-- 217% Year-over-year Total Revenue Growth -- Raising Full Year
Guidance BEIJING, Nov. 6 /Xinhua-PRNewswire-FirstCall/ -- AirMedia
Group Inc. (NASDAQ:AMCN), operator of the largest digital media
network in China dedicated to air travel advertising, today
announced its unaudited financial results for the third quarter
ended September 30, 2008. Financial Highlights -- Total revenues
increased 217.3% year-over-year and 13.2% quarter-over- quarter to
US$33.7 million, beating the high end of company guidance by US$0.7
million; -- Net income increased 1.8% quarter-over-quarter to
US$7.5 million. Both basic and diluted income per ADS were US$0.11;
-- Adjusted net income (non-GAAP), which is net income excluding
share- based compensation expenses and amortization of acquired
intangible assets, increased 183.1% year-over-year and 4.4%
quarter-over-quarter to US$8.9 million. Both adjusted basic and
diluted net income per ADS (non-GAAP) were US$0.13. "We are very
pleased with our solid third quarter performance despite the
challenges imposed by the Beijing Olympic Games," commented Herman
Guo, Chairman and Chief Executive Officer of AirMedia. "As
expected, the Beijing Capital International Airport, our largest
revenue contributing airport, was subject to a temporary sales
restriction which meant we could only sell to Olympic sponsors from
July 11th to September 18th. Despite this, we saw significant
growth in airports outside of Beijing of digital TV screens as well
as digital frames, a business line we just expanded to 15 new
airports during the second quarter. We also saw significant growth
of digital TV screens on airplanes." Mr. Guo continued, "During the
quarter, we acquired a billboard advertising business on gate
bridges in ten airports and signed a partnership contract with
Wenzhou Yongqiang Airport, marking our collaboration with all of
the top 30 airports in China. As advertisers look towards more
robust and flexible media platforms, especially given uncertainties
during the economic slowdown, we believe AirMedia's strong balance
sheet, industry leadership and operational expertise will position
us to take advantage of further opportunities to consolidate
China's highly fragmented traditional media market in air travel
advertising sector." Conor Yang, AirMedia's Chief Financial Officer
added, "Our solid performance during a difficult quarter
demonstrates the increasing popularity of our product offering and
AirMedia's strong growth potential. We expect further solid growth
in revenues as we continue to execute our growth strategy. We
believe our industry leadership, growth momentum and strong cash
position will allow us to further strengthen our market leadership
even in a difficult economic environment." Financial Results
Revenues Total revenues by product line (numbers in US$ 000's
except for percentage): Quarter Quarter Ended % of Ended % of
September Total June 30, Total 30, 2008 Revenues 2008 Revenues
Digital TV screens in airports 13,079 38.8% 13,143 44.1% Digital TV
screens on airplanes 6,586 19.5% 4,636 15.6% Digital frames in
airports 10,114 30.0% 10,960 36.8% Billboards on gate bridges in
airports 1,910 5.7% -- -- Other displays 2,019 6.0% 1,035 3.5%
Total revenues 33,708 100.0% 29,774 100.0% Net revenues 32,335
28,489 Quarter Ended % of Y/Y Q/Q September Total Growth Growth 30,
2007 Revenues rate rate Digital TV screens in airports 6,953 65.4%
88.1% -0.5% Digital TV screens on airplanes 2,550 24.0% 158.3%
42.1% Digital frames in airports -- -- N/A -7.7% Billboards on gate
bridges in airports -- -- N/A N/A Other displays 1,122 10.6% 79.9%
95.1% Total revenues 10,625 100.0% 217.3% 13.2% Net revenues 10,137
219.0% 13.5% Total revenues for the third quarter of 2008 reached
US$33.7 million, representing a year-over-year increase of 217.3%
from US$10.6 million and a quarter-over-quarter increase of 13.2%
from US$29.8 million. The year-over- year increase was due to the
increases of revenues from all of the product lines. The
quarter-over-quarter increase was due to the increases of revenues
from Digital TV screens on airplanes, billboards on gate bridges in
airports and other displays. All media in Beijing Capital
International Airport, AirMedia's largest revenue contribution
airport, were restricted to be sold only to Olympic Sponsors from
July 11th to September 18th. Due to the impact of this (or the
"Olympic Impact"), the revenues from digital TV screens and digital
frames in Beijing airport were negatively impacted. Due to less
revenue contribution from Beijing airport, which had the highest
average advertising revenue per time slot sold (or the "ASP") among
all the airports and accounted for a significant percentage of the
revenues in the previous quarter, the ASPs of our digital frames
and digital TV screens in airports decreased quarter-over- quarter.
Revenues from digital TV screens in airports Revenues from digital
TV screens in airports for the third quarter of 2008 grew 88.1%
year-over-year to US$13.1 million and remained approximately
unchanged from the previous quarter. The year-over-year increase
was primarily due to the increase in the number of time slots sold
and the increase of the ASP. The slight quarter-over-quarter
decrease was primarily due to the slight decrease in ASP, which was
offset by the increase in the number of time slots sold. Please
refer to "Summary of Selected Operating Data" for detailed
definitions. The ASP for the third quarter of 2008 increased 49.3%
year-over-year to US$1,631 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 offered to our
customers from the first quarter of 2008 onwards. The ASP for the
third quarter of 2008 decreased 0.8% quarter-over-quarter from
US$1,644 in the second quarter of 2008 due to the Olympic Impact as
explained above. The number of time slots sold increased 26.0%
year-over-year and 0.3% quarter-over-quarter to 8,019 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 number of time slots available for sale increased
32.7% year-over-year and 1.2% quarter-over-quarter to 25,275 time
slots in the third quarter of 2008. The year-over-year increase of
the number of time slots available for sale was due to the increase
of airports in operation which increased from 37 airports at the
end of the third quarter of 2007, to 41 airports at the end of the
third quarter of 2008. The quarter- over-quarter increase of the
number of time slots available for sale was due to the full-quarter
operation time of the two additional airports which started
operation in the middle of the previous quarter. With an extensive
network of airports already in place, the increase of the number of
time slots available for sale going forward will be minimal,
allowing management to focus on maximizing the value of time slots
sold. The utilization rate for the third quarter of 2008 decreased
1.7 percentage points year-over-year and 0.3 percentage points
quarter-over-quarter to 31.7% primarily due to the increase of the
number of time slots available for sale. Revenues from digital TV
screens on airplanes Revenues from digital TV screens on airplanes
for the third quarter of 2008 grew 158.3% year-over-year and 42.1%
quarter-over-quarter to US$6.6 million due to the increase of ASP
and the increase in the number of time slots sold. The ASP for the
third quarter of 2008 increased 64.8% year-over- year and 15.8%
quarter-over-quarter to US$22,930. The year-over-year increase of
ASP was due to the increase of the listing prices and fewer
discounts offered. The quarter-over-quarter increase of ASP was due
to more time slots sold on the top three airlines, especially on
Air China, which had higher- than-average ASPs, and fewer discounts
offered. The number of time slots sold increased 56.8%
year-over-year and 22.7% quarter-over-quarter to 287 time slots.
The year-over-year and quarter-over- quarter increases were
primarily due to continued sales efforts, growing acceptance of
AirMedia's digital media by advertisers and advertisers' budget
transfer to airlines due to the Olympic Impact, especially to Air
China, which was the official carrier of the Olympic Games but had
no sales limitation for non-Olympic Sponsors. The number of time
slots available for sale in the third quarter of 2008 increased
6.8% year-over-year to 468 time slots and remained unchanged from
the previous quarter. The year-over-year increase of time slots
available for sale was because AirMedia added additional three
minutes of advertising time on China Southern Airlines in September
2007 and additional three minutes of advertising time on Air China
in March 2008. The utilization rate for the third quarter of 2008
increased 19.6 percentage points year-over-year and 11.4 percentage
points quarter-over-quarter to 61.4%. Revenues from digital frames
in airports Revenues from digital frames in airports for the third
quarter of 2008 decreased 7.7% quarter-over-quarter to US$10.1
million due to the decrease of ASP. Revenues from digital frames in
airports was nil in the same period one year ago. The ASP of
digital frames for the third quarter of 2008 decreased 66.6%
quarter-over-quarter to US$3,049 due to the Olympic Impact in
Beijing Capital International Airport as explained above and the
significant increase in the time slots sold in other airports which
have lower ASPs. The number of time slots sold increased 176.7%
quarter-over-quarter to 3,317 time slots due to continued sales
efforts and growing acceptance of AirMedia's digital frames by
advertisers and advertisers' budget transfer to digital frames in
other airports due to the Olympic Impact. The number of time slots
available for sale increased 63.0% quarter-over-quarter to 17,086
time slots primarily due to the commencement of operations of
digital frames in additional three airports during the third
quarter, the full-quarter operation of the digital frames in 15
airports, which started operation in the middle of the second
quarter, and additional product line of digital frames added in
three existing airports, which previously only had either
TV-attached digital frames or stand-alone digital frames. The
number of AirMedia's airport operating digital frames was 19
airports in the third quarter, up from 16 airports at the end of
the second quarter. The utilization rate of digital frames for the
third quarter increased to 19.4% from 11.4% in the previous quarter
due to the increase of time slots available for sale. Revenues from
billboards on gate bridges in 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 billboard advertising
business on gate bridges in 10 airports in mainland China. From
August 2008, AirMedia started to consolidate the revenues of the
acquired billboard advertising business on gate bridges in
airports. Revenues from billboards on gate bridges in airports were
US$1.9 million for the third quarter of 2008, which were not at
normal levels because billboards on gate bridges in Beijing Capital
International Airport, which accounted for a significant percentage
of revenues from gate bridges, were also limited to be sold to
Olympic Sponsors during the Olympic Period. AirMedia expects its
revenues to rebound in the fourth quarter. Please refer to "Summary
of Selected Operating Data" for more operating data. Business tax
and other sales tax for the third quarter of 2008 was US$1.4
million, representing a year-over-year increase of 181.4% from
US$488,000 and a quarter-over-quarter increase of 6.8% from US$1.3
million in line with the increase in total revenues. Net revenues
for the third quarter of 2008 reached US$32.3 million, representing
a year-over-year increase of 219.0% from US$10.1 million and a
quarter-over-quarter increase of 13.5% from US$28.5 million. The
year-over- year and quarter-over-quarter increases were due to the
increase of total revenues. Cost of Revenues Cost of revenues for
the third quarter of 2008 was US$20.5 million, representing a
year-over-year increase of 293.8% from US$5.2 million and a
quarter-over-quarter increase of 17.2% from US$17.5 million. The
year-over- year and quarter-over-quarter 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 third quarter of
2008 was 63.4%, a year-over-year increase from 51.4% in the same
period one year ago and a quarter-over-quarter increase from 61.4%
in the previous quarter. AirMedia incurs concession fees to
airports for placing and operating digital TV screens, digital
frames, billboards on gate bridges 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 third quarter of 2008 were
US$14.3 million, which included concession fees of AirMedia's
digital media of US$12.1 million and concession fees of its
acquired traditional billboards on gate bridges of US$2.2 million,
representing a year-over-year increase of 372.0% from US$3.0
million due to additional concession right contracts entered into
during the year and a quarter-over-quarter increase of 25.5% from
US$11.4 million primarily due to the consolidated concession fees
of acquired billboard advertising business on gate bridges for two
months. Concession fees as a percentage of net revenues in the
third quarter of 2008 increased to 44.2% from 29.9% in the same
period one year ago and 40.0% in the previous quarter. The
year-over-year increase was because AirMedia obtained additional
concession rights to further grow its business and revenues. The
quarter-over-quarter increase was primarily due to the consolidated
concession fees of acquired billboard advertising business on gate
bridges. Gross Profit Gross profit for the third quarter of 2008
was US$11.8 million, representing a year-over-year increase of
140.0% from US$4.9 million and a quarter-over-quarter increase of
7.6% from US$11.0 million. Gross profit as a percentage of net
revenues for the third quarter of 2008 was 36.6%, compared to 48.6%
in the same period one year ago and 38.6% in the previous quarter.
The year-over-year decrease of gross profit as a percentage of net
revenues was because AirMedia obtained additional concession rights
to further grow its business and revenues while it takes some time
to ramp up revenues from these new concession rights contracts. The
quarter-over-quarter decrease of gross profit as a percentage of
net revenues was because of the sales limitation due to the Olympic
Games and the consolidation of the billboard advertising business
on gate bridges which has lower gross margin than digital media.
Operating Expenses Operating expenses (numbers in US$ 000's except
for percentage): Quarter Quarter Ended Ended September % of Net
June 30, % of Net 30, 2008 Revenues 2008 Revenues Selling and
marketing expenses 2,276 7.0% 2,110 7.4% General and administrative
expenses 3,420 10.6% 2,849 10.0% Total operating expenses 5,696
17.6% 4,959 17.4% Total operating expenses excluding share-based
compensation expenses and amortization of acquired intangible
assets (a non-GAAP measure) 4,264 13.2% 3,769 13.2% Quarter Ended
Y/Y Q/Q September % of Net Growth Growth 30, 2007 Revenues rate
rate Selling and marketing expenses 1,146 11.3% 98.6% 7.9% General
and administrative expenses 19,135 188.8% -82.1% 20.0% Total
operating expenses 20,281 200.1% -71.9% 14.9% Total operating
expenses excluding share-based compensation expenses and
amortization of acquired intangible assets (a non-GAAP measure)
1,886 18.6% 126.1% 13.1% Total operating expenses for the third
quarter of 2008 were US$5.7 million, representing a year-over-year
decrease of 71.9% from US$20.3 million and a quarter-over-quarter
increase of 14.9% from US$5.0 million. Total operating expenses for
the third quarter of 2008 included share- based compensation
expenses of US$1.0 million, compared to share-based compensation
expenses of US$18.3 million 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 third
quarter of 2008 were US$4.3 million, representing a year-over-year
increase of 126.1% from US$1.9 million and a quarter-over-quarter
increase of 13.1% from US$3.8 million. Total operating expenses
excluding share-based compensation expenses and amortization of
acquired intangible assets as a percentage of net revenues
(non-GAAP) in the third quarter of 2008 decreased to 13.2% from
18.6% in the same period one year ago and remained approximately
unchanged from the previous quarter. Selling and marketing expenses
for the third quarter of 2008 were US$2.3 million including
$233,000 of share-based compensation expenses, representing a
year-over-year increase of 98.6% from US$1.1 million and a
quarter-over- quarter increase of 7.9% from US$2.1 million. 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 options granted on July 2, July
20, and November 29, 2007. The quarter-over-quarter increase was
primarily due to the expansion of the direct sales force. General
and administrative expenses for the third quarter of 2008 were
US$3.4 million including $771,000 of share-based compensation
expenses, representing a year-over-year decrease of 82.1% from
US$19.1 million and a quarter-over-quarter increase of 20.0% from
US$2.8 million. The year-over- year decrease was primarily because
that there was a one-time share-based compensation expense of
US$17.5 million included in the third quarter of 2007 in connection
with the one-time share transfer of 5,000,000 ordinary shares in
September 2007 by a principal shareholder of the company to Mr.
Herman Man Guo in recognition of his service as Chairman and Chief
Executive Officer. The quarter-over-quarter increase was primarily
due to higher amortization of acquired intangible assets of
US$357,000 in connection with the acquisitions of the billboard
advertising business on gate bridges. Income from Operations Income
from operations for the third quarter of 2008 was US$6.1 million,
compared to a loss from operations of US$15.4 million in the same
period one year ago, and representing a quarter-over-quarter
increase of 1.6% from US$6.0 million. Income from operations
excluding share-based compensation expenses and amortization of
acquired intangible assets (non-GAAP) for the third quarter of 2008
was US$7.6 million, representing a year-over-year increase of
148.7% from US$3.0 million and a quarter-over-quarter increase of
4.7% from US$7.2 million. Operating margin excluding the effect of
share-based compensation expenses and amortization of acquired
intangible assets (non-GAAP) for the third quarter of 2008 was
23.4%, as compared to 30.0% in the same period one year ago and
25.4% in the previous quarter. Income Tax Expense/Benefit Income
tax expense for the third quarter of 2008 was US$6,000, compared to
income tax expense of US$51,000 in the same period one year ago and
income tax benefit of US$74,000 in the previous quarter. The
effective income tax rate for the third quarter of 2008 was 0.1%,
as compared to a negative 0.3% in the same period one year ago and
a negative 1.0% in the previous quarter primarily because the most
profitable entities of AirMedia are currently enjoying preferential
tax holidays. Net Income Net income for the third quarter of 2008
was US$7.5 million, compared to net loss of US$15.3 million in the
same period one year ago, and representing a quarter-over-quarter
increase of 1.8% from US$7.3 million. The basic income per ADS for
the third quarter of 2008 was US$0.11, compared to basic loss per
ADS of US$0.54 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 third quarter of 2008 was US$0.11, compared to diluted loss
per ADS of US$0.54 in the same period one year ago and diluted
income per ADS of US$0.11 in the previous quarter. Adjusted net
income (non-GAAP) for the third quarter of 2008, which is net
income excluding share-based compensation expenses and amortization
of acquired intangible assets, was US$8.9 million, representing a
year-over-year increase of 183.1% from US$3.1 million and a
quarter-over-quarter increase of 4.4% from US$8.5 million. Basic
adjusted net income per ADS (non-GAAP) for the third quarter of
2008 was US$0.13, compared to basic adjusted net income per ADS of
US$0.10 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 third quarter of 2008 was US$0.13,
compared to diluted adjusted net income per ADS of US$0.10 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. Other Recent Developments On October 31,
2008, AirMedia received an award from Deloitte for being recognized
as one of the fastest growing companies in China in Deloitte
Technology Fast 50 China 2008 program. AirMedia ranked Number 6 in
this year's program. In August, AirMedia entered into an exclusive
agency agreement to be the sole sales agent in mainland China to
sell advertisements on both the international and domestic routes
operated by Dragonair and Cathay Pacific Airways from August 2008
to December 31, 2010. According to the agreement, AirMedia obtained
certain attractive discounts off the listing prices of
advertisements on the digital TV screens on airplanes of Dragonair
and Cathay Pacific. AirMedia can sell these times slots to its
well-based customers at a premium without any prepaid fees.
Payments of the already-displayed advertisements during the month
will be made on a monthly basis. The revenue to be generated from
this new agreement is agency commission in nature, different from
other AirMedia's airlines. There was no revenue contribution from
this new agency commission model in the third quarter of 2008. In
the third quarter of 2008, AirMedia started operating digital
frames in additional three airports, including TV-attached digital
frames in two airports located in Xi'an and Xiamen, and stand-alone
digital frames in three airports located in Xi'an, Xiamen and
Qingdao. This expanded AirMedia's digital frame network airports to
19. In addition, AirMedia also started operating TV-attached
digital frames in Chongqing Jiangbei Airport, which already had
stand-alone digital frames in operation, and started operating
stand-alone digital frames in airports located in Nanjing and
Jinan, which already had TV-attached digital frames in operation.
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. Wenzhou is a city located in Zhejiang province
with the third highest average disposable income of residents among
all the cities in mainland China. 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 has concession rights to
operate digital TV screens in all of the top 30 airports in China.
Business Outlook In AirMedia's previously announced full year
guidance, it expected that its total revenues for 2008 would be in
an amount ranging from US$122.4 million to US$ 126.4 million. As a
result of AirMedia's performance in the first three quarters of
2008 and anticipated performance in the fourth quarter of 2008,
AirMedia is raising its full year guidance of total revenues for
2008 to an amount ranging from US$125.1 million to US$127.1
million, representing a year-over-year increase of 186.8% to 191.4%
from fiscal year 2007. AirMedia currently expects that its total
revenues for the fourth quarter of 2008 will be in an amount
ranging from US$40.0 million to US$42.0 million, representing a
year-over-year increase of 145.6% to 157.9% from the same period in
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 Ended Quarter Ended YOY QOQ September Ended June
September Growth Growth 30, 2008 30, 2008 30, 2007 Rate Rate
Digital TV screens in airports Number of airports in operation 41
41 37 10.8% 0.0% Number of time slots available for sale (1) 25,275
24,982 19,050 32.7% 1.2% Number of time slots sold (3) 8,019 7,993
6,364 26.0% 0.3% Utilization rate (4) 31.7% 32.0% 33.4% -1.7% -0.3%
Average advertising revenue per time slot sold (5) US$1,631
US$1,644 US$1,092 49.3% -0.8% Digital TV screens on airplanes
Number of airlines in operation 9 9 9 0.0% 0.0% Number of time
slots available for sale (1) 468 468 438 6.8% 0.0% Number of time
slots sold (3) 287 234 183 56.8% 22.7% Utilization rate (4) 61.4%
50.0% 41.8% 19.6% 11.4% Average advertising revenue per time slot
sold (5) US$22,930 US$19,799 US$13,916 64.8% 15.8% Digital frames
in airports Number of airports in operation 19 16 N/A N/A 18.8%
Number of time slots available for sale (2) 17,086 10,483 N/A N/A
63.0% Number of time slots sold (3) 3,317 1,199 N/A N/A 176.7%
Utilization rate (4) 19.4% 11.4% N/A N/A 8.0% Average advertising
revenue per time slot sold (5) US$3,049 US$9,138 N/A N/A -66.6%
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. The ASP of digital frames
for the third quarter of 2008 decreased 66.6% quarter-over-quarter
to US$3,049 due to the Olympic Impact in Beijing Capital
International Airport as explained above and the significant
increase in the time slots sold in other airports which have lower
ASPs. Earnings Conference Call Details AirMedia will hold a
conference call to discuss the third quarter 2008 earnings at 7:00
PM U.S. Eastern Time on November 6, 2008 (4:00 PM U.S. Pacific Time
on November 6, 2008; 8:00 AM Beijing/Hong Kong time on November 7,
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 +1 888 396 2386. 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 +1 617 847 8712. The pass code for
all participants is AMCN. A replay of the call will be available
for 1 week between 8:00 PM Eastern Time on November 6, 2008, and
8:00 PM Eastern Time on November 13, 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 95108920. 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 all of the 30 largest airports in China. AirMedia also
has contractual concession rights to operate TV-attached digital
frames ranging from 46 to 52 inches and stand-alone digital frames
ranging from 63 to 82 inches in 19 major airports. In addition,
AirMedia has contractual concession rights to place its programs on
the routes operated by 9 airlines, including the three largest
airlines in China, and the exclusive rights in mainland China to
sell advertisements on Cathay Pacific Airline and Dragonair's
routes. 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 our customers reduce their advertising
spending due to an economic downturn in China and/or elsewhere or
for any other reason, our revenues and results of operations may be
materially and adversely affected; 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. AirMedia Group Inc. UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (In U.S. dollars in thousands) Sept.
30, Dec. 31, 2008 2007 Assets Current assets: Cash 177,649 210,915
Short-term investment 736 -- Accounts receivable, net 39,022 13,478
Prepaid concession fees 14,501 13,130 Other current assets 11,363
2,393 Deferred tax assets - current 251 95 Total current assets
243,522 240,011 Acquired intangible assets, net 9,679 4,862
Property and equipment, net 53,565 15,985 Long-term deposits 10,079
4,706 Long-term investment 1,609 788 Deferred tax assets -
non-current 730 507 TOTAL ASSETS 319,184 266,859 Liabilities
Current liabilities: Accounts payable 13,979 4,666 Accrued expenses
and other current liabilities 6,245 1,309 Deferred revenue 3,274
1,712 Income tax payable 390 32 Amounts due to related parties --
11 Total current liabilities 23,888 7,730 Non-current liabilities:
Deferred tax liability - non-current 2,830 1,527 Total liabilities
26,718 9,257 Minority interest 180 (3) Shareholders' equity
Ordinary shares 134 133 Additional paid-in capital 267,187 263,130
Statutory reserve 1,782 1,782 Accumulated earning/(deficiency)
11,612 (10,317) Accumulated other comprehensive income 11,571 2,877
Total shareholders' equity 292,286 257,605 TOTAL LIABILITIES,
MINORITY INTEREST, AND SHAREHOLDERS' EQUITY 319,184 266,859
AirMedia Group Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In U.S. dollars in thousands, except share related
data) Three Months Ended Sept. 30, Jun. 30, Sept. 30, 2008 2008
2007 Revenues 33,708 29,774 10,625 Business tax and other sales tax
(1,373) (1,285) (488) Net revenues 32,335 28,489 10,137 Cost of
revenues 20,499 17,486 5,206 Gross profit 11,836 11,003 4,931
Operating expenses: Selling and marketing * 2,276 2,110 1,146
General and administrative * 3,420 2,849 19,135 Total operating
expenses 5,696 4,959 20,281 Income/(loss) from operations 6,140
6,044 (15,350) Interest income 1,122 1,218 303 Other income, net
428 135 -- Income/(loss) before income taxes and minority interest
7,690 7,397 (15,047) Income tax expense/ (benefit) 6 (74) 51 Net
income/(loss) before minority interest 7,684 7,471 (15,098)
Minority interest (102) (6) 3 Loss of equity accounting investment
(119) (137) (158) Net income / (loss) 7,463 7,328 (15,253) Deemed
dividend on series A convertible redeemable preferred shares-
Accretion of redemption premium -- -- (361) Deemed dividend on
series B convertible redeemable preferred shares- Accretion of
redemption premium -- -- (1,302) Net income/(loss) attributable to
holders of ordinary shares 7,463 7,328 (16,916) Net Income
allocated for computing EPS Ordinary shares - Basic 7,463 7,328
(16,916) Net Income allocated for computing EPS preferred A shares
- Basic -- -- 361 Net Income allocated for computing EPS preferred
B shares - Basic -- -- 1,302 Net income used in calculating Income
per ordinary share-diluted 7,463 7,328 (16,916) Net income/(loss)
per ordinary share - basic $0.06 $0.05 ($0.27) - diluted $0.05
$0.05 ($0.27) Net income/(loss) per ADS - basic $0.11 $0.11 ($0.54)
- diluted $0.11 $0.11 ($0.54) Net income per Series A preferred
share -- -- $0.01 Net income per Series B preferred share -- --
$0.08 Weighted average ordinary shares outstanding used in
computing net income per ordinary share - basic 133,680,775
133,454,562 62,617,391 Weighted average ordinary shares outstanding
used in computing net income per ordinary share - diluted
138,054,496 139,116,185 62,617,391 share used in calculating net
income/(loss) per Series A preferred share-basic -- -- 37,382,609
share used in calculating net income/(loss) per Series B preferred
share-basic -- -- 16,000,000 * share-based compensation charges
included are as follow: Selling and marketing 233 260 100 General
and administrative 771 861 18,231 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 Sept. 30, Jun. 30, Sept. 30, 2008 2008
2007 GAAP net income attributable to shareholders 7,463 7,328
(15,253) Amortization of acquired intangible assets 428 69 64
Share-based compensation 1,004 1,121 18,331 Adjusted net income
8,895 8,518 3,142 Basic adjusted net income per share $0.07 $0.06
$0.05 Diluted adjusted net income per share $0.06 $0.06 $0.05 Basic
adjusted net income per ADS $0.13 $0.13 $0.10 Diluted adjusted net
income per ADS $0.13 $0.12 $0.10 Shares used in computing adjusted
basic net income per share 133,680,775 133,454,562 62,617,391
Shares used in computing adjusted diluted net income per share
138,054,496 139,116,185 62,617,391 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. For
more information, please contact: Investor Contact: Raymond Huang
Investor Relations Director AirMedia Group, Inc. Tel:
+86-10-8460-8678 Email: Cynthia He Brunswick Group Tel:
+86-10-84608678 Email: DATASOURCE: AirMedia Group Inc. CONTACT:
Raymond Huang, Investor Relations Director, AirMedia Group, Inc. at
+86-10-8460-8678 or ; Or Cynthia He, Brunswick Group at +86-
10-8460-8678 or Web site: http://www.airmedia.net.cn/
http://ir.airmedia.net.cn/
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