BEIJING, Nov. 13 /Xinhua-PRNewswire-FirstCall/ -- Xinhua Finance
Media Limited ("XFMedia" or "the Company"; Nasdaq: XFML), China's
leading diversified financial and entertainment media company,
today announced its unaudited financial results for the quarter
ended September 30, 2007. Third Quarter 2007 Highlights -- Net
revenue for the third quarter of 2007 was $40.7 million, up 118%
year-over-year from $18.7 million in the third quarter of 2006 or
up 41% sequentially from $29.0 million in the second quarter of
2007. The increase in revenue was driven by strong organic business
growth and contribution from new acquisitions. -- EBITDA
(non-GAAP), defined as earnings before interest expense, taxes,
depreciation, amortization and share-based compensation expenses,
for the third quarter of 2007 was $14.7 million, up 199%
year-over-year from $4.9 million in the third quarter of 2006 or up
62% sequentially from $9.1 million in the second quarter of 2007.
-- Net income for the third quarter of 2007 was $9.0 million, up
964% year-over-year from $0.8 million in the third quarter of 2006
or up 301% sequentially from $2.3 million in the second quarter of
2007. -- Adjusted net income (non-GAAP), defined as net income
before amortization of intangible assets, imputed interest and
share-based compensation expenses, for the third quarter of 2007
was $14.9 million, up 424% year-over-year from $2.8 million in the
third quarter of 2006 or up 87% sequentially from $7.9 million in
the second quarter of 2007. -- Net income and adjusted net income
per ADS and per share are shown in the following table: Net income
per ADS - basic * 0.14 Net income per ADS - diluted * 0.13 Adjusted
net income per ADS - basic * 0.23 Adjusted net income per ADS -
diluted * 0.21 Net income per share - basic * 0.07 Net income per
share - diluted * 0.06 Adjusted net income per share - basic * 0.12
Adjusted net income per share - diluted * 0.10 * Weighted average
number of ADS - basic: 63.5 million; weighted average number of ADS
- diluted: 71.4 million; weighted average number of share - basic:
126.9 million; weighted average number of share - diluted: 142.8
million. "We are pleased to report strong financial results for the
third quarter of 2007 that came from strong business growth in
advertising revenue," said Ms Fredy Bush, XFMedia's Chief Executive
Officer, "demonstrating our ability to capitalize on the growing
advertising market in China. We look forward to progress across our
business groups as we continue to leverage the prospects generated
by China's dynamic development." Third Quarter 2007 Financial
Results Net revenue for the third quarter of 2007 was $40.7
million, up 118% year- over-year from $18.7 million in the third
quarter of 2006 or up 41% sequentially from $29.0 million in the
second quarter of 2007. Net Revenues by type and segment The
following is a summary of net revenue relating to each segment
reconciled to amounts on the accompanying consolidated financial
statements for the third quarter of 2007: Advertising Broadcast
Print Net revenues: Media production $ -- $ -- $ -- Advertising
sales 3,801,931 4,993,633 3,551,108 Advertising services 18,763,878
3,693,157 2,110,687 Publishing services -- -- 291,072 Total net
revenues $22,565,809 $8,686,790 $5,952,867 Production Research
Total Net revenues: Media production $ 2,073,675 $ -- $ 2,073,675
Advertising sales -- -- 12,346,672 Advertising services --
1,445,257 26,012,979 Publishing services -- -- 291,072 Total net
revenues $ 2,073,675 $ 1,445,257 $40,724,398 Advertising Group Net
revenue for the Advertising Group for the third quarter of 2007 was
$22.6 million, up 99% year-over-year from $11.4 million in the
third quarter of 2006 or up 48% sequentially from $15.3 million in
the second quarter of 2007. Television Advertising Net revenue for
Television for the third quarter of 2007 was $3.8 million, up 84%
year-over-year from $2.0 million in the third quarter of 2006 or
down 21% sequentially from $4.8 million in the second quarter of
2007. The sequential decrease was due to seasonality of the
business. In addition, a higher portion of television programming
during the quarter focused on the coverage of the 17th Party
Congress and resulted in a mix of television advertisement that
generated on average a lower level of revenue. Print/Online
Advertising Net revenue for Print for the third quarter of 2007 was
$9.5 million, up 92% year-over-year from $4.9 million in the third
quarter of 2006 or up 59% sequentially from $6.0 million in the
second quarter of 2007. Outdoor/Other Advertising Services Net
revenue for Outdoor/Other for the third quarter of 2007 was $5.7
million, up 29% year-over-year from $4.4 million in the third
quarter of 2006 or up 52% sequentially from $3.7 million in the
second quarter of 2007. We completed the acquisition of Convey
Advertising Company Limited ("Convey") on July 2, 2007. Convey
contributed $3.8 million in post- acquisition net revenue for the
third quarter of 2007. The acquisition of Convey expands XFMedia's
outdoor advertising network significantly by adding to it
billboards along key transit routes linking mainland China with
Hong Kong and Macau. Excluding the contribution from Convey, net
revenue was down by 50% sequentially due primarily to a lower level
of event marketing activities conducted during the period leading
up to the 17th Party Congress. Below-The-Line Marketing Net revenue
for Below-The-Line Marketing for the third quarter of 2007 was $3.6
million, up 363% sequentially from $0.8 million in the second
quarter of 2007. There was no comparable revenue for the
Below-The-Line Marketing business in the third quarter of 2006 as
this business was acquired in June of 2007. The sequential increase
was primarily due to full quarter consolidation of Shanghai
Singshine Marketing Service Ltd. Broadcast Group Net revenue for
the Broadcast Group for the third quarter of 2007 was $8.7 million,
up 4655% year-over-year increase from $0.2 million in the third
quarter of 2006 or up 107% sequentially from $4.2 million in the
second quarter of 2007. The year-over-year increase was primarily
due to revenue contribution from the television business which was
acquired in September of 2006. Television Net revenue for the
television business for the third quarter of 2007 was $3.5 million,
up 1806% year-over-year from $0.2 million in the third quarter of
2006 or up 48% sequentially from $2.3 million in the second quarter
of 2007. Radio Net revenue for the radio business for the third
quarter of 2007 was $1.9 million, up 61% sequentially from $1.2
million in the second quarter of 2007. There was no comparable
revenue for the radio business in the third quarter of 2006 as the
radio business was acquired in September 2006 and only started to
generate revenue in the fourth quarter of 2006. Mobile Services Net
revenue for the mobile services business for the third quarter of
2007 was $3.3 million, up 388% sequentially from $0.7 million in
the second quarter of 2007. There was no comparable revenue for the
mobile services business in the third quarter of 2006 as this
business was acquired in the second quarter of 2007. The sequential
increase was partially due to full quarter consolidation of Beijing
Mobile Interactive Co., Ltd, which was acquired in June, 2007.
Print Group Net revenue for the Print Group for the third quarter
of 2007 was $6.0 million, up 57% year-over-year from $3.8 million
in the third quarter of 2006 or up 19% sequentially from $5.0
million in the second quarter of 2007. The Print Group consists of
the advertising business in newspapers and magazines. Newspaper Net
revenue for the newspaper business for the third quarter of 2007
was $2.5 million, up 45% year-over-year from $1.7 million in the
third quarter of 2006 or up 17% sequentially from $2.2 million in
the second quarter of 2007. Magazine Net revenue for the magazine
business for the third quarter of 2007 was $3.4 million, up 68%
year-over-year from $2.0 million in the third quarter of 2006 or up
21% sequentially from $2.8 million in the second quarter of 2007.
Production Group Net revenue for the Production Group for the third
quarter of 2007 was $2.1 million, down 22% year-over-year from $2.7
million in the third quarter of 2006 or down 32% sequentially from
$3.1 million in the second quarter of 2007. The decrease was
primarily due to seasonality of distribution of TV drama series.
Research Group Net revenue for the Research Group for the third
quarter of 2007 was $1.4 million, up 100% year-over-year from $0.7
million in the third quarter of 2006 or down 1% sequentially from
$1.5 million in the second quarter of 2007. Cost of Revenues Cost
of revenues for the third quarter of 2007 was $23.3 million, up
113% year-over-year from $11.0 million in the third quarter of 2006
or up 36% sequentially from $17.2 million in the second quarter of
2007. The increase in cost of revenues was in line with the
increase in net revenues, which increased by 118% year-to-year or
41% sequentially. Adjusted cost of revenue (non-GAAP), defined as
cost of revenues before amortization of intangible assets, for the
third quarter of 2007 was $20.4 million, up 95 % year-over- year
from $10.5 million in the third quarter of 2006 or up 42%
sequentially from $14.4 million in the second quarter of 2007. The
cost of revenues for the five business segments are as follows:
Advertising Broadcast Print Cost of revenues: Media production $ --
$ 202,884 $ -- Advertising sales 1,636,063 2,664,941 747,933
Advertising services 12,739,178 2,993,949 80,054 Publishing
services -- -- 283,714 Total cost of revenues $14,375,241 $
5,861,774 $ 1,111,701 Amortization of intangible assets (237,557)
(2,381,048) (307,220) Adjusted cost of revenues $14,137,684 $
3,480,726 $ 804,481 Production Research Total Cost of revenues:
Media production $ 1,302,047 $ -- $ 1,504,931 Advertising sales --
-- 5,048,937 Advertising services -- 696,800 16,509,981 Publishing
services -- -- 283,714 Total cost of revenues $ 1,302,047 $ 696,800
$23,347,563 Amortization of intangible assets -- -- (2,925,825)
Adjusted cost of revenues $ 1,302,047 $ 696,800 $20,421,738
Operating Expenses Operating expenses for the third quarter of 2007
were $11.1 million, up 91% year-over-year from $5.8 million in the
third quarter of 2006 or up 24% sequentially from $9.0 million in
the second quarter of 2007. Total operating expenses were composed
of selling and marketing expenses and general and administrative
expenses. Selling and marketing expenses for the third quarter of
2007 were $4.3 million, up 167% year-over-year from $1.6 million in
the third quarter of 2006 or up 37% sequentially from $3.2 million
in the second quarter of 2007. General and administrative expenses
for the third quarter of 2007 were $6.8 million, up 61%
year-over-year from $4.2 million in the third quarter of 2006 or up
17% sequentially from $5.8 million in the second quarter of 2007.
Included in the general and administrative expenses were
share-based compensation expenses of US$0.5 million, resulting from
grants made in 2006. EBITDA (non-GAAP) EBITDA (non-GAAP), defined
as earnings before interest expense, taxes, depreciation,
amortization and share-based compensation expenses, for the third
quarter of 2007 was $14.7 million, up 199% year-over-year from $4.9
million in the third quarter of 2006 or up 62% sequentially from
$9.1 million in the second quarter of 2007. The following is a
summary of EBITDA (non-GAAP) relating to each segment for the third
quarter of 2007: Advertising Broadcast Print Segment EBITDA
(non-GAAP) $ 6,512,142 $ 3,850,243 $ 4,090,007 Less: net head
office expenses EBITDA (non-GAAP) Production Research Total Segment
EBITDA (non-GAAP) $ 481,723 $ 375,829 $ 15,309,944 Less: net head
office expenses (613,022) EBITDA (non-GAAP) $14,696,922 * Net head
office expenses represent corporate expenses of $3.6 million less
interest income of $2.4 million and other income of $0.6 million.
Net Income and Adjusted Net Income (non-GAAP) Net income for the
third quarter of 2007 was $9.0 million, up 964% year- over-year
from $0.8 million in the third quarter of 2006 or up 301%
sequentially from $2.3 million in the second quarter of 2007.
Adjusted net income (non-GAAP), defined as net income before
amortization of intangible assets, imputed interest and share-based
compensation expenses, for the third quarter of 2007 was $14.9
million, up 424% year-over-year from $2.8 million in the third
quarter of 2006 or up 87% sequentially from $7.9 million in the
second quarter of 2007. Outlook for 2007 XFMedia maintains its full
year revenue guidance of US$128 to 133 million. Fourth quarter
revenue is expected to be US$42 to 47 million. This forecast
reflects XFMedia's current and preliminary view, which is subject
to change. Conference Call Information Following the earnings
announcement, Xinhua Finance Media's senior management will host a
conference call on November 13, 2007 at 5:00 PM (New York) /
November 14, 2007 at 6:00 AM (Beijing) to review the results and
discuss recent business activity. Interested parties may dial into
the conference call at: (US) +1-480-293-1744 (UK) +44-20-7190 1232
(Asia Pacific) +852-3009-5027 A telephone replay will be available
shortly after the call for one week at: (US) +1-303-590-3030
(Passcode: 3800017#) (UK) +44-207-154-2833 (Passcode: 3800017#)
(Asia Pacific) +852-2287-4304 (Passcode: 124110#) A real-time
webcast and replay will be also available at:
http://www.xinhuafinancemedia.com/earnings About Xinhua Finance
Media Limited Xinhua Finance Media ("XFMedia"; NASDAQ: XFML) is
China's leading diversified financial and entertainment media
company targeting high net worth individuals nationwide. The
company reaches its target audience via TV, radio, newspapers,
magazines and other distribution channels. Through its five
synergistic business groups, Advertising, Broadcast, Print,
Production and Research, XFMedia offers a total solution empowering
clients at every stage of the media process and keeping people
connected and entertained. Headquartered in Beijing, the company
has offices and affiliates in major cities of China including
Beijing, Shanghai, Guangzhou, Shenzhen and Hong Kong. For more
information, please visit http://www.xinhuafinancemedia.com/. Safe
Harbor 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," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates" and similar statements. Among other things,
the outlook for fourth quarter and full year 2007 and quotations
from management in this announcement, as well as XFMedia's
strategic and operational plans, contain forward-looking
statements. XFMedia may also make written or oral forward-looking
statements in its periodic reports to the U.S. Securities and
Exchange Commission, 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 XFMedia's
beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward- looking
statement, including but not limited to the following: our growth
strategies; our future business development, results of operations
and financial condition; our ability to attract and retain
customers; competition in the Chinese advertising and media market;
changes in our revenues and certain cost or expense items as a
percentage of our revenues; the outcome of ongoing, or any future,
litigation or arbitration, including those relating to copyright
and other intellectual property rights; the expected growth of the
Chinese advertising and media market; and Chinese governmental
policies relating to advertising and media. Further information
regarding these and other risks is included in our registration
statement on Form F-1, as amended, filed with the Securities and
Exchange Commission. XFMedia does not undertake any obligation to
update any forward-looking statement, except as required under
applicable law. Non-GAAP Financial Measures To supplement XFMedia's
consolidated financial results presented in accordance with U.S.
GAAP, XFMedia uses the following non-GAAP financial measures:
adjusted cost of revenue, EBITDA and adjusted net income. The
presentation of these non-GAAP financial measures is not intended
to be considered in isolation or as a substitute for the financial
information prepared and presented in accordance with U.S. GAAP.
For more information on these non-GAAP financial measures, please
see the table captioned "Reconciliations of GAAP and non-GAAP
results" set forth at the end of this release. XFMedia believes
that these non-GAAP financial measures provide meaningful
supplemental information regarding its performance and liquidity.
XFMedia believes that both management and investors benefit from
referring to these non-GAAP financial measures in assessing its
performance and when planning and forecasting future periods. To
provide investors with a better understanding of our underlying
operational and financial performance, starting from this quarter,
XFMedia has adopted the measure "adjusted cost of revenue", defined
as cost of revenue excluding amortization of intangible assets, and
has changed the methodology of presenting "adjusted net income", by
defining adjusted net income as net income excluding amortization
of intangible assets, imputed interest and share-based
compensation. XFMedia believes these non-GAAP financial measures
are useful to investors in allowing for greater transparency with
respect to supplemental information used by management in its
financial and operational decision making. A limitation of using
non-GAAP measures which exclude share-based compensation expenses
is that share-based compensation expenses have been and will
continue to be a significant recurring expense in our business. A
limitation of using non-GAAP adjusted cost of revenue, EBITDA and
adjusted net income is that they do not include all items that
impact our net income for the period. Management compensates for
these limitations by providing specific information regarding the
GAAP amounts excluded from each non-GAAP measure. The accompanying
tables have more details on the reconciliations between GAAP
financial measures that are most directly comparable to non-GAAP
financial measures. Reconciliations of GAAP and non-GAAP results
(in USD thousands, unaudited) Three months ended Three months ended
September 30, 2007 September 30, 2006 GAAP Adjustment Non-GAAP GAAP
Adjustment Non-GAAP Results Results Results Results Cost of revenue
(*) 23,348 (2,926) 20,422 10,976 (482) 10,494 Operating Profit (**)
6,248 8,449 14,697 1,909 3,004 4,913 Net Income (***) 9,038 5,814
14,852 849 1,985 2,834 Three months ended June 30, 2007 GAAP
Adjustment Non-GAAP Results Results Cost of revenue (*) 17,209
(2,855) 14,354 Operating Profit (**) 2,757 6,316 9,073 Net Income
(***) 2,254 5,680 7,934 (*) The adjustments are for amortization
for intangible assets. (**) The adjustments are for share-based
compensation expenses, interest income, depreciation, and
amortization for intangible assets. (***) The adjustments are for
amortization of intangible assets, imputed interest, and
share-based compensation expenses. Xinhua Finance Media Limited
Condensed Consolidated Balance Sheets (In U.S. dollars) September
30, December 31, 2007 2006 Unaudited (Note 1) Assets Current
assets: $75,350,743 $36,353,547 Cash Restricted cash (Note 2)
37,202,191 12,579,822 Short-term investment 40,700,000 -- Accounts
receivable (Note 3) 40,657,189 17,403,632 Prepaid program expenses
8,455,823 8,597,935 Other current assets 27,579,563 22,114,480
Total current assets 229,945,509 97,049,416 Content production
deposit and cost, net 6,836,842 5,854,271 Property and equipment,
net 8,674,224 4,367,329 Intangible assets, net (Note 4) 215,891,059
176,201,528 Goodwill 136,597,341 83,670,010 Investment 500,000
500,000 Deposits for acquisition of subsidiaries 25,634,000
29,246,500 Deposits for acquisition of intangible asset --
2,561,246 Other long-term asset 8,563,980 -- Total assets
$632,642,955 $399,450,300 Liabilities and shareholders' equity
Current liabilities: Bank borrowings $33,704,539 $11,218,256 Bank
overdrafts 1,525,086 -- Other current liabilities 42,124,072
163,848,633 Total current liabilities 77,353,697 175,066,889
Deferred tax liabilities 33,344,407 41,168,035 Convertible loan --
14,017,289 Long term payables, non-current portion 72,189,021
64,937,958 Total liabilities 182,887,125 295,190,171 Minority
Interests 4,121,929 3,010,407 Shareholders' equity: Class A common
shares and nonvested shares (par value $0.001; 69,035,751 as of
December 31, 2006 and 143,822,874 as of September 30, 2007 shares
authorized; 32,011,154 as of December 31, 2006 and 88,017,922 as of
September 30, 2007 shares issued and outstanding) 88,020 32,011
Class B common shares (par value $0.001; 50,054,619 as of December
31, 2006 and September 30, 2007 shares authorized; 50,054,618 as of
December 31, 2006 and September 30, 2007 shares issued and
outstanding) 7,442 7,442 Convertible preferred shares (par value
$0.001;15,600,000 as of December 31, 2006 shares authorized;
15,585,254 as of December 31, 2006 shares issued and outstanding
and nil as of September 30, 2007 shares issued and outstanding) --
15,585 Additional paid-in capital 423,842,031 103,155,391 Retained
earnings (deficits) 19,746,440 (2,797,112) Accumulated other
comprehensive income 1,949,968 836,405 Total shareholders' equity
445,633,901 101,249,722 Total $632,642,955 $399,450,300 Xinhua
Finance Media Limited Condensed Consolidated Statements of
Operations (in U.S. Dollars) Three months Three months Three months
Nine months ended ended ended ended September September June 30,
September 30, 2007 30, 2006 2007 30, 2007 Unaudited Unaudited
Unaudited Unaudited Net revenues: Advertising services 26,012,979
12,974,827 19,165,786 54,253,721 Content production 2,073,675
2,668,838 3,050,899 5,904,289 Advertising sales 12,346,672
2,592,625 6,477,426 25,447,053 Publishing services 291,072 482,516
265,422 758,924 Total net revenues 40,724,398 18,718,806 28,959,533
86,363,987 Cost of revenues: Advertising services 16,509,981
8,879,575 12,073,200 35,910,052 Content production 1,504,931
1,025,106 1,341,785 3,113,566 Advertising sales 5,048,937 32,968
3,613,015 12,567,865 Publishing services 283,714 1,037,963 180,902
615,540 Total cost of revenues 23,347,563 10,975,612 17,208,902
52,207,023 Operating expenses: Selling and distribution 4,337,558
1,621,663 3,165,211 9,082,225 General and administrative 6,791,370
4,212,367 5,828,831 17,608,426 Total operating expenses 11,128,928
5,834,030 8,994,042 26,690,651 Other operating income (Note 5) --
-- -- 2,261,788 Income from operations 6,247,907 1,909,164
2,756,589 9,728,101 Other income (expense): Interest expense (Note
7) (375,093) (915,523) (2,086,990) (3,673,022) Interest income
2,431,529 617,994 1,858,221 4,746,584 Other, net 730,850 201,012
158,401 926,989 Income before provision for income taxes 9,035,193
1,812,647 2,686,221 11,728,652 and minority interest Provision for
income taxes (Note 8) (232,016) 128,307 202,457 (12,944,939) Net
income before minority interest 9,267,209 1,684,340 2,483,764
24,673,591 Minority interest 229,467 782,908 229,355 791,706 Equity
in loss of an investment -- 52,211 -- -- Net income 9,037,742
849,221 2,254,409 23,881,885 Dividend on redeemable convertible
preferred shares -- 2,169,227 -- 1,338,333 Net income (loss)
attributable to holders of common shares 9,037,742 (1,320,006)
2,254,409 22,543,552 Net income per share: Basic - Common shares
0.071 (0.029) 0.018 0.227 Basic - American Depositary Shares 0.142
(0.058) 0.036 0.454 Diluted - Common shares 0.063 (0.029) 0.016
0.193 Diluted - American Depositary Shares 0.126 (0.058) 0.032
0.386 Xinhua Finance Media Limited Condensed Consolidated
Statements of Cash Flows Three months Three months Three months
ended ended ended September September June 30, (in U.S. Dollars)
30, 2007 30, 2006 2007 (Unaudited) (Unaudited) (Unaudited) Net cash
provided by operating activities 1,550,989 6,489,492 41,081 Net
cash used in investing activities (9,536,253) (59,548,936)
(97,768,365) Net cash provided by financing activities 1,660,617
2,449,972 2,660,996 Effect of exchange rate changes 263,683 144,605
546,121 Net decrease in cash (6,060,964) (50,464,867) (94,520,167)
Cash, as at beginning of the period 81,411,707 62,195,089
175,931,874 Cash, as at end of the period 75,350,743 11,730,222
81,411,707 Notes to Financial Information 1) 2006 condensed
consolidated balance sheets Information was extracted from the
audited financial statements included in the prospectus on Form-1
of the Company filed with the Securities and Exchange Commission on
March 8, 2007. 2) Restricted cash Restricted cash is US dollar cash
deposits pledged for the RMB loan facilities granted by banks for
RMB working capital purposes. 3) Accounts receivables and debtors
turnover Debtors turnover for the second quarter and third quarter
of 2007 was 97 days and 92 days respectively. Our business groups
generally granted 90 days to 180 days average credit period to
major customers, which is in line with the industry practices in
the PRC. 4) Intangible assets Net book value for intangible assets
as of September 30, 2007 was $215.9 million. It mainly represents
the fair value of the long term advertising agreements for the
Broadcast and Print Group. The net book value of the intangible
assets were primarily composed of $99.8 million advertising license
agreement for our TV business, $59.8 million exclusive advertising
agreement for our newspaper business, and $7.7 million exclusive
advertising agreements we entered for radio advertising operations
in Shanghai, Beijing and Guangdong. There is derecognition of the
intangible assets of $40.7 million for one of our radio exclusive
advertising agreements upon clarification of the terms of one of
our exclusive radio advertising agreements. We are in the process
of obtaining third-party valuations of certain identifiable
intangible assets for the acquisitions we completed in the second
and third quarters and hence the net book value for intangible
assets is preliminary and subject to revision once we complete the
valuation exercise. 5) Other operating income Other operating
income of $2.3 million represents reimbursement of IPO related
expenses by Bank of New York in the first quarter of 2007. Those
expenses, all of which had been recorded in the 2006 income
statement as operating expenses because they were not considered to
be directly related to the sale of securities, related primarily to
audit fees and fees paid to consultants during the listing process.
6) Amortization included in cost of sales, selling expenses, or
administrative expenses Amortization for the second quarter and
third quarter of 2007 were $3.4 million and $4.2million
respectively. It mainly represents the amortization of the
intangible assets as mentioned in note 4. The amortization for the
TV license agreement was $1.3 million for both second and third
quarter of 2007. The amortization for the newspaper exclusive
advertising agreement was $0.4 million and $0.3 million for the
second and third quarter of 2007. The amortization for the radio
exclusive advertising agreements was $0.7 million and $0.3 million
for the second and third quarter of 2007. The decrease in
amortization is due to the derecognition of the intangible assets
of $40.7 million as mentioned in note 4. 7) Interest expense
Included in interest expense is imputed interest of $1.7 million
and $1.1 million for the second quarter and third quarter of 2007
respectively. It mainly represents the monthly imputed interest
expense charged on the payment obligations for the above long term
contracts. There is also a one-time adjustment of $1.3 million,
representing reversal of the imputed interest taken in first half
year of 2007 (the imputed interest for the first quarter and second
quarter of 2007 were $0.6 million and $0.6 million respectively) as
a result of clarification of terms of one of our exclusive radio
advertising agreements as mentioned also in note 4. For the TV
license agreement, the imputed interest each quarter in 2007 was
$0.7 million. For the Newspaper exclusive advertising agreement,
the imputed interest for the second quarter and third quarter of
2007 were $0.4 million and $0.3 million respectively. For radio
exclusive advertising agreements, the imputed interest for the
second quarter and third quarter of 2007 were $0.6 million and $0.1
million respectively. The sequential decrease was driven by the
fact that there is no imputed interest taken in the third quarter
of 2007 as a result of clarification of terms of one of our
exclusive radio advertising agreements as mentioned in note 4. 8)
Provision for income taxes Provision for income taxes included
deferred tax credits of $0.7 million in both second quarter and
third quarter of 2007. For more information, please contact: Media
Contact: Xinhua Finance Media Ms. Joy Tsang Tel: +86-21-6113-5999
Email: IR Contact: Xinhua Finance Media Ms. Jennifer Chan Lyman
Tel: +86-21-6113-5960 Email: DATASOURCE: Xinhua Finance Media
CONTACT: China: Joy Tsang of Xinhua Finance Media,
+86-21-6113-5999, or mobile, +86-136-2179-1577, or Web Site:
http://www.xinhuafinancemedia.com/
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