omniture

China New Media Reports Third Quarter Fiscal Year 2012 Financial Results

China New Media Corp.
2012-05-16 20:00 1697

DALIAN, China, May 16, 2012 /PRNewswire-Asia/ -- China New Media Corp. (OTCBB: CMDI) (the "Company"), China's fast-growing advertising media company who owns or operates an outdoor media network located in Dalian, Shenyang, Tianjin, Beijing, Shanghai, and New York City, today announced its financial results for the third quarter of fiscal year 2012 ended March 31, 2012.

Mr. James Wang, Chairman and Chief Executive Officer of China New Media, stated, "During the third quarter of fiscal year 2012, we still see a tougher macro economic environment. Advertisers in certain cyclical industries, such as real estate, have tightened their advertising budgets since the second half of 2011. Facing this unfavorable economic conditions, we are working diligently to strengthen our position in the market - continue to focus on our expansion strategy of adding more advertising platforms geographically, at the same time, focus more on sales, marketing and promotional efforts, and provided more value-added services in order to maintain existing customers and add new customers in our new markets. For each new market we have developed our own sales team to sell existing advertising platforms and develop new advertising platforms. The investment required to build greater future sales resulted in decrease in overall gross profit margins and profitability during the quarter. However, we believe over the long term there will be greater leverage in this model and we strongly believe that it is the best plan of action for the value of the Company and our shareholders."

Mr. Wang continued, "During the third quarter of fiscal year 2012, one of the most significant breakthroughs in our company history is the acquisition of the operation right of the 684 square-foot LED screen located at No.1 Times Square in New York City, USA. It's the first step for our company to expand our media platform and sales network directly to overseas market. We are confident that we will have a margin recovery as the new market gains sales momentum."

Summary Financials for 2012 Fiscal Third Quarter Ended March 31, 2012:

Fiscal Third Quarter Financials (USD)

Three months ended March 31,

2012

2011

CHANGE

Revenue

$4.1 million

$5.4 million

-24.6%

Gross Profit

$1.3 million

$3.1 million

-57.9%

Gross Profit Margin

31.6%

56.6%

-44.1%

Net Income*

$(442,000)

$1,.4 million

-131.8%

EPS**

$(0.02)

$0.05

-131.8%

* Attributable to China New Media Corp.

** Based on 27.6 million shares outstanding

Financial Results for the 2012 Fiscal Third Quarter Ended March 31, 2012

Revenue for the 2012 fiscal third quarter ended March 31, 2012 totaled $4,071,427 a decrease of 24.6% compared to $5,402,726 for the same period in fiscal 2011. The decline in revenue was primarily attributable to a decrease in contracting demand from advertisers under unfavorable macro economic conditions. Advertisers from certain industries, such as real estate, have significantly decreased their advertising budget in the third quarter of fiscal year 2012. However, since we maintained our expansion strategy of getting more advertising platforms at desired locations, we believe we can have a revenue recovery once we further develop our new market.

Revenue generated from the outdoor billboard advertising platform increased 7% compared with same quarter last year and accounted for 49.5% of total revenue during the 2012 fiscal third quarter. The billboard advertising platform has presented a significant growth opportunity with gross profit margin of 33.0% during the 2012 fiscal third quarter. The outdoor billboard platform is established in Dalian, Shenyang, Tianjin, Beijing, Shanghai and New York City, and going forward the Company will continue to establish its presence in these markets.

Fiscal 2012 Third Quarter Revenue Breakdown by Advertising Platform (USD)

Period ended March 31,

2012

2011

CHANGE

Street Fixture and Display Network

% of Sales

Gross Profit Margin %

$1.1 million

28.2%

32.3%

$1.8 million

33.5%

61.5%

-36.6%

City Transit System Display Network

% of Sales

Gross Profit Margin %

$0.6 million

13.8%

28.5%

$1.1 million

19.4%

41.2%

-46.4%

Outdoor Billboards

% of Sales

Gross Profit Margin %

$2.0 million

49.5%

33%

$1.9 million

34.9%

52.2%

+7.0%

City Navigator

% of Sales

Gross Profit Margin %

$0.3 million

8.0%

30.1%

$0.5 million

9.6%

71.1%

-37.8%

Other Services Income

% of Sales

Gross Profit Margin %

$0.02 million

0.5%

-39.3%

$0.1 million

2.5%

11.0%

-86.3%

Total Sales

$4.1 million

$5.4 million

-24.6%

Cost of sales for the 2012 fiscal third quarter ended March 31, 2012 totaled $2.8 million or 68.4% of revenue, an increase of 18.8% compared to $2.3 million or 43.4% of revenue for the 2011 fiscal third quarter ended March 31, 2011. The increase in cost of revenue was primarily attributable to increased depreciation of advertising equipment, labor and raw material cost.

Gross profit for the 2012 fiscal third quarter ended March 31, 2012 totaled $1.29 million, a decrease of 57.9% compared to $3.1 million for the 2011 fiscal third quarter ended March 31, 2011. The decrease in gross profit was primarily due to decrease in revenue while an increased cost of revenue. Gross profit margin was 31.6% and 56.6% for the 2012 and 2011 fiscal third quarters ended March 31, 2012 and 2011, respectively. The decrease in our gross profit margin during the third quarter of 2012 was primarily due to (i) decrease in revenue caused by certain cyclical industries; (ii) increased cost of revenue which was mainly caused by increased depreciation expense of advertising equipment and increased labor and raw material cost. As a result, our gross profit margin was lower than the level we normally would expect. We intend to increase our sales effort to improve the utilization rate of our new platforms in the coming quarters to improve our gross profit margin.

Selling, general and administrative expenses consist primarily of sales personnel salaries, sales representative commissions, rent expenses and related administrative expenses totaling $1.4 million for the 2012 fiscal third quarter as compared to $1.0 million for the 2011 fiscal third quarter. This increase was due to salary increase, an increased sales effort from the Company to address the more competitive overall advertising market and to accommodate its geographic expansion of its media platforms, higher maintenance, professional fees and other expenses related to the growth of the business.

Net loss attributable to China New Media Corp. for the three months ended March 31, 2012 was $442,000 as compared to income $1.4 million for the three months ended March 31, 2011. The decrease was due to decreased revenue compared to same period last year with an increase in cost of revenues and selling, general and administrative expenses. Basic and diluted earnings per share for the 2012 fiscal third quarter ended March 31, 2012 was -$0.02 based on 27.6 million basic and diluted shares versus basic and diluted earnings per share of $0.05 for the 2011 fiscal third quarter ended March 31, 2011 based on 27.6 million basic and diluted shares outstanding.

Summary Financials for Nine Months of Fiscal 2012 Ended March 31, 2012:

Fiscal 2012 Nine-Month Results (USD) (unaudited)

Nine months ended March 31,

2012

2011

CHANGE

Revenue

$13.7 million

$14.6 million

-6.1%

Gross Profit

$6.5 million

$8.3 million

-21.5%

Gross Profit Margin

47.4%

56.7%

-16.4%

Net Income*

$1.0 million

$3.7 million

-72.1%

EPS**

$0.04

$0.14

-72.1%

* Attributable to China New Media Corp.

** Based on 27.6 million shares outstanding

Financial Results for the Nine Months FY 2012 Ended March 31, 2012

Revenue for the nine months FY 2012 ended March 31, 2012 totaled $13.7 million, dropped 6.1% compared to $14.6 million for the same period in fiscal 2011 under current unfavorable macro economic conditions. The Company plans to spend more effort on sales, marketing and promotion in order to generate sales from existing and new customers, and continue focusing on expanding outdoor advertising network at more desirable locations for the various outdoor advertising platforms.

Fiscal 2012 Nine Months Revenue Breakdown by Advertising Platform (USD)

Period ended March 31,

2012

2011

CHANGE

Street Fixture and Display Network

% of Sales

Gross Profit Margin %

$3.6million

26.6%

50.5%

$4.9 million

33.7%

61.8%

-25.9%

City Transit System Display Network

% of Sales

Gross Profit Margin %

$2.2 million

16.3%

49.0%

$2.9 million

19.6%

47.5%

-21.9%

Outdoor Billboards

% of Sales

Gross Profit Margin %

$6.3 million

45.8%

44.5%

$5.0 million

34.0%

58.4%

+26.5%

City Navigator

% of Sales

Gross Profit Margin %

$1.2 million

9.1%

58.1%

$1.2 million

8.5%

69.1%

+0.4%

Other Services Income

% of Sales

Gross Profit Margin %

$0.3 million

2.1%

14.9%

$0.6 million

4.1%

19.1%

-50.9%

Total Sales

$13.7 million

$14.6 million

-6.1%

Cost of sales for the nine months ended March 31, 2012 totaled $7.2 million or 52.6% of revenue, an increase of 21.5% compared to $6.3 million or 43.3% of revenue for the nine months ended March 31, 2011, mainly attributable to increased depreciation of advertising equipment, labor and raw material cost.

Gross profit for the nine months ended March 31, 2012 totaled $6.5million, a decrease of 21.5% compared to $8.3 million for the same period the prior year. Gross profit margin was 47.4% and 56.7% for the nine months ended March 31, 2012 and 2011, respectively. The decrease in gross profit margin was mainly due to the decrease in revenue while an increase in cost of revenue, especially with an increased depreciation of advertising equipment, and the increase of labor and raw material cost.

Selling, general and administrative expenses totaled $3.9 million for the nine months of fiscal 2012 as compared to $2.7 million for the same period in fiscal 2011. This increase was due to an increased sales effort from the Company to accommodate its geographic expansion of its media platforms and tougher macro economic conditions, higher maintenance, professional fees and other expenses related to the growth of the business.

Net income attributable to China New Media Corp. for the nine months ended March 31, 2012 was $1.0 million, a decrease of 72.1%, as compared to $3.7 million for the same period ended March 31, 2011. Basic and diluted earnings per share for the nine months ended March 31, 2012 was $0.04 based on 27.6 million basic and diluted shares versus basic and diluted earnings per share of $0.14 and $0.13 for the nine months ended March 31, 2011 based on 27.6 million basic and 28.2 million diluted shares outstanding.

Liquidity and Capital Resources

As of March 31, 2012, China New Media had approximately $1.1 million in cash and cash equivalents. As of March 31, 2012, total current assets and total assets were $9.4 million and $41.8 million, respectively. During the same period, total current liabilities and total liabilities were $20.4 million and $20.9million respectively. Shareholder's equity totaled 20.9 million, or a fully diluted book value of $0.76 per share, as of March 31, 2012.

Conference Call Details:

Date:

Thursday, May 17, 2012

Time:

8:30 a.m. Eastern

U.S. Dial-In:

(877) 941-4775

International Dial-In:

(480) 629-9761

Live Webcast:

http://public.viavid.com/index.php?id=100574

It is recommended that participants dial in approximately 10 minutes prior to the start of the 8:30 a.m. Eastern call. A telephonic replay of the conference call may be accessed approximately two hours after the call through May 31, 2012. Please dial 877-870-5176 for U.S. and 858-384-5517 for international callers and entering the access code, 4540184.

There will also be a simultaneous live webcast and archived recording of the conference call available by clicking on the following link, http://public.viavid.com/index.php?id=100574.

About China New Media Corp.

Founded in September 2000, Dalian Vastitude Media Group Co., Ltd., now known as China New Media Corp., is headquartered in Dalian, the commercial center of Northeastern China. The company owns and operates the city's largest outdoor media network encompassing over 800 bus shelters furnished with billboards and displays; 130 taxi stops with displays; and 22 large-size billboards, majority of which are large-size LED displays at major traffic conjunctions. The company also furnishes more than 400 buses with advertising posters and 35 metro-trains throughout Dalian Metro Lines. China New Media provides comprehensive adverting services from art design to ad publishing, from daily maintenance to technical upgrading. Launched in Dalian in 2009, China New Media's proprietary LED multimedia display network, City Navigator®, is one of the country's first web-based outdoor advertising networks. For more information, please visit www.gywj.cn.

Forward-Looking Statements

This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements", including statements regarding the Company's ability to meet its obligations under its various contracts; the timeliness of payments and other economic benefits the Company expects to receive under such contracts; and the Company's ability to maintain its customer relationships and to maintain its ability to pursue its commercial objectives. In addition, the Company's operations are conducted in the PRC and, accordingly, are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe such as risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. 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 at http://www.sec.gov. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Company Contact:

Rita Jiang
Executive Vice President of Finance
646-691-5047
Rita.jiang@gmail.com
www.gywj.cn

CHINA NEW MEDIA CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN US DOLLARS)

(UNAUDITED)




As of March 31,


As of June 30,



2012


2011






ASSETS










Current assets





Cash and cash equivalents


$

1,127,958


$

1,808,880

Accounts receivable, net



4,466,874



5,395,698

Advance to suppliers



342,977



619,582

Prepaid expenses



47,316



189,759

Loans receivable



2,548,138



1,761,139

Other current assets



753,150



243,159

Deferred tax assets



185,476



129,443

Total current assets



9,471,889



10,147,660








Property, equipment and construction in progress, net



22,961,285



18,867,352








Other assets







Security deposits



1,878,639



1,955,343

Equity investment



83,323



-

Billboards use right



7,455,531



4,766,060

Total other assets



9,417,493



6,721,403








Total Assets


$

41,850,667


$

35,736,415








LIABILITIES AND EQUITY














Current liabilities







Short term loans


$

11,562,952


$

11,603,746

Current portion of long term loan



476,495



464,150

Capital lease obligation - current portion



585,945



-

Accounts payable



2,652,747



47,067

Other payables



1,818,067



1,121,947

Accrued expenses



134,651



491,997

Deferred revenues



1,428,017



1,618,548

Taxes payable



1,215,075



1,055,620

Short term borrowing - third party



317,664



-

Due to related parties



255,094



158,297

Total current liabilities



20,446,707



16,561,372








Capital leases obligation - non-current portion



519,022



-








Total Liabilities



20,965,729



16,561,372








Commitments and contingencies














Equity







Series A Preferred Stock, $0.0001 par value, 20,000,000 shares authorized,
1,000,000 shares issued and outstanding



100



100

Common stock, $0.0001 Par value; 80,000,000 shares authorized;




27,590,701 shares issued and outstanding



2,759



2,759

Additional paid-in-capital



6,820,820



6,820,820

Accumulated other comprehensive income



1,042,887



636,300

Retained earnings



11,764,973



10,724,103

Total China New Media Corp. equity



19,631,539



18,184,082

Noncontrolling interest



1,253,399



990,961

Total equity



20,884,938



19,175,043








Total Liabilities and Equity


$

41,850,667


$

35,736,415

CHINA NEW MEDIA CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(IN US DOLLARS)

(UNAUDITED)




For the nine months ended March 31,


For the three months ended March 31,



2012


2011


2012


2011



















Revenues


$

13,677,360


$

14,571,264


$

4,071,427


$

5,402,726














Cost of revenue



(7,188,490)



(6,304,608)



(2,783,255)



(2,342,570)














Gross profit



6,488,870



8,266,656



1,288,172



3,060,156














Selling, general and administrative expenses



(3,874,595)



(2,738,538)



(1,415,572)



(1,046,951)














Income (loss) from operations



2,614,275



5,528,118



(127,400)



2,013,205














Other income (expenses):













Interest income



4,442



3,947



1,551



916

Interest expense



(774,245)



(491,507)



(305,100)



(175,950)

Loss from equity investment



(11,855)



-



(3,954)



-

Other income



-



166,082



-



48,545

Other expenses



(23,099)



(15,526)



(1,851)



(102)














Total Other income (expenses)



(804,757)



(337,004)



(309,354)



(126,592)














Income (loss) before income taxes



1,809,518



5,191,114



(436,754)



1,886,613














Income tax provision (benefit)













Current



589,993



1,409,685



23,558



511,169

Deferred



(55,027)



(46,504)



(98,822)



(23,300)

Total income tax provision (benefit)



534,966



1,363,181



(75,264)



487,869














Net income (loss)



1,274,552



3,827,933



(361,490)



1,398,744














Less: net income attribute to the noncontrolling interest



233,684



94,452



80,737



7,881














Net income (loss) attributable to China New Media Corp.


$

1,040,868


$

3,733,481


$

(442,227)


$

1,390,863














Net income (loss)



1,274,552



3,827,933



(361,490



1,398,744














Other comprehensive income













Foreign currency translation adjustments



435,340



882,032



17,623



601,418














Comprehensive income (loss)



1,709,892



4,709,965



(343,867)



2,000,162














Less: comprehensive income attribute to the noncontrolling interest



262,437



616,469



82,721



504,311














Comprehensive income (loss) attributable to China New Media Corp.


$

1,447,455


$

4,093,496


$

(426,588)


$

1,495,851














Earnings (loss) per share













Basic


$

0.04


$

0.14


$

(0.02)


$

0.05

Diluted


$

0.04


$

0.13


$

(0.02)


$

0.05

Weighted average number of common shares













Basic



27,550,701



27,550,701



27,550,701



27,550,701

Diluted



27,550,701



28,196,904



27,550,701



27,550,701

CHINA NEW MEDIA CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN US DOLLARS)

(UNAUDITED)




For the nine months ended March 31,



2012


2011






CASH FLOWS FROM OPERATING ACTIVITIES:





Net income


$

1,274,552


$

3,827,933

Adjustments to reconcile net income to net cash







provided by operating activities:







Depreciation and amortization



3,498,270



1,955,181

Amortization of stock based compensation expense



22,871



-

Loss from equity investment



11,855



-

Provision for doubtful accounts



207,142



-

Deferred tax benefit



(52,056)



(46,504)

Changes in operating assets and liabilities







Accounts receivable



854,311



(2,794,405)

Other current assets



(600,660)



(2,261,688)

Security deposit



127,405



17,991

Advance to suppliers



290,110



959,485

Accounts payable



2,885,753



428,261

Other payables



505,975



679,643

Accrued expenses



(378,169)



153,697

Deferred revenues



(231,210)



575,784

Taxes payable



130,044



1,080,481








Net cash provided by operating activities



8,546,193



4,575,859








CASH FLOWS FROM INVESTING ACTIVITIES:







Loan to third party



(732,643)



-

Acquisition of billboards use right



(4,504,460)



(1,566,756)

Purchase of property and equipment



(3,980,837)



(4,798,015)








Net cash used in investing activities



(9,217,940)



(6,364,771)








CASH FLOWS FROM FINANCING ACTIVITIES:







Net proceeds from capital contributions



-



479,837

Net proceeds from short-term bank loans



754,653



1,799,390

Payment of capital leases obligations



(105,878)



-

Repaymnet of short-term bank loans



(1,100,536)



-

Repayment of related party loans



87,698



(321,034)

Proceeds from outside party



314,439



-

Repayments of long-term bank loans



-



(299,898)








Net cash (used in) provided by financing activities



(49,624)



1,658,295








EFFECT OF EXCHANGE RATE CHANGE ON







CASH AND CASH EQUIVALENTS



40,449



50,272








NET DECREASE IN CASH AND CASH EQUIVALENTS



(680,922)



(80,345)








CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD



1,808,880



1,672,017








CASH AND CASH EQUIVALENTS, END OF PERIOD


$

1,127,958


$

1,591,672








SUPPLEMENTAL CASH FLOW DISCLOSURE







Income taxes paid


$

446,077


$

692,274

Interest paid


$

724,034


$

491,507

Source: China New Media Corp.
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