to be US$ 6.5 mn to US$ 7.5 mn, and Non-GAAP net profit is expected to be US$ 9 mn to US$ 10 mn.
Conference Call:
The Company's management team will conduct a conference call at 7:30 am Beijing time on May 17, 2012 (7:30 pm Eastern time and 4:30 pm Pacific time on May 16, 2012). A webcast of this conference call will be accessible on the Company's web site at http://ir.kongzhong.com.
KongZhong Corporation | |||||
Condensed Consolidated Statements of Comprehensive Income | |||||
(US$ in thousands, except per share and share data) | |||||
(Unaudited) | |||||
For the Three | For the Three | For the Three | |||
Revenues | $40,127 | $39,285 | $43,841 | ||
Sales tax | 839 | 1,062 | 1,381 | ||
Cost of revenues | 22,753 | 21,553 | 23,713 | ||
Gross profit | 16,535 | 16,670 | 18,747 | ||
Operating expenses | |||||
Product development | 3,606 | 3,899 | 4,080 | ||
Sales and marketing | 4,831 | 5,636 | 5,712 | ||
General and administrative | 2,939 | 2,738 | 2,862 | ||
Total operating expenses | 11,376 | 12,273 | 12,654 | ||
Change in fair value of contingent consideration for business acquisition | (3,729) | - | |||
- | |||||
Government subsidy | - | 319 | - | ||
Operating income | 1,430 | 4,716 | 6,093 | ||
Interest income | 686 | 1,338 | 1,276 | ||
Interest expense on convertible note | 230 | 88 | 63 | ||
Loss on extinguishment of debt upon prepayment of convertible senior note | 1,567 | - | - | ||
Investment income | 292 | 486 | 589 | ||
Income before tax expense | 611 | 6,452 | 7,895 | ||
Income tax expense | 1,067 | 784 | 1,037 | ||
Net (loss) income | $(456) | $5,668 | $6,858 | ||
Basic (loss) earnings per ADS | $(0.01) | $0.14 | $0.17 | ||
Diluted (loss) earnings per ADS | $(0.01) | $0.14 | $0.16 | ||
Weighted average ADS outstanding (million) | 37.58 | 41.08 | 41.03 | ||
Weighted average ADS used in diluted EPS calculation (million) | 37.58 | 41.58 | 41.91 | ||
Net (loss) income | $(456) | $5,668 | $6,858 | ||
Other comprehensive income | 2,701 | 3,549 | 209 | ||
Total comprehensive income | $2,245 | $9,217 | $7,067 | ||
KongZhong Corporation | |||
(Unaudited) | |||
For the Three | For the Three | ||
Months Ended | Months Ended | ||
March 31, 2011 | March 31, 2012 | ||
Cash Flows From Operating Activities | |||
Net (loss) income | $(456) | $6,858 | |
Adjustments to reconcile net (loss) income to net cash | |||
provided by operating activities | |||
Depreciation and amortization | 1,159 | 1,136 | |
Loss on disposal of property and equipment | (4) | (6) | |
Provision of bad debt | 222 | - | |
Change in fair value of contingent consideration for business acquisition | 3,729 | - | |
Share-based compensation | 1,191 | 1,150 | |
Amortization of the debt discount | 144 | 36 | |
Loss on extinguishment of debt upon prepayment of convertible senior note | 1,567 | - | |
Changes in operating assets and liabilities | (2,075) | 6,050 | |
Net Cash Provided by Operating Activities | 5,477 | 15,224 | |
Cash Flows From Investing Activities | |||
Acquisition of business | - | (3,000) | |
Purchase of property and equipment | (676) | (313) | |
Loans to third party | (21,228) | 22,190 | |
Held-to-maturity securities | - | (59,886) | |
Long-term investment | - | (2,000) | |
Proceeds from disposal of property and equipment | 4 | 6 | |
Net Cash Used in Investing Activities | (21,900) | (43,003) | |
Cash Flows From Financing Activities | |||
Proceeds from exercise of share options | 105 | 49 | |
Deferred payments for acquisition of subsidiaries | (14,578) | - | |
Stock repurchase | - | (1,587) | |
Prepayment for convertible senior note | (9,310) | - | |
Net Cash Used in Financing Activities | (23,783) | (1,538) | |
Effect of foreign exchange rate changes | 1,355 | 739 | |
Net decrease in Cash and Cash Equivalents | (38,851) | (28,578) | |
Cash and Cash Equivalents, Beginning of Period | 157,171 | 129,512 | |
Cash and Cash Equivalents, End of Period | 118,320 | 100,934 | |
KongZhong Corporation | |||||
Condensed Consolidated Balance Sheets | |||||
(US$ in thousands) | |||||
(Unaudited) | |||||
March 31, | December 31, | March 31, | |||
2011 | 2011 | 2012 | |||
Cash and cash equivalents | $118,320 | $129,512 | $100,934 | ||
Held-to-maturity securities | - | 17,299 | 77,259 | ||
Trading securities | 29 | 7,754 | 2 | ||
Loans to third party | 21,357 | 22,187 | - | ||
Accounts receivable (net) | 28,143 | 19,903 | 20,722 | ||
Other current assets | 3,779 | 4,147 | 4,948 | ||
Total current assets | 171,628 | 200,802 | 203,865 | ||
Rental deposits | 525 | 511 | 512 | ||
Intangible assets (net) | 3,872 | 2,348 | 5,260 | ||
Property and equipment (net) | 3,910 | 3,620 | 3,384 | ||
Long-term investments | - | - | 2,000 | ||
Goodwill | 88,764 | 72,967 | 87,456 | ||
Total assets | $268,699 | $280,248 | $302,477 | ||
Accounts payable(including accounts payable of the consolidated variable interest | $11,989 | $15,347 | $13,052 | ||
entities ("VIE") without recourse to KongZhong Corporation of $11,986, $15,344 | |||||
and $13,049 as of March 31, 2011, December 31, 2011 and March 31,2012, respectively) | |||||
Deferred revenue(including deferred revenue of the consolidated VIE without recourse | 2,596 | 4,044 | 4,542 | ||
to KongZhong Corporation of $1,054 , $2,796 and $3,530 as of March 31, 2011, | |||||
December 31,2011 and March 31, 2012, respectively) | |||||
Other current liabilities(including other current liabilities of the consolidated VIE without | 11,313 | 13,134 | 30,698 | ||
recourse to KongZhong Corporation of $7,463, $7,628 and $9,375 as of March 31, | |||||
2011, December 31,2011 and March 31, 2012, respectively) | |||||
Total current liabilities | 25,898 | 32,525 | 48,292 | ||
Convertible note | 1,063 | 1,273 | - | ||
Non-current deferred tax liability(including non-current deferred tax liability of the | |||||
consolidated VIE without recourse to KongZhong Corporation of $305, $272 and | |||||
$61 as of March 31, 2011, December 31,2011 and March 31, 2012, respectively) | 305 | 272 | 61 | ||
Total liabilities | $27,266 | $34,070 | $48,353 | ||
Shareholders' equity | 241,433 | 246,178 | 254,124 | ||
Total liabilities and shareholders' equity | $268,699 | $280,248 | $302,477 | ||
Non-GAAP Financial Measures
To supplement the unaudited condensed statements of comprehensive income presented in accordance with US GAAP, the Company uses non-GAAP financial measures (Non-GAAP Financial Measures) of net income and net income per diluted ADS, which are adjusted from results based on GAAP to exclude certain infrequent or unusual or non-cash based expenses, gains and losses. The Non-GAAP Financial Measures are provided as additional information to help both management and investors compare business trends among different reporting periods on a consistent and more meaningful basis and enhance investors' overall understanding of the Company's current financial performance and prospects for the future.
The Non-GAAP Financial Measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. In addition, the Company's calculation of the Non-GAAP Financial Measures may be different from the calculation used by other companies, and therefore comparability may be limited.
For the periods presented, the Company's non-GAAP net income and non-GAAP net income per diluted ADS exclude, as applicable, the amortization of intangibles, share-based compensation expense, interest expense on convertible note, loss on extinguishment of debt upon prepayment of convertible senior note and change of contingent payable, as well as is adjusted for the dilution impact on ADS numbers of the options, nonvested shares and convertible note.
Reconciliation of the Company's Non-GAAP financial measures to the GAAP financial measures is set forth below.
For the Three (US$ thousands, | For the Three (US$ in thousands, | For the Three (US$ in thousands, | |
GAAP net (loss) income | $(456) | $5,668 | $6,858 |
Share-based compensation | 1,191 | 1,174 | 1,150 |
Interest expense on convertible note | 230 | 88 | 63 |
Amortization of intangibles | 619 | 537 | 585 |
Loss on extinguishment of debt upon | 1,567 | - | - |
Change of contingent payable | 3,730 | - | - |
Non-GAAP net income | $6,881 | $7,467 | $8,656 |
Weighted average ADS used in diluted | 40.94 | 42.15 | 41.91 |
Non-GAAP diluted net income per ADS (Note 1) | $0.17 | $0.18 | $0.21 |
Note 1: The non-GAAP adjusted net income per ADS is computed using non-GAAP net income and number of ADS used in GAAP diluted EPS calculation, where the number of ADS is adjusted for dilution due to options, nonvested shares and convertible note issued to Nokia Growth Partners.
About KongZhong:
We are one of the leading providers of digital entertainment services for consumers in the PRC. We operate three main business units, namely WVAS, mobile games and Internet games. We are one of the leading providers of WVAS to mobile phone users and have been in cooperation with all major telecommunications operators in the PRC since 2002. In 2005, we began providing feature-phone mobile games on the networks of China Mobile with the acquisition of Tianjin Mammoth, a mobile games developer. To further expand our mobile games development capabilities, we acquired Noumena in 2012 in order to develop smartphone mobile games on smartphone mobile operating systems, such as iOS and Android. We commenced our Internet games business in 2010 through our acquisition of Dacheng, a developer and operator of Internet games in the PRC. In addition to developing and operating our self-developed Internet games, such as Loong, Demon Code and Kung Fu Hero, we are the exclusive operator of the popular World of Tanks game for the PRC Internet games market.
Safe Harbor Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding trends in the wireless value-added services, wireless media, mobile games and online games industries and our future results of operations, financial condition and business prospects. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends and our results may differ materially from those expressed or implied in these forward looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, continued competitive pressure in China's wireless value-added services, wireless media, mobile games and online games industries and the effect of such pressure on revenues; our ability to develop new products that are commercially successful; unpredictable changes in technology, consumer demand and usage preferences in the markets we operate; our ability to protect our intellectual property rights; the short operating history of certain of our business segments, in particular the online games segment; the state of and any change in our relationship with China's telecommunications operators; our dependence on the billing systems of telecommunications operators for our performance; the outcome of our investment of operating income generated from the WVAS segment into the development of our wireless Internet, mobile games and online games segments; changes in the regulations or policies of the Ministry of Industry and Information Technology and other government authorities relevant to our businesses; and changes in political, economic, legal and social conditions in China, including the Chinese government's policies with respect to economic growth, foreign exchange, foreign investment and entry by foreign companies into China's telecommunications and online games markets. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.
]]>Highlights for the First Quarter of 2012
"Through solid execution on our business strategies, the Ctrip team has continued outperforming the industry in the first quarter of 2012," said Min Fan, President and Chief Executive Officer of Ctrip. "In the first quarter, we strengthened all business sectors, expanded into more new business areas and intensified sales and marketing campaigns. As the industry leader, Ctrip will continuously strive to deliver the best product with the best service at the best price to our customers."
First Quarter 2012 Financial Results
For the first quarter of 2012, Ctrip reported total revenues of RMB964 million (US$153 million), representing an 18% increase from the same period in 2011. Total revenues for the first quarter of 2012 decreased by 2% from the previous quarter.
Hotel reservation revenues amounted to RMB367 million (US$58 million) for the first quarter of 2012, representing an 18% increase year-on-year, primarily driven by an increase of 21% in hotel reservation volume and partially offset by a decrease of 3% commission per room night year-on-year. Hotel reservation revenues decreased by 8% quarter-on-quarter, primarily due to seasonality.
Air ticket booking revenues for the first quarter of 2012 were RMB360 million (US$57 million), representing a 10% increase year-on-year, primarily driven by a 17% increase in air ticketing sales volume and a 5% decrease in commission per ticket year-on-year. Air ticket booking revenues decreased 5% quarter-on-quarter.
Packaged-tour revenues for the first quarter of 2012 were RMB166 million (US$26 million), representing a 33% increase year-on-year due to the increase of leisure travel volume. Packaged-tour revenues increased 28% quarter-on-quarter, primarily due to the increased travel demand during Chinese New Year.
Corporate travel revenues for the first quarter of 2012 were RMB39 million (US$6 million), representing a 23% increase year-on-year, primarily driven by the increased corporate travel demand from business activities. Corporate travel revenues decreased 18% quarter-on-quarter due to the fewer business activities during Chinese New Year.
For the first quarter of 2012, net revenues were RMB911 million (US$145 million), representing a 19% increase from the same period in 2011. Net revenues for the first quarter of 2012 decreased by 2% from the previous quarter.
Gross margin was 75% in the first quarter of 2012, compared to 78% in the same period in 2011 and 76% in the previous quarter.
Product development expenses for the first quarter of 2012 increased by 51% to RMB196 million (US$31 million) from the same period in 2011, and increased by 14% from the previous quarter, primarily due to an increase in product development personnel and share-based compensation charges. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 18% of the net revenues, increased from 14% in the same period in 2011 and increased from 16% in the previous quarter.
Sales and marketing expenses for the first quarter of 2012 increased by 47% to RMB183 million (US$29 million) from the same period in 2011, primarily due to an increase in sales and marketing related activities and an increase in sales and marketing personnel. Sales and marketing expenses for the first quarter of 2012 decreased by 1% from the previous quarter. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 19% of the net revenues, increased from 15% in the same period in 2011 and remained consistent with that in the previous quarter.
General and administrative expenses for the first quarter of 2012 increased by 57% to RMB129 million (US$20 million) from the same period in 2011 and increased by 14% from the previous quarter, primarily due to an increase in administrative personnel, share-based compensation charges and the incremental turnover tax due to the new value-added tax reform. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 8% of the net revenues, increased from 5% in the same period in 2011 and increased from 6% in the previous quarter.
Income from operations for the first quarter of 2012 was RMB177 million (US$28 million), representing a decrease of 33% from the same period in 2011 and a decrease of 23% from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB277 million (US$44 million), representing a decrease of 17% from the same period in 2011 and a decrease of 15% from the previous quarter.
Operating margin was 19% in the first quarter of 2012, compared to 34% in the same period in 2011, and 25% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 30%, decreased from 44% in the same period in 2011 and 35% in the previous quarter.
The effective tax rate for the first quarter of 2012 was 28%, increased from 21% in the same periods of 2011 and increased from 23% in the previous quarter, primarily due to the increase in the amount of non tax-deductible share-based compensation as a percentage to our income as a whole.
Net income attributable to Ctrip's shareholders for the first quarter of 2012 was RMB169 million (US$27 million), representing a decrease of 28% from the same period in 2011 and a decrease of 33% from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB270 million (US$43 million), representing a decrease of 12% from the same period in 2011 and a decrease of 22% from the previous quarter.
Diluted earnings per ADS were RMB1.11 (US$0.18) for the first quarter of 2012. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.77 (US$0.28) for the first quarter of 2012.
As of March 31, 2012, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB5.2 billion (US$819 million).
Business Outlook
For the second quarter of 2012, the Company expects to continue the net revenue growth year-on-year at a rate of approximately 15-20%. This forecast reflects Ctrip's current and preliminary view, which is subject to change.
Recent Development
As of May 16, 2012, Ctrip cumulatively purchased approximately 2.6 million ADSs with a total consideration of US$58 million from open market under two existing share repurchase plans adopted in 2008 and 2011, respectively.
Management Promotions
Ctrip today announced the promotion of Ms. Jane Jie Sun, Ctrip's Chief Financial Officer from December 2005 to May 2012, to be the Chief Operating Officer of the Company. Ms. Sun played an important role in building Ctrip into a leading Internet travel company. Ms. Sun was awarded the Best CFO of the 2011 All-Asia Executive Team by Institutional Investor Magazine. Ms. Sun is well-respected for her expertise in financial operations, mergers and acquisitions, investor relationship, operating and managing the OTA business over the years as the CFO of the company.
Ctrip also announced the promotion of Ms. Jenny Wenjie Wu, Ctrip's Deputy CFO since December 2011, to be the Chief Financial Officer of the Company. Prior to joining Ctrip, Ms. Wu was an equity research analyst covering China Internet and Media industries in Morgan Stanley Asia Limited and in Citi Investment Research & Analysis from 2005 to 2011. Prior to that, Ms. Wu worked in the Department of Enterprises Operations and Management in China Merchants Holdings International, one of the largest SOEs in China listed on the Hong Kong Stock Exchange for three years. Ms. Wu has a Ph.D. degree in finance from the University of Hong Kong, a Master's degree in philosophy in finance from the Hong Kong University of Science and Technology, and both a Master's degree and a Bachelor's degree in economics from Nan Kai University, China. Ms. Wu has been a Chartered Financial Analyst (CFA) since 2004.
Mr. Min Fan, President and Chief Executive Officer of Ctrip, said: "We hold a highest appreciation to Jane's significant contribution to Ctrip during her tenure with us as the CFO, and we trust she will play an even greater role in our company for the years to come. We are very pleased to have Jenny succeed the CFO position. Jenny's extensive experience and knowledge in capital markets, Internet industry and large corporate operations make her an excellent choice for our CFO position. We believe that Ctrip will achieve greater success under the leadership of our expanded senior management team."
Conference Call
Ctrip's management team will host a conference call at 9:00PM U.S. Eastern Time on May 16, 2012 (or 9:00AM on May 17, 2012 in the Shanghai/HK time zone) following the announcement.
The conference call will be available on Webcast live and replay at: http://ir.ctrip.com. The call will be archived for one month at this website.
The dial-in details for the live conference call: U.S. Toll Free Number +1.888.679.8018, International dial-in number +1.617.213.4845, Passcode 25338369. For pre-registration, please click https://www.theconferencingservice.com/prereg/key.process?key=PPX489TDY
A telephone replay of the call will be available after the conclusion of the conference call through May 24, 2012. The dial-in details for the replay: U.S. Toll Free Number +1.888.286.8010, International dial-in number +1.617.801.6888, Passcode 84999517.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "may," "will," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," "is/are likely to," "confident" or other similar statements. Among other things, quotations from management and the Business Outlook section in this press release, as well as Ctrip's strategic and operational plans, contain forward-looking statements. Ctrip may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Ctrip's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, the slow-down of economic growth in China and the global economic downturn, general declines or disruptions in the travel industry, volatility in the trading price of Ctrip's ADSs, Ctrip's reliance on its relationships and contractual arrangements with travel suppliers and strategic alliances, failure to further increase Ctrip's brand recognition to obtain new business partners and consumers, failure to compete against new and existing competitors, failure to successfully manage current growth and potential future growth, risks associated with any strategic investments or acquisitions, seasonality in the travel industry in mainland China, Hong Kong, Macau or Taiwan, failure to successfully develop Ctrip's corporate travel business, damage to or failure of Ctrip's infrastructure and technology, loss of services of Ctrip's key executives, inflation in China and in other countries, risks and uncertainties associated with PRC laws and regulations with respect to the ownership structure of Ctrip's affiliated Chinese entities and the contractual arrangements among Ctrip, its affiliated Chinese entities and their shareholders, and other risks outlined in Ctrip's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F and other filings. All information provided in this press release and in the attachments is as of the date of the issuance, and Ctrip does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
About Non-GAAP Financial Measures
To supplement Ctrip's unaudited consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Ctrip uses non-GAAP financial information related to product development expenses, sales and marketing expenses, general and administrative expenses, income from operations, operating margin, net income, and diluted earnings per ordinary share and per ADS, each of which is adjusted from the most comparable GAAP result to exclude the share-based compensation charges recorded under ASC 718, "Stock Compensation" for 2011 and 2010. Ctrip's management believes the non-GAAP financial measures facilitate better understanding of operating results from quarter to quarter and provide management with a better capability to plan and forecast future periods.
Non-GAAP information is not prepared in accordance with GAAP and may be different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for GAAP results. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Ctrip's business for the foreseeable future.
Reconciliations of Ctrip's non-GAAP financial data to the most comparable GAAP data included in the consolidated statement of operations are included at the end of this press release.
About Ctrip.com International, Ltd.
Ctrip.com International, Ltd. is a leading travel service provider of hotel accommodations, airline tickets, packaged tours, and corporate travel management in China. Ctrip aggregates hotel and flight information to enable business and leisure travelers to make informed and cost-effective bookings. Ctrip also books vacation packages and guided tours. In addition, Ctrip corporate travel management services help corporate clients effectively manage their travel requirements. Since its inception in 1999, Ctrip has experienced substantial growth and become one of the best-known travel brands in China.
For further information, please contact:
Investor Relations
Ctrip.com International, Ltd.
Tel: (+86) 21 3406 4880 X 12258
Email: iremail@ctrip.com
Ctrip.com International, Ltd. | |||||||||
Consolidated Balance Sheets Information | |||||||||
December 31, 2011 | March 31, 2012 | March 31, 2012 | |||||||
RMB | RMB | USD | |||||||
(unaudited) | (unaudited) | (unaudited) | |||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 3,503,428,418 | 2,964,876,678 | 470,802,172 | ||||||
Restricted cash | 211,636,294 | 213,856,633 | 33,958,973 | ||||||
Short-term investment | 1,288,471,562 | 1,977,502,865 | 314,013,952 | ||||||
Accounts receivable, net | 789,036,329 | 832,743,004 | 132,233,903 | ||||||
Prepayments and other current assets | 566,187,711 | 558,883,123 | 88,746,824 | ||||||
Deferred tax assets, current | 39,782,201 | 39,014,008 | 6,195,158 | ||||||
Total current assets | 6,398,542,515 | 6,586,876,311 | 1,045,950,982 | ||||||
Long-term deposits | 155,360,492 | 158,347,808 | 25,144,551 | ||||||
Land use rights | 113,460,899 | 112,765,106 | 17,906,329 | ||||||
Property, equipment and software | 683,903,870 | 686,403,058 | 108,996,119 | ||||||
Investment | 1,305,145,043 | 1,328,462,640 | 210,950,796 | ||||||
Goodwill | 798,601,767 | 798,601,767 | 126,812,508 | ||||||
Intangible assets | 306,420,192 | 304,243,163 | 48,311,737 | ||||||
Total assets | 9,761,434,778 | 9,975,699,853 | 1,584,073,022 | ||||||
LIABILITIES | |||||||||
Current liabilities: | |||||||||
Accounts payable | 763,256,074 | 970,132,455 | 154,050,410 | ||||||
Salary and welfare payable | 145,524,036 | 113,325,353 | 17,995,292 | ||||||
Taxes payable | 220,604,123 | 196,218,724 | 31,158,194 | ||||||
Advances from customers | 1,090,852,066 | 880,348,965 | 139,793,405 | ||||||
Accrued liability for customer reward program | 161,838,531 | 173,441,232 | 27,541,283 | ||||||
Other payables and accruals | 185,985,423 | 206,750,724 | 32,830,604 | ||||||
Total current liabilities | 2,568,060,253 | 2,540,217,453 | 403,369,188 | ||||||
Deferred tax liabilities, non-current | 48,308,692 | 48,092,750 | 7,636,800 | ||||||
Total liabilities | 2,616,368,945 | 2,588,310,203 | 411,005,988 | ||||||
SHAREHOLDERS' EQUITY | |||||||||
Share capital | 2,939,527 | 2,946,619 | 467,903 | ||||||
Additional paid-in capital | 3,465,924,424 | 3,659,701,771 | 581,135,652 | ||||||
Statutory reserves | 98,049,668 | 98,049,668 | 15,569,618 | ||||||
Accumulated other comprehensive loss | (172,466,277) | (253,617,950) | (40,272,799) | ||||||
Retained Earnings | 3,806,608,747 | 3,975,661,748 | 631,307,939 | ||||||
Treasury stock | (158,761,225) | (158,761,225) | (25,210,198) | ||||||
Total Ctrip's shareholders' equity | 7,042,294,864 | 7,323,980,631 | 1,162,998,115 | ||||||
Noncontrolling interests | 102,770,969 | 63,409,019 | 10,068,919 | ||||||
Total shareholders' equity | 7,145,065,833 | 7,387,389,650 | 1,173,067,034 | ||||||
Total liabilities and shareholders' equity | 9,761,434,778 | 9,975,699,853 | 1,584,073,022 | ||||||
Ctrip.com International, Ltd. | ||||||||||||
Consolidated Statements of Operations Information | ||||||||||||
Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | |||||||||
March 31, 2011 | December 31, 2011 | March 31, 2012 | March 31, 2012 | |||||||||
RMB | RMB | RMB | USD | |||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Revenues: | ||||||||||||
Hotel reservation | 310,393,954 | 399,622,781 | 366,784,363 | 58,242,852 | ||||||||
Air-ticketing | 326,474,923 | 378,235,877 | 360,463,420 | 57,239,130 | ||||||||
Packaged tour | 124,834,012 | 130,155,486 | 166,379,981 | 26,420,005 | ||||||||
Corporate travel | 31,444,896 | 47,237,358 | 38,801,113 | 6,161,352 | ||||||||
Others | 20,959,425 | 31,344,006 | 31,170,118 | 4,949,602 | ||||||||
Total revenues | 814,107,210 | 986,595,508 | 963,598,995 | 153,012,941 | ||||||||
Less: business tax and related surcharges | (49,584,200) | (60,762,409) | (52,790,604) | (8,382,787) | ||||||||
Net revenues | 764,523,010 | 925,833,099 | 910,808,391 | 144,630,154 | ||||||||
Cost of revenues | (164,706,899) | (224,533,043) | (225,956,740) | (35,880,387) | ||||||||
Gross profit | 599,816,111 | 701,300,056 | 684,851,651 | 108,749,767 | ||||||||
Operating expenses: | ||||||||||||
Product development * | (130,286,710) | (172,796,077) | (196,216,150) | (31,157,785) | ||||||||
Sales and marketing * | (124,641,801) | (184,658,424) | (183,405,064) | (29,123,472) | ||||||||
General and administrative * | (82,145,928) | (113,264,071) | (128,674,249) | (20,432,592) | ||||||||
Total operating expenses | (337,074,439) | (470,718,572) | (508,295,463) | (80,713,849) | ||||||||
Income from operations | 262,741,672 | 230,581,484 | 176,556,188 | 28,035,918 | ||||||||
Interest income | 19,013,573 | 32,710,259 | 45,773,353 | 7,268,496 | ||||||||
Other income | 12,924,512 | 32,831,890 | 9,437,752 | 1,498,651 | ||||||||
Income before income tax expense and equity in income | 294,679,757 | 296,123,633 | 231,767,293 | 36,803,065 | ||||||||
Income tax expense | (62,849,199) | (69,327,999) | (64,797,513) | (10,289,403) | ||||||||
Equity in income of affiliates | 4,796,882 | 27,675,601 | 4,161,068 | 660,749 | ||||||||
Net income | 236,627,440 | 254,471,235 | 171,130,848 | 27,174,411 | ||||||||
Less: Net income attributable to noncontrolling interests | (1,719,107) | (1,947,341) | (2,077,847) | (329,948) | ||||||||
Net income attributable to Ctrip's shareholders | 234,908,333 | 252,523,894 | 169,053,001 | 26,844,463 | ||||||||
Comprehensive income | 67,587,559 | 244,377,532 | 87,901,328 | 13,958,131 | ||||||||
Earnings per ordinary share | ||||||||||||
- Basic | 6.55 | 7.01 | 4.71 | 0.75 | ||||||||
- Diluted | 6.17 | 6.70 | 4.44 | 0.71 | ||||||||
Earnings per ADS | ||||||||||||
- Basic | 1.64 | 1.75 | 1.18 | 0.19 | ||||||||
- Diluted | 1.54 | 1.67 | 1.11 | 0.18 | ||||||||
Weighted average ordinary shares outstanding | ||||||||||||
- Basic | 35,891,105 | 36,003,255 | 35,911,996 | 35,911,996 | ||||||||
- Diluted | 38,060,214 | 37,713,249 | 38,053,311 | 38,053,311 | ||||||||
* Share-based compensation charges included are as follows: | ||||||||||||
Product development | 19,924,207 | 28,161,520 | 29,767,590 | 4,726,890 | ||||||||
Sales and marketing | 10,220,801 | 13,336,213 | 13,547,719 | 2,151,285 | ||||||||
General and administrative | 40,223,323 | 53,218,496 | 57,363,156 | 9,108,877 | ||||||||
Ctrip.com International, Ltd. | ||||||||||
Reconciliation of GAAP and Non-GAAP Results | ||||||||||
(In RMB, except % and per share information) | ||||||||||
Quarter Ended March 31, 2012 | ||||||||||
GAAP Result | % of Net Revenue | Share-based Compensation | % of Net Revenue | Non-GAAP Result | % of Net Revenue | |||||
Product development | (196,216,150) | 22% | 29,767,590 | 3% | (166,448,560) | 18% | ||||
Sales and marketing | (183,405,064) | 20% | 13,547,719 | 1% | (169,857,345) | 19% | ||||
General and administrative | (128,674,249) | 14% | 57,363,156 | 6% | (71,311,093) | 8% | ||||
Total operating expenses | (508,295,463) | 56% | 100,678,465 | 11% | (407,616,998) | 45% | ||||
Income from operations | 176,556,188 | 19% | 100,678,465 | 11% | 277,234,653 | 30% | ||||
Net income attributable to Ctrip's shareholders | 169,053,001 | 19% | 100,678,465 | 11% | 269,731,466 | 30% | ||||
Diluted earnings per ordinary share (RMB) | 4.44 | 2.65 | 7.09 | |||||||
Diluted earnings per ADS (RMB) | 1.11 | 0.66 | 1.77 | |||||||
Diluted earnings per ADS (USD) | 0.18 | 0.11 | 0.28 | |||||||
Quarter Ended December 31, 2011 | ||||||||||
GAAP Result | % of Net Revenue | Share-based Compensation | % of Net Revenue | Non-GAAP Result | % of Net Revenue | |||||
Product development | (172,796,077) | 19% | 28,161,520 | 3% | (144,634,557) | 16% | ||||
Sales and marketing | (184,658,424) | 20% | 13,336,213 | 1% | (171,322,211) | 19% | ||||
General and administrative | (113,264,071) | 12% | 53,218,496 | 6% | (60,045,575) | 6% | ||||
Total operating expenses | (470,718,572) | 51% | 94,716,229 | 10% | (376,002,343) | 41% | ||||
Income from operations | 230,581,484 | 25% | 94,716,229 | 10% | 325,297,713 | 35% | ||||
Net income attributable to Ctrip's shareholders | 252,523,894 | 27% | 94,716,229 | 10% | 347,240,123 | 38% | ||||
Diluted earnings per ordinary share (RMB) | 6.70 | 2.51 | 9.21 | |||||||
Diluted earnings per ADS (RMB) | 1.67 | 0.63 | 2.30 | |||||||
Diluted earnings per ADS (USD) | 0.27 | 0.10 | 0.37 | |||||||
Quarter Ended March 31, 2011 | ||||||||||
GAAP Result | % of Net Revenue | Share-based Compensation | % of Net Revenue | Non-GAAP Result | % of Net Revenue | |||||
Product development | (130,286,710) | 17% | 19,924,207 | 3% | (110,362,503) | 14% | ||||
Sales and marketing | (124,641,801) | 16% | 10,220,801 | 1% | (114,421,000) | 15% | ||||
General and administrative | (82,145,928) | 11% | 40,223,323 | 5% | (41,922,605) | 5% | ||||
Total operating expenses | (337,074,439) | 44% | 70,368,331 | 9% | (266,706,108) | 35% | ||||
Income from operations | 262,741,672 | 34% | 70,368,331 | 9% | 333,110,003 | 44% | ||||
Net income attributable to Ctrip's shareholders | 234,908,333 | 31% | 70,368,331 | 9% | 305,276,664 | 40% | ||||
Diluted earnings per ordinary share (RMB) | 6.17 | 1.85 | 8.02 | |||||||
Diluted earnings per ADS (RMB) | 1.54 | 0.46 | 2.01 | |||||||
Diluted earnings per ADS (USD) | 0.24 | 0.07 | 0.31 | |||||||
Notes for all the consolidated financial schedules presented: | ||||||||||
Note 1: The conversion of Renminbi (RMB) into U.S. dollars (USD) is based on the certified exchange rate of USD1.00=RMB6.2975 on March 30, 2012 published by the Federal Reserve Board. | ||||||||||
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About SunGard
SunGard is one of the world's leading software and technology services companies. SunGard has more than 17,000 employees and serves approximately 25,000 customers in more than 70 countries. SunGard provides software and processing solutions for financial services, education and the public sector. SunGard also provides disaster recovery services, managed IT services, information availability consulting services and business continuity management software. With annual revenue of about US$4.5 billion, SunGard is the largest privately held software and services company and is ranked 480 on the Fortune 500. For more information, please visit www.sungard.com.
Trademark Information: SunGard and the SunGard logo are trademarks or registered trademarks of SunGard Data Systems Inc. or its subsidiaries in the U.S. and other countries. All other trade names are trademarks or registered trademarks of their respective holders.
]]>SHENZHEN, China, May 17, 2012 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group (NYSE Amex: NEWN) ("New Energy" or the "Company"), a vertically integrated original design manufacturer and distributor of Anytone® and MeePower® braned consumer backup power systems for mobile devices and solar panels and related solar application products to service municipal power applications, today announced financial results for the first quarter ended March 31, 2012.
Mr. Jack Yu, Chairman of New Energy stated, "We took additional actions we deemed necessary to make New Energy more focused and efficient. Since we divested our battery components business in the fourth quarter of last year, we have focused all of our efforts on growing the consumer products and solar businesses. This comprehensive transformation includes developing new products, expanding our distribution channels and consolidating our fixed overhead. While this will take several quarters to gain traction, we believe this is the right strategy to pursue in order to maximize shareholder value."
For the Three Months Ended March 31, | |||
2012 | 2011 | CHANGE | |
Net Sales | $5.0 million | $12.5 million | -60% |
Gross Profit | $0.2 million | $5.3 million | -96% |
Net Income (Loss) from Continued Operations | -$1.7 million | $2.6 million | N/A |
Adjusted Net Income (Loss)* from Continued Operations | -$1.0 million | $3.3 million | N/A |
GAAP EPS (Diluted) from Continued Operations | -$0.11 | $0.18 | N/A |
Adjusted EPS (Diluted)* from Continued Operations | -$0.07 | $0.23 | N/A |
*Adjusted net income and adjusted EPS exclude $0.2 million of non-cash stock-based compensation expenses and 0.5 million of amortization expenses during Q1 2012 and Q1 2011, respectively. Fully dilued shares on March 31, 2012 were 14.6 million versus 14.6 million on March 31,2011. | |||
Revenues declined 60% year-over-year to $5 million due to lower demand for batteries in China and price reductions as a result of competitive pricing pressures. Solar panel and related solar product sales were down 65% to $2 million due to the downturn pressure of the entire solar market and the formal market competition.
Anytone® consumer products division sold 306,380 units in the first quarter of 2012, down 50% from the same period last year. Anytone introduced three new products during the quarter, including products for Apple and Andorid series devices.
Gross profit in the first quarter of 2012 was $0.2 million compared to $5.3 million, a 96% decrease compared to the same period last year. Consolidated gross margin fell to 4% from 43% in the first quarter of 2011 as a result of higher raw materials costs and a significant decrease in production and sales volumes.
Operating expenses for the three months ended March 31, 2012 were $2.1 million representing approximately 42% of sales compared to $1.7 million and 14% of sales in the same period last year. The increase was primarily a result of higher labor costs and marketing expenses.
The Company incurred $0.2 million of non-cash stock-based compensation expenses and 0.5 million amortization expenses during the first three months of 2012 and 2011. Excluding these expenses, operating loss was $1.0 million for the first quarter of 2012.
Net income from continuing operations was a net loss of $1.7 million compared to net income of $2.6 million in the first quarter of 2011. GAAP net loss per share were was $0.11 compared to earnings per share of $0.18 in the first quarter of 2012 and 2011, respectively. Non-GAAP adjusted net loss and net loss per share were $1.0 million and $0.07, respectively, in the first three months of 2012.
Balance Sheet and Cash Flow Summary
As of March 31, 2012, cash and equivalents of the Company stood at $8.5 million, up from $4.5 million as of December 31, 2011. Working capital was approximately $23.4 million at March 31, 2012; accounts receivable was $5.6 million, compared to $6.6 million as of December 31, 2011. New Energy generated $0.3 million of cash flow from operations during the three months ended March 31, 2012 versus $3.6 million in the same period a year ago.
Business Update:
Effective on January 13, 2012, Kim Fai's business, including all the assets and liabilities, has been transferred into Shenzhen Anytone to maximize operations efficiency and save cost. All of Kim Fai's products will be sold under "Anytone" brand name.
Anytone signed an agreement with New Trent Corporation ("New Trent") to begin selling products in the U.S. starting in the second quarter of 2012. The agreement will initially focus on Anytone's mobile power products. The two parties expect this agreement to generate at least $1 million in sales during the first full year.
On March 6, 2012, the Company launched two online stores in China. Consumers nationwide are now able to purchase Anytone's mobile power devices and accessories for their laptops, mobile phones and tablets through www.taobao.com and www.paipai.com. The online expansion is a part of Anytone's strategic efforts to expand into the retail segment.
Conference Call
To attend the call, please use the dial-in information below. When prompted, ask for the "New Energy Call " and/or be prepared to provide the conference ID.
Date: | May 18th, 2012 |
Time: | 9:00 a.m. Eastern Time, US. |
Conference Line Dial-In (U.S.): | 1-877-317-6776 |
International Dial-In: | 1-412-317-6776 |
Conference ID: | 10014483 "New Energy" |
Webcast link: | http://webcast.mzvaluemonitor.com/Home/Login/1738279b-58f5-4125-9cdb-3fd6672e9090 |
Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through May 27, 2012. To listen, please call 1-877-870-5176 within the United States or 1-858-384-5517 if calling internationally. Utilize the pass code 4440646 for the replay.
About New Energy Systems Group
New Energy Systems Group is a vertically integrated original design manufacturer and distributor of lithium ion batteries and backup power systems for mobile phones, laptops, digital cameras, MP3s and a variety of other portable electronics. The company's end-user consumer products are sold under the Anytone® brand in China, and the company has begun expanding its international sales efforts. The fast pace of new mobile device introductions in China combined with a growing middle class make it fertile ground for New Energy's end-user consumer products, as well as its high powered, light weight lithium ion batteries. In addition to historically strong organic growth, New Energy is expected to benefit from economies of scale, broader distribution, and higher production capacity and higher profit margins. Additional information about the company is available at: www.newenergysystemsgroup.com
Forward Looking Statements
This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary and affiliated companies. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (www.sec.gov). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
COMPANY
New Energy Systems Group
Ken Lin, VP of Investor Relations
Tel: +1-917-573-0302
Email: klin1330@hotmail.com
INVESTOR RELATIONS
John Mattio, SVP
HC International, Inc.
Tel: US +1-212-301-7130
Email: john.mattio@mzgroup.us
Web: http://www.mz-ir.com
NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
March 31, 2012 (Unaudited) | December 31, 2011 | ||||||
Current assets | |||||||
Cash and equivalents | $ | 8,540,268 | $ | 4,528,731 | |||
Accounts receivable | 5,644,163 | 6,614,814 | |||||
Inventory | 829,823 | 1,661,515 | |||||
Prepayments | 324,631 | 554,375 | |||||
Other receivables | 9,802,811 | 14,121,556 | |||||
Taxes receivable | 251,930 | 217,106 | |||||
Due from shareholders | 284,636 | 284,337 | |||||
Prepaid expense | 100,000 | - | |||||
Deferred compensation | 683,838 | 686,979 | |||||
Total current assets | 26,462,100 | 28,669,413 | |||||
Noncurrent assets | |||||||
Property and equipment | 196,959 | 208,271 | |||||
Deferred compensation - noncurrent | 254,742 | 423,493 | |||||
Goodwill | 39,888,807 | 39,888,807 | |||||
Intangible assets, net | 10,533,645 | 11,051,910 | |||||
Total noncurrent assets | 50,874,153 | 51,572,481 | |||||
Total assets | $ | 77,336,253 | $ | 80,241,894 | |||
Current liabilities | |||||||
Accounts payable | $ | 1,991,134 | $ | 2,837,889 | |||
Accrued expenses and other payables | 996,981 | 818,452 | |||||
Taxes payable | 121,112 | 21,103 | |||||
Loans payable to related parties | - | 571,347 | |||||
Total current liabilities | 3,109,227 | 4,248,791 | |||||
Deferred tax liability | 2,635,005 | 2,764,571 | |||||
Total Liabilities | 5,744,232 | 7,013,362 | |||||
Commitments and Contingencies | |||||||
Stockholders' equity | |||||||
Preferred stock, $.001 par value, 60,000,000 shares authorized, 0 shares issued and outstanding | - | - | |||||
Common stock, $.001 par value, 140,000,000 shares authorized, 14,571,731 shares issued and outstanding | 14,571 | 14,571 | |||||
Additional paid in capital | 74,261,543 | 74,255,585 | |||||
Statutory reserves | 2,410,573 | 2,410,573 | |||||
Other comprehensive income | 3,301,907 | 3,292,074 | |||||
Accumulated deficit | (8,396,573) | (6,744,271) | |||||
Total stockholders' equity | 71,592,021 | 73,228,532 | |||||
Total liabilities and stockholders' equity | $ | 77,336,253 | $ | 80,241,894 | |||
NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||||
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
(Unaudited) | |||||||
NET SALES | |||||||
Battery | $ | 2,996,861 | $ | 6,968,898 | |||
Solar panel | 1,958,404 | 5,514,918 | |||||
Total revenue | 4,955,265 | 12,483,816 | |||||
COST OF SALES | |||||||
Battery | 2,875,569 | 3,279,195 | |||||
Solar panel | 1,862,693 | 3,876,878 | |||||
Total cost of sales | 4,738,262 | 7,156,073 | |||||
GROSS PROFIT | 217,003 | 5,327,743 | |||||
OPERATING EXPENSE | |||||||
Selling | 395,355 | 321,863 | |||||
General and administrative | 1,665,598 | 1,382,432 | |||||
Total operating expenses | 2,060,953 | 1,704,295 | |||||
INCOME (LOSS) FROM OPERATIONS | (1,843,950) | 3,623,448 | |||||
OTHER INCOME (EXPENSES) | |||||||
Other expense (income) | (259) | 2,614 | |||||
Interest income | 7,178 | 1,275 | |||||
Total other income, net | 6,919 | 3,889 | |||||
INCOME (LOSS) BEFORE INCOME TAXES | (1,837,031) | 3,627,337 | |||||
INCOME TAX BENEFIT (EXPENSE) | 184,729 | (987,101) | |||||
INCOME (LOSS) FROM CONTINUED OPERATIONS | (1,652,302) | 2,640,236 | |||||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | - | 2,820,319 | |||||
NET INCOME (LOSS) | (1,652,302) | 5,460,555 | |||||
OTHER COMPREHENSIVE INCOME | |||||||
Foreign currency translation | 9,833 | 114,851 | |||||
COMPREHENSIVE INCOME (LOSS) | $ | (1,642,469) | $ | 5,575,406 | |||
WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||
Basic | 14,571,731 | 14,286,511 | |||||
Diluted | 14,571,731 | 14,558,566 | |||||
NET INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS | |||||||
Basic | $ | (0.11) | $ | 0.18 | |||
Diluted | $ | (0.11) | $ | 0.18 | |||
NET INCOME (LOSS) PER SHARE FROM DISCONTINUING OPERATIONS | |||||||
Basic | $ | - | $ | 0.20 | |||
Diluted | $ | - | $ | 0.19 | |||
NET INCOME (LOSS) PER SHARE | |||||||
Basic | $ | (0.11) | $ | 0.38 | |||
Diluted | $ | (0.11) | $ | 0.37 | |||
NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
(Unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income (loss) | $ | (1,652,302) | $ | 5,460,555 | |||
Adjustments to reconcile net income (loss) to net cash | |||||||
provided by operating activities: | |||||||
Depreciation and amortization | 529,770 | 768,370 | |||||
Changes in deferred taxes | (129,566) | (167,641) | |||||
Deferred stock compensation | 171,892 | 168,750 | |||||
Stock options and warrant expense | 5,958 | 10,071 | |||||
(Increase) / decrease in current assets: | |||||||
Accounts receivable | 1,124,971 | (5,840,687) | |||||
Inventory | 831,703 | (2,341,718) | |||||
Prepaid expenses, deposits and other receivables | 129,846 | 790 | |||||
Increase/(decrease) in current liabilities: | |||||||
Accounts payable | (997,380) | 4,325,793 | |||||
Accrued expenses and other payables | 178,374 | 61,580 | |||||
Taxes payable | 65,256 | 1,131,689 | |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 258,522 | 3,577,552 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Cash of disposed subsidiaries | 3,739,666 | - | |||||
Acquisition of property and equipment | - | (12,456) | |||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 3,739,666 | (12,456) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Repayment of acquisition liability for subsidiaries | - | (6,714,060) | |||||
Cash proceeds from warrant exercise | - | 87,500 | |||||
NET CASH USED IN FINANCING ACTIVITIES | - | (6,626,560) | |||||
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND EQUIVALENTS | 13,349 | 118,251 | |||||
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS | 4,011,537 | (2,943,213) | |||||
CASH AND EQUIVALENTS, BEGINNING OF PERIOD | 4,528,731 | 13,065,008 | |||||
CASH AND EQUIVALENTS, END OF PERIOD | $ | 8,540,268 | $ | 10,121,795 | |||
SUPPLEMENTAL DISCLOSURES: | |||||||
Cash paid during the period for: | |||||||
Income taxes | $ | - | $ | 1,396,883 | |||
Interest | $ | - | $ | - | |||
BEIJING, May 17, 2012 /PRNewswire-Asia-FirstCall/ -- China Distance Education Holdings Limited (NYSE: DL) ("CDEL", or the "Company"), a leading provider of online education in China focusing on professional education, reported today its unaudited financial results for the second quarter of fiscal year 2012 ended March 31, 2012.
Second Quarter Fiscal 2012 Business and Financial Highlights:
Commenting on the results, Mr. Zhengdong Zhu, Chairman and Chief Executive Officer said, "We are very pleased to report another quarter of healthy top- and bottom-line growth, building on the momentum we have gained in recent quarters. Supported by steady enrollment growth across our core online education courses and increasing pricing power, revenue for the quarter again exceeded guidance. Our results demonstrate the robust underlying demand for high quality online training and educational services and the growing strength of our brand power in China's education market. We are also pleased to see that our recent initiatives, including our newly launched high definition courseware and mobile learning platform, are helping to drive incremental enrollment growth across our course offerings, while also supporting growth in average student payments. These new services highlight our innovative and student-focused approach which we believe will help to further strengthen our industry leading position for years to come.
"While overall market conditions and student demand remain healthy, some major Accounting Professional Qualification Examination, or 'APQE', originally scheduled for May have been delayed to October. At the same time we are still awaiting the release of the official policy on this year's CPA exams, including the exam dates, registration timeline and text books. The release of this information is already more than six weeks behind the usual schedule. Consequently, we anticipate a shift in the timing of enrollments and revenue recognition for APQE and CPA exams. Specifically, a significant portion of APQE revenue that we had expected to record in the third fiscal quarter will shift into next fiscal year, and post-exam APQE enrollment will also be delayed until next fiscal year. The delayed release of CPA exam policy for this year may also affect both the timing and the amount of revenue we may earn in the remainder of this fiscal year. While the delayed timing of these exams will impact our results, we believe that these regulatory changes are a one-time event and such changes will only affect the timing of the revenue contribution related to these exams.
"We believe that the continuing strength of our other accounting and non-accounting courses will help to partially offset the near-term impact from these delays. The continued diversification of our business in recent years and the growing momentum of our recent initiatives have helped us to develop a more robust platform with multiple sustainable revenue streams. As a result, we still expect to achieve our revenue guidance for the full year of 20-30% revenue increase year-over-year."
Ms. Ping Wei, Chief Financial Officer of CDEL, commented, "Our performance in the second quarter has again demonstrated the scalability of our business model as we registered another quarter of strong top- and bottom-line growth. Both our gross and net margin continue to expand at a healthy pace while cash flow has also continued to increase, registering a US$4.8 million increase in the second quarter.
"The delayed timing of the AQPE exams and the delayed release of CPA exam policy will result in about 15-20% of third-quarter revenue being delayed to later quarters. On a fiscal year basis, APQE alone will result in the delayed recognition of at least US$1.8 million in revenue into fiscal 2013. As most of our costs and expenses are fixed, the impact to our bottom line for the next quarter and for fiscal year 2012 will be even more significant.
"Nonetheless, as most of our other education verticals are growing at a particularly high rate, and as we continue to tightly control our costs and expenses, we remain confident that despite these unexpected delays, we will still maintain net profit growth in-line with our revenue growth in fiscal year 2012."
Fiscal Second Quarter 2012 Unaudited Financial Results
Net Revenues. Total net revenues from continuing operations for the second quarter of fiscal 2012 were US$12.3 million, representing a year-over-year increase of 36.7% from US$9.0 million in the second quarter of fiscal 2011.
Online education services net revenues for the second quarter of fiscal 2012 were US$9.2 million, an increase of 36.4% from the second quarter of fiscal 2011. The increase was a result of increased revenue in all major test preparation courses. Such increase was partially offset by decreased revenue from accounting continuing education courses primarily as it is low enrollment season for continuing education courses.
Net revenues from books and reference materials for the second quarter of fiscal 2012 were US$1.3 million after reallocating the delivery of online course services deliverable of US$0.2 million as online education services net revenues, almost unchanged from the second quarter of fiscal 2011.
Net revenues from others increased by 86.6% year-over-year to US$1.9 million for the second quarter of fiscal 2012 from US$1.0 million in the same period last year. The increase was a result of increased revenue in courseware production services, offline business start-up training courses provided by Zhengbao Yucai and other offline supplementary training courses. Such increase was partially offset by decreased revenue from magazine content production services.
Cost of Sales. Cost of sales from continuing operations for the second quarter of fiscal 2012 was US$5.32 million, representing a 23.0% increase over the second quarter of fiscal 2011. Non-GAAP(1) cost of sales from continuing operations for the second quarter of fiscal 2012 was US$5.31 million, an increase of 32.7% over the same period last year. The increase in cost of sales was primarily due to the increased salaries and related expenses, and lecturer fees. Such increase was partially offset by decreased cost of books and reference materials.
Gross Profit and Gross Margin. Gross profit from continuing operations for the second quarter of fiscal 2012 was US$7.02 million, representing a 49.3% increase from US$4.7 million in the same period last year. Non-GAAP(1) gross profit from continuing operations was US$7.03 million, an increase of 39.9% year-over-year. Gross profit margin from continuing operations for the second quarter of fiscal 2012 was 56.9%, compared to 52.1% in the second quarter of fiscal 2011. Non-GAAP(1) gross profit margin from continuing operations for the second quarter of fiscal 2012 expanded to 57.0%, compared to 55.7% in the same period last year as we continue to leverage on our highly scalable online revenue model.
Operating Expenses. Total operating expenses from continuing operations for the second quarter of fiscal 2012 were US$3.8 million, a decrease of 13.3% year-over-year. Non-GAAP(1) operating expenses from continuing operations were US$3.7 million, representing a year-over-year decrease of 2.2%.
Selling expenses from continuing operations amounted to US$1.72 million for the second quarter of fiscal 2012, representing a 11.9% decrease year-over-year. Non-GAAP(1) selling expenses from continuing operations were US$1.71 million, a 7.2% decrease from the same period last year primarily as a result of decreased advertising and promotional activities and commissions to our agents as we continue to refine the collaboration model with our online distribution partners. Such decrease was partially offset by increased salaries and related expenses.
General and administrative expenses from continuing operations were US$2.1 million in the second quarter of fiscal 2012, representing a 14.4% decrease year-over-year. Non-GAAP(1) general and administrative expenses from continuing operations were US$2.0 million, an increase of 2.5% year-over-year primarily due to increased salaries and related expenses. Such increase was partially offset by decreased professional fees.
Income Tax Expenses. Income tax expenses for the second quarter of fiscal 2012 were US$0.7 million, compared with US$0.1 million in the same period last year.
Net Income from continuing operations attributable to China Distance Education Holdings Limited. Net income from continuing operations was US$2.8 million for the second quarter of fiscal 2012, compared to net income from continuing operations of US$0.5 million in the same period last year. Non-GAAP(1) net income from continuing operations for the second quarter of fiscal 2012 was US$2.9 million, compared to non-GAAP(1) net income from continuing operations of US$1.4 million in the same period last year.
Net Income (Loss) from discontinued operations attributable to China Distance Education Holdings Limited. Net income from discontinued operations was US$0.02 million for the second quarter of fiscal 2012, compared to net loss from discontinued operations of US$0.01 million in the same period last year.
Net Income. Net income was US$2.8 million for the second quarter of fiscal 2012, compared to net income of US$0.4 million in the same period last year. Non-GAAP(1) net income for the second quarter of fiscal 2012 was US$2.9 million, compared to non-GAAP net income of US$1.4 million in the same period last year.
Operating Cash Flow. Net operating cash inflow for the second quarter of fiscal 2012 was US$4.8 million, compared to a net operating cash inflow of US$2.7 million in the same period last year. The increase was primarily the result of increased profit generated in the quarter, decrease in accounts receivable and deferred cost, increase in income tax payable, and higher deferred revenue and refundable fees balance resulted primarily from increased payments by our students to obtain our courses. Such increase was partially offset by increase in prepayment and other current assets, and inventories.
Cash and Cash Equivalents, Term Deposits and Restricted Cash. Cash and cash equivalents, term deposits and restricted cash as of March 31, 2012 increased to US$54.5 million from US$49.7 million as of December 31, 2011 primarily due to US$4.8 million of operating cash flow generated from operations in the quarter, partially offset by US$0.5 million of capital expenditures.
Third Quarter Fiscal 2012 Guidance ———— The Company expects to generate total net revenues from continuing operations for the third quarter of fiscal 2012 in the range of US$12.3 million to US$13.3 million, as compared to net revenues from continuing operations of US$12.1 million in the third quarter of fiscal 2011, representing a 2% to 10% year-over-year increase. This represents our current and preliminary view, which is subject to change.
(1) For more information about the non-GAAP financial measures contained in this press release, please see "Use of Non-GAAP Financial Measures" below |
Conference Call
China Distance Education Holdings Limited senior management will host a conference call at 8:00 am (Eastern) / 5:00 am (Pacific) / 8:00 pm (Beijing/Hong Kong) on May 17, 2012 to discuss its second fiscal quarter 2012 financial results and recent business activity. The conference call may be accessed by calling +1 866 519 4004 (US), 800 930 346 (Hong Kong), 800 819 0121 (China Land-line), 400 620 8038 (China Mobile), or 0 808 234 6646 (UK). The pass code is CDEL.
A telephone replay will be available shortly after the call until May 24, 2012 at +1 866 214 5335 (US), 800 901 596 (Hong Kong), 10 800 714 0386 (China North), 10 800 140 0386 (China South), or 0 800 731 7846 (UK). The Pass code is 76311305.
A live webcast of the conference call and replay will be available on the investor relations page of China Distance Education Holdings Limited's website at:
http://ir.cdeledu.com/versions/Financials_en/EarningsAnnouncements_en.html
About China Distance Education Holdings Limited
China Distance Education Holdings Limited is a leading provider of online education in China focusing on professional education. The courses offered by the Company through its websites are designed to help professionals and other course participants obtain and maintain the skills, licenses and certifications necessary to pursue careers in China in the areas of accounting, law, healthcare, construction engineering, and other industries. The Company also offers online test preparation courses to self-taught learners pursuing higher education diplomas or degrees and to secondary school and college students preparing for various academic and entrance exams. In addition, the Company offers online foreign language courses and offline business start-up training courses. For further information please visit http://ir.cdeledu.com.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "may," "should," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "is/are likely to," "estimate" and similar statements. Among other things, the outlook for the third quarter of the fiscal year 2012 and the quotations from management in this announcement, the impact on us of the delayed timing of the APQE and CPA exams, as well as the Company's strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its periodic reports to the SEC in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our goals and growth strategies; our future prospects and market acceptance of our online and offline courses and other products and services; our future business development and results of operations; projected revenues, profits, earnings and other estimated financial information; projected enrollment numbers; our plans to expand and enhance our online and offline courses and other products and services; competition in the education and test preparation markets; and Chinese laws, regulations and policies, including those applicable to the Internet and Internet content providers, the education and telecommunications industries, mergers and acquisitions, taxation and foreign exchange.
Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed with the SEC. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this press release.
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is preliminary and subject to adjustments. Adjustments to the financial statements may be identified when audit work is performed for the year-end audit, which could result in significant differences from this preliminary unaudited financial information.
Use of Non-GAAP Financial Measures
To supplement the Company's consolidated financial results presented in accordance with U.S. generally accepted accounting principles, or GAAP, the Company uses the following measures defined as non-GAAP financial measures: non-GAAP net income, operating income, gross profit, cost of sales, selling expenses, general and administrative expenses, net income margin, operating margin, gross profit margin and basic and diluted earnings per ADS and per share. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to comparable GAAP measures" set forth at the end of this release.
The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based compensation expenses that may not be indicative of its operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance and liquidity. The Company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of excluding share-based compensation expenses from the above-mentioned line items and presenting these non-GAAP measures is that such charges may continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for this limitation by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table at the end of this release provides more detail on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
Contacts:
China Distance Education Holdings Limited Lingling Kong, IR manager Tel: +86-10-8231-9999 ext1805 Email: IR@cdeledu.com
| Investor Relations (HK): Mahmoud Siddig, Managing Director Taylor Rafferty Tel: +852 3196 3712 Email: cdel@taylor-rafferty.com
|
Financial Tables Follow
China Distance Education Holdings Limited | |||||
Consolidated Balance Sheets | |||||
(in thousands of US Dollars, except number of shares and per share data) | |||||
September 30, 2011 | March 31, 2012 | ||||
(Derived from audited) | (Unaudited) | ||||
Assets: | |||||
Current assets: | |||||
Cash and cash equivalents | 49,738 | 46,459 | |||
Term deposit | 7,839 | 7,940 | |||
Restricted cash | 2,676 | 90 | |||
Accounts receivable, net of allowance for doubtful accounts of US$3,190 | 4,661 | 3,435 | |||
Inventories | 363 | 692 | |||
Prepayment and other current assets | 2,861 | 3,878 | |||
Deferred tax assets, current portion | 1,556 | 1,555 | |||
Deferred cost | 1,868 | 1,533 | |||
Current assets of discontinued operations | 2,306 | 1,649 | |||
Total current assets | 73,868 | 67,231 | |||
Non-current assets: | |||||
Property, plant and equipment, net | 8,586 | 8,791 | |||
Goodwill | 7,403 | 7,496 | |||
Other intangible assets, net | 2,382 | 1,993 | |||
Deposit for purchase of non-current assets | 242 | 217 | |||
Long term loan to employees | - | 3,918 | |||
Deferred tax assets, non-current portion | 668 | 611 | |||
Other non-current assets | 729 | 968 | |||
Total non-current assets | 20,010 | 23,994 | |||
Total assets | 93,878 | 91,225 | |||
Liabilities and equity: | |||||
Current liabilities: | |||||
Accrued expenses and other liabilities (including accrued expenses | 6,514 | 7,625 | |||
Dividend payable (including dividend payable of the consolidated VIE without | - | 348 | |||
Income tax payable (including income tax payable of the consolidated VIE | 2,329 | 2,212 | |||
Deferred revenue (including deferred revenue of the consolidated VIE without | 7,861 | 13,555 | |||
Refundable fees (including refundable fees of the consolidated VIE without | 2,580 | 2,222 | |||
Current liabilities of discontinued operations (including current liabilities of | 1,860 | 945 | |||
Total current liabilities | 21,144 | 26,907 | |||
Total liabilities | 21,144 | 26,907 | |||
Equity: | |||||
Ordinary shares (par value of US$0.0001 per share at September 30, 2011 and | 13 | 14 | |||
Additional paid-in capital | 78,804 | 66,669 | |||
Accumulated other comprehensive income | 4,221 | 4,770 | |||
Cumulative deficits | (10,304) | (7,135) | |||
Total China Distance Education Holdings Limited shareholders' equity | 72,734 | 64,318 | |||
Total equity | 72,734 | 64,318 | |||
Total liabilities and equity | 93,878 | 91,225 | |||
China Distance Education Holdings Limited | ||||
Unaudited Consolidated Statements Of Operations | ||||
(in thousands of US dollars, except number of shares, per share and per ADS data) | ||||
Three Months Ended March 31, | ||||
2011 | 2012 | |||
Sales, net of business tax, value-added tax and related surcharges: | ||||
Online education services | 6,747 | 9,202 | ||
Books and reference materials | 1,285 | 1,280 | ||
Others | 993 | 1,853 | ||
Total net revenues | 9,025 | 12,335 | ||
Cost of sales | ||||
Cost of services | (3,586) | (4,683) | ||
Cost of tangible goods sold | (739) | (637) | ||
Total cost of sales | (4,325) | (5,320) | ||
Gross profit | 4,700 | 7,015 | ||
Operating expenses | ||||
Selling expenses | (1,948) | (1,717) | ||
General and administrative expenses | (2,422) | (2,073) | ||
Total operating expenses | (4,370) | (3,790) | ||
Other operating income | 2 | - | ||
Operating income | 332 | 3,225 | ||
Interest income | 198 | 229 | ||
Exchange loss | (26) | (16) | ||
Income before income taxes | 504 | 3,438 | ||
Less: Income tax expense | (101) | (658) | ||
Net income from continuing operations | 403 | 2,780 | ||
Net loss of continuing operations attributable to noncontrolling interest | 58 | - | ||
Net income from continuing operations attributable to China Distance Education | 461 | 2,780 | ||
Net income (loss) from discontinued operations attributable to China Distance Education Holdings | (12) | 21 | ||
Net income attributable to China Distance Education Holdings Limited | 449 | 2,801 | ||
Net income (loss) per share: | ||||
Net income (loss) attributable to China Distance Education Holdings Limited shareholders | ||||
Basic from continuing operations | 0.003 | 0.021 | ||
Basic from discontinued operations | (0.000) | 0.000 | ||
Basic | 0.003 | 0.021 | ||
Diluted from continuing operations | 0.003 | 0.021 | ||
Diluted from discontinued operations | (0.000) | 0.000 | ||
Diluted | 0.003 | 0.021 | ||
Net income (loss) per ADS: | ||||
Net income (loss) attributable to China Distance Education Holdings Limited shareholders | ||||
Basic from continuing operations | 0.013 | 0.082 | ||
Basic from discontinued operations | (0.000) | 0.001 | ||
Basic | 0.013 | 0.083 | ||
Diluted from continuing operations | 0.013 | 0.082 | ||
Diluted from discontinued operations | (0.000) | 0.000 | ||
Diluted | 0.013 | 0.082 | ||
Weighted average shares used in calculating net income (loss) per share: | ||||
Basic | 136,461,653 | 135,562,521 | ||
Diluted | 136,555,042 | 136,024,388 | ||
China Distance Education Holdings Limited | ||||
Unaudited Reconciliation of non-GAAP measures to comparable GAAP measures from continuing operations | ||||
(In thousands of US Dollars, except number of shares, per share and per ADS data) | ||||
Three Months Ended March 31, | ||||
2011 | 2012 | |||
Cost of sales | 4,325 | 5,320 | ||
Share-based compensation expense in cost of sales | 325 | 13 | ||
Non-GAAP cost of sales | 4,000 | 5,307 | ||
Selling expenses | 1,948 | 1,717 | ||
Share-based compensation expense in selling expenses | 108 | 10 | ||
Non-GAAP selling expenses | 1,840 | 1,707 | ||
General and administrative expenses | 2,422 | 2,073 | ||
Share-based compensation expense in general and administrative expenses | 479 | 81 | ||
Non-GAAP general and administrative expenses | 1,943 | 1,992 | ||
Gross profit | 4,700 | 7,015 | ||
Share-based compensation expenses | 325 | 13 | ||
Non-GAAP gross profit | 5,025 | 7,028 | ||
Gross profit margin | 52.1% | 56.9% | ||
Non-GAAP gross profit margin | 55.7% | 57.0% | ||
Operating income | 332 | 3,225 | ||
Share-based compensation expenses | 912 | 104 | ||
Non-GAAP operating income | 1,244 | 3,329 | ||
Operating margin | 3.7%. | 26.1% | ||
Non-GAAP operating margin | 13.8% | 27.0% | ||
Net income attributable to China Distance Education Holdings Limited | 461 | 2,780 | ||
Share-based compensation expenses | 912 | 104 | ||
Non-GAAP net income attributable to China Distance Education Holdings Limited | 1,373 | 2,884 | ||
Net income margin attributable to China Distance Education Holdings Limited | 5.1% | 22.5% | ||
Non-GAAP net income margin attributable to China Distance Education Holdings Limited | 15.2% | 23.4% | ||
Net income per share————basic | 0.003 | 0.021 | ||
Net income per share————diluted | 0.003 | 0.021 | ||
Non-GAAP net income per share————basic | 0.010 | 0.021 | ||
Non-GAAP net income per share————diluted | 0.010 | 0.021 | ||
Net income per ADS attributable to China Distance Education Holdings Limited shareholders————basic (note 1) | 0.013 | 0.082 | ||
Net income per ADS attributable to China Distance Education Holdings Limited shareholders————diluted (note 1) | 0.013 | 0.082 | ||
Non-GAAP net income per ADS attributable to China Distance Education Holdings Limited shareholders————basic (note 1) | 0.040 | 0.085 | ||
Non-GAAP net income per ADS attributable to China Distance Education Holdings Limited shareholders————diluted (note 1) | 0.040 | 0.085 | ||
Weighted average shares used in calculating basic net income per share | 136,461,653 | 135,562,521 | ||
Weighted average shares used in calculating diluted net income per share | 136,555,042 | 136,024,388 | ||
Weighted average shares used in calculating basic non-GAAP net income per share | 136,461,653 | 135,562,521 | ||
Weighted average shares used in calculating diluted non-GAAP net income per share | 136,555,042 | 136,024,388 | ||
Note 1: Each ADS represents four ordinary shares | ||||
XI'AN, China, May 17, 2012 /PRNewswire-Asia-FirstCall/ -- Sino Clean Energy Inc. (NASDAQ: SCEI) ("Sino Clean Energy," or the "Company"), a leading producer and distributor of coal-water slurry fuel ("CWSF") in China, today announced unaudited financial results for the first quarter of 2012.
First Quarter 2012 Financial Highlights
Mr. Baowen Ren, chairman and chief executive officer of Sino Clean Energy, commented, "The past quarter was a challenging period for Sino Clean Energy but also one marked by encouraging developments. Although we had expected a slowdown in order volume from our largest customer, which is based in Shenyang, our Shenyang facility sales were more sluggish than anticipated. We are encouraged, however, that order volume at Dongguan continued to expand and partly offset the revenue reductions from our other two facilities.
"Our ongoing progress at Dongguan serves as a benchmark for other facilities," continued Mr. Ren. "Our management team and I are carefully reviewing both the successes and shortcomings of the year's first quarter to find ways to recapture the growth that our experience has shown this company is fully capable of achieving."
First Quarter 2012 Financial Results
Revenue in the first quarter 2012 decreased 17.6% to $27.8 million from $33.8 million in the same period of 2011, primarily due to a year-on-year decrease in sales to the Company's major customer, Haizhong Heating, in Shenyang. Sales to Haizhong Heating decreased by $4.4 million or 38.3% to $7.0 million. In addition, the Company's subsidiary Shaanxi Suo'ang New Energy lost nine customers in 2011. The reduction in sales due to this loss of customers was approximately $5.0 million. This decrease in sales was partially offset by an increase in sales of $5.2 million from the Company's customer in Dongguan, Xin Xing Industry Group.
During the first quarter of 2012, the Company sold 221,033 metric tons of CWSF compared to 290,933 metric tons in the same period of 2011, representing a decrease of 24.0%. The Company's annual production capacity at March 31, 2012 was 1,150,000 metric tons, unchanged from March 31, 2011.
As of March 31, 2012 Sino Clean Energy had 35 active customers under CWSF supply agreements, compared to 47 customers at March 31, 2011.
Cost of Goods Sold was $19.3 million in the first quarter 2012, compared to $21.3 million in the same period of 2011, representing a decrease of 9.3%, in line with the decrease in selling volume.
Gross Profit in the first quarter of 2012 decreased 31.7% to $8.5 million from $12.5 million in the same period of 2011. Gross margin decreased from 37% in 2011 to 31% in 2012, mainly as a combination of significantly higher purchase price for coal in Dongguan and higher depreciation costs for plant and machinery at that facility.
Selling expenses were $1.2 million in the first quarter of 2012, as compared to $1.5 million in the same period of 2011, a decrease of 20.6%. This decrease was mainly attributable to decreased transportation costs due to decreased selling volume.
General and Administrative Expenses were $1.3 million in the first quarter of 2012, compared to $1.0 million in the same period of 2011, representing an increase of 25.1%. This was primarily due to the legal expense and professional fees related to the Company's operations, and increased expenses related to being a public company. The general expenses associated with the development of new plant in southern China also contributed to the increase in general and administrative expenses.
Income from Operations decreased 39.3% to $6.0 million in the first quarter of 2012 from $9.9 million in the same period of 2011, due to the above-mentioned factors.
Provision for income taxes was $1.6 million in the first quarter of 2012, compared to $1.9 million in the same quarter of 2011. The decrease in income taxes reflects the decrease in taxable income from the Company's operations in China. For the three-month periods ended March 31, 2012 and 2011, the Company's effective tax rate was 37.1% and 13.7%, respectively, on income before provision for income taxes.
Net income in the first quarter of 2012 was $2.8 million and basic earnings per share were $0.12. Adjusting for non-cash charges during each respective period, adjusted earnings (non-GAAP) was $4.5 million and $8.1 million for the first quarter of 2012 and 2011, yielding $0.16 and $0.32 in adjusted basic earnings per share, respectively.
As of March 31, 2012, the Company had cash and cash equivalents of $66.5 million, compared to $42.4 million as of December 31, 2011. Net cash provided by operations was $22.4 million in the three months ended March 31, 2012, compared to $5.1 million in the same period in 2011. This increase in cash generated by operating activities was primarily due to the decrease in prepaid inventories of $17.8 million. The Company had net working capital of $96.6 million at March 31, 2012 and a current ratio of 14-to-1.
Net accounts receivable balance was $13.0 million at March 31, 2012, compared to $8.5 million at March 31, 2012 and $13.2 million at December 31, 2011, respectively. Allowance for doubtful accounts was nil as of March 31, 2012 and 2011.
The annualized days sales outstanding for three months ended on March 31, 2012 were 43 days compared to 23 days in the first quarter 2011. The lengthening of days sales outstanding reflects the tightening credit environment in China.
Prepaid inventories were $18.9 million and $37.1 million as of March 31, 2012 and December 31, 2011, respectively. The Company estimates that the remaining prepaid inventories at March 31, 2012 will be delivered to its factories and used in production by the end of 2012, and does not expect to make any more major prepayments of coal until such prepaid balances have been used.
Recent Development and Updates
Acquisition of Foshan Nan Hai
The Company has engaged Shaanxi Rongde Law Firm to conduct comprehensive due diligence and evaluation of Foshan Nan Hai's assets, ownership structure, liabilities, and credit worthiness. This due diligence and evaluation was still progressing as of March 31, 2012. Management expects the evaluation and negotiation process to be completed by the third quarter of 2012.
Cooperation with Nathalin Welstar Energy Co Ltd
Management undertook a site visit in Thailand in December 2011 for feasibility study and inspections and to begin the process of technical and financial analysis of the project. In mid February 2012, the company sent a project quotation list to Nathalin. As of the end of the first quarter of 2012, Nathalin had submitted a quotation to the Company's board of directors for discussion. These discussions are still in progress.
Legal Proceedings
On May 6, 2011, a complaint was filed in the Federal District Court for the Central District of California against the Company and certain of its current and former officers and directors. As the Company previously announced, recent developments include the Plaintiff filing a Second Amended Complaint on or about March 5, 2012. On April 20, 2012, the Company moved to dismiss the Second Amended Complaint. The Company continues to deny the allegations and intends to defend the litigation vigorously. No prediction can be made, however, as to the final outcome of the matter.
On May 9, 2011, the Company filed a complaint in the Supreme Court of the State of New York against Geoinvesting LLC, an individual calling himself "Alfred Little", and unidentified persons acting with, for, or through them. The suit seeks, among other relief, $55 million in compensatory damages and $10 million in punitive damages resulting from the defendants' fraud, defamation, and tortuous interference with the Company's business relationships. The Court dismissed the complaint against Geoinvesting LLC, primarily on jurisdictional grounds, and reserved judgment with regard to "Alfred Little".
Financial Outlook
Management reiterates full year 2012 guidance and expects revenue of between $150 million and $168 million. The Company expects full year 2012 non-GAAP adjusted earnings to be in the range of $35 million to $40 million and adjusted earnings per share of between $1.35 and $1.54. This guidance assumes total sales volume of 1.3 million to 1.4 million metric tons of CWSF in 2012.
Exchange Rate
This announcement contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars were made at the noon buying rate of RMB6.3122 to USD1.00 on March 30, 2012 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.
Exchange rate | ||||
3/31/2012 | 12/31/2011 | 3/31/2011 | ||
Period end RMB : US$ | 6.3122 | 6.3776 | 6.5483 | |
Average RMB : US$ | 6.2976 | 6.4725 | 6.5790 |
Conference Call
The Company will host a conference call at 8:00 a.m. ET on Thursday, May 17, 2012, which is 8:00 p.m. Beijing Time on the same day, to discuss first quarter results and answer questions from investors.
To access the conference call, please dial:
US: | +1-877-941-1428 |
International: | +1-480-629-9665 |
Please ask to be connected to the "Sino Clean Energy call" and provide the conference ID: 4539033
Sino Clean Energy will also broadcast a live audio webcast of the conference call. The broadcast will be available by visiting the "Investor Relations" section of the Company's web site at http://www.sinocei.net.
An archive of the call will be available through May 24, 2012 by dialing:
US: | +1-877-870-5176 |
International: | +1-858-384-5517 |
About Sino Clean Energy
Sino Clean Energy is one of the top producers of coal-water slurry fuel ("CWSF") by sales in China, according to data provided in Frost & Sullivan's 2010 Chinese CWSF market report. A leader in developing CWSF as a cleaner alternative to burning coal aggregate in heating, industrial and power generation for residential and industrial applications, the Company has seven production lines located in Shaanxi, Liaoning, and Guangdong provinces. For more information about Sino Clean Energy, please visit http://www.sinocei.net.
Contact Information
Sino Clean Energy Inc.
Jing Li, Assistant to the CEO
Phone: +86-29-8844-7960 ext. 802
Email: Jing.Li@sinocei.net
ICR Inc.
Rob Koepp
Phone: +86-10-6583-7516 or +1-646-328-2526
E-mail: SCEI@icrinc.com
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they exclude non-cash charges that our management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential operating activities of Sino Clean Energy. Accordingly, management excludes the change in derivative liabilities, when making operational decisions. The Company believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand the Company's financial performance in comparison to historical periods. In addition, it allows investors to evaluate the Company's performance using the same methodology and information as that used by our management. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measures. However, our management compensates for these limitations by providing the relevant disclosure of the items excluded.
The following table provides the non-GAAP financial measure and the related GAAP measure and provides a reconciliation of the non-GAAP measure to the equivalent GAAP measure.
March 31, 2012 | March 31, 2011 | ||||||||
(unaudited) | (unaudited) | ||||||||
Net income | $ | 2,779,664 | $ | 12,079,753 | |||||
Non-GAAP adjustments | |||||||||
Change in fair value of derivative liabilities | 1,677,336 | (4,010,630) | |||||||
Non-GAAP Adjusted Earnings | $ | 4,457,000 | $ | 8,069,123 | |||||
The adjusted number of shares used to determine adjusted earnings per share is calculated by adding the basic weighted number of shares to the number of shares that would be issued upon exercise of all warrants classified as derivative liabilities. At March 31, 2012, basic weighted number of shares of 23,863,701 is increased by 2,790,885 warrant shares that would be issued upon exercise of all the Company's warrants, resulting in 26,654,586, the adjusted earnings number of shares. For the three-month period ended March 31, 2012, adjusted earnings of $4,457,000 divided by the 26,654,586 adjusted number of shares results in adjusted earnings per share of $0.16 per adjusted shares. At March 31, 2011, basic weighted number of shares of 23,465,794 is increased by 1,915,598 warrant shares that would be issued upon exercise of all the Company's warrants, resulting in 25,381,392, the adjusted earnings number of shares. For the three-month period ended March 31, 2011, adjusted earnings of $8,069,123 divided by the 25,381,392 adjusted number of shares resulted in adjusted earnings per share of $0.32 per adjusted shares.
Safe Harbor Statement
This press release contains certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to uncertainties in product demand, the impact of competitive products and pricing, our ability to obtain regulatory approvals, changing economic conditions around the world and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
FINANCIAL INFORMATION
Sino Clean Energy Inc. and Subsidiaries | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 66,492,750 | $ | 42,431,330 | ||||
Accounts receivable, net | 12,967,753 | 13,191,545 | ||||||
Inventories | 1,925,860 | 1,288,599 | ||||||
Prepaid inventories | 18,891,673 | 37,057,551 | ||||||
Prepaid expenses | 76,684 | 26,510 | ||||||
Land use right - current portion | 83,812 | 82,954 | ||||||
Total current assets | 100,438,532 | 94,078,489 | ||||||
Land use right - non-current portion | 5,494,655 | 5,467,517 | ||||||
Property, plant and equipment, net | 17,560,096 | 18,110,321 | ||||||
Deposits on property, plant and equipment | 6,332,451 | 6,267,514 | ||||||
Goodwill | 762,018 | 762,018 | ||||||
Total assets | $ | 130,587,752 | $ | 124,685,859 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Accounts payable and accrued expenses | $ | 1,965,089 | $ | 1,988,263 | ||||
Taxes payable | 2,601,407 | 2,596,227 | ||||||
Amount due to directors | 198,409 | 48,457 | ||||||
Derivative liabilities | 2,407,076 | 729,740 | ||||||
Total liabilities | 7,171,981 | 5,362,687 | ||||||
Shareholders' Equity | ||||||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized | ||||||||
None issued and outstanding | ||||||||
Common stock, $0.001 par value, 30,000,000 shares authorized, | ||||||||
23,863,701 issued and outstanding as of March 31, 2012 | ||||||||
and December 31, 2011 respectively | 23,841 | 23,841 | ||||||
Additional paid-in capital | 67,291,387 | 67,291,387 | ||||||
Treasury stock, at cost, 321,100 shares | (799,423) | (799,423) | ||||||
Retained earnings | 42,300,033 | 39,520,369 | ||||||
Statutory reserves | 6,565,521 | 6,565,521 | ||||||
Accumulated other comprehensive income | 8,034,412 | 6,721,477 | ||||||
Total shareholders' equity | 123,415,771 | 119,323,172 | ||||||
Total liabilities and shareholders' equity | $ | 130,587,752 | $ | 124,685,859 | ||||
Sino Clean Energy Inc. and Subsidiaries | |||||||
Condensed Consolidated Statements of Income and Other Comprehensive Income (Unaudited) | |||||||
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Revenue | $ | 27,831,694 | $ | 33,780,732 | |||
Cost of goods sold | (19,298,230) | (21,281,408) | |||||
Gross profit | 8,533,464 | 12,499,324 | |||||
Selling expenses | 1,212,838 | 1,527,466 | |||||
General and administrative expenses | 1,290,073 | 1,031,542 | |||||
Income from operations | 6,030,553 | 9,940,316 | |||||
Other income (expense) | |||||||
Interest income | 65,569 | 44,187 | |||||
Change in fair value of derivative liabilities | (1,677,336) | 4,010,630 | |||||
Total other (expense) income | (1,611,767) | 4,054,817 | |||||
Income before provision for income taxes | 4,418,786 | 13,995,133 | |||||
Provision for income taxes | 1,639,122 | 1,915,380 | |||||
Net income | 2,779,664 | 12,079,753 | |||||
Other comprehensive income | |||||||
Foreign currency translation adjustment | 1,312,935 | 918,229 | |||||
Comprehensive income | $ | 4,092,599 | $ | 12,997,982 | |||
Weighted average number of shares | |||||||
-Basic | 23,863,701 | 23,465,794 | |||||
-Diluted | 23,877,337 | 25,381,392 | |||||
Income (loss) per common share | |||||||
- Basic | $ | 0.12 | $ | 0.51 | |||
- Diluted | $ | 0.12 | $ | 0.48 | |||
Sino Clean Energy Inc. and Subsidiaries | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(Unaudited) | |||||||
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 2,779,664 | $ | 12,079,753 | |||
Adjustments to reconcile net income to cash provided by operating activities : | |||||||
Depreciation and amortization | 769,153 | 735,857 | |||||
Change in fair value of derivative liabilities | 1,677,336 | (4,010,630) | |||||
Change in operating assets and liabilities : | |||||||
- Accounts receivable | 87,116 | (4,592,187) | |||||
- Inventories | (650,612) | (1,432,356) | |||||
- Prepaid inventories | 17,781,929 | 2,951,225 | |||||
- Prepaid expenses | (50,449) | 6,871 | |||||
- Accounts payable and accrued expenses | (2,574) | (370,299) | |||||
- Taxes payable | 32,079 | (312,674 | |||||
Net cash provided by operating activities | 22,423,642 | 5,055,560 | |||||
Cash flows from investing activities: | |||||||
Payable on plant acquisition | - | 2,318,540 | |||||
Repayment from related party- Suo'ang BST | - | 10,639,915 | |||||
Purchase of property, plant and equipment | - | (47,751) | |||||
Net cash provided by investing activities | - | 12,910,704 | |||||
Cash flows from financing activities: | |||||||
Cash advance from a director | 149,950 | - | |||||
Cash received from exercise of warrants | - | 34,200 | |||||
Repayment of mortgage payable | - | (1,344) | |||||
Net cash provided by financing activities | 149,950 | 32,856 | |||||
Effect of foreign currency translation | 1,487,828 | 300,193 | |||||
Net increase in cash and cash equivalents | 24,061,420 | 18,299,313 | |||||
Cash and cash equivalents, beginning of period | 42,431,330 | 52,055,857 | |||||
Cash and cash equivalents, end of period | $ | 66,492,750 | $ | 70,355,170 | |||
Supplemental Disclosure Information: | |||||||
Cash paid for taxes | $ | 1,633,942 | $ | 2,127,983 | |||
Supplemental non-cash investing and financing activities: | |||||||
Deposits applied to purchase of land use rights, property, plant and equipment | $ | - | $ | 9,409,091 | |||
First Quarter 2012 Highlights
"We achieved robust growth in our core advertising agency business, despite the softer-than-usual advertising environment in the first quarter," said Mr. He Dang, Charm's founder, chairman and chief executive officer. "We will continue to enhance the services and capabilities of our agency services with investments in talent and infrastructure, especially in the faster-growing digital space."
"Although we reduced our exposure to satellite channels in our media business, the joint impact of macro uncertainties and regulatory changes was greater than anticipated and resulted in weaker sales. In this challenging macro environment, our goal is to minimize our short-term media inventory risk while looking opportunistically for long-term media partners, especially as media prices begin to rationalize," concluded Mr. Dang.
Mr. Wei Zhou, Charm's chief financial officer, added, "We saw solid turnover growth in our television and internet agency businesses as a result of strategic investments to enhance our services and capabilities. Looking ahead, 2012 will remain a key investment year for Charm, as talent and infrastructure remain the key building blocks to support our long-term growth."
First quarter 2012 Results
Turnover (non-GAAP)
US$ mm | 1Q12 | 1Q11 | 4Q11 | Y-o-Y % | Q-o-Q% |
Total turnover (non-GAAP) | $210.4 | $198.2 | $254.8 | 6.1% | -17.4% |
Advertising agency | $188.2 | $144.2 | $189.2 | 30.5% | -0.5% |
Media investment management | $22.2 | $54.0 | $65.6 | -58.9% | -66.2% |
Branding and identity services | N/A | N/A | N/A | N/A | N/A |
The Company uses turnover (non-GAAP), defined as total customer advertising spending placed through or with Charm, to reflect the scale of its business.
The 6.1% year-over-year increase in total turnover was mainly due to the increase in the number of advertising clients and the increase in advertising spending from existing clients. The 17.4% quarter-over-quarter decrease in turnover was largely attributed to the decline in the media investment business as well as seasonal factors.
The 30.5% year-over-year increase in the advertising agency business, or agency business, turnover was mainly due to the increase in the number of new agency clients and the increase in advertising spending from existing agency clients. The 0.5% quarter-over-quarter decline in turnover was mainly attributed to slightly weaker demand in the first quarter due to seasonal factors. In the first quarter of 2012, Charm's agency business had 160 advertisers, compared to 153 advertisers in the fourth quarter of 2011 and 140 advertisers in the first quarter of 2011.
The revenue extraction rate, which is defined as revenue divided by turnover, was 5.5% for the agency business, compared to 4.9% for the first quarter of 2011 and 6.2% for the fourth quarter of 2011. The year-over-year increase in the revenue extraction rate was mainly due to the increased advertising spending on non-CCTV media platforms, internet and satellite channels, which have a higher extraction rate. The quarter-over-quarter decrease in the revenue extraction rate was mainly due to strong, seasonal-related placements in the first quarter on China Central Television ("CCTV"), which generally has slightly lower extraction rates compared to other media platforms. Charm expects the revenue extraction rate to increase as the Company expands its full-service offerings across all media platforms under Charm Advertising and ramps up digital media offerings under Charm Interactive and Charm Click.
The 58.9% year-over-year and 66.2% quarter-over-quarter turnover decrease (equivalent to GAAP revenue) in the media investment management business, or principal media business, which operates under the Shangxing Media brand, was mainly due to the dropping of several media assets in order to modify the Company's media inventory mix and reduce risks associated with uncertainties in the satellite market following recent regulatory changes. For the first quarter of 2012, Charm had 150 advertisers for its principal media business, compared with 325 advertisers for the first quarter of 2011. The decline in advertisers is mainly due to the dropping of Hubei Provincial Economic TV, which had a large number of small advertisers.
Revenues
US$ mm | 1Q12 | 1Q11 | 4Q11 | Y-o-Y % | Q-o-Q% |
Total revenues | $33.5 | $62.3 | $80.3 | -46.1% | -58.3% |
Advertising agency | $10.3 | $7.1 | $11.7 | 44.6% | -12.4% |
Media investment management | $22.2 | $54.0 | $65.6 | -58.9% | -66.2% |
Branding and identity services | $1.1 | $1.1 | $3.0 | -4.7% | -64.3% |
The increase in agency revenues is consistent with the changes in turnover. The decrease in principal media business revenues is consistent with the changes in turnover while the quarter-to-quarter decrease in branding and identity services is primarily due to decreased client demand for creative services due to seasonal factors in the first quarter of 2012.
Gross Profit
US$ mm | 1Q12 | 1Q11 | 4Q11 | Y-o-Y % | Q-o-Q% |
Cost of revenues | $23.7 | $47.4 | $51.8 | -50.0% | -54.3% |
Gross profit | $9.8 | $14.8 | $28.5 | -33.7% | -65.5% |
Gross margin | 29.3% | 23.8% | 35.5% |
Charm mainly attributes the year-over-year decrease in cost of revenues to the dropping of several media assets in order to modify the Company's media inventory mix due to uncertainties in the satellite market following recent regulatory changes. The year-over-year decline in gross profit was due to a lower contribution from the media investment management business.
Operating Profit
US$ mm | 1Q12 | 1Q11 | 4Q11 | Y-o-Y % | Q-o-Q% |
Total operating expenses | $9.5 | $6.8 | $13.0 | 40.8% | -26.5% |
Selling and marketing | $7.4 | $5.0 | $9.6 | 48.2% | -23.1% |
General and administrative | $2.1 | $1.8 | $3.4 | 20.0% | -36.5% |
Operating profit | $0.2 | $8.1 | $15.5 | -97.1% | -98.5% |
The 48.2% year-over-year increase in selling and marketing expenses was primarily due to the continued investment in the Company's digital business, including increased headcount at Charm Interactive and Charm Click. The 23.1% quarter-over-quarter decrease in selling and marketing expenses was primarily due to seasonal factors as fewer marketing events were held in the first quarter of 2012.
General and administrative expenses in the first quarter of 2012 grew 20.0% year over year and decreased 36.5% quarter over quarter to $2.1 million. The year-over-year increase was mainly attributed to investment in infrastructure to support long-term growth, such as office expansion and information technology ("IT") systems.
Net Income
US$ mm | 1Q12 | 1Q11 | 4Q11 | Y-o-Y % | Q-o-Q% |
Non-GAAP net income* | $1.9 | $8.9 | $17.1 | -79.1% | -89.1% |
Net income | $0.8 | $8.2 | $15.7 | -90.0% | -94.8% |
Basic net income per ADS (US$) | $0.01 | $0.20 | $0.38 | ||
Fully diluted net income per ADS (US$) | $0.01 | $0.19 | $0.36 |
*The Company's non-GAAP net income excludes share-based compensation expenses, amortization of intangible assets and impairments on investments.
Each ADS represents two common shares. The weighted average shares used to compute basic net income per ADS for the first quarter of 2012 is 39,068,333. As of March 31, 2012, 38,967,941 ADS were issued and outstanding.
Cash Flows and Cash Position
Net cash outflow from operations for the first quarter of 2012 was $4.7 million, which is mainly due to deposits made for new CCTV media inventory. As of March 31, 2012, the Company had cash and cash equivalents of $132.5 million, compared to $139.4 million at the end of the fourth quarter of 2011.
Customers
In the first quarter of 2012, Charm's agency business had 160 advertisers, compared to 153 advertisers in the fourth quarter of 2011 and 140 advertisers in the first quarter of 2011.
In the first quarter of 2012, Charm's principal media business had 150 advertisers, compared to 325 advertisers in the first quarter of 2011
Employee Headcount
As of March 31, 2012, the Company had 764 employees, compared to 691 employees as of December 31, 2011.
Recent Business Developments
In February 2012, Charm was named CCTV's "Top Advertising Agency" for the ninth consecutive year and tenth overall, extending its dominant run as the go-to agency for advertisers on China's largest television network.
In March 2012, Charm Click received the 2012 Discovery Award from Baidu, Inc. ("Baidu"), the leading Chinese-language internet search provider, as well as the 2011 Outstanding Partner Award from Taobao, China's largest e-commerce marketplace operator. The awards were based on the number of Charm Click clients, the volume of billings and the effectiveness of the SEM solutions delivered to both Baidu and Taobao in 2011.
In April 2012, Charm paid a cash dividend of US$0.16 per ordinary share, which is equivalent to US$0.32 per ADS. In the future, Charm's Board of Directors will evaluate the Company's dividend policy on an annual basis.
In April 2012, Charm established a three-year sponsorship and promotional agreement with various Chinese Winter Olympic sports associations, including China's ice hockey, curling, short-track speed skating, figure skating, and freestyle skiing teams. The cooperation initiatives will be managed by Charm's new sports marketing department, which is led by Mr. Lei Wu, a veteran of the sports marketing business and who joined Charm from the CCTV Sports and Entertainment Group.
In May 2012, Charm signed an exclusive advertising agency agreement with Beijing Television ("BTV") to operate on its sports channel ("BTV-Sports"), effective June 1, 2012 to December 31, 2014. BTV-Sports is a 24-hour sports channel broadcasting to the greater Beijing area with programming that includes live and recorded popular athletic events such as the English Premier League, UEFA Champions League, the Chinese Basketball Association and the (U.S.) National Basketball Association. Charm expects the initial payment and ramp-up period to impact the Company's second quarter results.
Charm won the following accounts in the first quarter of 2012:
Business Outlook
US$ mm | 2Q12E |
Total revenues | $36.0 to $37.5 |
Non-GAAP net income* | $1.50 to $2.00 |
*The Company's non-GAAP net income excludes share-based compensation expenses, amortization of intangible assets and impairments on investments.
The Company bases these estimates on a foreign exchange rate of RMB6.30 to US$1.00. This forecast reflects the Company's current and preliminary view, which is subject to change.
Non-GAAP Financial Measures:
To supplement the unaudited condensed consolidated financial information presented in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP"), the Company also provides the following non-GAAP financial measures: "turnover," which is defined as total customer advertising spending placed through or with Charm, and "non-GAAP net income," which is defined as GAAP net income excluding stock-based compensation expenses, amortization of intangible assets and impairment on investments.
The non-GAAP financial measures are provided to enhance investors' overall understanding of the Company's current and past financial performance in ongoing core operations as well as prospects for the future. These measures should be considered in addition to results prepared and presented in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Management uses both GAAP and non-GAAP information in evaluating and operating the Company's business internally and therefore deems it important to provide all of this information to investors.
Cautions on Use of Non-GAAP Measures
In addition to Charm's consolidated financial results prepared under US GAAP, the Company also provides non-GAAP financial measures, including "turnover" and "non-GAAP net income." The Company believes that the non-GAAP financial measures provide investors with another method for assessing its operating results in a manner that is focused on the performance of its ongoing operations.
Management believes investors will benefit from greater transparency in referring to these non-GAAP financial measures when assessing the Company's operating results, as well as when forecasting and analyzing future periods. However, management recognizes that:
Further, these non-GAAP financial measures may be unique to the Company, as they may be different from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company's results to the results of other companies. 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.
A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure or measures appears at the end of this press release.
Conference Call
Charm's management team will hold an earnings conference call at 8 a.m. U.S. Eastern Time (8 p.m. Beijing/Hong Kong Time) on Thursday, May 17, 2012.
Dial-in details for the conference call are as follows:
U.S.: | +1-718-354-1231 |
International: | +1-866-519-4004 |
United Kingdom: | +44-20-3059-8139 |
Hong Kong: | +852-2475-0994 |
Passcode: | 79400253 |
A replay of the call will be available from 1 a.m. May 18, 2012 until May 25, 2012 U.S. Eastern Time. Dial-in details for the replay are as follows:
International: | +61-2-8235-5000 |
Passcode: | 79400253 |
Additionally, an archived webcast of this call will be available on the Investor Relations section of the Charm web site at http:/ir.charmgroup.cn.
About Charm
Charm Communications Inc. (NASDAQ: CHRM) is a leading advertising agency group in China that offers integrated advertising services with particular focus on television and the internet. Charm's integrated advertising services include full media planning and buying, as well as creative and branding services. Charm has built a full service digital advertising platform, which offers digital campaign capabilities across all key digital media, including search engines, display portals, online video sites and social networking services. Charm also secures advertising inventory and other advertising rights, such as sponsorships and branded content, from premium media networks and resells to clients as part of its integrated media offerings. Charm's clients include China's top domestic brands, as well as some major international brands, across a wide range of industries. Since 2003 Charm has been the top agency every year for China's leading television network, China Central Television (CCTV). For more information, please go to http://ir.charmgroup.cn.
Safe Harbor Statement
This press release contains "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. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties. Further information regarding these and other risks is included in Charm's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.
For investor and media inquiries, please contact:
In China:
Mr. Kevin Sun
IR Department
Charm Communications Inc.
Phone: +86-10-8556-2527
Email: ir@charmgroup.cn
In the U.S.:
Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Phone: +1-646-460-9989
Email: chrm@ogilvy.com
Charm Communications Inc. | |||
Unaudited Condensed Consolidated Balance Sheets | |||
(Amounts in thousands of U.S. dollars) | |||
March 31, 2012 | December 31, 2011 | ||
ASSETS | |||
Current Assets | |||
Cash and cash equivalents | 132,480 | 139,406 | |
Notes receivable | 14,798 | 28,880 | |
Prepaid expenses | 92,529 | 106,393 | |
Deposits | 26,787 | 25,730 | |
Accounts receivable | 101,141 | 103,920 | |
Amount due from related parties | 1,715 | 3,494 | |
Deferred tax assets | 125 | 125 | |
Other current assets | 3,635 | 2,139 | |
Total current assets | 373,210 | 410,087 | |
Fixed assets, net | 5,770 | 4,344 | |
Intangible assets, net | 3,134 | 3,397 | |
Investments under equity method | 1,382 | 1,445 | |
Goodwill | 4,332 | 4,335 | |
Other non-current assets | 1,009 | 1,009 | |
Total non-current assets | 15,627 | 14,530 | |
TOTAL ASSETS | 388,837 | 424,617 | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY | |||
Current Liabilities | |||
Accounts payable (of which 757 and 687, as of March 31, 2012 and December 31,2011 of the consolidated VIE without recourse to the Company, respectively) | 50,923 | 63,141 | |
Amounts due to related parties (of which 310 and nil as of March 31, 2012 and December 31,2011 of the consolidated VIE without recourse to the Company, respectively) | 7,119 | 4,460 | |
Advances from customers (of which 1,559 and 12,028 as of March 31, 2012 and December 31,2011 of the consolidated VIE without recourse to the Company, respectively) | 64,479 | 85,720 | |
Accrued expenses and other current liabilities (of which 3,850 and 4,411 as of March 31, 2012 and December 31,2011 of the consolidated VIE without recourse to the Company, respectively) | 16,951 | 22,876 | |
Dividends payable (of which nil as of March 31, 2012 and December 31,2011 of the consolidated VIE without recourse to the Company, respectively) | 12,556 | - | |
Consideration payable (of which nil as of March 31, 2012 and December 31,2011 of the consolidated VIE without recourse to the Company, respectively) | 2,812 | 2,813 | |
Total current liabilities | 154,840 | 179,010 | |
Consideration payable (of which nil as of December 31, 2011, September 30, 2011 and December 31, 2010 of the consolidated VIE without recourse to the Company, respectively) | 2,474 | 2,476 | |
Total non-current liabilities | 2,474 | 2,476 | |
Total liabilities | 157,314 | 181,486 | |
Redeemable noncontrolling interest | 4,744 | 4,723 | |
Equity: | |||
Charm Communications Inc.'s equity | |||
Ordinary shares | 8 | 8 | |
Additional paid-in capital | 104,335 | 116,637 | |
Retained earnings | 106,482 | 105,930 | |
Accumulated other comprehensive income | 13,258 | 13,384 | |
Total Charm Communications Inc. shareholders' equity | 224,083 | 235,959 | |
Noncontrolling interest | 2,696 | 2,449 | |
Total equity | 226,779 | 238,408 | |
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING | |||
INTEREST AND EQUITY | 388,837 | 424,617 | |
Charm Communications Inc. | |||||
Condensed Consolidated Statements of Operations | |||||
(Amounts in thousands of U.S. dollars, except for number of shares and per share data) | |||||
For the three months ended, | |||||
March 31, 2012 | March 31, 2011 | December 31, 2011 | |||
(Unaudited) | (Unaudited) | (Unaudited) | |||
Revenues: | |||||
Media investment management | 22,194 | 54,046 | 65,618 | ||
Advertising agency | 10,283 | 7,113 | 11,745 | ||
Branding and identity services | 1,064 | 1,116 | 2,979 | ||
Total revenues | 33,541 | 62,275 | 80,342 | ||
Cost of revenues: | |||||
Media investment management | 22,081 | 46,007 | 48,861 | ||
Advertising agency | 982 | 816 | 1,207 | ||
Branding and identity services | 638 | 611 | 1,739 | ||
Total cost of revenues: | 23,701 | 47,434 | 51,807 | ||
Gross profit | 9,840 | 14,841 | 28,535 | ||
Operating expenses: | |||||
Selling and marketing expenses | 7,420 | 5,007 | 9,643 | ||
General and administrative expenses | 2,127 | 1,773 | 3,350 | ||
Total operating expenses | 9,547 | 6,780 | 12,993 | ||
Gain(Loss) from equity method investees | -62 | -5 | |||
Operating profit | 231 | 8,061 | 15,537 | ||
Interest income | 645 | 553 | 663 | ||
Other expense | 13 | ||||
Income before income tax expense | 863 | 8,614 | 16,200 | ||
Income tax expense | 43 | 431 | 465 | ||
Net income | 820 | 8,183 | 15,735 | ||
Net income attributable to noncontrolling interest | 268 | 309 | 944 | ||
Net income attributable to Charm Communications Inc. | 552 | 7,874 | 14,791 | ||
Net income(loss) attributable to Charm Communications Inc. shareholders per ADS: | |||||
Basic | 0.01 | 0.20 | 0.38 | ||
Diluted | 0.01 | 0.19 | 0.36 | ||
Shares used in computation of net income(loss) per ADS: | |||||
Basic | 39,068,333 | 39,135,833 | 39,075,906 | ||
Diluted | 40,900,414 | 40,911,713 | 40,976,069 | ||
Notes: | |||||
(1) Share-based compensation expenses during the period included in: | |||||
Cost of revenues | 1 | 1 | 1 | ||
Selling and marketing expenses | 535 | 422 | 571 | ||
General and administrative expenses | 238 | 250 | 303 | ||
Total | 774 | 673 | 875 | ||
For the three months ended, | |||||
March 31, 2012 | March 31, 2011 | December 31, 2011 | |||
(Unaudited) | (Unaudited) | (Unaudited) | |||
Net income | 820 | 8,183 | 15,735 | ||
Other comprehensive income: | |||||
Change in cumulative foreign exchange translation adjustment | (126) | 1,293 | 2,938 | ||
Comprehensive income | 694 | 9,476 | 18,673 | ||
Less: Comprehensive income attributable to non-controlling interest | (247) | (309) | (755) | ||
Less: Comprehensive income attributable to redeemable non-controlling interest | (21) | - | (189) | ||
Comprehensive income attributable to Charm Communications Inc. | 426 | 9,167 | 17,729 | ||
Reconciliation from Net income to Non-GAAP net income: | ||||
(Amounts in thousands of U.S. dollars) | ||||
For the three months ended, | ||||
March 31, 2012 | March 31, 2011 | December 31, 2011 | ||
Net income | 820 | 8,183 | 15,735 | |
Add back share-based compensation expenses | ||||
during the related periods | 774 | 673 | 875 | |
Add back amortization on intangible assets | 261 | - | 443 | |
Non-GAAP net income | 1,855 | 8,856 | 17,053 | |
Reconciliation from Turnover (non-GAAP) to USGAAP Revenues: | ||||
(Amounts in thousands of U.S. dollars) | ||||
For the three months ended, | ||||
March 31, 2012 | March 31, 2011 | December 31, 2011 | ||
Turnover (non-GAAP): | ||||
Media investment management | 22,194 | 54,046 | 65,618 | |
Advertising agency | 188,162 | 144,159 | 189,178 | |
Branding and identity services | N/A | N/A | N/A | |