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Monday, March 02, 2009

VisionChina Media Announces Fourth Quarter and Full-Year 2008 Results

VisionChina Media Announces Fourth Quarter and Full-Year 2008 Results

Full-Year 2008 Advertising Service Revenues Grow 276.6% Year-over-Year

Fourth Quarter Net Income Grows 158.6% Year-over-Year

BEIJING, March 2 /PRNewswire-Asia/ -- VisionChina Media Inc. (the "Company" or "VisionChina Media") (NASDAQ:VISN) , one of China's largest out-of-home digital television advertising networks on mass transportation systems, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2008.

   Fourth Quarter 2008 Highlights   -- Total revenues in the fourth quarter of 2008 increased 185.1% year over      year to $34.3 million. Advertising service revenue, which accounted for      all of total revenues in the fourth quarter of 2008, increased 193.1%      year over year.   -- Gross profit in the fourth quarter of 2008 was $19.7 million, an      increase of 157.8% from $7.6 million in the fourth quarter of 2007.   -- Operating profit in the fourth quarter of 2008 was $12.8 million, an      increase of 155.5% from $5.0 million in the fourth quarter of 2007.   -- Net income in the fourth quarter of 2008 was $14.8 million, an increase      of 158.6% from $5.7 million in the fourth quarter of 2007.   -- Basic and diluted net incomes per share in the fourth quarter of 2008      were $0.21 and $0.20, respectively (each ADS representing one common      share), compared to $0.11 and $0.10 respectively in the fourth quarter      of 2007.   -- The Company had cash and cash equivalents of $163.2 million as of      December 31, 2008, an increase of $22.2 million from $141.0 million as      of September 30, 2008. The increase was mainly a result of a $14.8      million profit and collection of accounts receivables during the fourth      quarter of 2008. The Company had net operating cash inflow totaling      $25.1 million in the fourth quarter of 2008.   -- Network capacity, which is measured by total broadcasting hours,      reached 31,834 hours in the fourth quarter of 2008, compared to 23,908      hours in the fourth quarter of 2007.   -- As of December 31, 2008, the Company had installed a total of 66,264      digital displays on buses, subway trains and subway platforms.   -- On average, the Company sold 8.83 advertising minutes per broadcasting      hour in the fourth quarter of 2008, compared to 8.69 advertising      minutes per broadcasting hour in the fourth quarter of 2007.   -- Average advertising service revenue per broadcasting hour was $1,023,      compared to $474 in the fourth quarter of 2007.     Full-Year 2008 Highlights   -- Total revenues in the full year 2008 increased 254.2% over the previous      year to $104.1 million, of which advertising service revenue increased      276.6% over the previous year to $103.5 million.   -- Gross profit in the full year 2008 increased 320.0% to $63.0 million,      from $15.0 million in 2007.   -- Operating profit in the full year 2008 increased 390.7% to $42.4      million, from $8.6 million in 2007.   -- Net income in the full year 2008 increased 398.4% to $46.8 million,      from $9.4 million in 2007.   -- Basic and diluted net incomes per share during the full year 2008 were      $0.67 and $0.65, respectively (each ADS representing one common share),      compared to $0.11 and $0.11, respectively during the full year 2007.   -- Network capacity, which is measured by total broadcasting hours,      reached 119,170 hours in 2008, compared to 77,925 hours in 2007.   -- The Company sold an average of 7.72 advertising minutes per      broadcasting hour in 2008, compared to an average of 7.04 advertising      minutes per broadcasting hour in 2007.   -- Average advertising service revenue per broadcasting hour increased      147.4% in 2008 to $843, compared to $341 in 2007.    

Limin Li, VisionChina Media's chairman and chief executive officer, commented, "2008 was an exceptional year for VisionChina Media. We were able to take advantage of the unprecedented opportunities presented by the Beijing Olympic Games in the third quarter and maintain momentum throughout the fourth quarter despite a challenging economic environment. Our accomplishments in 2008 are underscored by exciting new developments in the first quarter of 2009 as several multinational and domestic brands have renewed or signed new contracts. In fact, as of February 27, 2009, 129 multinational and domestic household brands had either renewed sales contracts or signed new contracts for ad placement in 2009, demonstrating increased acceptance of our platform as well as customer satisfaction. These developments reaffirm the tremendous long-term growth potential of our business model and the industry in which we operate. We believe we have the right strategy in place to capitalize on the growth and expansion of the mobile TV industry in China, which will enable us to deliver long-term shareholder value."

Alfred Tong, VisionChina Media's chief marketing officer, said, "We strive to deliver the best possible viewing experience to the millions of commuters who watch our screens on buses and subways in China each day. We are confident that major brands, both domestic and international, will continue to increase their spending on our platform as they witness the benefits that real-time digital mobile television can offer. Our low cost per minute advertising platform provides an extremely cost-effective alternative to traditional television, as was recently documented by the second phase of a study of our industry by CTR Market Research, one of China's largest third-party market research providers."

Dina Liu, VisionChina Media's chief financial officer, added, "While the digital mobile television industry is still in its infancy in China, it is a dynamic market poised for consolidation. As the only publicly listed company operating in our competitive landscape, we are well positioned to play an active role in the industry's consolidation and create long-term shareholder value for our investors. In 2009, we will continue to focus on execution, cost control and profitability. Our talented and dedicated workforce will continue to direct their attention toward further penetrating our existing network, expanding our geographical reach to new cities, developing new platforms, increasing utilization rates and achieving fair pricing for our advertising minutes."

Fourth Quarter 2008 Results

VisionChina Media's total revenues were $34.3 million in the fourth quarter of 2008, an increase of 185.1% from $12.0 million in the fourth quarter of 2007.

Advertising service revenue was $34.3 million in the fourth quarter of 2008, an increase of 193.1% from $11.7 million in the fourth quarter of 2007. Total broadcasting hours in the fourth quarter of 2008 remained unchanged from 31,834 hours in the third quarter of 2008, compared to 23,908 hours in the fourth quarter of 2007. Average advertising revenue per broadcasting hour was $1,023 in the fourth quarter of 2008 compared to $474 per broadcasting hour in the fourth quarter of 2007. On average, the Company sold 8.83 advertising minutes per broadcasting hour in the fourth quarter of 2008 compared to 8.69 advertising minutes per broadcasting hour in the fourth quarter of 2007. As of December 31, 2008, 705 advertisers had purchased advertising time on the Company's network either directly or through an advertising agent.

Media cost, the most significant component of advertising service costs of total revenues, was $11.5 million in the fourth quarter of 2008, representing 78.9% of total advertising service costs, compared to $3.2 million, or 77.6% of total advertising service costs, in the fourth quarter of 2007.

Gross profit in the fourth quarter of 2008 was $19.7 million, an increase of 157.8% from $7.6 million in the fourth quarter of 2007. Advertising service gross margin was 57.4% in the fourth quarter of 2008, compared to 64.8% in the fourth quarter of 2007.

Selling and marketing expenses were $4.8 million in the fourth quarter of 2008, an increase of 409.6% from $0.9 million in the fourth quarter of 2007. The Company noted that the year-over-year increase was primarily due to an increase in headcount, which strengthened its sales capabilities and sales network as well as branding efforts.

Selling and marketing expenses represented 13.9% of the Company's advertising service revenues in the fourth quarter of 2008 compared to 8.0% in the fourth quarter of 2007.

General and administrative expenses were $2.1 million in the fourth quarter of 2008, an increase of 74.4% from $1.2 million in the fourth quarter of 2007.

Loss from equity method investments amounted to $5,000 in the fourth quarter of 2008, compared to a $0.48 million loss in the fourth quarter of 2007.

Operating profit was $12.8 million in the fourth quarter of 2008, an increase of 155.5% from $5.0 million in the fourth quarter of 2007.

The Company recognized an income tax benefit of $0.3 million in the fourth quarter of 2008. The Company is a certified "Cultural Enterprise" and therefore benefits from full tax exemption from 2005 through 2008.

Net income was $14.8 million in the fourth quarter of 2008, an increase of 158.6% from $5.7 million in the fourth quarter of 2007. Strong revenues and well implemented cost control measures allowed the Company to meet the guidance provided last quarter. Basic and diluted net incomes per share in the fourth quarter of 2008 were $0.21 and $0.20, respectively. The Company's fourth quarter net income, excluding share-based compensation expenses (non-GAAP) was $15.3 million.

As of December 31, 2008, the Company had 66,264 digital television displays in its network, compared to 41,410 as of December 31, 2007.

As of December 31, 2008, the Company had 473 employees, compared to 216 employees as of December 31, 2007,

The Company had cash and cash equivalents of $163.2 million as of December 31, 2008, an increase of $22.2 million from $141.0 million as of September 30, 2008. The increase was mainly a result of $14.8 million in profit and collections of accounts receivables during the fourth quarter of 2008. Depreciation and amortization in the fourth quarter of 2008 was $1.1 million and capital expenditures were $1.9 million. The Company had net operating cash inflow totaling $25.1 million in the fourth quarter 2008.

Full-Year 2008 Results

Total revenues in the full year 2008 were $104.1 million, an increase of 254.2% from 2007.

Advertising service revenue in the full year 2008 was $103.5 million, an increase of 276.6% from 2007.

Gross profit in the full year 2008 was $63.0 million, an increase of 320.0% from gross profit of $15.0 million in 2007.

Advertising service gross margin and advertising equipment gross margin were 60.8% and 15.9% respectively, in the full year 2008.

Selling and marketing expenses in the full year 2008 were $14.7 million, compared to $2.1 million in 2007. The increase was primarily attributable to the expansion of the Company's sales team, the strengthening of its sales capabilities and the overall improvement of its sales network.

General and administrative expenses in the full year 2008 were $5.4 million, compared to $3.0 million in 2007. The increase was primarily attributable to management investing in operational and administrative infrastructure to support the growth of the business during 2008 and beyond as well as professional fees incurred due to the Company's status as a publicly listed company.

Loss from equity method investments in the full year 2008 amounted to $0.5 million, compared to a loss of $1.3 million in 2007, a result of the improved operations of the Company's investment entities that have been accounted for under equity method.

Operating profit in the full year 2008 was $42.4 million, an increase of 390.7% from $8.6 million in 2007.

The Company recognized an income tax benefit of $0.2 million in the full year 2008, compared to $0.3 million in 2007.

Net income in the full year 2008 was $46.8 million, compared to $9.4 million in 2007. Basic and diluted net incomes per share in the full year 2008 were $0.67 and $0.65, respectively.

Other Recent Company and Industry Developments

Effective January 1, 2009, VisionChina Media added a second TV channel to its broadcast in Beijing allowing for subways and buses to air programming and advertising independently. Airing a separate broadcast on each platform allows the Company to sell bus and subway advertising minutes separately. Beijing subways have a distinct rate card and the Company has exclusive rights to 5 of Beijing's 8 subway lines. Beijing is a significant and lucrative market for VisionChina Media as subway expansion there continues at a rapid pace. By 2015, Beijing is expected to have one of the world's largest subway systems with approximately 349 miles of rail lines and capacity of over 9 million passengers daily.

In January 2009, VisionChina Media signed an agreement with Hangzhou New & Mobile Media to provide a certain amount of mobile television advertising time per day from several key industries on public buses and ferries via 5,841 screens. The move into Hangzhou signifies an important step in the Company's endeavors to capture the many untapped opportunities in Tier II cities where exposure to brand-building advertising is not yet as widespread.

In February 2009, VisionChina Media expanded network coverage to Tianjin by signing a two-year, exclusive agreement granting the Company the right to sell a minimum of 114 advertising minutes per day to national advertisers during 17 hours of daily programming. The Tianjin network currently features 2,486 screens, with 2,700 more planned by May 2009. Like Hangzhou, Tianjin is a strategically significant Tier II city due to its large population, high GDP and close proximity to Beijing.

In February 2009, Phase II of the CTR Market Research Report was delivered. The research was undertaken to measure the metrics of the digital mobile TV industry in China. Phase II of the research indicated that digital mobile TV has the ability to reach wide audiences and generate high retention rates at costs that are a fraction of those offered through advertising on traditional TV. While research is ongoing, statistics like these validate the effectiveness of the Company's television and advertising platform for advertisers.

In November 2008, VisionChina Media's board of directors approved a share repurchase program of up to $50 million by December 31, 2009. Under the share repurchase program, the Company purchased 281,400 shares in the open market during the fourth quarter of 2008 at an average price of $5.13 and total consideration of $1.4 million. The share repurchase program reflects management's unwavering confidence in the Company's growth prospects as well as the sustainability of its business model and the industry in which it operates.

Business Outlook

The Company estimates total revenues, which consist of advertising service revenues only, in the first quarter of 2009 to range from $27 million to $30 million. First quarter 2009 net income excluding share-based compensation expenses (non-GAAP) is expected to be between $7 million and $9.5 million. Margins will be negatively impacted by fixed media cost payments in the first quarter of 2009 due to three new exclusive agency agreements that the company entered into during the first quarter to secure fixed cost capacity. Excluding these incremental costs, the Company expects first quarter 2009 net income, excluding share-based compensation expenses (non-GAAP), to be between $8.7 million and $11.2 million.

The Company estimates its total revenues in the full year 2009 to range from $141 million to $157 million. Net income in the full year 2009, excluding share-based compensation expenses (non-GAAP), is expected to be between $46 million and $58 million.

The Company bases these estimates on a foreign exchange rate of RMB6.8470 per US$1.00.

The Company noted that its guidance is based on its current network of 18 cities that, as of release date, have already been secured by contract. If and when more cities are added, either organically or through M&A activity, it will impact the management's forecast.

Conference Call

VisionChina's management will hold an earnings conference call at 7:00 PM U.S. Eastern Standard Time on March 2, 2009 (8:00 AM Beijing/Hong Kong Time on March 3, 2009).

   Dial-in details for the earnings conference call are as follows:    US Toll Free:             + 1-866-272-9941   Hong Kong:                + 852-3002-1672   International:            + 1-617-213-8895   Passcode for all regions: Vision China Earnings Call   

A replay of the conference call may be accessed by phone at the following numbers until March 31, 2009.

   US Toll Free:  +1-888-286-8010   International: +1-617-801-6888   Passcode:      54938147   

Additionally, a live and archived webcast of this conference call will be available on the Investor Relations section of VisionChina Media's website at http://www.visionchina.cn/ .

About VisionChina Media Inc.

VisionChina Media Inc. (NASDAQ:VISN) operates an out-of-home advertising network on mass transportation systems, including buses and subways that reach over 26 million viewers each day in China, according to CTR Market Research. As of December 31, 2008, VisionChina Media's advertising network included over 66,264 digital television displays on mass transportation systems in 17 of China's economically prosperous cities, including Beijing, Guangzhou, Shanghai and Shenzhen. VisionChina Media has the ability to deliver real-time, location-specific broadcasting, including news, stock quotes, weather and traffic reports and other entertainment programming. For more information, please visit http://www.visionchina.cn/ .

Use of Non-GAAP Financial Measures

In addition to VisionChina Media's consolidated financial results under GAAP, the company also provides non-GAAP financial measures, including non-GAAP net income, excluding non-cash share-based compensation. The company believes that the non-GAAP financial measures provide investors with another method for assessing VisionChina Media's operating results in a manner that is focused on the performance of its ongoing operations. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies. The company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of VisionChina Media's liquidity and when planning and forecasting future periods.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1 and its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

                             VISIONCHINA MEDIA INC.                     CONDENSED CONSOLIDATED BALANCE SHEETS   (Amounts in U.S. dollars ($), except number of shares and per share data)                                          December     September     December   ASSETS                                31, 2008     30, 2008      31, 2007                                        (Unaudited)  (Unaudited)    (Note 1)   Current Assets:   Cash and cash equivalents           163,248,286  141,018,871  131,139,659   Accounts receivable, net             38,296,590   43,663,731   13,256,450   Amounts due from related parties      5,225,564    6,508,029    5,596,995   Prepaid expenses and other current    assets                               9,431,279   12,425,517    7,718,928   Deferred tax assets                     273,325      252,975      332,386   Total current assets                216,475,044  203,869,123  158,044,418   Non-current Assets:   Fixed assets, net                    10,205,784   10,046,944    7,709,204   Investments under equity method       7,686,065    6,826,319    6,714,853   Other investments                     2,276,034    2,286,962    2,128,732   Long-term prepaid expenses              731,772      703,397      703,069   Long-term prepayments and deposits   21,156,296   19,816,249           --   Intangible assets                    14,034,343   14,814,638           --   Goodwill                             21,074,229           --           --   Total non-current assets             77,164,523   54,494,509   17,255,858   TOTAL ASSETS                        293,639,567  258,363,632  175,300,276   LIABILITIES AND SHAREHOLDERS' EQUITY   Current Liabilities:   Accounts payable                      1,237,262    2,025,147    4,236,695   Amounts due to related parties          786,284    1,013,403      407,900   Acquisition consideration payable    30,734,610           --           --   Accrued expenses and other current    liabilities                          9,546,550    6,317,675    5,974,184   Deferred tax liabilities                415,554           --           --   Total current liabilities            42,720,260    9,356,225   10,618,779   Non-current Liabilities:   Contingent consideration              2,776,173   12,511,658           --   Deferred tax liabilities              2,508,519    3,275,762           --   Total non-current liabilities         5,284,692   15,787,420           --   Total liabilities                    48,004,952   25,143,645   10,618,779   Minority interest                       561,401      587,197      652,678    Shareholders' equity   Common shares                             7,182        7,206        6,839   Additional paid-in capital          190,694,719  192,365,003  163,820,443   Accumulated profit/(deficit)         43,509,296   28,689,575   -3,300,654   Accumulated other comprehensive    income                              10,862,017   11,571,006    3,502,191   Total shareholders' equity          245,073,214  232,632,790  164,028,819   TOTAL LIABILITIES AND SHAREHOLDERS'    EQUITY                             293,639,567  258,363,632  175,300,276    Note 1: Information extracted from the audited financial statements           included in the 2007 Form 20-F of the Company filed with the           Securities and Exchange Commission on April 3, 2008.                                VISIONCHINA MEDIA INC.                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     (Amounts in USD thousand, except number of shares and per share data)                                                 For three months ended                                             December   September    December                                            31, 2008    30, 2008    31, 2007                                          (Unaudited) (Unaudited) (Unaudited)   Revenues:   Advertising revenue                        34,250      35,871      11,687   Equipment revenue                              --          38         325   Total revenues                             34,250      35,909      12,012   Cost of revenues   Advertising cost                          -14,592     -11,703      -4,111   Equipment cost                                 --         -34        -275   Total cost of revenues                    -14,592     -11,737      -4,386   Gross profit                               19,658      24,172       7,626   Operating expenses:   Selling and marketing                      -4,760      -5,345        -934   General and administrative                 -2,089      -1,517      -1,198   Total operating expenses                   -6,849      -6,862      -2,132   Loss from equity method investees              -5         -38        -482   Operating profit                           12,804      17,272       5,012   Interest income                             1,003         826         409   Government grant                              672          --          --   Other expenses                                 --         -20         -32   Net income before income taxes             14,479      18,078       5,389   Income taxes                                  315         -29         332   Net income after income taxes              14,794      18,049       5,721   Minority interest                              26          25          11   Net income                                 14,820      18,074       5,732   Deemed dividend on convertible    redeemable preferred shares                   --          --      -2,037    Net income attributable to    holders of common shares                  14,820      18,074       3,695   Net income per share:   Basic                                        0.21        0.26        0.11   Diluted                                      0.20        0.25        0.10   Shares used in computation of net    income per share:   Basic                                  72,070,484  70,873,656  32,749,732   Diluted                                73,275,526  73,292,630  59,532,622    Share-based compensation expenses    during the related periods included in:   Cost of revenues                               -9         -10         -11   Selling and marketing expenses               -344        -337         -69   General and administrative expenses          -142         -67         -19   Total                                        -495        -414         -99                               VISIONCHINA MEDIA INC.                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     (Amounts in USD thousand, except number of shares and per share data)                                                    For twelve months ended                                                 December          December                                                 31, 2008          31, 2007                                                (Unaudited)        (Note 1)   Revenues:   Advertising revenue                            103,515            27,489   Equipment revenue                                  565             1,897   Total revenues                                 104,080            29,386   Cost of revenues   Advertising cost                               -40,602           -12,802   Equipment cost                                    -475            -1,583   Total cost of revenues                         -41,077           -14,385   Gross profit                                    63,003            15,001   Operating expenses:   Selling and marketing                          -14,712            -2,149   General and administrative                      -5,414            -2,950   Total operating expenses                       -20,126            -5,099   Loss from equity method investees                 -485            -1,262   Operating profit                                42,392             8,640   Interest income                                  3,480               506   Government grant                                   672                --   Other expenses                                     -39               -96   Net income before income taxes                  46,505             9,050   Income taxes                                       213               332   Net income after income taxes                   46,718             9,382   Minority interest                                   92                11   Net income                                      46,810             9,393   Deemed dividend on convertible    redeemable preferred shares                        --            -6,625    Net income attributable to holders of    common shares                                  46,810             2,768   Net income per share:   Basic                                             0.67              0.11   Diluted                                           0.65              0.11   Shares used in computation of net    income per share:   Basic                                       70,064,663        24,709,522   Diluted                                     72,404,916        25,771,702      Share-based compensation expenses during    the related periods included in:   Cost of revenues                                    -39              -34   Selling and marketing expenses                   -1,164             -136   General and administrative expenses                -264              -51   Total                                            -1,467             -221    Note 1: Information extracted from the audited financial statements           included in the 2007 Form 20-F of the Company filed with the           Securities and Exchange Commission on April 3, 2008.     For investor inquiries, please contact:    In China:    Mrs. Helen Plummer    Investor Relations Officer    VisionChina Media Inc.    Tel:   +86-10-8418-7475    Email: helen.plummer@visionchina.cn     Mr. Derek Mitchell    Ogilvy Financial, Beijing    Tel:   +86-10-8520-6284    Email: derek.mitchell@ogilvy.com    In the United States:    Ms. Jessica Barist Cohen    Ogilvy Financial, New York    Tel:   +1-646-460-9989    Email: jessica.cohen@ogilvy.com    For media inquiries, please contact:     Ms. Ceren Wende    Ogilvy Financial, Beijing    Tel:   +86-10-8520-6514    Email: ceren.wende@ogilvy.com  

Source: VisionChina Media Inc.

CONTACT: For investors inquiries, in China: Mrs. Helen Plummer, Investor
Relations Officer of VisionChina Media Inc., +86-10-8418-7475, or
helen.plummer@visionchina.cn; or Mr. Derek Mitchell of Ogilvy Financial,
Beijing, +86-10-8520-6284, or derek.mitchell@ogilvy.com; in the United States:
Ms. Jessica Barist Cohen of Ogilvy Financial, New York, +1-646-460-9989, or
jessica.cohen@ogilvy.com; for media inquiries: Ms. Ceren Wende of Ogilvy
Financial, Beijing, +86-10-8520-6514, or ceren.wende@ogilvy.com, all for
VisionChina Media Inc.

Web Site: http://www.visionchina.cn/


Profile: International Entertainment

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