BEIJING, Aug. 11 /Xinhua-PRNewswire-FirstCall/ -- AirMedia Group
Inc. (NASDAQ:AMCN), the operator of the largest digital media
network in China dedicated to air travel advertising, today
announced its unaudited financial results for the second quarter
ended June 30, 2008. Financial Highlights -- Total revenues
increased 251.6% year-over-year and 37.9% sequentially to US$29.8
million; -- Revenues from digital frames in airports for the second
quarter of 2008 grew 63.4% sequentially to US$11.0 million.
Revenues from digital frames in airports was nil in the same period
one year ago; -- Net income increased 241.8% year-over-year and
0.7% sequentially to US$7.3 million. Basic and diluted income per
ADS was both US$0.11; -- Adjusted net income (non-GAAP), which
excluded share-based compensation expenses and amortization of
acquired intangible assets, increased 286.1% year-over-year and
0.6% sequentially to US$8.5 million. Adjusted basic and diluted net
income per ADS (non-GAAP) was US$0.13 and US$0.12, respectively.
"We are very pleased to report that AirMedia's financial results in
the second quarter of 2008 were in line with our raised revenue
guidance. We are particularly excited about our roll-out of digital
frames to a total of sixteen airports, which marked the successful
source of revenue generation from this relatively new product line
and underscored the increasing acceptance by advertisers of this
innovative media format," commented Herman Man Guo, Chairman and
Chief Executive Officer of AirMedia. "We also complement AirMedia's
organic business growth with our latest acquisitions which enabled
us to expand into advertising business on gate bridges in airports,
making us well positioned to capture the growth opportunities in
the air travel advertising sector in China. While the Olympic Games
currently taking place in Beijing, China may to certain extent
limit our rapid growth in the short term since we are only allowed
to sell advertisements to Olympic Sponsors in Beijing Capital
International Airport and Qingdao Liuting International Airport
from July 11, 2008 to September 18, 2008, the Olympic Games will
further drive our growth in the long term as we have obtained
several new clients who are Olympic Sponsors, and we expect to
continue to retain them after the Olympic Games. We are expecting a
strong performance in the fourth quarter of 2008 as we expect that
non-Olympic-sponsor clients will increase their advertising
spending in the fourth quarter." Financial Results Revenues Total
revenues by product line (numbers in US$ 000's except for
percentage): Quarter Quarter Ended % of Ended % of June 30, Total
March 31, Total 2008 Revenues 2008 Revenues Digital TV screens in
airports 13,143 44.1% 9,981 46.2% Digital TV screens on airplanes
4,636 15.6% 3,881 18.0% Digital frames in airports 10,960 36.8%
6,706 31.1% Other displays 1,035 3.5% 1,028 4.7% Total revenues
29,774 100.0% 21,596 100.0% Net revenues 28,489 20,419 Quarter
Ended % of Y/Y Q/Q June 30, Total Growth Growth 2007 Revenues rate
rate Digital TV screens in airports 4,935 58.3% 166.3% 31.7%
Digital TV screens on airplanes 2,566 30.3% 80.7% 19.5% Digital
frames in airports -- -- N/A 63.4% Other displays 968 11.4% 6.9%
0.7% Total revenues 8,469 100.0% 251.6% 37.9% Net revenues 8,050
253.9% 39.5% Total revenues for the second quarter of 2008 reached
US$29.8 million, representing a year-over-year increase of 251.6%
from US$8.5 million in the same period one year ago and a
sequential increase of 37.9% from US$21.6 million in the previous
quarter. The year-over-year and sequential increases were due to
the increases of revenues from all of the product lines. Revenues
from digital TV screens in airports Revenues from digital TV
screens in airports for the second quarter of 2008 grew 166.3%
year-over-year and 31.7% sequentially to US$13.1 million. The
year-over-year increase was primarily due to the increase in the
number of time slots sold and the increase of the average
advertising revenue per time slot sold (or the "ASP"). The
sequential increase was primarily due to the increase in the number
of time slots sold. Please refer to "Summary of Selected Operating
Data" for detailed definitions. In the first quarter of 2008,
AirMedia proactively managed the value of its time slots and sales
volume by increasing its ASPs, which resulted in sufficient revenue
growth capacity. During the second quarter of 2008, AirMedia
successfully improved the utilization rate of digital TV screens in
airports while maintaining the high level ASP achieved during the
first quarter of 2008. The utilization rate for the second quarter
of 2008 increased 0.2 percentage points year-over-year and 9.7
percentage points sequentially to 32.0%. The ASP for the second
quarter of 2008 increased 92.8% year-over-year to US$1,644 due to
the increase in listing prices of digital TV screens in the fourth
quarter of 2007 and the first quarter of 2008, as well as fewer
discounts from the first quarter of 2008 onwards. AirMedia
internally categorizes Beijing Capital International Airport,
Guangzhou Baiyun International Airport, Shanghai Pudong
International Airport and Shanghai Hongqiao International Airport
as triple-A airports. The ASP for the second quarter of 2008
decreased 9.4% sequentially from US$1,815 in the first quarter of
2008 because during the second quarter time slots sold in the
non-triple-A airports accounted for a higher percentage of total
time slots sold. The listing prices in non-triple-A airports were
significantly lower than the those in the triple-A airports and
AirMedia's discount policy in these airports was more flexible
which resulted in generally lower ASPs than those in the triple-A
airports. The ASP of digital TV screens in the triple-A airports
increased 7.0% sequentially in the second quarter of 2008. The
number of time slots sold increased 38.2% year-over-year and 45.3%
sequentially to 7,993 time slots. The number of time slots
available for sale increased 37.3% year-over-year and 1.1%
sequentially to 24,982 time slots in the second quarter of 2008.
The year-over-year increase of the number of time slots available
for sale was primarily due to the increase of airports in operation
which increased from 31 airports at the end of the second quarter
of 2007, to 41 airports at the end of the second quarter of 2008.
With an extensive network of airports already in place, the
increase of time slots available for sale going forward will be
minimal, allowing management to focus on maximizing the value of
time slots sold. Revenues from digital TV screens on airplanes
Revenues from digital TV screens on airplanes for the second
quarter of 2008 grew 80.7% year-over-year and 19.5% sequentially to
US$4.6 million. The year-over-year increase was primarily due to
the increase in time slots sold and the increase of ASP. The
sequential increase was primarily due to the increase of the ASP.
The ASP for the second quarter of 2008 increased 51.1%
year-over-year and 24.7% sequentially to US$19,799. The
year-over-year increase of ASP was due to the increase of the
listing prices and fewer discounts offered. The sequential increase
of ASP was due to fewer discounts offered and more time slots sold
in the top three airlines, which had higher- than-average ASPs. The
number of time slots sold increased 19.4% year-over-year and
decreased 4.5% sequentially to 234 time slots. The year-over-year
increase was primarily due to continued sales efforts and growing
acceptance of AirMedia's digital media by advertisers. The
sequential decrease was due to fewer time slots sold in airlines
other than the top three airlines in the second quarter. The number
of times slots sold in the top three airlines increased
sequentially in the second quarter. The number of time slots
available for sale increased 8.3% year-over-year to 468 time slots
in the second quarter of 2008 because AirMedia added another three
minutes of advertising time on China Southern Airlines in September
2007 and another three minutes of advertising time on Air China in
March 2008. The number of time slots available for sale grew 2.6%
sequentially as a result of the increase of three minutes of
advertising time on Air China. The utilization rate for the second
quarter of 2008 increased 4.6 percentage points year-over-year and
decreased 3.7 percentage points sequentially to 50.0%. The
sequential decrease of utilization rate was primarily due to the
increase in time slots available and the decrease in time slots
sold in airlines other than the top three airlines. Revenues from
digital frames in airports Revenues from digital frames in airports
for the second quarter of 2008 grew 63.4% sequentially to US$11.0
million due to the increase in time slots sold. Revenues from
digital frames in airports was nil in the same period one year ago.
The number of time slots sold increased 182.1% sequentially to
1,199 time slots due to continued sales efforts and growing
acceptance of AirMedia's digital frames by advertisers. The number
of time slots available for sale increased 757.2% sequentially to
10,483 time slots primarily due to the commencement of operation of
digital frames in additional 15 airports during the second quarter,
up from one airport at the end of the first quarter. The
utilization rate of digital frames for the second quarter decreased
to 11.4% from 34.8% in the previous quarter due to the increase of
time slots available for sale. The ASP of digital frames for the
second quarter of 2008 decreased 42.1% sequentially to US$9,138
because the listing prices of digital frames in the newly operated
airports were significantly lower than the listing prices of
digital frames in Beijing Capital International Airport, which was
the only airport where we had operation of digital frames in the
first quarter of 2008. Please refer to "Summary of Selected
Operating Data" for more operating data. Business tax and other
sales tax for the second quarter of 2008 was US$1.3 million,
representing a year-over-year increase of 206.7% from US$419,000 in
the same period one year ago and a sequential increase of 9.2% from
US$1.2 million in the previous quarter due to the related increase
in total revenues. Net revenues for the second quarter of 2008
reached US$28.5 million, representing a year-over-year increase of
253.9% from US$8.1 million in the same period one year ago and a
sequential increase of 39.5% from US$20.4 million in the previous
quarter. The year-over-year and sequential increases were due to
the increase of total revenues. Cost of Revenues Cost of revenues
for the second quarter of 2008 was US$17.5 million, representing a
year-over-year increase of 282.5% from US$4.6 million in the same
period one year ago and a sequential increase of 79.7% from US$9.7
million in the previous quarter. The year-over-year and sequential
increases of cost of revenues were primarily due to the increase of
concession fees in connection with the expansion of AirMedia's
business. Cost of revenues as a percentage of net revenues in the
second quarter of 2008 was 61.4%, a year- over-year increase from
56.8% in the same period one year ago and a sequential increase
from 47.7% in the previous quarter. AirMedia incurs concession fees
to airports for placing and operating digital TV screens, digital
frames and other displays, and to airlines for placing programs on
their digital TV screens. Most of the concession fees are fixed
with an annual escalation. The total concession fee under each
concession right agreement is charged to the consolidated
statements of operations on a straight-line basis over the
agreement periods, which are generally between three and five
years. Concession fees for the second quarter of 2008 were US$11.4
million, representing a year-over-year increase of 308.8% from
US$2.8 million in the same period one year ago and a sequential
increase of 141.6% from US$4.7 million in the previous quarter due
to additional concession contracts. The sequential increase of
concession fees was due to the full-quarter impact of concession
fees for Terminal 3 of Beijing Capital International Airport and
new concession rights contracts to install large size digital
frames in other airports. Concession fees as a percentage of net
revenues in the second quarter of 2008 increased to 40.0% from
34.6% in the same period one year ago and 23.1% in the previous
quarter. The year-over-year and sequential increases were because
AirMedia obtained additional concession rights to further grow its
business and revenues. Gross Profit Gross profit for the second
quarter of 2008 was US$11.0 million, representing a year-over-year
increase of 216.4% from US$3.5 million in the same period one year
ago and a sequential increase of 2.9% from US$10.7 million in the
previous quarter. Gross profit as a percentage of net revenues for
the second quarter of 2008 was 38.6%, as compared to 43.2% in the
same period one year ago and 52.3% in the previous quarter. The
year-over-year and sequential decreases of gross profit as a
percentage of net revenues were because AirMedia obtained
additional concession rights to further grow its business and
revenues. Operating Expenses Operating expenses (numbers in US$
000's except for percentage): Quarter Quarter Ended Ended June 30,
% of Net March 31, % of Net 2008 Revenues 2008 Revenues Selling and
marketing expenses 2,110 7.4% 2,444 12.0% General and
administrative expenses 2,849 10.0% 2,911 14.3% Total operating
expenses 4,959 17.4% 5,355 26.2% Total operating expenses excluding
share-based compensation expenses and amortization of acquired
intangible assets (a non-GAAP measure) 3,769 13.2% 4,168 20.4%
Quarter Ended Y/Y Q/Q June 30, % of Net Growth Growth 2007 Revenues
rate rate Selling and marketing expenses 941 11.7% 124.2% -13.7%
General and administrative expenses 453 5.6% 528.9% -2.1% Total
operating expenses 1,394 17.3% 255.7% -7.4% Total operating
expenses excluding share-based compensation expenses and
amortization of acquired intangible assets (a non-GAAP measure)
1,332 16.5% 183.0% -9.6% Total operating expenses for the second
quarter of 2008 were US$5.0 million, representing a year-over-year
increase of 255.7% from US$1.4 million in the same period one year
ago and a sequential decrease of 7.4% from US$5.4 million in the
previous quarter. Total operating expenses for the second quarter
of 2008 included share- based compensation expenses of US$1.1
million while there were no share-based compensation expenses in
the same period one year ago. Total operating expenses excluding
share-based compensation expenses and amortization of acquired
intangible assets (non-GAAP) for the second quarter of 2008 were
US$3.8 million, representing a year-over-year increase of 183.0%
from US$1.3 million in the same period one year ago and a
sequential decrease of 9.6% from US$4.2 million in the previous
quarter. Total operating expenses excluding share-based
compensation expenses and amortization of acquired intangible
assets as a percentage of net revenues (non-GAAP) in the second
quarter of 2008 decreased to 13.2% from 16.5% in the same period
one year ago and 20.4% in the previous quarter. Selling and
marketing expenses for the second quarter of 2008 were US$2.1
million including $260,000 of share-based compensation expenses,
representing a year-over-year increase of 124.2% from US$941,000 in
the same period one year ago and a sequential decrease of 13.7%
from US$2.4 million in the previous quarter. The year-over-year
increase was primarily due to the expansion of the direct sales
force and share-based compensation expenses in connection with the
employee stock option grants made on July 2, July 20, and November
29, 2007. The sequential decrease was primarily due to a reduction
of marketing expenses. General and administrative expenses for the
second quarter of 2008 were US$2.8 million including $861,000 of
share-based compensation expenses, representing a year-over-year
increase of 528.9% from US$453,000 in the same period one year ago
and a sequential decrease of 2.1% from US$2.9 million in the
previous quarter. The year-over-year increase was primarily due to
share- based compensation expenses in connection with the employee
stock option grants made on July 2, July 20, and November 29, 2007,
headcount increase, and higher professional expenses. The
sequential decrease was primarily due to lower professional service
fees which were partially offset by headcount increase. Income from
Operations Income from operations for the second quarter of 2008
was US$6.0 million, representing a year-over-year increase of
190.0% from US$2.1 million in the same period one year ago and a
sequential increase of 13.3% from US$5.3 million in the previous
quarter. Income from operations excluding share-based compensation
expenses and amortization of acquired intangible assets (non-GAAP)
for the second quarter of 2008 was US$7.2 million, representing a
year-over-year increase of 237.1% from US$2.1 million in the same
period one year ago and a sequential increase of 10.9% from US$6.5
million in the previous quarter. Operating margin excluding the
effect of share-based compensation expenses and amortization of
acquired intangible assets (non-GAAP) for the second quarter of
2008 was 25.4%, as compared to 26.7% in the same period one year
ago and 31.9% in the previous quarter. Income Tax Expense/Benefit
Income tax benefit for the second quarter of 2008 was US$74,000, as
compared to income tax expense of US$122,000 in the same period one
year ago and income tax benefit of US$77,000 in the previous
quarter. The effective income tax rate for the second quarter of
2008 was a negative 1.0%, as compared to 5.7% in the same period
one year ago and a negative 1.1% in the previous quarter primarily
because the most profitable entities of AirMedia are currently
enjoying preferential tax holidays. Net Income Net income for the
second quarter of 2008 was US$7.3 million, representing a
year-over-year increase of 241.8% from US$2.1 million in the same
period one year ago and a sequential increase of 0.7% from US$7.3
million in the previous quarter. The basic income per ADS for the
second quarter of 2008 was US$0.11, as compared to basic income per
ADS of US$0.03 in the same period one year ago and basic income per
ADS of US$0.11 in the previous quarter. The diluted income per ADS
for the second quarter of 2008 was US$0.11, as compared to diluted
income per ADS of US$0.03 in the same period one year ago and
diluted income per ADS of US$0.10 in the previous quarter. Adjusted
net income (non-GAAP) for the second quarter of 2008, which
excluded share-based compensation expenses and amortization of
acquired intangible assets, was US$8.5 million, representing a
year-over-year increase of 286.1% from US$2.2 million in the same
period one year ago and a sequential increase of 0.6% from US$8.5
million in the previous quarter. Basic adjusted net income per ADS
(non-GAAP) for the second quarter of 2008 was US$0.13, as compared
to basic adjusted net income per ADS of US$0.07 in the same period
one year ago and basic adjusted income per ADS of US$0.13 in the
previous quarter. Diluted adjusted income per ADS (non-GAAP) for
the second quarter of 2008 was US$0.12, as compared to diluted
adjusted net income per ADS of US$0.07 in the same period one year
ago and diluted adjusted net income per ADS of US$0.12 in the
previous quarter. Please refer to the attached table for a
reconciliation of net income and basic and diluted net income per
ADS under US GAAP to adjusted net income and basic and diluted
adjusted income per ADS. "We are very pleased with AirMedia's
strong top-line and bottom-line financial results this quarter.
While we are experiencing gross margin pressure in the second
quarter from the increased concession fees in connection with
Terminal 3 of Beijing Capital International Airport and other newly
signed concession rights contracts, we believe these investments
enable us to grow our revenues and maintain our leading position in
the air travel advertising market in China. We expect to improve on
gross margin in the quarters after the Olympic Games," remarked
Conor Chiahung Yang, Chief Financial Officer of AirMedia. Other
Recent Developments In July 2008, AirMedia succeeded in a highly
competitive selection process and obtained the exclusive concession
rights from Wenzhou Yongqiang Airport to operate all digital and
traditional media formats in both the old and new terminals of
Wenzhou Airport until December 31, 2013. AirMedia will make a
comprehensive advertising media plan for Wenzhou Airport and pay
concession fees to operate all these media exclusively. With this
new concession rights, AirMedia now have concession rights to
operate digital TV screens in all of the top 30 airports in China.
The concession rights will also help AirMedia to gain more
operating experience in the traditional media business. During the
second quarter of 2008, AirMedia upgraded its 120 stand-alone
digital frames in Beijing Capital International Airport from the
70-inch frames to 82-inch frames, which are the largest-size
digital frames for commercial use currently available in the
Chinese market. AirMedia also upgraded its 418 TV-attached digital
frames in Beijing Capital International Airport from 46-inch frames
to 52-inch frames. The surplus 70-inch stand- alone digital frames
and 46-inch TV-attached digital frames will be moved to other,
smaller airports. In July 2008, AirMedia entered into definitive
agreements to acquire 100% of the equity interest in Excel Lead
International Limited, or Excel Lead, and 80% of the equity
interest in Flying Dragon Media Advertising Co., Ltd., or Flying
Dragon, which operate the advertising business on gate bridges in
10 airports in mainland China. The contingent consideration for the
acquisition of Excel Lead, which was based on the after-tax net
profit performance of Excel Lead in the second half of 2008, the
full year of 2009 and 2010, respectively, was up to RMB189.3
million in cash and 1,530,950 ordinary shares of AirMedia, which
equal to 765,475 ADSs of AirMedia, or up to RMB275.5 million in
cash only. The consideration for the acquisition of Flying Dragon
was RMB10 million in cash. The transactions further expanded
AirMedia's air travel advertising network to cover the advertising
business on gate bridges in airports, and diversify its media
resources to include billboard advertisements, which will help
AirMedia to capture the growth opportunities in the air travel
advertising sector in China. The transactions may also help
AirMedia win some new and important clients, which have customarily
advertised through these media resources, and consequently enlarge
AirMedia's customer base. AirMedia reinforced its sales team
through the addition of two experienced sales personnel, who joined
AirMedia from key positions in the advertising industry. Mr. Aaron
Tsoi was appointed as Vice President of Sales and will lead the
sales team focused on second- and third-tier airports, an area of
significant potential for AirMedia's continued growth. Ms. Lisa Sze
was appointed as the General Manager of Beijing Digital Frames
Department of AirMedia, where she will lead and manage all of the
sales efforts for the AirMedia's digital frame business in the
North China region. These two additions have further strengthened
AirMedia's already robust sales force. In the second quarter of
2008, AirMedia started operating digital frames in additional 15
airports, including TV-attached digital frames in 10 airports
located in Guangzhou, Shenzhen, Hangzhou, Wuhan, Nanjing,
Zhengzhou, Jinan, Tianjin, Hefei and Changzhou, and stand-alone
digital frames at 10 airports located in Shenzhen, Kunming,
Chongqing, Changsha, Nanjing, Haikou, Zhengzhou, Jinan, Ningbo and
Hefei. This expanded AirMedia's digital frame network airports to
16. In addition, in mid-May 2008, AirMedia also adjusted the length
of its digital frame's time slot to 12 seconds per time slot from
the previous 15 seconds per time slot, which increased the capacity
of AirMedia's digital frame network. Starting from June 2008,
AirMedia adjusted its advertising cycle of 52-inch digital frames
in Beijing Capital International Airport from 20-minute cycles to
10-minute cycles to give more exposure to clients' advertisements.
Business Outlook As a result of current business visibility,
AirMedia currently expects that its total revenues for 2008 will be
in an amount ranging from US$122.4 million to US$126.4 million,
representing a year-over-year increase of 180.6% to 189.8% from
fiscal year 2007. AirMedia currently expects that its total
revenues for the third quarter of 2008 will be in an amount ranging
from US$31.0 million to US$33.0 million, representing a
year-over-year increase of 191.8% to 210.6% from the same period of
2007. The above forecast reflects AirMedia's current and
preliminary view and is therefore subject to change. Please refer
to our Safe Harbor Statement for the factors which could cause
actual results to differ materially from those contained in any
forward-looking statement. Summary of Selected Operating Data
Quarter Quarter Quarter YOY QOQ Ended June Ended March Ended June
Growth Growth 30, 2008 31, 2008 30, 2007 Rate Rate Digital TV
screens in airports Number of airports in operation 41 39 31 32.3%
5.1% Number of time slots available for sale (1) 24,982 24,700
18,200 37.3% 1.1% Number of time slots sold (3) 7,993 5,501 5,784
38.2% 45.3% Utilization rate (4) 32.0% 22.3% 31.8% 0.2% 9.7%
Average advertising revenue per time slot sold (5) US$1,644
US$1,815 US$853 92.8% -9.4% Digital TV screens on airplanes Number
of airlines in operation 9 9 9 -- -- Number of time slots available
for sale (1) 468 456 432 8.3% 2.6% Number of time slots sold (3)
234 245 196 19.4% -4.5% Utilization rate (4) 50.0% 53.7% 45.4% 4.6%
-3.7% Average advertising revenue per time slot sold (5) US$19,799
US$15,873 US$13,105 51.1% 24.7% Digital frames in airports Number
of airports in operation 16 1 -- -- 1500.0% Number of time slots
available for sale (2) 10,483 1,223 -- -- 757.2% Number of time
slots sold (3) 1,199 425 -- -- 182.1% Utilization rate (4) 11.4%
34.8% -- -- -23.4% Average advertising revenue per time slot sold
(5) US$9,138 US$15,769 -- -- -42.1% Notes: (1) We define a time
slot as a 30-second equivalent advertising time unit for digital TV
screens in airports and digital TV screens on airplanes, which is
shown during each advertising cycle on a weekly basis in a given
airport or on a monthly basis on the routes of a given airline,
respectively. Our airport advertising programs are shown repeatedly
on a daily basis during a given week in one-hour cycles and each
hour of programming includes 25 minutes of advertising content,
which allows us to sell a maximum of 50 time slots per week. The
number of time slots available for our digital TV screens in
airports during the period presented is calculated by multiplying
the time slots per week per airport by the number of weeks during
the period presented when we had operations in each airport and
then calculating the sum of all the time slots available for each
of our network airports. The length of our in- flight programs
typically ranges from approximately 45 minutes to an hour per
flight, approximately five to 13 minutes of which consist of
advertising content. The number of time slots available for our
digital TV screens on airplanes during the period presented is
calculated by multiplying the time slots per airline per month by
the number of months during the period presented when we had
operations on each airline and then calculating the sum of all the
time slots for each of our network airlines. (2) After our
adjustment of time-slot length in mid May, we define a time slot as
a 12-second equivalent advertising time unit for digital frames in
airports, which is shown during each advertising cycle on a weekly
basis in a given airport. Our airport advertising programs are
shown repeatedly on a daily basis during a given week in 10-minute
cycles, which allows us to sell a maximum of 50 time slots per
week. The number of time slots available for our digital frames in
airports during the period presented is calculated by multiplying
the time slots per week per airport by the number of weeks during
the period presented when we had operations in each airport and
then calculating the sum of all the time slots available for each
of our network airports. (3) Number of time slots sold refers to
the number of 30-second equivalent advertising time units for
digital TV screens in airports and digital TV screens on airplanes
or 12-second equivalent advertising time units for digital frames
in airports sold during the period presented. (4) Utilization rate
refers to total time slots sold as a percentage of total time slots
available for sale during the relevant period. (5) Average
advertising revenue per time slot sold for digital TV screens in
airports, digital TV screens on airplanes and digital frames in
airports is calculated by dividing our revenues derived from
digital TV screens in airports, digital TV screens on airplanes and
digital frames in airports by its own number of time slots sold,
respectively. Earnings Conference Call Details AirMedia will hold a
conference call to discuss the second quarter 2008 earnings at 8:00
PM U.S. Eastern Time on August 11, 2008 (5:00 PM U.S. Pacific Time
on August 11, 2008; 8:00 AM Beijing/Hong Kong time on August 12,
2008). AirMedia's management team will be on the call to discuss
the financial results and highlights and to answer questions. The
toll-free number for U.S. participants is +1 866 700 7441. The toll
number for UK participants is +44 207 365 8426. The toll number for
Hong Kong participants is +852 3002 1672. The toll number for other
international participants is +1 617 213 8839. The pass code for
all participants is AMCN. A replay of the call will be available
for 1 week between 9:00 pm Eastern Time on August 11, 2008, and
9:00 pm Eastern Time on August 18, 2008. The toll-free number for
U.S callers is +1 888 286 8010 and the dial-in number for
international callers is +1 617 801 6888. The pass code for the
replay is 14687562. Additionally, a live and archived web cast of
this call will be available on the Investor Relations section of
the AirMedia corporate website at http://ir.airmedia.net.cn/ . Use
of Non-GAAP Financial Measures AirMedia's management uses non-GAAP
financial measures to gain an understanding of AirMedia's
comparative operating performance and future prospects. AirMedia's
non-GAAP financial measures exclude certain special items,
including (1) amortization of non-cash stock-based compensation
expense, and (2) amortization of acquired intangible assets.
Non-GAAP financial measures are used by AirMedia's management in
their financial and operating decision-making, because management
believes they reflect AirMedia's ongoing business in a manner that
allows meaningful period-to-period comparisons. AirMedia's
management believes that these non-GAAP financial measures provide
useful information to investors and others in understanding and
evaluating AirMedia's current operating performance and future
prospects in the same manner as management does, if they so choose.
Specifically, AirMedia believes the non-GAAP financial measures
provide useful information to both management and investors by
excluding certain charges that we believe are not indicative of our
core operating results. The non-GAAP financial measures have
limitations. They do not include all items of income and expense
that affect AirMedia's income from operations. Specifically, these
non-GAAP financial measures are not prepared in accordance with
GAAP, may not be comparable to non-GAAP financial measures used by
other companies and, with respect to the non-GAAP financial
measures that exclude certain items under GAAP, do not reflect any
benefit that such items may confer to AirMedia. Management
compensates for these limitations by also considering AirMedia's
financial results as determined in accordance with GAAP. The
presentation of this additional information is not meant to be
considered superior to, in isolation from or as a substitute for
results prepared in accordance with US GAAP. For more information
on these non-GAAP financial measures, please see the table
captioned "Reconciliation of GAAP Income/(Loss) and EPS and
non-GAAP Adjusted Income/(Loss) and EPS" set forth at the end of
this release. About AirMedia Group Inc. AirMedia Group Inc.
(NASDAQ:AMCN) operates the largest digital media network in China
dedicated to air travel advertising. AirMedia has contractual
concession rights to operate digital TV screens in 53 airports,
including 29 out of the 30 largest airports in China, and has
contractual concession rights to place its programs on the routes
operated by 9 airlines, including the three largest airlines in
China. In addition, AirMedia also has contractual concession rights
to operate digital frames of 46 to 52 inches and large-size digital
frames ranging from 63 to 82 inches in several major airports.
AirMedia also offers advertisers other media platforms in airports,
such as 360-degree LED displays, mega display screens, shuttle bus
displays and billboards on gate bridges. For more information about
AirMedia, please visit http://www.airmedia.net.cn/ . 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," "expect," "anticipate," "future," "intend," "plan,"
"believe," "estimate," "confident" and similar statements. Among
other things, the quotations from management in this announcement,
as well as AirMedia Group Inc.'s strategic and operational plans,
contain forward-looking statements. AirMedia 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 AirMedia'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, if advertisers or the viewing public do not
accept, or lose interest in, our air travel digital media network,
we may be unable to generate sufficient cash flow from our
operating activities and our prospects and results of operations
could be negatively affected; we derive substantially all of our
revenues from the provision of air travel advertising services, and
if there is a downturn in the air travel advertising industry, we
may not be able to diversify our revenue sources; if we are unable
to retain existing concession rights contracts or obtain new
concession rights contracts on commercially advantageous terms that
allow us to place or operate the digital TV screens in airports or
on airplanes, we may be unable to maintain or expand our network
coverage and our business and prospects may be harmed; a
substantial majority of our revenues are currently concentrated in
the five largest airports and three largest airlines in China, and
if any of these airports or airlines experiences a material
business disruption, our ability to generate revenues and our
results of operations would be materially and adversely affected;
AirMedia's limited operating history makes it difficult to evaluate
our future prospects and results of operations; and other risks
outlined in AirMedia's filings with the U.S. Securities and
Exchange Commission. AirMedia does not undertake any obligation to
update any forward-looking statement, except as required under
applicable law. For more information, please contact: Raymond Huang
Investor Relations Director Tel: +86-10-8460-8678 Email: AirMedia
Group Inc. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In U.S.
dollars in thousands) Jun. 30, Dec. 31, 2008 2007 Assets Current
assets: Cash 185,843 210,915 Accounts receivable, net 35,687 13,478
Prepaid concession fees 16,349 13,130 Other current assets 5,124
2,393 Deferred tax assets - current 210 95 Total current assets
243,213 240,011 Acquired intangible assets, net 5,140 4,862
Property and equipment, net 41,911 15,985 Long-term deposits 6,706
4,706 Long-term investment 1,720 788 Deferred tax assets -
non-current 626 507 TOTAL ASSETS 299,316 266,859 Liabilities
Current liabilities: Accounts payable 9,857 4,666 Accrued expenses
and other current liabilities 2,134 1,309 Deferred revenue 4,451
1,712 Income tax payable 46 32 Amounts due to related parties -- 11
Total current liabilities 16,488 7,730 Non-current liabilities:
Deferred tax liability - non-current 1,696 1,527 Total liabilities
18,184 9,257 Minority interest 1 (3) Shareholders' equity Ordinary
shares 134 133 Additional paid-in capital 265,785 263,130 Statutory
reserve 1,782 1,782 Accumulated deficiency 4,289 (10,317)
Accumulated other comprehensive income 9,141 2,877 Total
shareholders' equity 281,131 257,605 TOTAL LIABILITIES, MINORITY
INTEREST, AND SHAREHOLDERS' EQUITY 299,316 266,859 AirMedia Group
Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
U.S. dollars in thousands, except share related data) Three Months
Ended Jun. 30, Mar. 30, Jun. 30, 2008 2008 2007 Revenues 29,774
21,596 8,469 Business tax and other sales tax (1,285) (1,177) (419)
Net revenues 28,489 20,419 8,050 Cost of revenues 17,486 9,730
4,572 Gross profit 11,003 10,689 3,478 Operating expenses: Selling
and marketing * 2,110 2,444 941 General and administrative * 2,849
2,911 453 Total operating expenses 4,959 5,355 1,394 Income from
operations 6,044 5,334 2,084 Interest income 1,218 1,822 51 Other
income, net 135 135 -- Income before income taxes and minority
interest 7,397 7,291 2,135 Income tax expense/ (benefit) (74) (77)
(122) Net income before minority interest 7,471 7,368 2,257
Minority interest (6) 2 2 Loss of equity accounting investment
(137) (93) (115) Net income 7,328 7,277 2,144 Deemed dividend on
series A convertible redeemable preferred shares- Accretion of
redemption premium -- -- (359) Deemed dividend on series B
convertible redeemable preferred shares- Accretion of redemption
premium -- -- (326) Net income attributable to holders of ordinary
shares 7,328 7,277 1,459 Net Income allocated for computing EPS
Ordinary shares - Basic 7,328 7,277 785 Net Income allocated for
computing EPS preferred A shares - Basic -- -- 832 Net Income
allocated for computing EPS preferred B shares - Basic -- -- 527
Net income used in calculating Income per ordinary share-diluted --
-- 785 Net income per ordinary share - basic $0.05 $0.05 $0.01 -
diluted $0.05 $0.05 $0.01 Net income per ADS - basic $0.11 $0.11
$0.03 - diluted $0.11 $0.10 $0.03 Net income per Series A preferred
share -- -- $0.02 Net income per Series B preferred share -- --
$0.14 Weighted average ordinary shares outstanding used in
computing net income per ordinary share - basic 133,454,562
133,425,925 62,400,000 Weighted average ordinary shares outstanding
used in computing net income per ordinary share - diluted
139,116,185 139,317,264 62,400,000 share used in calculating net
income per Series A preferred share-basic -- -- 37,600,000 share
used in calculating net income per Series B preferred share-basic
-- -- 3,868,132 * share-based compensation charges included are as
follow: Selling and marketing 260 259 -- General and administrative
861 860 -- AirMedia Group Inc. RECONCILIATION OF GAAP NET INCOME
AND EPS TO NON-GAAP ADJUSTED NET INCOME AND EPS (In U.S. dollars in
thousands, except share related data) Three Months Ended Jun. 30,
Mar. 31, Jun. 30, 2008 2008 2007 GAAP net income attributable to
shareholders 7,328 7,277 2,144 Amortization of acquired intangible
assets 69 68 62 Share-based compensation 1,121 1,119 -- Adjusted
net income 8,518 8,464 2,206 Basic adjusted net income per share
$0.06 $0.06 $0.04 Diluted adjusted net income per share $0.06 $0.06
$0.04 Basic adjusted net income per ADS $0.13 $0.13 $0.07 Diluted
adjusted net income per ADS $0.12 $0.12 $0.07 Shares used in
computing adjusted basic net income per share 133,454,562
133,425,925 62,400,000 Shares used in computing adjusted diluted
net income per share 139,116,185 139,317,264 62,400,000 Note: The
Non-GAAP adjusted net income per share and per ADS are computed
using Non-GAAP net adjusted income and number of shares and ADS
used in GAAP basic and diluted EPS calculation, where the number of
shares and ADS is adjusted for dilution due to share-based
compensation plan. DATASOURCE: AirMedia Group Inc. CONTACT: Raymond
Huang, Investor Relations Director of AirMedia Group Inc.,
+86-10-8460-8678, or Web site: http://www.airmedia.net.cn/
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