| At | At | |||||||
| September 30 | December 31 | |||||||
| 2006 | 2005 | |||||||
| (Unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
| Cash and cash equivalents | $ | 26,153 | $ | 94,321 | ||||
| Available-for-sale securities (Note 1) | 119,263 | 23,982 | ||||||
| Accounts receivable, net | 5,527 | 5,545 | ||||||
| Receivables from sales representatives | 10,766 | 5,659 | ||||||
| Inventory of paper | 951 | 866 | ||||||
| Prepaid expenses and other current assets | 18,743 | 10,585 | ||||||
Total Current Assets | 181,403 | 140,958 | ||||||
| Property and equipment, net | 27,114 | 28,178 | ||||||
| Long term investments | 100 | 100 | ||||||
| Bonds held to maturity, at amortized cost | 484 | 463 | ||||||
| Other assets | 2,987 | 1,981 | ||||||
Total Assets | $ | 212,088 | $ | 171,680 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
| Accounts payable | $ | 7,009 | $ | 5,484 | ||||
| Deferred income and customer prepayments | 68,154 | 52,624 | ||||||
| Accrued liabilities | 11,150 | 6,644 | ||||||
| Income taxes payable | 687 | 405 | ||||||
Total Current Liabilities | 87,000 | 65,157 | ||||||
| Liabilities for incentive and bonus plans | 307 | 307 | ||||||
| Deferred income and customer prepayments — long term | 539 | 348 | ||||||
| Deferred tax liability | 358 | 436 | ||||||
Total Liabilities | 88,204 | 66,248 | ||||||
| Minority interest | 7,656 | 6,191 | ||||||
Shareholders’ equity: | ||||||||
| Common shares, US$0.01 par value; 75,000,000 shares authorized; 38,428,310 (2005: 38,340,310) shares issued and outstanding | 384 | 383 | ||||||
| Additional paid in capital (Note 2) | 122,826 | 127,747 | ||||||
| Retained deficit | (8,629 | ) | (21,199 | ) | ||||
| Less : Unearned compensation (Note 2) | — | (7,900 | ) | |||||
| Accumulated other comprehensive income (Note 1) | 1,647 | 210 | ||||||
Total Shareholders’ Equity | 116,228 | 99,241 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 212,088 | $ | 171,680 | ||||
| Note: 1. | The Company recorded the $14.5 million being approximately 13.09% equity interest in HC International at fair value based on the closing share price of HCI, as at 30 September 2006, of $0.23094 per share, as available-for-sale securities in the financial statements as at September 30, 2006. The unrealized market gain has been credited to accumulated other comprehensive income, shown under shareholders’ equity. |
| Note: 2. | The Company adopted SFAS No. 123(R), “Share Based Payment” with effect from January 1, 2006. The unearned compensation costs associated with the Employee Compensation Plans at the beginning of the year 2006 were reversed as per SFAS No. 123(R). |
| Three months ended | Nine months ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Revenue: | ||||||||||||||||
| Online and other media services (Note 3) | $ | 28,594 | $ | 24,835 | $ | 82,762 | $ | 71,504 | ||||||||
| Exhibitions | 435 | 403 | 20,514 | 7,961 | ||||||||||||
| Miscellaneous | 291 | 123 | 901 | 398 | ||||||||||||
| 29,320 | 25,361 | 104,177 | 79,863 | |||||||||||||
Operating Expenses: | ||||||||||||||||
| Sales | 9,974 | 8,627 | 33,845 | 24,932 | ||||||||||||
| Event production | 129 | 141 | 9,245 | 1,933 | ||||||||||||
| Community | 4,397 | 4,253 | 16,574 | 13,894 | ||||||||||||
| General and administrative | 8,385 | 8,260 | 26,773 | 24,730 | ||||||||||||
| Online services development | 1,189 | 1,040 | 3,212 | 3,012 | ||||||||||||
| Non-cash compensation expense (Note 4) | 1,518 | 512 | 2,622 | 1,323 | ||||||||||||
| Amortization of software cost | 315 | 296 | 922 | 1,006 | ||||||||||||
Total Operating Expenses | 25,907 | 23,129 | 93,193 | 70,830 | ||||||||||||
Income from Operations | 3,413 | 2,232 | 10,984 | 9,033 | ||||||||||||
| Interest and dividend income | 1,426 | 405 | 3,774 | 794 | ||||||||||||
| Gain on sale of available-for-sale securities | 9 | 249 | 309 | 557 | ||||||||||||
| Foreign exchange gains (losses), net | (228 | ) | (257 | ) | (456 | ) | (78 | ) | ||||||||
Income before Income Taxes | 4,620 | 2,629 | 14,611 | 10,306 | ||||||||||||
Income Tax Provision | (153 | ) | (158 | ) | (576 | ) | (475 | ) | ||||||||
Net Income before Minority Interest | $ | 4,467 | $ | 2,471 | $ | 14,035 | $ | 9,831 | ||||||||
| Minority interest | $ | (332 | ) | $ | (150 | ) | $ | (1,465 | ) | $ | (987 | ) | ||||
Net Income | $ | 4,135 | $ | 2,321 | $ | 12,570 | $ | 8,844 | ||||||||
Retained deficit brought forward | $ | (21,199 | ) | $ | (34,577 | ) | ||||||||||
Retained deficit carried forward | $ | (8,629 | ) | $ | (25,733 | ) | ||||||||||
Basic net income per share | $ | 0.11 | $ | 0.06 | $ | 0.33 | $ | 0.24 | ||||||||
Shares used in basic net income per share calculations | 38,428,310 | 38,340,310 | 38,409,614 | 37,347,816 | ||||||||||||
Diluted net income per share | $ | 0.11 | $ | 0.06 | $ | 0.33 | $ | 0.24 | ||||||||
Shares used in diluted net income per share calculations | 38,501,938 | 38,401,174 | 38,484,617 | 37,435,857 | ||||||||||||
| Note: 3. | Online and other media services consists of: |
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Online services | $ | 16,690 | $ | 13,954 | $ | 47,469 | $ | 40,383 | ||||||||
| Print services | 11,904 | 10,881 | 35,293 | 31,121 | ||||||||||||
| $ | 28,594 | $ | 24,835 | $ | 82,762 | $ | 71,504 | |||||||||
| Note: 4. | Reflects the non-cash compensation expenses associated with the employee equity compensation plans and Directors Purchase Plan. | |
| Non-cash compensation includes ($236) (2005: $NIL) being the cumulative effect of change in accounting principle, resulting from the adoption of SFAS123(R) with effect from January 1, 2006, and represents the following categories of expenses: |
| �� | ||||||||||||||||
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Sales | $ | 662 | $ | 128 | $ | 956 | $ | 310 | ||||||||
| Community | 33 | 22 | 74 | 76 | ||||||||||||
| General and administrative | 769 | 305 | 1,466 | 674 | ||||||||||||
| Online services development | 54 | 57 | 126 | 263 | ||||||||||||
| $ | 1,518 | $ | 512 | $ | 2,622 | $ | 1,323 | |||||||||
| Nine months ended September 30 | ||||||||
| 2006 | 2005 | |||||||
| (Unaudited) | (Unaudited) | |||||||
Cash flows from operating activities: | ||||||||
| Net income | $ | 12,570 | $ | 8,844 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation and amortization | 3,370 | 2,887 | ||||||
| Accretion of U.S. Treasury strips zero % coupons | (21 | ) | (29 | ) | ||||
| Profit on sale of equipment | (30 | ) | (10 | ) | ||||
| Equipment written off | 1 | 31 | ||||||
| Unrealised dividend income on available-for-sale securities | (19 | ) | — | |||||
| Unrealised interest income available-for-sale securities | (762 | ) | (19 | ) | ||||
| Bad debt expense | 131 | 32 | ||||||
| Non-cash compensation expense | 2,622 | 1,323 | ||||||
| Income attributable to minority shareholder | 1,465 | 987 | ||||||
| 19,327 | 14,046 | |||||||
Changes in assets and liabilities: | ||||||||
| Accounts receivables | (114 | ) | 91 | |||||
| Receivables from sales representatives | (5,107 | ) | (3,289 | ) | ||||
| Inventory of paper | (85 | ) | (286 | ) | ||||
| Prepaid expenses and other current assets | (8,139 | ) | (4,182 | ) | ||||
| Long term assets | (1,006 | ) | (304 | ) | ||||
| Accounts payable | 1,525 | (104 | ) | |||||
| Accrued liabilities and liabilities for incentive and bonus plans | 4,506 | 353 | ||||||
| Deferred income and customer prepayments | 15,721 | 16,728 | ||||||
| Tax liability | 204 | 116 | ||||||
Net cash provided by operating activities | 26,832 | 23,169 | ||||||
Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (2,307 | ) | (5,080 | ) | ||||
| Sale of equipment | 30 | 11 | ||||||
| Purchase of available-for-sale securities | (404,494 | ) | (257,102 | ) | ||||
| Sale of available-for-sale securities | 311,412 | 214,357 | ||||||
Net cash used in investing activities | (95,359 | ) | (47,814 | ) | ||||
Cash flows from financing activities: | ||||||||
| Proceeds from the issue of common shares, net of share issue expenses | — | 38,303 | ||||||
| Amount received towards directors purchase plan | 359 | 118 | ||||||
Net cash generated from financing activities | 359 | 38,421 | ||||||
| Net increase in cash and cash equivalents | (68,168 | ) | 13,776 | |||||
| Cash and cash equivalents, beginning of the period | 94,321 | 41,195 | ||||||
Cash and cash equivalents, end of the period | $ | 26,153 | $ | 54,971 | ||||
Supplemental cash flow disclosures: | ||||||||
| Income tax paid | $ | 372 | $ | 358 | ||||
