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SECURITIES AND EXCHANGE COMMISSION
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
N/A
(Translation of Registrant’s name into English)
Cayman Islands
(Jurisdiction of incorporation or organization)
17/F, Sky Plaza
No. 46 Dongzhimenwai Street
Dongcheng District, Beijing 100027
People’s Republic of China
(Address of principal executive offices)
Xiaoya Zhang
AirMedia Group Inc.
17/F, Sky Plaza
No. 46 Dongzhimenwai Street
Dongcheng District, Beijing 10027
People’s Republic of China
Phone: +86 10 8438 6868
Email:xiaoyazhang@airmedia.net.cn
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Title of each class | Name of exchange on which each class is to be registered | |
Ordinary shares, par value $0.001 per share* | The NASDAQ Stock Market LLC | |
American Depositary Shares, each representing two ordinary | (The NASDAQ Global Market) | |
shares, par value $0.001 per share |
* | Not for trading, but only in connection with the listing on The Nasdaq Global Market of American depositary shares, each representing two ordinary shares. |
(Title of Class)
(Title of Class)
Large accelerated filero | Accelerated filerþ | Non-accelerated filero |
U.S. GAAPþ | International Financial Reporting Standards as issued by the International Accounting Standards Boardo | Othero |
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Exhibit 4.45 | ||||||||
Exhibit 4.46 | ||||||||
Exhibit 8.1 | ||||||||
Exhibit 12.1 | ||||||||
Exhibit 12.2 | ||||||||
Exhibit 13.1 | ||||||||
Exhibit 13.2 | ||||||||
Exhibit 15.1 | ||||||||
Exhibit 15.2 | ||||||||
Exhibit 15.3 |
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• | “ADSs” refers to our American depositary shares, each of which represents two ordinary shares; |
• | “China” or the “PRC” refers to the People’s Republic of China, excluding, for the purpose of this annual report only, Hong Kong, Macau and Taiwan; |
• | “ordinary shares” refers to our ordinary shares, par value US$0.001 per share; |
• | “preferred shares” refers to our Series A redeemable convertible preferred shares and Series B redeemable convertible preferred shares, all of which were converted into our ordinary shares upon the completion of our initial public offering on November 13, 2007; |
• | references to “RMB” and “Renminbi” are to the legal currency of China; |
• | references to “US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States; and |
• | “we,” “us,” “our company,” “our,” and “AirMedia” refer to AirMedia Group Inc., its subsidiaries and consolidated variable interest entities and their subsidiaries. |
• | our growth strategies; |
• | our future business development, results of operations and financial condition; |
• | our plans to expand our air travel advertising network into additional locations, airports and airlines; |
• | our plans to expand our advertising network into other out-of-home advertising platforms such as billboards and light boxes located at gas stations; |
• | competition in the advertising industry and the air travel advertising industry in China; |
• | the expected growth in consumer spending, average income levels and advertising spending levels; |
• | the growth of the air travel sector in China; and |
• | PRC governmental policies relating to the advertising industry. |
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Period from | ||||||||||||||||||||
August 7, 2005 | ||||||||||||||||||||
to December 31, | Year ended December 31, | |||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
(in thousands, except share, per share and per ADS data) | ||||||||||||||||||||
Consolidated Statements of Operations Data: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Air Travel Media Network | ||||||||||||||||||||
Digital frames in airports | US$ | — | US$ | — | US$ | 1,263 | US$ | 45,011 | US$ | 66,255 | ||||||||||
Digital TV screens in airports | 887 | 10,502 | 26,921 | 47,591 | 37,260 | |||||||||||||||
Digital TV screens on airplanes | 405 | 4,868 | 11,093 | 19,227 | 17,082 | |||||||||||||||
Traditional media in airports | 7 | 2,055 | 1,872 | 6,490 | 27,192 | |||||||||||||||
Other revenues in air travel | 51 | 1,471 | 2,462 | 7,221 | 4,639 | |||||||||||||||
Gas station Media Network | — | — | — | — | 102 | |||||||||||||||
Total revenues | 1,350 | 18,896 | 43,611 | 125,540 | 152,530 | |||||||||||||||
Business tax and other sales tax | (2 | ) | (961 | ) | (1,983 | ) | (6,107 | ) | (3,102 | ) | ||||||||||
Net revenues | 1,348 | 17,935 | 41,628 | 119,433 | 149,428 | |||||||||||||||
Cost of revenues | (3,189 | ) | (10,040 | ) | (21,365 | ) | (70,995 | ) | (147,541 | ) | ||||||||||
Gross profit/(loss) | (1,841 | ) | 7,895 | 20,263 | 48,438 | 1,887 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling and marketing (including share-based compensation of nil, nil, $274, $1,158 and $1,540 in 2005, 2006, 2007, 2008 and 2009, respectively) | (461 | ) | (2,751 | ) | (4,813 | ) | (10,171 | ) | (13,439 | ) | ||||||||||
General and administrative (including share-based compensation of nil, nil, $18,831, $3,805 and $4,226 in 2005, 2006, 2007, 2008 and 2009, respectively) | (376 | ) | (1,293 | ) | (21,982 | ) | (14,374 | ) | (34,936 | ) | ||||||||||
Total operating expenses | (837 | ) | (4,044 | ) | (26,795 | ) | (24,545 | ) | (48,375 | ) | ||||||||||
Income/(loss) from operations | (2,678 | ) | 3,851 | (6,532 | ) | 23,893 | (46,488 | ) | ||||||||||||
Interest income | 3 | 17 | 1,745 | 5,379 | 2,025 | |||||||||||||||
Other income, net | — | — | — | 1,135 | 1,239 | |||||||||||||||
Income/(loss) before income taxes | (2,675 | ) | 3,868 | (4,787 | ) | 30,407 | (43,224 | ) | ||||||||||||
Income tax benefits | 273 | 197 | 195 | 498 | 6,032 | |||||||||||||||
Net income/(loss) before share of income/(loss) on equity method investments | (2,402 | ) | 4,065 | (4,592 | ) | 30,905 | (37,192 | ) | ||||||||||||
Share of income/(loss) on equity method investments | — | — | (520 | ) | (325 | ) | 164 | |||||||||||||
Net income/(loss) | (2,402 | ) | 4,065 | (5,112 | ) | 30,580 | (37,028 | ) | ||||||||||||
Less: Net income/(loss) attributable to noncontrolling interests | — | (1 | ) | (2 | ) | 382 | 211 | |||||||||||||
Net income/(loss) attributable to AirMedia Group Inc.’s shareholders | US$ | (2,402 | ) | US$ | 4,066 | US$ | (5,110 | ) | US$ | 30,198 | (37,239 | ) | ||||||||
Net income/(loss) attributable to AirMedia Group Inc.’s shareholders per ordinary share—basic | US$ | (0.04 | ) | US$ | 0.03 | US$ | (0.12 | ) | US$ | 0.23 | US$ | (0.28 | ) | |||||||
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Period from | ||||||||||||||||||||
August 7, 2005 | ||||||||||||||||||||
to December 31, | Year ended December 31, | |||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
(in thousands, except share, per share and per ADS data) | ||||||||||||||||||||
Net income/(loss) attributable to AirMedia Group Inc.’s shareholders per ordinary share —diluted | US$ | (0.04 | ) | US$ | 0.03 | US$ | (0.12 | ) | US$ | 0.22 | US$ | (0.28 | ) | |||||||
Net income/ (loss) attributable to AirMedia Inc.’s shareholders per ADS —basic(1) | US$ | (0.08 | ) | US$ | 0.06 | US$ | (0.23 | ) | US$ | 0.45 | US$ | (0.57 | ) | |||||||
Net income/ (loss) attributable to AirMedia Inc.’s shareholders per ADS —diluted(1) | US$ | (0.08 | ) | US$ | 0.06 | US$ | (0.23 | ) | US$ | 0.44 | US$ | (0.57 | ) | |||||||
Weighted average shares used in calculating net income/(loss) per ordinary share—basic | 62,400,000 | 62,400,000 | 73,469,589 | 133,603,419 | 131,320,730 | |||||||||||||||
Weighted average shares used in calculating net income/(loss) per ordinary share—diluted | 62,400,000 | 62,400,000 | 73,469,589 | 137,782,135 | 131,320,730 |
(1) | Each ADS represents two ordinary shares. |
As of December 31, | ||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||
Cash | US$ | 2,952 | US$ | 2,086 | US$ | 210,915 | US$ | 161,534 | US$ | 123,754 | ||||||||||
Total assets | 6,371 | 20,547 | 266,859 | 329,891 | 316,651 | |||||||||||||||
Total liabilities | 2,765 | 9,511 | 9,257 | 28,208 | 50,372 | |||||||||||||||
Series A convertible redeemable preferred shares | 12,296 | 13,736 | — | — | — | |||||||||||||||
Series B convertible redeemable preferred shares | — | — | — | — | — | |||||||||||||||
Total AirMedia Group Inc.’s shareholders’ equity | (2,690 | ) | 221 | 257,605 | 300,730 | 263,042 | ||||||||||||||
Noncontrolling interests | — | (1 | ) | (3 | ) | 953 | 3,237 | |||||||||||||
Total equity | (2,690 | ) | 220 | 257,602 | 301,683 | 266,279 |
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Noon Buying Rate | ||||||||||||||||
Period | Period End | Average(1) | Low | High | ||||||||||||
(RMB per US$1.00) | ||||||||||||||||
2004 | 8.2765 | 8.2768 | 8.2774 | 8.2764 | ||||||||||||
2005 | 8.0702 | 8.1826 | 8.2765 | 8.0702 | ||||||||||||
2006 | 7.8041 | 7.9579 | 8.0702 | 7.8041 | ||||||||||||
2007 | 7.2946 | 7.5806 | 7.8127 | 7.2946 | ||||||||||||
2008 | 6.8225 | 6.9459 | 7.2946 | 6.3879 | ||||||||||||
2009 | 6.8259 | 6.8307 | 6.8470 | 6.8176 | ||||||||||||
October | 6.8281 | 6.8267 | 6.8292 | 6.8254 | ||||||||||||
November | 6.8272 | 6.8267 | 6.8300 | 6.8255 | ||||||||||||
December | 6.8282 | 6.8275 | 6.8299 | 6.8244 | ||||||||||||
2010 | ||||||||||||||||
January | 6.8270 | 6.8269 | 6.8295 | 6.8258 | ||||||||||||
February | 6.8269 | 6.8285 | 6.8330 | 6.8258 | ||||||||||||
March | 6.8258 | 6.8262 | 6.8270 | 6.8254 | ||||||||||||
April | 6.8247 | 6.8256 | 6.8275 | 6.8229 | ||||||||||||
May (through May 21) | 6.8262 | 6.8267 | 6.8285 | 6.8245 |
(1) | Annual averages are calculated from month-end rates. Monthly averages are calculated using the average of the daily rates during the relevant period. |
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• | preserve our market position in the air travel advertising market in China; |
• | manage our relationships with airports and airlines to retain existing concession rights contracts and obtain new concession rights contracts on commercially advantageous terms or at all; |
• | retain existing and acquire new advertisers and third party content providers; |
• | secure a sufficient number of low-cost digital frames and digital TV screens from our suppliers; |
• | manage our expanding operations, including effectively integrating acquired businesses; |
• | successfully expand into other advertising media platforms, including traditional media platforms in airports, gas station media platforms and outdoor media platforms; |
• | respond to competitive market conditions; |
• | respond to changes in the PRC regulatory regime; |
• | maintain adequate control of our costs and expenses; or |
• | attract, train, motivate and retain qualified personnel. |
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• | Downturns in the economy. Business travel is one of the primary drivers of the air travel industry; it tends to increase in times of economic growth and decrease in times of economic slowdown. The recent economic downturn has led to an overall lower number of air passengers in China, which may in turn lead to lower advertiser spending on our air travel advertising network. | ||
• | Terrorist attacks or fear of such attacks. The terrorist attacks of September 11, 2001 in the U.S. involving commercial aircraft severely and adversely affected the air travel industry throughout the world. Additional terrorist attacks or fear of such attacks, even if not made directly on the air travel industry, may negatively affect the air travel industry and reduce the demand for air travel. | ||
• | Additional security measures regarding air travel. Terrorist attacks have lead to significantly increased security costs and associated passenger inconvenience. Since September 11, 2001, relevant authorities in the U.S., China and other countries have implemented numerous security measures that affect airport and airline operations and costs. These increasingly stringent security measures have lead to higher costs for airports and airlines and may cause some air travelers to consider other travel options, which may in turn lead to higher concession fees and reduced advertising demand for us. | ||
• | Plane crashes or other accidents. An aircraft crash or other accident could create a public perception that air travel is not safe or reliable, which could result in air travelers being reluctant to fly. Significant aircraft delays due to capacity constraints, weather conditions or mechanical problems could also reduce demand for air travel, especially for shorter domestic flights. |
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• | the integration of new operations, services and personnel; |
• | unforeseen or hidden liabilities; |
• | the diversion of resources from our existing business and technology; or |
• | failure to achieve the intended objectives of our acquisitions. |
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• | investors’ perception of, and demand for, securities of alternative advertising media companies; |
• | conditions of the market; |
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• | our future results of operations, financial condition and cash flows; and |
• | PRC governmental regulation of foreign investment in advertising services companies in China. |
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• | revoking the business and operating licenses of our PRC subsidiaries and affiliates; |
• | discontinuing or restricting our PRC subsidiaries’ and affiliates’ operations; |
• | imposing conditions or requirements with which we or our PRC subsidiaries and affiliates may not be able to comply; or |
• | requiring us or our PRC subsidiaries and affiliates to restructure the relevant ownership structure or operations. |
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• | Our board of directors has the authority to establish from time to time one or more series of preferred shares without action by our shareholders and to determine, with respect to any series of preferred shares, the terms and rights of that series, including the designation of the series, the number of shares of the series, the dividend rights, dividend rates, conversion rights, voting rights, and the rights and terms of redemption and liquidation preferences. |
• | Subject to applicable regulatory requirements, our board of directors may issue additional ordinary shares or rights to acquire ordinary shares without action by our shareholders to the extent of available authorized but unissued shares. |
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• | China Southern Airlines; |
• | China Eastern Airlines; |
• | Air China; |
• | Shanghai Airlines; |
• | Shenzhen Airlines; |
• | Air Macau; |
• | Xiamen Airlines; and |
• | Chengdu Airlines. |
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• | advertising companies that operate airport advertising networks, such as JC Decaux; |
• | in-house advertising companies of airports and airlines that may operate their own advertising networks; and |
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• | other advertising media companies for advertising budgets, such as Internet, street furniture displays, billboard and public transport advertising companies, and with traditional advertising media, such as newspapers, television, magazines and radio, some of which may advertise in the airports in which we have exclusive contract rights to operate digital TV screens and some of which may advertise in the gas stations and other areas where we have our displays. |
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• | we are able to exert effective control over our PRC operating affiliates and their respective subsidiaries; |
• | a substantial portion of the economic benefits of our PRC operating affiliates and their respective subsidiaries are transferred to us; and |
• | we have an exclusive option to purchase all of the equity interests in our PRC operating affiliates in each case when and to the extent permitted by PRC law. |
• | the respective ownership structures of AM Technology and our consolidated variable interest entities are in compliance with existing PRC laws and regulations; |
• | the contractual arrangements among AM Technology and our consolidated variable interest entities, in each case governed by PRC law, are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect; and |
• | except for the SAIC outdoor advertising registrations and the SARFT approval for our non-advertising content, the PRC business operations of our variable interest entities as described in this annual report are in compliance with existing PRC laws and regulations in all material respects. |
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• | utilize traffic safety facilities and traffic signs; |
• | impede the use of public facilities, traffic safety facilities and traffic signs; |
• | obstruct commercial and public activities or create an unpleasant sight in urban areas; |
• | be placed in restrictive areas near government offices, cultural landmarks or historical or scenic sites; or |
• | be placed in areas prohibited by the local governments from having outdoor advertisements. |
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(1) | Dotted line denotes contractual arrangements with variable interest entities and their respective shareholders. | |
(2) | Shengshi Lianhe is 79.86% owned by Herman Man Guo, our founder, chairman, chief executive officer and an ultimate owner of our ordinary shares, 11.94% owned by Qing Xu, our director and an ultimate owner of our ordinary shares and 8.2% owned by Xiaoya Zhang, our president, interim chief financial officer, director and an ultimate owner of our ordinary shares. | |
(3) | AM Advertising is 96.76% owned by Shengshi Lianhe, 2.833% owned by Herman Man Guo, 0.241% owned by Qing Xu and 0.166% owned by Xiaoya Zhang. | |
(4) | AirMedia UC is 98.75% owned by AM Advertising, 1.035% owned by Herman Man Guo and 0.215% owned by Qing Xu. | |
(5) | AM Yuehang is 80% owned by James Zhonghua Feng, our chief operating officer and 20% owned by Tao Hong. |
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Year ended December 31, | ||||||||||||||||||||||||
2007 | 2008 | 2009 | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
Air Travel Media Network | ||||||||||||||||||||||||
Digital frames in airports | US$ | 1,263 | 2.9 | % | US$ | 45,011 | 35.9 | % | US$ | 66,255 | 43.4 | % | ||||||||||||
Digital TV screens in airports | 26,921 | 61.7 | 47,591 | 37.9 | 37,260 | 24.4 | ||||||||||||||||||
Digital TV screens on airplanes | 11,093 | 25.4 | 19,227 | 15.3 | 17,082 | 11.2 | ||||||||||||||||||
Traditional media in airports | 1,872 | 4.3 | 6,490 | 5.2 | 27,192 | 17.8 | ||||||||||||||||||
Other revenues in air travel | 2,462 | 5.7 | 7,221 | 5.7 | 4,639 | 3.1 | ||||||||||||||||||
Gas station Media Network | — | — | — | — | 102 | 0.1 | ||||||||||||||||||
Total revenues | 43,611 | 100.0 | 125,540 | 100.0 | 152,530 | 100.0 | ||||||||||||||||||
Business tax and other sales tax | (1,983 | ) | (4.5 | ) | (6,107 | ) | (4.9 | ) | (3,102 | ) | (2.0 | ) | ||||||||||||
Net revenues | US$ | 41,628 | 95.5 | % | US$ | 119,433 | 95.1 | % | US$ | 149,428 | 98.0 | % | ||||||||||||
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Year ended December 31, | ||||||||||||||||||||||||
2007 | 2008 | 2009 | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
Net revenues | US$ | 41,628 | 100.0 | % | US$ | 119,433 | 100.0 | % | US$ | 149,428 | 100.0 | % | ||||||||||||
Cost of revenues | ||||||||||||||||||||||||
Concession fees | (11,992 | ) | (28.8 | ) | (45,704 | ) | (38.3 | ) | (110,075 | ) | (73.7 | ) | ||||||||||||
Agency fees | (7,172 | ) | (17.2 | ) | (18,164 | ) | (15.2 | ) | (21,356 | ) | (14.2 | ) | ||||||||||||
Others | (2,201 | ) | (5.3 | ) | (7,127 | ) | (6.0 | ) | (16,110 | ) | (10.8 | ) | ||||||||||||
Total cost of revenues | US$ | (21,365 | ) | (51.3 | )% | US$ | (70,995 | ) | (59.4 | )% | US$ | (147,541 | ) | (98.7 | )% | |||||||||
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Year ended December 31, | ||||||||||||||||||||||||
2007 | 2008 | 2009 | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
Net revenues | US$ | 41,628 | 100.0 | % | US$ | 119,433 | 100.0 | % | US$ | 149,428 | 100.0 | % | ||||||||||||
Operating expenses | ||||||||||||||||||||||||
General and administrative expenses | (21,982 | ) | (52.8 | ) | (14,374 | ) | (12.0 | ) | (34,936 | ) | (23.4 | ) | ||||||||||||
Selling and marketing expenses | (4,813 | ) | (11.6 | ) | (10,171 | ) | (8.5 | ) | (13,439 | ) | (9.0 | ) | ||||||||||||
Total operating expenses | US$ | (26,795 | ) | (64.4 | )% | US$ | (24,545 | ) | (20.6 | )% | US$ | (48,375 | ) | (32.4 | )% | |||||||||
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Year ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands, except share, per share and per ADS data) | ||||||||||||
Consolidated Statements of Operations Data: | ||||||||||||
Revenues: | ||||||||||||
Air Travel Media Network | ||||||||||||
Digital frames in airports | US$ | 1,263 | US$ | 45,011 | US$ | 66,255 | ||||||
Digital TV screens in airports | 26,921 | 47,591 | 37,260 | |||||||||
Digital TV screens on airplanes | 11,093 | 19,227 | 17,082 | |||||||||
Traditional media in airports | 1,872 | 6,490 | 27,192 | |||||||||
Other revenues in air travel | 2,462 | 7,221 | 4,639 | |||||||||
Gas Station Media Network | — | — | 102 | |||||||||
Total revenues | 43,611 | 125,540 | 152,530 | |||||||||
Business tax and other sales tax | (1,983 | ) | (6,107 | ) | (3,102 | ) | ||||||
Net revenues | 41,628 | 119,433 | 149,428 | |||||||||
Cost of revenues | (21,365 | ) | (70,995 | ) | (147,541 | ) | ||||||
Gross profit/(loss) | 20,263 | 48,438 | 1,887 | |||||||||
Operating expenses: | ||||||||||||
Selling and marketing (including share-based compensation of $274, $1,158 and $1,540 in 2007, 2008 and 2009, respectively) | (4,813 | ) | (10,171 | ) | (13,439 | ) | ||||||
General and administrative (including share-based compensation of $18,831, $3,805 and $4,226 in 2007, 2008 and 2009, respectively) | (21,982 | ) | (14,374 | ) | (34,936 | ) | ||||||
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Year ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands, except share, per share and per ADS data) | ||||||||||||
Total operating expenses | (26,795 | ) | (24,545 | ) | (48,375 | ) | ||||||
Income/(loss) from operations | (6,532 | ) | 23,893 | (46,488 | ) | |||||||
Interest income | 1,745 | 5,379 | 2,025 | |||||||||
Other income, net | — | 1,135 | 1,239 | |||||||||
Income tax benefits | 195 | 498 | 6,032 | |||||||||
Net income/(loss) attributable to noncontrolling interests | (2 | ) | 382 | 211 | ||||||||
Share of income/(loss) on equity method investments | (520 | ) | (325 | ) | 164 | |||||||
Net income/(loss) attributable to AirMedia Group Inc.’s shareholders | US$ | (5,110 | ) | US$ | 30,198 | US$ | (37,239 | ) | ||||
Year ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Selected Operating Data: | ||||||||||||
Digital frames in airports | ||||||||||||
Number of airports in operation | 1 | 22 | 31 | |||||||||
Number of digital frames in our network airports as of year end | 90 | 2,156 | 3,056 | |||||||||
Number of time slots available for sale(1) | 354 | 48,570 | 109,455 | |||||||||
Number of time slots sold(2) | 128 | 9,559 | 26,983 | |||||||||
Utilization rate(3) | 36.2 | % | 19.7 | % | 24.7 | % | ||||||
Average advertising revenue per time slot sold(4) | US$ | 9,841 | US$ | 4,709 | US$ | 2,455 | ||||||
Digital TV screens in airports | ||||||||||||
Number of airports in operation | 39 | 41 | 40 | |||||||||
Number of screens in our network airports as of year end | 2,041 | 2,854 | 2,231 | |||||||||
Number of time slots available for sale(5) | 77,574 | 100,624 | 102,322 | |||||||||
Number of time slots sold(2) | 28,359 | 27,223 | 23,911 | |||||||||
Utilization rate(3) | 36.6 | % | 27.1 | % | 23.4 | % | ||||||
Average advertising revenue per time slot sold(4) | US$ | 949 | US$ | 1,748 | US$ | 1,558 | ||||||
Digital TV screens on airplanes | ||||||||||||
Number of airlines in operation | 9 | 9 | 9 | |||||||||
Number of time slots available for sale(5) | 1,752 | 1,878 | 1,908 | |||||||||
Number of time slots sold(2) | 845 | 962 | 838 | |||||||||
Utilization rate(3) | 48.2 | % | 51.2 | % | 43.9 | % | ||||||
Average advertising revenue per time slot sold(4) | US$ | 13,132 | US$ | 19,992 | US$ | 20,384 | ||||||
Traditional media in airports | ||||||||||||
Numbers of locations available for sale(6) | — | — | 3,564 | |||||||||
Numbers of locations sold(7) | — | — | 1,271 | |||||||||
Utilization rate(8) | — | — | 35.7 | % | ||||||||
Average advertising revenue per location(9) | — | — | US$ | 21,394 |
(1) | We define a time slot for digital frames as a 12-second equivalent advertising time unit for digital frames in airports, which is shown during each standard advertising cycle on a weekly basis in a given airport. Our standard 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 length of time slot and advertising program cycle of some digital frames in several airports are different from the standard ones. The number of time slots available for our digital frames in airports during the period presented is calculated by multiplying the number of 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. | |
(2) | Number of time slots for digital frames, digital TV screens in airports or digital TV screens on airplanes sold refers to the number of 12-second equivalent advertising time units for digital frames in airports or 30-second equivalent advertising time units for digital TV screens in airports and digital TV screens on airplanes sold during the period presented. | |
(3) | Utilization rate refers to total time slots for digital frames in airports, digital TV screens in airports and digital TV screens on airplanes sold as a percentage of total time slots available for sale during the relevant period. | |
(4) | 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 frames in airports, digital TV screens in airports and digital TV screens on airplanes by its own number of time slots sold, respectively. |
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(5) | We define a time slot for digital TV screens 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 number of 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. | |
(6) | We define the number of locations available for sale in traditional media as the sum of (1) the number of light boxes and billboards in Beijing, Shenzhen, Wenzhou and certain other airports, and (2) the number of gate bridges in airports where we have concession rights to place advertisements on gate bridges. | |
(7) | Number of locations sold is defined as the sum of (1) the number of light boxes and billboards sold and (2) the number of gate bridges sold. To calculate the number of light boxes and billboards sold in a given airport, we first calculate the “utilization rates of light boxes and billboards” in such airport by dividing the “total value of light boxes and billboards sold” in such airport by the “total value of light boxes and billboards” in such airport. The ��total value of light boxes and billboards sold” in a given airport is calculated as the respective daily listing prices of light boxes and billboards sold multiplied by their respective number of days sold during the period presented. The “total value of light boxes and billboards” in a given airport is calculated as the sum of listing prices of all the light boxes and billboards during the period presented. The number of light boxes and billboards sold in a given airport is then calculated as the number of light boxes and billboards available for sale in such airport multiplied by the utilization rates of light boxes and billboards in such airport. The number of gate bridges sold in a given airport is counted based on the contracts. | |
(8) | Utilization rate for traditional media in airports refers to total locations sold as a percentage of total locations available for sale during the period presented. | |
(9) | Average advertising revenue per location sold is calculated by dividing the revenues derived from all the locations sold by the number of locations sold during the period presented. |
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• | Selling and Marketing Expenses. Our selling and marketing expenses increased by 32.1% from US$10.2 million in 2008 to US$13.4 million in 2009. This increase was primarily due to the expansion of the direct sales force and increased share-based compensation expenses. |
• | General and Administrative Expenses. Our general and administrative expenses increased by 143.0% from US$14.4 million in 2008 to US$34.9 million in 2009, primarily due to higher bad-debt provisions, increased amortization of acquired intangible assets, headcount increase, increased expenses of office and utilities, and increased share-based compensation expenses. We recorded a US$13.6 million bad-debt provision in 2009, compared with US$1.0 million in 2008. In response to significant budget cuts by multinational corporation advertisers in 2009, we provided services to some new, smaller domestic advertising agencies and domestic as in 2009, which resulted in significant increase in our doubtful accounts. |
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• | Selling and Marketing Expenses. Our selling and marketing expenses increased from US$4.8 million in 2007 to US$10.2 million in 2008. This increase was primarily due to the expansion of the direct sales force and higher marketing expenses. |
• | General and Administrative Expenses. Our general and administrative expenses decreased from US$22.0 million in 2007 to US$14.4 million in 2008. Our general and administrative expenses excluding share-based compensation expense increased from US$3.2 million in 2007 to US$10.5 million in 2008, primarily due to the increase in the number of our administrative staff in support of our growing operations and our compliance with Section 404 of the Sarbanes-Oxley Act. |
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Year ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands) | ||||||||||||
Net cash provided by (used in) operating activities | US$ | (6,510 | ) | US$ | 3,586 | US$ | 8,858 | |||||
Net cash used in investing activities | (15,673 | ) | (56,692 | ) | (42,644 | ) | ||||||
Net cash provided by (used in) financing activities | 229,989 | 789 | (3,913 | ) | ||||||||
Effect of exchange rate changes on cash | 1,023 | 2,936 | (81 | ) | ||||||||
Net increase (decrease) in cash | 208,829 | (49,381 | ) | (37,780 | ) | |||||||
Cash at the beginning of the period | 2,086 | 210,915 | 161,534 | |||||||||
Cash at the end of the period | 210,915 | 161,534 | 123,754 |
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Payment Due by Period | ||||||||||||||||||||
2015 and | ||||||||||||||||||||
Total | 2010 | 2011-2012 | 2013-2014 | thereafter | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Operating lease agreements. | US$ | 3,805 | US$ | 2,415 | US$ | 1,390 | US$ | — | US$ | — | ||||||||||
Concession rights contracts | 335,893 | 133,026 | 142,591 | 36,932 | 23,344 | |||||||||||||||
Total | US$ | 339,698 | US$ | 135,441 | US$ | 143,981 | US$ | 36,932 | US$ | 23,344 | ||||||||||
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Directors and Executive Officers | Age | Position/Title | ||||
Herman Man Guo | 47 | Chairman and Chief Executive Officer | ||||
Xiaoya Zhang | 48 | Director, President and Interim Chief Financial Officer | ||||
Qing Xu | 49 | Director | ||||
Shichong Shan | 79 | Independent Director | ||||
Donglin Xia | 49 | Independent Director | ||||
Junjie Ding | 46 | Independent Director | ||||
Songzuo Xiang | 45 | Independent Director | ||||
James Zhonghua Feng | 39 | Chief Operating Officer | ||||
Jacky Jian Li | 53 | President of Operations | ||||
Wei He | 35 | Chief Public Relations Officer |
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Ordinary | ||||||||||||||||
Shares | Exercise | |||||||||||||||
Underlying | Price | |||||||||||||||
Name | Options | (US$/Share) | Date of Grant | Date of Expiration | ||||||||||||
Herman Man Guo | 2,000,000 | 2.00 | July 2, 2007 | July 2, 2017 | ||||||||||||
Xiaoya Zhang | 1,000,000 | 2.00 | July 2, 2007 | July 2, 2017 | ||||||||||||
500,000 | 2.69 | July 10, 2009 | July 10, 2014 | |||||||||||||
Shichong Shan | * | 2.00 | July 20, 2007 | July 20, 2017 | ||||||||||||
Donglin Xia | * | 2.98 | (1) | November 29, 2007 | November 29, 2012 | |||||||||||
Junjie Ding | * | 2.69 | July 10, 2009 | July 10, 2014 | ||||||||||||
Songzuo Xiang | * | 2.69 | July 10, 2009 | July 10, 2014 | ||||||||||||
James Zhonghua Feng | 625,514 | 2.00 | July 2, 2007 | July 2, 2017 | ||||||||||||
150,000 | 2.00 | July 20, 2007 | July 20, 2017 | |||||||||||||
110,000 | 2.98 | (1) | November 29, 2007 | November 29, 2012 | ||||||||||||
840,000 | 2.69 | July 10, 2009 | July 10, 2014 | |||||||||||||
Jacky Jian Li | * | 2.00 | July 20, 2007 | July 20, 2017 | ||||||||||||
* | 2.69 | July 10, 2009 | July 10, 2014 | |||||||||||||
Wei He | * | 2.00 | July 20, 2007 | July 20, 2017 | ||||||||||||
* | 2.69 | July 10, 2009 | July 10, 2014 | |||||||||||||
Other individuals as a group | 2,720,484 | 2.00 | July 20, 2007 | July 20, 2017 | ||||||||||||
Other individuals as a group | 2,128,002 | 2.98 | (1) | November 29, 2007 | November 29, 2012 | |||||||||||
Other individuals as a group | 3,893,500 | 2.69 | July 10, 2009 | July 10, 2014 |
* | Aggregate beneficial ownership of our company by such officer or director is less than 1% of our total outstanding ordinary shares. | |
(1) | On December 10, 2008, to provide better incentive to our employees, our board of directors approved an adjustment to the exercise price of the stock options previously granted on November 29, 2007. The exercise price of each option was originally $8.50 per ordinary share. The revised exercise price for each option is $2.98 per ordinary share. |
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• | selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
• | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
• | reviewing and approving all proposed related-party transactions on an ongoing basis; |
• | discussing the annual audited financial statements with management and the independent auditors; |
• | reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies; |
• | annually reviewing and reassessing the adequacy of our audit committee charter; |
• | other matters specifically delegated to our audit committee by our board of directors from time to time; |
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• | meeting separately and periodically with management and the independent auditors; and |
• | reporting regularly to the full board of directors. |
• | reviewing and recommending to the board with respect to the total compensation package for our four most senior executives; |
• | approving and overseeing the total compensation package for our executives other than the four most senior executives; |
• | reviewing and making recommendations to the board with respect to the compensation of our directors; and |
• | reviewing periodically and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. |
Number of | ||||||||
Employees | % of Total | |||||||
Sales and Marketing Department | 370 | 46.5 | % | |||||
Quality Control and Technology Department | 164 | 20.6 | ||||||
Programming Department | 36 | 4.5 | ||||||
Resources Development Department | 58 | 7.3 | ||||||
General Administrative and Accounting | 167 | 21.1 | ||||||
Total | 795 | 100.0 | % | |||||
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• | each of our directors and executive officers; and |
• | each person known to us to own beneficially more than 5.0% of our ordinary shares. |
Shares Beneficially Owned | ||||||||
Number | % | |||||||
Directors and Executive Officers: | ||||||||
Herman Man Guo(1) | 49,449,312 | 37.17% | ||||||
Qing Xu(2) | 6,550,560 | 4.99 | ||||||
Xiaoya Zhang(3) | 1,329,524 | 1.01 | ||||||
Shichong Shan | * | * | ||||||
Donglin Xia | * | * | ||||||
Junjie Ding | * | * | ||||||
Songzuo Xiang | * | * | ||||||
James Zhonghua Feng | * | * | ||||||
Jacky Jian Li | * | * | ||||||
Wei He | * | * | ||||||
Principal Shareholders: | ||||||||
Wealthy Environment Limited(4) | 37,615,980 | 28.67% | ||||||
Global Gateway Investments Limited(5) | 26,100,000 | 19.9 | ||||||
Global Earning Pacific Limited (6) | 10,000,000 | 7.62 |
* | Aggregate beneficial ownership of our company by such director or officer is less than 1% of our total outstanding ordinary shares. | |
(1) | Includes (i) 37,615,980 ordinary shares held by Wealthy Environment Limited, a BVI company wholly owned by Mr. Guo, (ii) 1,833,332 ordinary shares issuable upon exercise of options held by Mr. Guo that are exercisable within 60 days after April 30, 2010 and (iii) 10,000,000 ordinary shares held by Global Earnings Pacific Limited, a BVI company wholly owned and controlled by Dan Shao, Mr. Guo’s wife. Mr. Guo disclaims beneficial ownership of the ordinary shares held by Global Earnings Pacific Limited. The business address of Mr. Guo is 17/F, Sky Plaza, No.46 of Dongzhimenwai Street, Dongcheng District, Beijing, China. |
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(2) | Includes (i) 5,000,000 ordinary shares held by Mambo Fiesta Limited, a BVI company wholly owned by Mr. Xu, and (ii) 1,550,560 ordinary shares held by Mambo Fiesta Limited, in the form of ADSs. The business address of Mr. Xu is 17/F, Sky Plaza, No.46 of Dongzhimenwai Street, Dongcheng District, Beijing, China. | |
(3) | Includes 287,858 ordinary shares held by Great Bridges International Corporation, a BVI company wholly owned by Mr. Zhang, and 1,041,666 ordinary shares issuable upon exercise of options held by Mr. Zhang that are exercisable within 60 days after April 30, 2010. The business address of Mr. Zhang is 17/F, Sky Plaza, No.46 of Dongzhimenwai Street, Dongcheng District, Beijing, China. | |
(4) | Wealthy Environment Limited, a company incorporated in BVI, is wholly owned and controlled by Herman Man Guo. The registered address of Wealthy Environment Limited is P.O. Box 173, Kingston Chambers, Road Town Tortola, BVI. | |
(5) | All of the issued and outstanding shares of Global Gateway Investments Limited are wholly owned by CDH China Growth Capital Fund II, a Cayman Islands exempted limited partnership. CDH China Growth Capital Holdings Company Limited, or CDH Growth Capital Holdings, a Cayman Islands exempted limited liability company, is the general partner of CDH Fund II and has the power to direct CDH Fund II as to the voting and disposition of shares directly and indirectly held by CDH Fund II. The investment committee of CDH Growth Capital Holdings comprises Wu Shangzhi, Jiao Shuge and Liu Xinlai. Changes to the investment committee require the approval of the directors of CDH Growth Capital Holdings. The directors of CDH Growth Capital Holdings are nominated by the principal shareholders of CDH Growth Capital Holdings, being (1) an affiliate of Capital Z Partners, (2) an affiliate of the Government of Singapore Investment Corporation, and (3) China Diamond Holdings II, L.P., a BVI limited partnership controlled by senior members of the CDH Fund II investment team. The registered address for Global Gateway Investments Limited is P.O. Box 957, Offshore Incorporation Centre, Road Town, Tortola, BVI. | |
(6) | Global Earning Pacific Limited, a company incorporated in BVI, is wholly owned and controlled by Dan Shao, Mr. Herman Man Guo’s wife. The registered address of Global Earning Pacific Limited is OMCChambers, Wickham Cay 1, Road Town Tortola, BVI. |
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Trading Price | ||||||||
High | Low | |||||||
US$ | US$ | |||||||
Annual High and Low | ||||||||
2008 | 26.51 | 3.85 | ||||||
2009 | 9.26 | 3.80 | ||||||
Quarterly Highs and Lows | ||||||||
First Quarter 2008 | 26.51 | 15.01 | ||||||
Second Quarter 2008 | 21.96 | 12.91 | ||||||
Third Quarter 2008 | 15.06 | 6.43 | ||||||
Fourth Quarter 2008 | 7.70 | 3.85 | ||||||
First Quarter 2009 | 6.08 | 3.80 | ||||||
Second Quarter 2009 | 8.10 | 4.18 | ||||||
Third Quarter 2009 | 8.38 | 5.19 | ||||||
Fourth Quarter 2009 | 9.26 | 6.55 | ||||||
First Quarter 2010 | 8.90 | 5.92 | ||||||
Monthly Highs and Lows | ||||||||
2009 | ||||||||
November | 8.75 | 6.55 | ||||||
December | 8.82 | 7.02 | ||||||
2010 | ||||||||
January | 8.90 | 7.55 | ||||||
February | 8.06 | 6.16 | ||||||
March | 7.98 | 5.92 | ||||||
April | 6.61 | 6.00 | ||||||
May (through May 27) | 6.49 | 4.05 |
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• | certain financial institutions; |
• | insurance companies; |
• | broker dealers; |
• | traders that elect to mark to market treatment; |
• | partnerships and their partners |
• | tax-exempt organization (including private foundations); |
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• | persons liable for alternative minimum tax; |
• | regulated investment companies; |
• | certain expatriates or former long-term residents of the United States; |
• | governments or agencies or instrumentalities thereof; |
• | persons holding an ADS or ordinary share as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; |
• | persons who own (directly, indirectly or constructively) 10% or more of our voting stock; |
• | persons who acquired ADSs or ordinary shares pursuant to the exercise of any employee stock options or otherwise as compensation; or |
• | persons holding ADSs or ordinary shares through partnerships or other pass-through entities; |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or other entity subject to tax as a corporation for U.S. federal income tax purposes) that is created or organized in or under the laws of the United States, any state or the District of Columbia; |
• | an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
• | a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
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• | at least 75% of its gross income is passive income, or |
• | at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). |
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• | the excess distribution or gain will be allocated ratably over his or her holding period for the ADSs or ordinary shares; |
• | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income; and |
• | the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
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Persons depositing or withdrawing shares must pay: | For: | |
US$5.00 per 100 ADSs (or portion of 100 ADSs) | • Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property | |
• Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates | ||
US$0.05 (or less) per ADS | • Any cash distribution to registered ADS holders | |
A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for issuance of ADSs | • Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to registered ADS holders | |
US$0.05 (or less) per ADSs per calendar year (if the depositary has not collected any cash distribution fee during that year) | • Depositary services | |
Expenses of the depositary | • Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) | |
• Converting foreign currency to U.S. dollars | ||
Registration or transfer fees | • Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares | |
Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes | • As necessary | |
Any charges incurred by the depositary or its agents for servicing the deposited securities | • As necessary |
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• | approximately US$65.4 million for the purchase of digital displays and other equipments and the construction of gas station media platforms; |
• | approximately US$12.6 million for business acquisitions and the purchase of intangible assets; |
• | approximately US$7.4 million for share repurchases; and |
• | approximately US$1.8 million for the purchase of long-term investments. |
• | approximately US$19.8 million to fund capital expenditure. |
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/s/ Deloitte Touche Tohmatsu CPA Ltd. |
May 28, 2010
For the Year Ended December 31, | ||||||||
2008 | 2009 | |||||||
Audit fees(1) | US$ | 1,300,546 | US$ | 1,148,578 | ||||
Audit-related fees(2) | — | — | ||||||
Tax fees(3) | — | — | ||||||
All other fees(4) | US$ | 128,551 | US$ | 45,452 |
(1) | “Audit fees” means the aggregate fees billed for professional services rendered by our principal auditors for the audit of our annual financial statements and the review of our comparative interim financial statements and also the other assurance services rendered in connection with our F-3 and S-8 filing incurred in 2009. | |
(2) | “Audit related fees” represents aggregate fees billed for professional services rendered by our principal auditors for the assurance and related services, which mainly included the financial due diligence services rendered by our principal auditors. |
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(3) | “Tax fees” represents aggregate fees billed for professional services rendered by our principal auditors for tax compliance, tax advice, and tax planning. | |
(4) | “All other fees” represents aggregate fees billed for professional services rendered by our principal auditors, other than the audit fees and audit-related fees, which mainly included tax consulting fees. |
Maximum Number (or | ||||||||||||||||
Total Number of ADSs | Approximate Dollar | |||||||||||||||
Purchased as Part of | Value) of ADSs that May | |||||||||||||||
(a) Total Number of | Average Price Paid per | Publicly Announced | Yet be Purchased Under | |||||||||||||
Period | ADSs Purchased | ADS | Program(1) | the Program | ||||||||||||
Month #1 (January 2009) | 152,905 | 5.05 | 152,905 | US$ | 49,228,576.5 | |||||||||||
Month #2 (February 2009) | 436,479 | 4.71 | 436,479 | 47,173,813.6 | ||||||||||||
Month #3 (March 2009) | 1,057,118 | 4.31 | 1,057,118 | 42,613,206.1 | ||||||||||||
Total | 1,646,502 | 4.69 | 1,646,502 | US$ | 42,613,206.1 | |||||||||||
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Exhibit Number | Description of Document | |||
1.1 | Amended and Restated Memorandum and Articles of Association (incorporated by reference to Exhibit 99.3 of Form 6-K (File No. 001-33765), filed with the Commission on December 10, 2009) | |||
2.1 | Registrant’s Specimen Certificate for Ordinary Shares (incorporated by reference to Exhibit 4.2 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
2.2 | Form of Deposit Agreement among the Registrant, the depositary and holder of the American Depositary Receipts (incorporated by reference to Exhibit 4.3 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
2.3 | Amended and Restated Shareholders’ Agreement originally dated as of June 7, 2007, as amended and restated on September 27, 2007, among the Company and Shareholders (incorporated by reference to Exhibit 4.4 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.1 | Amended and Restated 2007 Share Incentive Plan (incorporated by reference to Exhibit 99.2 of Form 6-K (File No. 001-33765), filed with the Commission on December 10, 2009) |
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Exhibit Number | Description of Document | |||
4.2 | Form of Indemnification Agreement with the Registrant’s directors and officers (incorporated by reference to Exhibit 10.2 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.3 | Form of Employment Agreement between the Registrant and an Executive Officer of the Registrant (incorporated by reference to Exhibit 10.3 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.4 | Investment Framework Agreement dated October 18, 2005, as amended on September 27, 2007, among Man Guo, Qing Xu and CDH China Management Company Limited (incorporated by reference to Exhibit 10.4 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.5 | English Translation of Business Cooperation Agreement dated June 14, 2007 between Beijing Shengshi Lianhe Advertising Co., Ltd. and AirTV United Media & Culture Co., Ltd. (incorporated by reference to Exhibit 10.9 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.6 | English Translation of Business Cooperation Agreement dated June 14, 2007 between Beijing AirMedia Advertising Co., Ltd. and AirTV United Media & Culture Co., Ltd. (incorporated by reference to Exhibit 10.10 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.7 | English Translation of Amended Power of Attorneys dated November 28, 2008 from each of the shareholders of Beijing Shengshi Lianhe Advertising Co., Ltd. (incorporated by reference to Exhibit 4.11 of our annual report on Form 20-F (File No.001-33765), filed with the Commission on April 28, 2009) | |||
4.8 | English Translation of Amended and Restated Technology Development Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing Shengshi Lianhe Advertising Co., Ltd. (incorporated by reference to Exhibit 10.12 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.9 | English Translation of Supplementary Agreement dated November 30, 2007 to the Amended and Restated Technology Development Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing Shengshi Lianhe Advertising Co., Ltd. (incorporated by reference to Exhibit 10.1 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 30, 2008) | |||
4.10 | English Translation of Amended and Restated Technology Support and Service Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing Shengshi Lianhe Advertising Co., Ltd. (incorporated by reference to Exhibit 10.13 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.11 | English Translation of Supplementary Agreement dated November 30, 2007 to the Amended and Restated Technology Support and Service Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing Shengshi Lianhe Advertising Co., Ltd. (incorporated by reference to Exhibit 10.2 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 30, 2008) |
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Exhibit Number | Description of Document | |||
4.12 | English Translation of Amended and Restated Equity Pledge Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing Shengshi Lianhe Advertising Co., Ltd. and the shareholders of Beijing Shengshi Lianhe Advertising Co., Ltd. (incorporated by reference to Exhibit 10.14 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.13 | English Translation of Supplementary Agreement dated November 28, 2008 to the Amended and Restated Equity Pledge Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing Shengshi Lianhe Advertising Co., Ltd. and the shareholders of Beijing Shengshi Lianhe Advertising Co., Ltd. (incorporated by reference to Exhibit 4.17 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.14 | English Translation of Amended and Restated Call Option Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing Shengshi Lianhe Advertising Co., Ltd. and the shareholders of Beijing Shengshi Lianhe Advertising Co., Ltd. (incorporated by reference to Exhibit 10.15 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.15 | English Translation of Supplementary Agreement dated November 28, 2008 to the Amended and Restated Call Option Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing Shengshi Lianhe Advertising Co., Ltd. and the shareholders of Beijing Shengshi Lianhe Advertising Co., Ltd. (incorporated by reference to Exhibit 4.19 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.16 | English Translation of Amended Power of Attorneys dated November 28, 2008 from the shareholders of Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 4.20 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.17 | English Translation of Amended and Restated Technology Development Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 10.17 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.18 | English Translation of Supplementary Agreement dated November 30, 2007 to the Amended and Restated Technology Development Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 10.3 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 30, 2008) | |||
4.19 | English Translation of Amended and Restated Technology Support and Service Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 10.18 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.20 | English Translation of Supplementary Agreement dated November 30, 2007 to the Amended and Restated Technology Support and Service Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 10.4 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 30, 2008) |
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Exhibit Number | Description of Document | |||
4.21 | English Translation of Amended and Restated Equity Pledge Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia Advertising Co., Ltd. and the shareholders of Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 10.19 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.22 | English Translation of Supplementary Agreement No. 1 dated June 19, 2008 to the Amended and Restated Equity Pledge Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia Advertising Co., Ltd. and the shareholders of Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 4.26 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.23 | English Translation of Supplementary Agreement No. 2 dated November 28, 2008 to the Amended and Restated Equity Pledge Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia Advertising Co., Ltd. and the shareholders of Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 4.27 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.24 | English Translation of Amended and Restated Call Option Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia Advertising Co., Ltd. and the shareholders of Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 10.20 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.25 | English Translation of Supplementary Agreement No. 1 dated June 19, 2008 to the Amended and Restated Call Option Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia Advertising Co., Ltd. and the shareholders of Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 4.29 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.26 | English Translation of Supplementary Agreement No. 2 dated November 28, 2008 to the Amended and Restated Call Option Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia Advertising Co., Ltd. and the shareholders of Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 4.30 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.27 | English Translation of Supplementary Agreement dated November 28, 2008 to the Loan Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd. and Guo Man, a shareholder of Beijing AirMedia Advertising Co., Ltd. (incorporated by reference to Exhibit 4.31 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.28 | English Translation of Amended Power of Attorneys dated November 28, 2008 from the shareholders of Beijing AirMedia UC Advertising Co., Ltd. (incorporated by reference to Exhibit 4.32 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.29 | English Translation of Technology Development Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing AirMedia UC Advertising Co., Ltd. (incorporated by reference to Exhibit 10.22 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) |
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Exhibit Number | Description of Document | |||
4.30 | English Translation of Supplementary Agreement dated November 30, 2007 to the Amended and Restated Technology Development Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing AirMedia UC Advertising Co., Ltd. (incorporated by reference to Exhibit 10.5 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 30, 2008) | |||
4.31 | English Translation of Technology Support and Service Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing AirMedia UC Advertising Co., Ltd. (incorporated by reference to Exhibit 10.23 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.32 | English Translation of Supplementary Agreement dated November 30, 2007 to the Amended and Restated Technology Support and Service Agreement dated June 14, 2007 between AirMedia Technology (Beijing) Co., Ltd. and Beijing AirMedia UC Advertising Co., Ltd. (incorporated by reference to Exhibit 10.6 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 30, 2008) | |||
4.33 | English Translation of Equity Pledge Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia UC Advertising Co., Ltd. and the shareholders of Beijing AirMedia UC Advertising Co., Ltd. (incorporated by reference to Exhibit 10.24 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.34 | English Translation of Supplementary Agreement dated November 28, 2008 to the Equity Pledge Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia UC Advertising Co., Ltd. and the shareholders of Beijing AirMedia UC Advertising Co., Ltd. (incorporated by reference to Exhibit 4.38 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.35 | English Translation of Call Option Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia UC Advertising Co., Ltd. and the shareholders of Beijing AirMedia UC Advertising Co., Ltd. (incorporated by reference to Exhibit 10.25 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
4.36 | English Translation of Supplementary Agreement dated November 28, 2008 to the Call Option Agreement dated June 14, 2007 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia UC Advertising Co., Ltd. and the shareholders of Beijing AirMedia UC Advertising Co., Ltd. (incorporated by reference to Exhibit 4.40 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.37 | English Translation of Supplementary Agreement dated October 31, 2008 among AirMedia Technology (Beijing) Co., Ltd. and the shareholders of Beijing AirMedia UC Advertising Co., Ltd., supplementing the original Loan Agreement dated January 1, 2007 (incorporated by reference to Exhibit 4.41 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.38 | English Translation of Power of Attorneys dated April 1, 2008 from each of the shareholders of Beijing Yuehang Digital Media Advertising Co., Ltd. (incorporated by reference to Exhibit 4.42 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.39 | English Translation of Technology Development Agreement dated April 1, 2008 between AirMedia Technology (Beijing) Co., Ltd. and Beijing Yuehang Digital Media Advertising Co., Ltd. (incorporated by reference to Exhibit 4.43 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) |
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Exhibit Number | Description of Document | |||
4.40 | English Translation of Technology Support and Service Agreement dated April 1, 2008 between AirMedia Technology (Beijing) Co., Ltd. and Beijing Yuehang Digital Media Advertising Co., Ltd. (incorporated by reference to Exhibit 4.44 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.41 | English Translation of Supplementary Agreement dated June 25, 2008 to the Technology Support and Service Agreement dated April 1, 2008 between AirMedia Technology (Beijing) Co., Ltd. and Beijing Yuehang Digital Media Advertising Co., Ltd. (incorporated by reference to Exhibit 4.45 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.42 | English Translation of Equity Pledge Agreement dated April 1, 2008 among AirMedia Technology (Beijing) Co., Ltd., Beijing Yuehang Digital Media Advertising Co., Ltd. and the shareholders of Beijing Yuehang Digital Media Advertising Co., Ltd. (incorporated by reference to Exhibit 4.46 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.43 | English Translation of Call Option Agreement dated April 1, 2008 among AirMedia Technology (Beijing) Co., Ltd., Beijing Yuehang Digital Media Advertising Co., Ltd. and the shareholders of Beijing Yuehang Digital Media Advertising Co., Ltd. (incorporated by reference to Exhibit 4.47 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.44 | Share Purchase Agreement dated July 4, 2008 among the Registrant, First Reach Holdings Limited and Excel Lead International Limited (incorporated by reference to Exhibit 4.48 of our annual report on Form 20-F (File No. 001-33765) filed with the Commission on April 28, 2009) | |||
4.45 | * | English Translation of Supplementary Agreement No. 2 to Call Option Agreement dated May 27, 2010 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia UC Advertising Co., Ltd. and the shareholders of Beijing AirMedia UC Advertising Co., Ltd. | ||
4.46 | * | English Translation of Supplementary Agreement No. 2 to the Equity Pledge Agreement dated May 27, 2010 among AirMedia Technology (Beijing) Co., Ltd., Beijing AirMedia UC Advertising Co., Ltd. and the shareholders of Beijing AirMedia UC Advertising Co., Ltd. | ||
8.1 | * | Subsidiaries of the Registrant | ||
11.1 | Code of Business Conduct and Ethics of the Registrant (incorporated by reference to Exhibit 99.1 of our F-1 registration statement (File No. 333-146825), as amended, initially filed with the Commission on October 19, 2007) | |||
12.1 | * | Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
12.2 | * | Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
13.1 | * | Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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Exhibit Number | Description of Document | |||
13.2 | * | Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
15.1 | * | Consent of Deloitte Touche Tohmatsu CPA Ltd. | ||
15.2 | * | Consent of Commerce & Finance Law Offices | ||
15.3 | * | Consent of Maples and Calder |
* | Filed with this Annual Report on Form 20-F |
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AIRMEDIA GROUP INC. | ||||
By: | /s/ Herman Man Guo | |||
Name: | Herman Man Guo | |||
Title: | Chairman and Chief Executive Officer |
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS | PAGE(S) | |||
F-1 | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-57 |
Table of Contents
Beijing, The People’s Republic of China
May 28, 2010
F-1
Table of Contents
(In U.S. dollars in thousands, except share related data)
As of December 31, | ||||||||
2008 | 2009 | |||||||
(Adjusted) | ||||||||
(Note24) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 161,534 | $ | 123,754 | ||||
Restricted cash | — | 1,431 | ||||||
Short-term investment | — | 586 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $1,521 and $14,843 as of December 31, 2008 and 2009 | 38,386 | 40,019 | ||||||
Prepaid concession fees | 32,706 | 15,425 | ||||||
Amount due from a related party | — | 5,991 | ||||||
Other current assets | 7,830 | 4,069 | ||||||
Deferred tax assets — current | 380 | 3,693 | ||||||
Total current assets | 240,836 | 194,968 | ||||||
Property and equipment, net | 62,443 | 78,831 | ||||||
Long-term investments | 1,099 | 1,984 | ||||||
Long term deposits | 14,724 | 15,914 | ||||||
Deferred tax assets — non-current | 1,762 | 4,726 | ||||||
Acquired intangible assets, net | 9,027 | 11,141 | ||||||
Goodwill | — | 9,087 | ||||||
TOTAL ASSETS | 329,891 | 316,651 | ||||||
Liabilities | ||||||||
Current liabilities: | ||||||||
Accounts payable | 15,696 | 30,680 | ||||||
Accrued expenses and other current liabilities | 5,664 | 7,136 | ||||||
Deferred revenue | 2,929 | 8,941 | ||||||
Income tax payable | 852 | 52 | ||||||
Amounts due to related parties | 408 | 408 | ||||||
Total current liabilities | 25,549 | 47,217 | ||||||
Non-current liabilities: | ||||||||
Deferred tax liability — non-current | 2,659 | 3,155 | ||||||
Total liabilities | 28,208 | 50,372 | ||||||
Commitments (Note 21) | ||||||||
Equity | ||||||||
Ordinary shares ($0.001 par value; 900,000,000 shares authorized in 2008 and 2009; 134,425,925 shares and 131,179,487 shares issued and outstanding as of December 31, 2008 and 2009, respectively) | 134 | 132 | ||||||
Additional paid-in capital | 268,881 | 268,542 | ||||||
Statutory reserves | 5,593 | 6,912 | ||||||
Retained earnings (accumulated deficits) | 16,070 | (22,488 | ) | |||||
Accumulated other comprehensive income | 10,052 | 9,944 | ||||||
Total AirMedia Group Inc.’s shareholders’ equity | 300,730 | 263,042 | ||||||
Noncontrolling interests | 953 | 3,237 | ||||||
Total equity | 301,683 | 266,279 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 329,891 | $ | 316,651 | ||||
F-2
Table of Contents
(In U.S. dollars in thousands, except share related data)
For the years ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Adjusted) | (Adjusted) | |||||||||||
(Note24) | (Note24) | |||||||||||
Revenues | $ | 43,611 | $ | 125,540 | $ | 152,530 | ||||||
Business tax and other sales tax | (1,983 | ) | (6,107 | ) | (3,102 | ) | ||||||
Net revenues | 41,628 | 119,433 | 149,428 | |||||||||
Cost of revenues | 21,365 | 70,995 | 147,541 | |||||||||
Gross profit/(loss) | 20,263 | 48,438 | 1,887 | |||||||||
Operating expenses: | ||||||||||||
Selling and marketing (including share-based compensation of $274, $1,158 and $1,540 in 2007, 2008 and 2009, respectively) | 4,813 | 10,171 | 13,439 | |||||||||
General and administrative (including share-based compensation of $18,831, $3,805 and $4,226 in 2007, 2008 and 2009, respectively) | 21,982 | 14,374 | 34,936 | |||||||||
Total operating expenses | 26,795 | 24,545 | 48,375 | |||||||||
Income/(loss) from operations | (6,532 | ) | 23,893 | (46,488 | ) | |||||||
Interest income | 1,745 | 5,379 | 2,025 | |||||||||
Other income, net | — | 1,135 | 1,239 | |||||||||
Income/(loss) before income taxes | (4,787 | ) | 30,407 | (43,224 | ) | |||||||
Income tax benefits | 195 | 498 | 6,032 | |||||||||
Net income/(loss) before share of income/(loss) on equity method investments | (4,592 | ) | 30,905 | (37,192 | ) | |||||||
Share of income/(loss) on equity method investments | (520 | ) | (325 | ) | 164 | |||||||
Net income/(loss) | (5,112 | ) | 30,580 | (37,028 | ) | |||||||
Less: Net income/(loss) attributable to noncontrolling interests | (2 | ) | 382 | 211 | ||||||||
Net income/(loss) attributable to AirMedia Group Inc.’s shareholders | (5,110 | ) | 30,198 | (37,239 | ) | |||||||
Deemed dividend on Series A and B convertible redeemable preferred shares — accretion of redemption premium | (3,353 | ) | — | — | ||||||||
Net income/(loss) attributable to AirMedia Group Inc.’s shareholders of ordinary shares | (8,463 | ) | 30,198 | (37,239 | ) | |||||||
Net income/(loss) attributable to AirMedia Group Inc.’s shareholders per ordinary share — basic | $ | (0.12 | ) | $ | 0.23 | $ | (0.28 | ) | ||||
Net income/(loss) attributable to AirMedia Group Inc.’s shareholders per ordinary share — diluted | $ | (0.12 | ) | $ | 0.22 | $ | (0.28 | ) | ||||
Net income per Series A preferred share — basic | $ | 0.04 | N/A | N/A | ||||||||
Net income per Series B preferred share — basic | $ | 0.32 | N/A | N/A | ||||||||
Weighted average shares used in calculating net income/(loss) per ordinary share — basic | 73,469,589 | 133,603,419 | 131,320,730 | |||||||||
Weighted average shares used in calculating net income/(loss) per ordinary share — diluted | 73,469,589 | 137,782,135 | 131,320,730 | |||||||||
Weighted average shares used in calculating net income per Series A preferred share — basic | 31,461,918 | N/A | N/A | |||||||||
Weighted average shares used in calculating net income per Series B preferred share — basic | 6,706,849 | N/A | N/A | |||||||||
F-3
Table of Contents
AND COMPREHENSIVE INCOME (LOSS)
(In U.S. dollars in thousands, except share data)
AirMedia Group Inc’s. shareholder’s equity | ||||||||||||||||||||||||||||||||||||||||||||
Retained | Accumulated | Total | ||||||||||||||||||||||||||||||||||||||||||
Earnings | other | AirMedia Group | Comprehensive | |||||||||||||||||||||||||||||||||||||||||
Ordinary shares | Subscription | Additional | Statutory | (Accumulated | comprehensive | Inc.’s shareholders’ | Noncontrolling | Total | income (loss) | |||||||||||||||||||||||||||||||||||
Shares | Amount | receivable | paid-in capital | reserves | deficits) | income | equity (deficits) | interests | equity | for the year | ||||||||||||||||||||||||||||||||||
Balance as of January 1, 2007 | 62,400,000 | $ | 62 | $ | (62 | ) | $ | — | $ | 102 | $ | (174 | ) | $ | 293 | $ | 221 | (1 | ) | 220 | $ | 4,351 | ||||||||||||||||||||||
Subscription received | — | — | 62 | — | — | — | — | 62 | — | 62 | ||||||||||||||||||||||||||||||||||
Deemed dividend on Series A convertible redeemable preferred shares-Accretion of redemption premium | — | — | — | — | — | (1,201 | ) | — | (1,201 | ) | — | (1,201 | ) | |||||||||||||||||||||||||||||||
Deemed dividend on Series B convertible redeemable preferred shares-accretion of redemption premium | — | — | — | — | — | (2,152 | ) | — | (2,152 | ) | — | (2,152 | ) | |||||||||||||||||||||||||||||||
Conversion of Series A convertible redeemable preferred shares into ordinary shares upon initial public offering | 37,600,000 | 37 | — | 14,900 | — | — | — | 14,937 | — | 14,937 | ||||||||||||||||||||||||||||||||||
Conversion of Series B convertible redeemable preferred shares into ordinary shares upon initial public offering | 5,925,925 | 6 | — | 41,146 | — | — | — | 41,152 | — | 41,152 | ||||||||||||||||||||||||||||||||||
Provision for statutory reserve | — | — | — | — | 1,680 | (1,680 | ) | — | — | — | — | |||||||||||||||||||||||||||||||||
Issuance of ordinary shares upon IPO | 27,500,000 | 28 | — | 190,785 | — | — | — | 190,813 | — | 190,813 | ||||||||||||||||||||||||||||||||||
IPO expenses | — | — | — | (2,806 | ) | — | — | — | (2,806 | ) | — | (2,806 | ) | |||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | 19,105 | — | — | — | 19,105 | — | 19,105 | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | 2,584 | 2,584 | — | 2,584 | 2,584 | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (5,110 | ) | — | (5,110 | ) | (2 | ) | (5,112 | ) | (5,112 | ) | ||||||||||||||||||||||||||||
Balance as of December 31, 2007 | 133,425,925 | 133 | — | 263,130 | 1,782 | (10,317 | ) | 2,877 | 257,605 | (3 | ) | 257,602 | (2,528 | ) | ||||||||||||||||||||||||||||||
Ordinary shares issued for share based compensation | 1,000,000 | 1 | — | 788 | — | — | — | 789 | — | 789 | ||||||||||||||||||||||||||||||||||
Provision for statutory reserve | — | — | — | — | 3,811 | (3,811 | ) | — | — | — | — | |||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | 4,963 | — | — | — | 4,963 | — | 4,963 | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | 7,175 | 7,175 | 2 | 7,177 | 7,177 | |||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 30,198 | — | 30,198 | 382 | 30,580 | 30,580 | |||||||||||||||||||||||||||||||||
Noncontrolling interest acquired in business combinations of Flying Dragon | — | — | — | — | — | — | — | — | 572 | 572 | ||||||||||||||||||||||||||||||||||
Balance as of December 31, 2008 | 134,425,925 | 134 | — | 268,881 | 5,593 | 16,070 | 10,052 | 300,730 | 953 | 301,683 | 37,757 | |||||||||||||||||||||||||||||||||
Ordinary shares issued for share based compensation | 46,566 | 1 | — | 1,279 | — | — | — | 1,280 | — | 1,280 | ||||||||||||||||||||||||||||||||||
Share repurchase | (3,293,004 | ) | (3 | ) | — | (7,384 | ) | — | — | — | (7,387 | ) | — | (7,387 | ) | |||||||||||||||||||||||||||||
Provision for statutory reserve | — | — | — | — | 1,319 | (1,319 | ) | — | — | — | — | |||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | 5,766 | — | — | — | 5,766 | — | 5,766 | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | (108 | ) | (108 | ) | 2 | (106 | ) | (106 | ) | |||||||||||||||||||||||||||||
Net income/(loss) | — | — | — | — | — | (37,239 | ) | — | (37,239 | ) | 211 | (37,028 | ) | (37,028 | ) | |||||||||||||||||||||||||||||
Dividend declaration of a VIE’s subsidiary | — | — | — | — | — | — | — | — | (124 | ) | (124 | ) | ||||||||||||||||||||||||||||||||
Incorporation of AM Jinshi, a majority-owned subsidiary | — | — | — | — | — | — | — | — | 2,195 | 2,195 | ||||||||||||||||||||||||||||||||||
Balance as of December 31, 2009 | 131,179,487 | 132 | — | 268,542 | 6,912 | (22,488 | ) | 9,944 | 263,042 | 3,237 | 266,279 | (37,134 | ) | |||||||||||||||||||||||||||||||
F-4
Table of Contents
(In U.S. dollars in thousands)
For the years ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Adjusted) | (Adjusted) | |||||||||||
(Note24) | (Note24) | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net income (loss) | $ | (5,112 | ) | $ | 30,580 | $ | (37,028 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
Allowance for doubtful accounts | 218 | 1,027 | 13,573 | |||||||||
Depreciation and amortization | 1,386 | 5,545 | 16,513 | |||||||||
Share-based compensation | 19,105 | 4,963 | 5,766 | |||||||||
Share of loss (income) on equity method investments | 520 | 325 | (164 | ) | ||||||||
Loss on disposal of property and equipment | 100 | 1,180 | 1,097 | |||||||||
Gain on sale/maturity of short-term investments | — | — | (360 | ) | ||||||||
Changes in assets and liabilities | ||||||||||||
Accounts receivable | (7,827 | ) | (24,376 | ) | (18,154 | ) | ||||||
Prepaid concession fees | (11,658 | ) | (15,933 | ) | 17,246 | |||||||
Other current assets | (980 | ) | (1,226 | ) | (1,431 | ) | ||||||
Long term deposits | (3,764 | ) | (8,882 | ) | (1,086 | ) | ||||||
Accounts payable | 1,613 | 10,623 | 14,209 | |||||||||
Amounts due to related parties | (150 | ) | 396 | — | ||||||||
Amounts due to shareholders | (210 | ) | — | — | ||||||||
Accrued expenses and other current liabilities | 16 | 2,357 | (101 | ) | ||||||||
Deferred revenue | 428 | (2,036 | ) | 6,530 | ||||||||
Deferred tax assets (liabilities), net | (227 | ) | (1,766 | ) | (6,953 | ) | ||||||
Income tax payable | 32 | 809 | (799 | ) | ||||||||
Net cash provided by (used in) operating activities | (6,510 | ) | 3,586 | 8,858 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Acquisition of business, net of cash acquired of $2,351 and $1,759 in 2008 and 2009, respectively | — | 562 | (6,070 | ) | ||||||||
Advance payment for contingent consideration in connection with a business combination | — | (6,334 | ) | — | ||||||||
Purchase of property and equipment | (13,046 | ) | (50,412 | ) | (28,702 | ) | ||||||
Proceeds from disposal of property and equipment | — | 2 | 72 | |||||||||
Purchase of intangible assets | (1,324 | ) | — | (146 | ) | |||||||
Purchase of short-term investments | — | — | (219,972 | ) | ||||||||
Proceeds from sale/maturity of short-term investments | — | — | 219,782 | |||||||||
Loan to related party | — | — | (5,575 | ) | ||||||||
Restricted cash | — | — | (1,447 | ) | ||||||||
Purchase of long-term investments | (1,303 | ) | (1,181 | ) | (586 | ) | ||||||
Proceeds from disposal of a long-term investment | — | 671 | — | |||||||||
Net cash used in investing activities | (15,673 | ) | (56,692 | ) | (42,644 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Proceeds from amounts due to shareholders | 62 | — | — | |||||||||
Proceeds from issuance of Series A convertible redeemable preferred shares | 2,920 | — | — | |||||||||
Proceeds from issuance of Series B convertible redeemable preferred shares, net of issuance cost of $1,000 | 39,000 | — | — | |||||||||
Short-term borrowings from a bank | 13,068 | — | — | |||||||||
Repayment of short-term borrowings to a bank | (13,068 | ) | — | — | ||||||||
Proceed from issuance of ordinary shares upon IPO | 190,813 | — | — | |||||||||
IPO expenses paid | (2,806 | ) | — | — | ||||||||
Share repurchase | — | — | (7,387 | ) | ||||||||
Capital contribution from noncontrolling interest in the incorporation of AM Jinshi | — | — | 2,195 | |||||||||
Proceed from exercises of stock options | — | 789 | 1,279 | |||||||||
Net cash provided (used in) by financing activities | 229,989 | 789 | (3,913 | ) | ||||||||
Effect of exchange rate changes | 1,023 | 2,936 | (81 | ) | ||||||||
Net increase (decrease) in cash | 208,829 | (49,381 | ) | (37,780 | ) | |||||||
Cash, at beginning of year | 2,086 | 210,915 | 161,534 | |||||||||
Cash, at end of year | $ | 210,915 | $ | 161,534 | $ | 123,754 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
Interest paid | $ | 51 | $ | — | $ | 197 | ||||||
Income tax paid | $ | — | $ | 885 | $ | 1,721 | ||||||
Fair value of property and equipment acquired in exchange of advertising services rendered | $ | 286 | $ | 1,041 | $ | 1,280 | ||||||
F-5
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
1. | ORGANIZATION AND PRINCIPAL ACTIVITIES |
Date of | Percentage of | |||||||
incorporation/ | Place of | economic | ||||||
Name | acquisition | incorporation | ownership | |||||
Intermediate Holding Company: | ||||||||
Broad Cosmos Enterprises Ltd. | June 26, 2006 | British Virgin Islands (“BVI”) | 100 | % | ||||
Excel Lead International Limited (“Excel Lead”) | August 1, 2008 | BVI | 100 | % | ||||
Dominant City Ltd (“Dominant City”) | July 1, 2009 | BVI | 100 | % | ||||
Subsidiaries: | ||||||||
AirMedia Technology (Beijing) Co., Ltd. (“AM Technology”) | September 19, 2005 | the PRC | 100 | % | ||||
Shenzhen AirMedia Information Technology Co., Ltd. (“Shenzhen AM”) | June 6, 2006 | the PRC | 100 | % | ||||
Xi’an AirMedia Chuangyi Technology Co., Ltd (“Xi’an AM”) | December 31, 2007 | the PRC | 100 | % | ||||
Royal Mart Limited (“Royal Mart”) | December 24, 2007 | Hong Kong | 100 | % | ||||
Glorious Star Investment Limited (“Glorious Star”) | August 1, 2008 | Hong Kong | 100 | % | ||||
VIEs: | ||||||||
Beijing Shengshi Lianhe Advertising Co., Ltd. (“Shengshi Lianhe”) | August 7, 2005 | the PRC | 100 | % | ||||
Beijing AirMedia Advertising Co., Ltd. (“AM Advertising”) | November 22, 2005 | the PRC | 100 | % | ||||
Beijing AirMedia UC Advertising Co. Ltd. (“AirMedia UC”) | January 1, 2007 | the PRC | 100 | % | ||||
Beijing Yuehang Digital Media Advertising Co. Ltd. (“AM Yuehang”) | January 16, 2008 | the PRC | 100 | % | ||||
VIE’s subsidiaries: | ||||||||
AirTV United Media & Culture Co., Ltd. (“AirTV United”) | October 10, 2006 | the PRC | 75 | % | ||||
Beijing AirMedia Film & TV Culture Co. Ltd. (“AM Film”) | September 13, 2007 | the PRC | 100 | % | ||||
Flying Dragon Media Advertising Co., Ltd. (“Flying Dragon”) | August 1, 2008 | the PRC | 80 | % | ||||
Wenzhou AirMedia Advertising Co., Ltd. (“AM Wenzhou”) | October 17, 2008 | the PRC | 100 | % | ||||
Beijing Weimei Shengshi Advertising Co., Ltd. (“Weimei Shengshi”) | March 16, 2009 | the PRC | 100 | % |
F-6
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
1. | ORGANIZATION AND PRINCIPAL ACTIVITIES — continued |
Date of | Percentage of | |||||||
incorporation/ | Place of | economic | ||||||
Name | acquisition | incorporation | ownership | |||||
VIE’s subsidiaries: | ||||||||
Beijing Weimei Lianhe Advertising Co., Ltd. (“Weimei Lianhe”) | March 10, 2009 | the PRC | 100 | % | ||||
Beiijng Shengshi Lixin Culture & Media Co., Ltd. (“Shengshi Lixin”) | June 1, 2009 | the PRC | 100 | % | ||||
Hainan Jinhui Guangming Media Advertising Co., Ltd. (“Hainan Jinhui”) | June 23, 2009 | the PRC | 100 | % | ||||
Beijing Union of Friendship Advertising Media Co. Ltd. (“Youtong”) | July 1, 2009 | the PRC | 100 | % | ||||
Beijing AirMedia Jinshi Advertising Co., Ltd. (“AM Jinshi”) | July 7, 2009 | the PRC | 80 | % | ||||
Tianjin AirMedia Jinshi Advertising Co., Ltd. (“TJ Jinshi”) | September 8, 2009 | the PRC | 100 | % | ||||
Tianjin AirMedia Advertising Co., Ltd. (“TJ AM”) | September 21, 2009 | the PRC | 100 | % |
• | Technology support and service agreement:AM Technology provides exclusive technology supports and consulting services to the VIEs and VIEs are required to pay AM Technology for the technical and consulting services they are provided. The VIEs pay to AM Technology annual service fees in the amount that guarantee that the VIEs can achieve, after deducting such service fees payable to AM Technology, a net cost-plus rate of no less than 0.5% in the case of AM Advertising, Shengshi Lianhe and AirMedia UC, or 1.0% in the case of AM Yuehang, which final rate should be determined by AM Technology. The “net cost-plus rate” refers to the operating profit as a percentage of total costs and expenses of a certain entity. |
F-7
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
1. | ORGANIZATION AND PRINCIPAL ACTIVITIES — continued |
• | Technology development agreement:VIEs exclusively engage AM Technology to provide technology development services. AM Technology owns the intellectual property rights developed in the performance of these agreements. The VIEs pay to AM Technology annual service fees in the amount that guarantee that the VIEs can achieve, after deducting such service fees payable to AM Technology, a net cost-plus rate of no less than 0.5% in the case of AM Advertising, Shengshi Lianhe and AirMedia UC, which final rate should be determined by AM Technology. The “net cost-plus rate” refers to the operating profit as a percentage of total costs and expenses of a certain entity. | ||
• | Call option agreement:Under the call option agreements, the shareholders of VIEs irrevocably granted AM Technology or its designated third party an exclusive option to purchase from VIEs’ shareholders, to the extent permitted under PRC law, all the equity interests in the VIEs, as the case may be, for the minimum amount of consideration permitted by the applicable law without any other conditions. In addition, AM Technology will act as guarantor of VIEs in all operation related contracts, agreements and transactions and commit to provide loans to support the business development needs of VIEs or when the VIEs are suffering operating difficulties. | ||
• | Equity pledge agreement:Under the equity pledge, the shareholders of the VIEs pledged all of their equity interests, including the right to receive declared dividends, in the VIEs to AM Technology to guarantee VIEs’ performance of its obligations under the technology support and service agreement and the technology development agreement. | ||
• | Authorization letter:Each shareholder of the VIEs has executed an authorization letter to authorize AM Technology to exercise certain of its rights, including voting rights, the rights to enter into legal documents and the rights to transfer any or all of its equity interest in the VIEs. Such authorization letters will remain effective during the operating periods of the VIEs. |
F-8
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
1. | ORGANIZATION AND PRINCIPAL ACTIVITIES — continued |
December 31, | ||||||||
2008 | 2009 | |||||||
Total assets | $ | 149,487 | $ | 160,565 | ||||
Total liabilities | 150,114 | 190,054 |
Years ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Net revenue | $ | 53,801 | $ | 119,521 | $ | 148,868 | ||||||
Net income (loss) | 539 | (4,182 | ) | (34,425 | ) |
F-9
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
(a) | Basis of presentation |
(b) | Basis of consolidation |
(c) | Noncontrolling interest |
(d) | Use of estimates |
(e) | Significant risks and uncertainties |
F-10
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(f) | Fair value |
F-11
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(g) | Restricted cash |
(h) | Short-term investments |
(i) | Property and equipment, net |
Digital display network equipment | 5 years | |
Gas station display network equipment | 5 years | |
Furniture and fixture | 5 years | |
Computer and office equipment | 5 years | |
Vehicle | 5 years | |
Software | 5 years | |
Property | 50 years | |
Leasehold improvement | Shorter of the term of the lease or the estimated useful lives of the assets |
F-12
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(j) | Impairment of long-lived assets |
(k) | Impairment of goodwill |
(l) | Equity method investments |
F-13
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(m) | Cost method investment |
(n) | Business combinations |
F-14
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(o) | Acquired intangible assets |
TV program license | 20 years | |||
Audio-vision programming & broadcasting qualification | 19.5 years | |||
Customer relationships | 3.4 years | |||
Contract backlog | 1.2 years | |||
Agreements with airports | 3.8 – 5 years | |||
Non-compete agreements | 4.4 years |
(p) | Revenue recognition |
F-15
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(q) | Business tax and other sale related taxes |
(r) | Concession fees |
(s) | Agency fees |
F-16
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(t) | Other operating leases |
(u) | Advertising costs |
(v) | Payment by Depositary |
(w) | Foreign currency translation |
F-17
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(x) | Income taxes |
(y) | Share based payments |
(z) | Comprehensive income (loss) |
F-18
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(aa) | Allowance of doubtful accounts |
(bb) | Concentration of credit risk |
F-19
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(cc) | Net income/(loss) per share |
(dd) | Recently issued accounting standards |
F-20
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(dd) | Recently issued accounting standards— continued |
F-21
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued |
(dd) | Recently issued accounting standards— continued |
F-22
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
3. | SEGMENT INFORMATION AND REVENUE ANALYSIS |
For the years ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Revenues(1): | ||||||||||||
Air Travel Media Network: | ||||||||||||
Digital frames in airports | $ | 1,263 | $ | 45,011 | $ | 66,255 | ||||||
Digital TV screens in airports | 26,921 | 47,591 | 37,260 | |||||||||
Digital TV screens on airplanes | 11,093 | 19,227 | 17,082 | |||||||||
Traditional media in airports | 1,872 | 6,490 | 27,192 | |||||||||
Other revenues in air travel | 2,462 | 7,221 | 4,639 | |||||||||
Gas station Media Network: | — | — | 102 | |||||||||
$ | 43,611 | $ | 125,540 | $ | 152,530 | |||||||
(1) | The prior years’ revenues have been reclassified to conform to the current year presentation. |
F-23
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
4. | BUSINESS ACQUISITION |
(a) | Acquisition of Advertising Business on Gate Bridges in Airports |
1 | Cash of $1,789 |
2 | Contingent consideration based on the after-tax net profit of the acquired business for each of the periods from July 1, 2008 to December 31, 2008 and of the years of 2009 and 2010. The maximum amount payable under such arrangements was $27,257 in cash and 1,530,950 ordinary shares of AirMedia, or, at the sole discretion of the selling shareholders, up to $39,653 in cash only. |
Amortization | ||||||||
period | ||||||||
Cash acquired | $ | 2,351 | ||||||
Accounts receivable | 149 | |||||||
Other current assets | 3,498 | |||||||
Property and equipment | 12 | |||||||
Intangible assets: | ||||||||
Customer relationships | 699 | 3.4 years | ||||||
Contract backlog | 1,461 | 1.2 years | ||||||
Agreements with airports | 2,547 | 3.8 years | ||||||
Non-compete agreements | 172 | 4.4 years | ||||||
Deferred revenue | (3,076 | ) | ||||||
Other current liabilities | (73 | ) | ||||||
Deferred tax liability | (1,220 | ) | ||||||
Noncontrolling interests | (571 | ) | ||||||
Total consideration | $ | 5,949 | ||||||
F-24
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
4. | BUSINESS ACQUISITION — continued |
(a) | Acquisition of Advertising Business on Gate Bridges in Airports— continued |
Advance payment | ||||||||
in connection | Contingent | |||||||
with business | consideration | |||||||
acquisition | liability | |||||||
As of July 2008 (date of acquisition) | 6,334 | (4,160 | ) | |||||
Contingent consideration for 2008 | (2,340 | ) | 2,340 | |||||
Balance as of December 31, 2008 | 3,994 | (1,820 | ) | |||||
Contingent consideration for 2009 | (6,507 | ) | 6,507 | |||||
Balance as of December 31, 2009 | (2,513 | )(1) | 4,687 | (2) | ||||
(1): | The excess of the contingent consideration over advance payment balances as of December 31, 2008 was recorded as consideration payable as of December 31, 2009 (see Note 13). | |
(2): | The excess of contingent consideration over liability in respect of contingent consideration was recorded as an addition to goodwill in 2009 (see Note 11). |
F-25
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
4. | BUSINESS ACQUISITION — continued |
(a) | Acquisition of Advertising Business on Gate Bridges in Airports— continued |
For the years | ||||||||
ended December 31, | ||||||||
2007 | 2008 | |||||||
(unaudited) | (unaudited) | |||||||
Pro forma revenue | $ | 51,588 | $ | 132,096 | ||||
Pro forma net income/(loss) | (5,954 | ) | 32,061 | |||||
Pro forma net income/(loss) per ordinary share-basic | (0.13 | ) | 0.23 | |||||
Pro forma net income/(loss) per ordinary share-diluted | (0.13 | ) | 0.22 |
(b) | Acquisition of Dominant City and Youtong |
F-26
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
4. | BUSINESS ACQUISITION — continued |
(b) | Acquisition of Dominant City and Youtong— continued |
Amortization | ||||||||
period | ||||||||
Cash acquired | $ | 1,759 | ||||||
Other current assets | 82 | |||||||
Property and equipment | 217 | |||||||
Intangible assets: | ||||||||
Resource agreements | 4,525 | 5 years | ||||||
Deferred revenue | (15 | ) | ||||||
Other current liabilities | (1,988 | ) | ||||||
Deferred tax liability | (1,131 | ) | ||||||
Goodwill | 4,380 | |||||||
Total consideration | $ | 7,829 | ||||||
For the years | ||||||||
ended Decmber 31, | ||||||||
2008 | 2009 | |||||||
(unaudited) | (unaudited) | |||||||
Pro forma revenue | $ | 125,700 | $ | 152,551 | ||||
Pro forma net income/(loss) | 28,619 | (38,045 | ) | |||||
Pro forma net income/(loss) per ordinary share-basic | 0.21 | (0.29 | ) | |||||
Pro forma net income/(loss) per ordinary share-diluted | 0.21 | (0.29 | ) |
F-27
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
5. | SHORT-TERM INVESTMENT |
6. | LONG-TERM INVESTMENTS |
(a) | Equity method investments |
As of December 31, | ||||||||||||||||
2008 | 2009 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Name of company | Percentage | value | Percentage | value | ||||||||||||
% | % | |||||||||||||||
Beijing Eastern Media Corporation, Ltd. (“BEMC”) (1) | 49 | $ | 953 | 49 | $ | 1,112 | ||||||||||
Beijing Dongding Gongyi Advertising Media Ltd. (“Dongding”) (2) | — | — | 30 | 726 | ||||||||||||
$ | 953 | $ | 1,838 | |||||||||||||
F-28
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
6. | LONG-TERM INVESTMENTS — continued |
(a) | Equity method investments— continued |
(1) | In March 2008, the Group entered into a definitive agreement with China Eastern Media Corporation, Ltd., a subsidiary of China Eastern Group and China Eastern Airlines Corporation Limited operating the media resources of China Eastern Group, to establish a joint venture, BEMC. BEMC was incorporated on March 18, 2008 in the PRC with China Eastern Media Corporation and the Group holding 51% and 49% equity interest, respectively. BEMC obtained concession rights of certain media resources from China Eastern Group, including the digital TV screens on airplanes of China Eastern Airlines, and paid concession fees to its shareholders as consideration. The total paid-in capital of BEMC was $2,119, which was contributed by both parties proportionately. |
(2) | In October 2009, the Group acquired 30% of the equity interest in Dongding, with a cash consideration of $721. Dongding has exclusive rights obtained from the Fire Department of the Beijing Municipal Public Security Bureau to build and operate billboards for public service advertising in various locations in Beijing. The Group accounted for the investment using equity method of accounting as the Group has the ability to exercise significant influence to the investee. |
F-29
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
6. | LONG-TERM INVESTMENTS — continued |
(a) | Equity method investments— continued |
As of and for the | ||||||||
years ended Decmber 31, | ||||||||
2008 | 2009 | |||||||
Total current assets | $ | 1,929 | $ | 3,299 | ||||
Total assets | 2,028 | 3,459 | ||||||
Total current liabilities | 84 | 1,630 | ||||||
Total liabilities | 84 | 1,630 | ||||||
Total net revenue | 1,353 | 6,292 | ||||||
Net income/(loss) | (700 | ) | 341 | |||||
(b) | Cost method investment |
7. | ACCOUNTS RECEIVABLE, NET |
As of December 31, | ||||||||
2008 | 2009 | |||||||
Billed receivable | $ | 10,370 | $ | 10,163 | ||||
Unbilled receivable | 28,016 | 29,856 | ||||||
$ | 38,386 | $ | 40,019 | |||||
F-30
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
7. | ACCOUNTS RECEIVABLE, NET — continued |
Balance at | Balance at | |||||||||||||||||||
beginning | Charge to | Exchange | end of the | |||||||||||||||||
of the year | expenses | Write off | adjustment | year | ||||||||||||||||
2007 | $ | 273 | 218 | (46 | ) | 10 | $ | 455 | ||||||||||||
2008 | $ | 455 | 1,027 | — | 39 | $ | 1,521 | |||||||||||||
2009 | $ | 1,521 | 13,573 | (252 | ) | 1 | $ | 14,843 | ||||||||||||
8. | OTHER CURRENT ASSETS |
As of December 31, | ||||||||
2008 | 2009 | |||||||
Short-term deposits | $ | 1,488 | $ | 1,934 | ||||
Advances to employees | 284 | 287 | ||||||
VAT refund receivable | — | 673 | ||||||
Prepaid agency fees | 167 | 223 | ||||||
Prepaid insurance premium | 146 | 164 | ||||||
Interest receivable | 158 | 141 | ||||||
Advance payment in connection with a business acquisition | 3,994 | — | ||||||
Other prepaid expenses | 1,593 | 647 | ||||||
$ | 7,830 | $ | 4,069 | |||||
F-31
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
9. | LONG-TERM DEPOSITS |
As of December 31, | ||||||||
2008 | 2009 | |||||||
Concession fee deposits | $ | 14,213 | $ | 15,400 | ||||
Office rental deposits | 511 | 514 | ||||||
$ | 14,724 | $ | 15,914 | |||||
10. | ACQUIRED INTANGIBLE ASSETS, NET |
As of December 31, | ||||||||||||||||||||||||
2008 | 2009 | |||||||||||||||||||||||
Gross | Net | Gross | Net | |||||||||||||||||||||
carrying | Accumulated | carrying | carrying | Accumulated | carrying | |||||||||||||||||||
amount | amortization | amount | amount | amortization | amount | |||||||||||||||||||
TV program license (1) | $ | 5,654 | $ | (629 | ) | $ | 5,025 | $ | 5,651 | $ | (911 | ) | $ | 4,740 | ||||||||||
Audio-vision programming and broadcasting qualification (2) | — | — | — | 203 | (6 | ) | 197 | |||||||||||||||||
Intangible assets arising from Business combinations: | ||||||||||||||||||||||||
- Customer relationships | 701 | (86 | ) | 615 | 701 | (292 | ) | 409 | ||||||||||||||||
- Contract backlog | 1,466 | (509 | ) | 957 | 1,465 | (1,465 | ) | — | ||||||||||||||||
- Agreements with airports | 2,554 | (280 | ) | 2,274 | 7,083 | (1,405 | ) | 5,678 | ||||||||||||||||
- Non-compete agreements | 172 | (16 | ) | 156 | 172 | (55 | ) | 117 | ||||||||||||||||
$ | 10,547 | $ | (1,520 | ) | $ | 9,027 | $ | 15,275 | $ | (4,134 | ) | $ | 11,141 | |||||||||||
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FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
10. | ACQUIRED INTANGIBLE ASSETS, NET — continued |
(1) | On October 10, 2006, the Group, through AM Advertising, acquired 75% equity interest of AirTV United with cash consideration of $3,310. AirTV United had no material assets and liabilities and was inactive other than holding a TV program production and operation license (“TV program license”), which is authorized by China National TV & Movie Broadcasting Bureau. This license allows editing, producing and operating non-advertising programs that are displayed on TV. The license has perpetual life but is subject to annual compliance review by a government agency. The Company determined the license has an estimated economic useful life of 20 years and computed the amortization using the straight-line method. Accordingly, the purchase was accounted for as an asset acquisition. The following table presents the allocation of the acquisition costs: |
Amortization | ||||||||
period | ||||||||
Total consideration | $ | 3,310 | ||||||
Less: cash acquired | (1 | ) | ||||||
Cost allocated to TV program license | 3,309 | |||||||
Plus: deferred income tax liability recognized | 1,631 | |||||||
Total acquired intangible asset cost initially recognized | $ | 4,940 | 20 years | |||||
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FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
10. | ACQUIRED INTANGIBLE ASSETS, NET — continued |
(2) | On June 1, 2009, the Group, through AM Advertising, acquired 100% equity interest of Shengshi Lixin with cash consideration of $879. Shengshi Lixin had no material assets and liabilities except cash and was inactive other than holding an audio-vision programming and broadcasting qualification, which is authorized by China Internet Network Information Center. The qualification allows broadcasting audio-vision programs (news, movie and television plays, sports, technology and other entertainment programs other than advertisement) in wired televisions in airports and on airlines. Accordingly, the purchase was accounted for as an asset acquisition. The following table presents the allocation of the acquisition costs: |
Amortization | ||||||||
period | ||||||||
Total consideration | $ | 879 | ||||||
Less: cash acquired | (733 | ) | ||||||
Add: current liabilities assumed | 17 | |||||||
Cost allocated to Audio-vision programming and Broadcasting qualification | 163 | |||||||
Plus: deferred income tax liability recognized | 40 | |||||||
Total acquired intangible asset cost initially recognized | $ | 203 | 19.5 years | |||||
11. | GOODWILL |
Balance as of January 1, 2009 | $ | — | ||
Goodwill recognized in connection with acquisitions of: | ||||
Flying Dragon upon contingent consideration payment (Note 4) | 4,687 | |||
Youtong (Note 4) | 4,380 | |||
Exchange differences | 20 | |||
Balance as of December 31, 2009 | $ | 9,087 | ||
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FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
12. | PROPERTY AND EQUIPMENT, NET |
As of December 31, | ||||||||
2008 | 2009 | |||||||
Digital display network equipment | $ | 65,481 | $ | 78,643 | ||||
Gas station display network equipment | — | 5,157 | ||||||
Furniture and fixture | 594 | 697 | ||||||
Computer and office equipment | 994 | 1,841 | ||||||
Vehicle | 595 | 874 | ||||||
Software | — | 7,336 | ||||||
Property | — | 2,255 | ||||||
Leasehold improvement | 962 | 1,096 | ||||||
68,626 | 97,899 | |||||||
Less: accumulated depreciation and amortization | (6,183 | ) | (19,068 | ) | ||||
$ | 62,443 | $ | 78,831 | |||||
13. | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
As of December 31, | ||||||||
2008 | 2009 | |||||||
Accrued payroll and welfare | $ | 1,216 | $ | 2,662 | ||||
Other tax payable | 1,114 | (218 | ) | |||||
Contingent consideration in connection with a business acquisition (Note 4) | 1,820 | — | ||||||
Consideration payable in connection with a business acquisition (Note 4) | — | 2,513 | ||||||
Others liabilities | 1,514 | 2,179 | ||||||
$ | 5,664 | $ | 7,136 | |||||
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FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
14. | INCOME TAXES |
F-36
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
14. | INCOME TAXES — continued | |
Income tax benefits are as follows: |
As of December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Income tax benefits: | ||||||||||||
Current | $ | (32 | ) | $ | (1,268 | ) | $ | (921 | ) | |||
Deferred | 227 | 1,766 | 6,953 | |||||||||
Total | $ | 195 | $ | 498 | $ | 6,032 | ||||||
As of December 31, | ||||||||
2008 | 2009 | |||||||
Deferred tax assets: | ||||||||
Current | ||||||||
Allowance for doubtful accounts | $ | 380 | $ | 3,693 | ||||
Total current deferred tax assets | 380 | 3,693 | ||||||
Non-current | ||||||||
Depreciation of property and equipment | 274 | 400 | ||||||
Start-up cost | 3 | — | ||||||
Prepaid concession fee | 1,087 | 1,070 | ||||||
Taxable loss arising from a disposal of an equity method investment | 198 | 198 | ||||||
Net operating loss carry forwards | 200 | 7,753 | ||||||
Total deferred tax assets | 2,142 | 13,114 | ||||||
Valuation allowance | — | (4,695 | ) | |||||
Net deferred tax assets | 2,142 | 8,419 | ||||||
Deferred tax liabilities: | ||||||||
Non-current | ||||||||
Acquired intangible assets | 2,659 | 3,155 | ||||||
Total deferred tax liabilities | $ | 2,659 | $ | 3,155 | ||||
F-37
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FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
14. | INCOME TAXES — continued |
For the years ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Net income/(loss) before provision for income taxes | $ | (4,787 | ) | $ | 30,407 | $ | (43,223 | ) | ||||
PRC statutory tax rate | 33 | % | 25 | % | 25 | % | ||||||
Income tax at statutory tax rate | (1,580 | ) | 7,602 | (10,806 | ) | |||||||
Expenses not deductible for tax purposes: | ||||||||||||
Entertainment expenses exceeded the tax limit | 46 | 62 | 172 | |||||||||
Payroll expenses exceeded the tax limit | 202 | — | — | |||||||||
Others | 79 | 19 | 38 | |||||||||
Non taxable income | — | — | (290 | ) | ||||||||
Changes in valuation allowance | — | — | 4,695 | |||||||||
Effect of income tax holidays in subsidiaries and VIEs in the PRC | 1,251 | (9,217 | ) | (1,392 | ) | |||||||
Effect of income tax rate difference in other jurisdictions | (193 | ) | 1,036 | 1,551 | ||||||||
Income tax benefits | $ | (195 | ) | $ | (498 | ) | $ | (6,032 | ) | |||
Effective tax rates | 4.1 | % | (1.6 | )% | 14.0 | % | ||||||
For the years ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Changes in income tax expenses | $ | 4,562 | $ | 9,217 | $ | 1,392 | ||||||
Decrease in net income/(loss) per ordinary share-basic | 0.06 | 0.07 | 0.01 | |||||||||
Decrease in net income/(loss) per ordinary share-diluted | 0.06 | 0.07 | 0.01 | |||||||||
Decrease in net income/(loss) per Series A preferred share — basic and diluted | — | N/A | N/A | |||||||||
Decrease in net income/(loss) per Series B preferred share — basic and diluted | — | N/A | N/A | |||||||||
F-38
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
14. | INCOME TAXES — continued |
F-39
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
15. | NET INCOME/(LOSS) PER SHARE |
For the year ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Net income/(loss) attributable to AirMedia Group Inc.’s shareholders | $ | (5,110 | ) | $ | 30,198 | $ | (37,239 | ) | ||||
Deemed dividend on Series A convertible redeemable preferred shares — accretion of redemption premium | (1,201 | ) | — | — | ||||||||
Deemed dividend on Series B convertible redeemable preferred shares — accretion of redemption premium | (2,152 | ) | — | — | ||||||||
Net income/(loss) attributable to holders of ordinary shares | (8,463 | ) | 30,198 | (37,239 | ) | |||||||
Numerator used in basic and diluted net income/(loss) per share: | ||||||||||||
Net income/(loss) allocated for computing net income/(loss) per ordinary share — basic and diluted | $ | (8,463 | )(i) | $ | 30,198 | $ | (37,239 | ) | ||||
Net income/(loss) allocated for computing net income/(loss) per preferred share Series A — basic | 1,201 | (i) | — | — | ||||||||
Net income/(loss) allocated for computing net income/(loss) per preferred share Series B — basic | 2,152 | (i) | — | — | ||||||||
Shares (denominator): | ||||||||||||
Weighted average ordinary shares outstanding used in computing net income/(loss) per ordinary share — basic | 73,469,589 | 133,603,419 | 131,320,730 | |||||||||
Weighted average ordinary and preferred shares outstanding used in computing net income/(loss) per ordinary share — diluted | 73,469,589 | (ii) | 137,782,135 | (ii) | 131,320,730 | (ii) | ||||||
Weighted average shares outstanding used in computing net income/(loss) per preferred share Series A — basic | 31,461,918 | N/A | N/A | |||||||||
Weighted average shares outstanding used in computing net income/(loss) per preferred share Series B — basic | 6,706,849 | N/A | N/A | |||||||||
Net income/(loss) per ordinary share-basic | $ | (0.12 | ) | $ | 0.23 | $ | (0.28 | ) | ||||
Net income/(loss) per ordinary share-diluted | (0.12 | ) | 0.22 | (0.28 | ) | |||||||
Net income/(loss) per preferred share Series A — basic | $ | 0.04 | N/A | N/A | ||||||||
Net income/(loss) per preferred share Series B — basic | $ | 0.32 | N/A | N/A | ||||||||
(i) | The net income attributable to holders of ordinary shares was allocated between ordinary shares and preferred shares on pro rata basis on the dividend participant rights. Since each Series A and Series B preferred share had the same participating right as each ordinary share, the allocation was based on the number of ordinary shares and Series A and Series B preferred shares issued. The net income allocated for computing net income per preferred share-basic also contained the deemed dividend for accretion of the redemption premium. |
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Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
15. | NET INCOME/(LOSS) PER SHARE — continued |
(ii) | The Group had securities outstanding which could potentially dilute basic net income/(loss) per share, but which were excluded from the computation of diluted net income/(loss) per share for the years ended December 31, 2007, 2008 and 2009, as their effects would have been anti-dilutive. For year 2007, such outstanding securities consisted of 37,600,000 shares on Series A preferred shares, 16,000,000 shares on Series B preferred shares, and stock options of a weighted average number of 4,083,329. For year 2008, such outstanding securities consisted of stock options of a weighted average number of 2,320,767. For year 2009, such outstanding securities consisted of stock options of a weighted average number of 9,578,559. | |
The calculation of the weighted average number of ordinary shares in year 2008 for the purpose of diluted net income per share has included the effect of stock of a weighted average number of 7,874,013 which gives rise to an incremental weighted average number of 4,178,716 ordinary shares from the assumed conversion of these stock options using the treasury stock method. |
16. | CONVERTIBLE REDEEMABLE PREFERRED SHARES |
F-41
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
16. | CONVERTIBLE REDEEMABLE PREFERRED SHARES — continued |
F-42
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
16. | CONVERTIBLE REDEEMABLE PREFERRED SHARES — continued |
F-43
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
16. | CONVERTIBLE REDEEMABLE PREFERRED SHARES — continued |
F-44
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
17. | STOCK BASED PAYMENTS |
F-45
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
17. | STOCK BASED PAYMENTS — continued |
Fair value per | Intrinsic value | |||||||||||||||
Options | Exercise price | ordinary share at | per option at the | |||||||||||||
Date of grant/modification | granted | per option | the grant dates | grant dates | ||||||||||||
July 2, 2007 | 4,600,000 | $ | 2.00 | $ | 1.92 | — | ||||||||||
July 20, 2007 | 3,465,000 | $ | 2.00 | $ | 1.92 | — | ||||||||||
December 10, 2008 | 2,330,000 | $ | 2.98 | $ | 2.98 | — | ||||||||||
July 10, 2009 | 5,434,500 | $ | 2.69 | $ | 2.69 | — | ||||||||||
Total | 15,829,500 | |||||||||||||||
2008 | 2009 | |||||||||||||||
Weighted average | Weighted average | |||||||||||||||
Number of | exercise price | Number of | exercise price | |||||||||||||
options | per option | options | per option | |||||||||||||
Outstanding at beginning of the year | 10,395,000 | $ | 3.46 | 9,902,052 | $ | 2.22 | ||||||||||
Granted | — | — | 5,434,500 | 2.69 | ||||||||||||
Exercised | (394,614 | ) | 2.00 | (620,710 | ) | 2.06 | ||||||||||
Forfeited | (98,334 | ) | 4.38 | (160,502 | ) | 2.80 | ||||||||||
Outstanding at end of the year | 9,902,052 | 2.22 | (1) | 14,555,340 | 2.40 | |||||||||||
Shares vested and exercisable at end of year | 3,742,469 | 6,780,798 | ||||||||||||||
(1) | The weighted average exercise price per option as of December 31, 2008 has reflected the impact of the exercise price adjustment made in the modification as set out in the preceding paragraph. |
F-46
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
17. | STOCK BASED PAYMENTS — continued |
Options outstanding | Options vested and exercisable | |||||||||||||||||||||||||||||||
Weighted | Weighted | Aggregate | Weighted | Weighted | Aggregate | |||||||||||||||||||||||||||
average | average | intrinsic | average | average | intrinsic | |||||||||||||||||||||||||||
remaining | exercise | value as of | Number | remaining | exercise | value as of | ||||||||||||||||||||||||||
Number | contractual | price per | December 31, | vested and | contractual | price per | December 31, | |||||||||||||||||||||||||
outstanding | life | option | 2009 | exercisable | life | option | 2009 | |||||||||||||||||||||||||
Ordinary shares | 14,555,340 | 5.74 | $ | 2.40 | 19,746 | 6,780,798 | 6.43 | $ | 2.24 | 10,230 | ||||||||||||||||||||||
For the years | ||||||||
ended December 31, | ||||||||
2008 | 2009 | |||||||
Options | 1.38 | 1.44 | ||||||
For the years | ||||||||
ended December 31, | ||||||||
2008 | 2009 | |||||||
Risk-free interest rate of return | 1.08 | % | 2.40 | % | ||||
Expected term | 2.37 years | 3.31 years | ||||||
Volatility | 78.43 | % | 77.09 | % | ||||
Dividend yield | — | — |
F-47
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
17. | STOCK BASED PAYMENTS — continued |
(1) | Volatility | ||
Expected volatility is estimated based on daily stock price of comparable company for a period with length commensurate to expected term since the Company lacks historic records of its own stock prices. The companies selected for reference were Focus Media Holding Limited, Lamar Advertising Company, Clear Media Limited, Dahe Media Company Limited, and Tom Group Limited. | |||
(2) | Risk-free rate | ||
Risk free rate is based on yield of US treasury bill as of valuation date with maturity date same as the qualified IPO time. | |||
(3) | Expected term | ||
The expected term is estimated by averaging the expiration period and the vesting term. | |||
(4) | Dividend yield | ||
The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the options. The Company has no plan to pay any dividend in the foreseeable future. Therefore, the Company considers the dividend yield to be zero. | |||
(5) | Exercise price | ||
The exercise price of the options was determined by the Company’s board of directors. | |||
(6) | Fair value of underlying ordinary shares | ||
When estimating the fair value of the ordinary shares on the grant dates before the IPO of the Company in November 2007, management had considered a number of factors, including the result of a third-party appraisal and equity transactions of the Company, while taking into account standard valuation methods and the achievement of certain events. After the IPO, the closing market price of the ordinary shares of the Company as of the grant/modification date was used as the fair value of the ordinary shares on that date. |
F-48
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
18. | SHARE REPURCHASE PLAN |
19. | MAINLAND CHINA CONTRIBUTION PLAN |
20. | STATUTORY RESERVES |
F-49
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
21. | COMMITMENTS |
(a) | Rental leases | ||
The Group has entered into operating lease agreements principally for its office spaces in the PRC. These leases expire through 2012 and are renewable upon negotiation. Rental expenses under operating leases for the years ended December 31, 2007, 2008 and 2009 were $846, $1,368 and $1,915, respectively. | |||
Future minimum rental lease payments under non-cancellable operating leases agreements were as follows: |
Year | ||||
2010 | $ | 2,415 | ||
2011 | 1,156 | |||
2012 | 234 | |||
$ | 3,805 | |||
(b) | Concession fees | ||
The Group has entered into concession right agreements with vendors, such as airports, airlines and a petroleum company. The contract terms of such concession rights are usually three to five years. The concession rights expire through 2015 and are renewable upon negotiation. Concession fees charged into statement of operations for the years ended December 31, 2007, 2008 and 2009 were $11,992, $45,704 and $110,075, respectively. | |||
Future minimum concession fee payments under non-cancellable concession right agreements were as follows: |
Year | ||||
2010 | $ | 133,026 | ||
2011 | 96,659 | |||
2012 | 45,932 | |||
2013 | 21,141 | |||
2014 | 15,791 | |||
2015 and thereafter | 23,344 | |||
$ | 335,893 | |||
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Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
22. | CONTINGENT LIABILITIES |
(a) | Outdoor advertisement registration certificate |
F-51
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
22. | CONTINGENT LIABILITIES — continued |
(b) | Approval for non-advertising content |
(c) | Contingent consideration in connection with a business acquisition |
F-52
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
23. | RELATED PARTY TRANSACTIONS |
(a) | Details of outstanding balances with the Group’s related parties as of December 31, 2008 and 2009 were as follows: |
As of December 31, | ||||||||||||
Name of related parties | Relationship | 2008 | 2009 | |||||||||
AM Outdoor | Cost method investment of the Group | — | 412 | |||||||||
$ | — | $ | 412 | |||||||||
As of December 31, | ||||||||||||
Name of related parties | Relationship | 2008 | 2009 | |||||||||
BEMC | Equity method investment of the Group | 408 | 408 | |||||||||
$ | 408 | $ | 408 | |||||||||
As of December 31, | ||||||||||||
Name of related parties | Relationship | 2008 | 2009 | |||||||||
AM Outdoor | Cost method investment of the Group | — | 5,579 | |||||||||
$ | — | $ | 5,579 | |||||||||
F-53
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
23. | RELATED PARTY TRANSACTIONS — continued |
(b) | Details of related party transactions occurred for the year ended December 31, 2008 and 2009 were as follows: |
Year ended December 31, | ||||||||||||
Name of related parties | Relationship | 2008 | 2009 | |||||||||
BEMC | Equity method investment of the Group | — | 2,035 | |||||||||
AM Outdoor | Cost method investment of the Group | — | 412 | |||||||||
$ | — | $ | 2,447 | |||||||||
24. | ADJUSTEMENTS FOR ADOPTION OF ACCOUNTING PRONOUNCEMENT ON NONCONTROLLING INTETRETS |
(a) | the noncontrolling interest (previously described as minority interest) has now been included as a component of total equity whereas previously it was shown outside of equity, |
(b) | the net income or loss attributable to the noncontrolling interest is now shown as an allocation of net income for the year rather than being deducted in arriving at net income, and |
(c) | consolidated comprehensive income or loss now includes the comprehensive income or loss attributable to the noncontrolling interest. |
F-54
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
(a) | In February 2010, the Group acquired an additional 45% of the equity interest in Dongding, with cash considerations of $899. The Group held 30% equity interest in Dongding before the transaction as set out in Note 6. |
Amortization | ||||||||
period | ||||||||
Cash acquired | $ | 3 | ||||||
Other current assets | 36 | |||||||
Property and equipment | 102 | |||||||
Intangible assets: | ||||||||
Concession right agreements | 1,798 | 10 years | ||||||
Current liabilities | (611 | ) | ||||||
Deferred tax liability | (449 | ) | ||||||
Goodwill | 932 | |||||||
Total consideration | $ | 1,811 | ||||||
F-55
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In U.S. dollars in thousands, except share data)
25. | SUBSEQEUENT EVENT — continued |
(b) | In January 2010, the Group acquired 100% of the equity interest in Easy Shop Ltd. and the additional 90% of the equity interest in AM Outdoor, with cash considerations of $13,935. The Group held 10% equity interest in AM Outdoor before the transaction as set out in Note 6. |
Amortization | ||||||||
period | ||||||||
Cash acquired | $ | 209 | ||||||
Other current assets | 16,559 | |||||||
Property and equipment | 67 | |||||||
Intangible assets: | ||||||||
Contract backlog | 340 | 3 years | ||||||
Customer relationship | 677 | 3 years | ||||||
Concession right agreements | 7,646 | 7 years | ||||||
Current liabilities | (15,299 | ) | ||||||
Deferred tax liability | (2,166 | ) | ||||||
Goodwill | 7,190 | |||||||
Total consideration | $ | 15,223 | ||||||
F-56
Table of Contents
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
BALANCE SHEETS
(In U.S. dollars in thousands, except share related data)
December 31, | December 31, | |||||||
2008 | 2009 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 60,998 | $ | 30,021 | ||||
Investment in subsidiaries | 73,942 | 52,492 | ||||||
Amount due from subsidiaries | 163,770 | 183,642 | ||||||
Other current assets | 4,249 | 224 | ||||||
TOTAL ASSETS | 302,959 | 266,379 | ||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Amount due to subsidiaries | 55 | 78 | ||||||
Accrued expenses and other liabilities | 2,174 | 3,259 | ||||||
Total liabilities | 2,229 | 3,337 | ||||||
Equity | ||||||||
Ordinary Shares ($0.001 par value; 900,000,000 shares authorized in 2008 and 2009; 134,425,925 shares and 131,179,487 shares issued and outstanding in 2008 and 2009 respectively) | 134 | 132 | ||||||
Additional paid in capital | 268,881 | 268,542 | ||||||
Retained earnings (accumulated deficit) | 21,663 | (15,576 | ) | |||||
Accumulated other comprehensive income | 10,052 | 9,944 | ||||||
Total equity | 300,730 | 263,042 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 302,959 | $ | 266,379 | ||||
F-57
Table of Contents
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENTS OF OPERATIONS
(In U.S. dollars in thousands)
For the years ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Operating expenses | ||||||||||||
Selling and marketing | $ | (327 | ) | $ | (1,213 | ) | $ | (1,540 | ) | |||
General and administrative | (19,135 | ) | (5,397 | ) | (4,693 | ) | ||||||
Total operating expenses | (19,462 | ) | (6,610 | ) | (6,233 | ) | ||||||
Equity in earnings of subsidiaries | 12,863 | 32,813 | (32,041 | ) | ||||||||
Interest income | 1,489 | 3,995 | 1,035 | |||||||||
Net income (loss) attributable to holders of ordinary shares | (5,110 | ) | 30,198 | (37,239 | ) | |||||||
Deemed dividend on Series A and B convertible redeemable preferred shares — Accretion of redemption premium | (3,353 | ) | — | — | ||||||||
Net income (loss) | $ | (8,463 | ) | $ | 30,198 | $ | (37,239 | ) | ||||
F-58
Table of Contents
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENTS OF CHANGES IN EQUITY AND COMPREHENSIVE INCOME
(In U.S. dollars in thousands, except share related data)
Retained | Accumulated | |||||||||||||||||||||||||||||||
earnings | other | |||||||||||||||||||||||||||||||
Ordinary shares | Subscription | Additional | (Accumulated | comprehensive | Total | Comprehensive | ||||||||||||||||||||||||||
Shares | Amount | receivable | paid in capital | deficits) | income | equity | income (loss) | |||||||||||||||||||||||||
Balance as of January 1, 2007 | 62,400,000 | $ | 62 | $ | (62 | ) | $ | — | $ | (72 | ) | $ | 293 | $ | 221 | $ | 4,351 | |||||||||||||||
Deemed dividend on Series A convertible redeemable preferred shares — accretion of redemption premium | — | — | — | — | (1,201 | ) | — | (1,201 | ) | |||||||||||||||||||||||
Deemed dividend on Series B convertible redeemable preferred shares — accretion of redemption premium | — | — | — | — | (2,152 | ) | — | (2,152 | ) | |||||||||||||||||||||||
Series A convertible redeemable preference shares converted into ordinary shares upon initial public offering | 37,600,000 | 37 | — | 14,900 | — | — | 14,937 | |||||||||||||||||||||||||
Series B convertible redeemable preference shares converted into ordinary shares upon initial public offering | 5,925,925 | 6 | — | 41,146 | — | — | 41,152 | |||||||||||||||||||||||||
Issuance of ordinary shares upon IPO | 27,500,000 | 28 | — | 190,785 | — | — | 190,813 | |||||||||||||||||||||||||
IPO expenses | — | — | — | (2,806 | ) | — | — | (2,806 | ) | |||||||||||||||||||||||
Subscription received | — | — | 62 | — | — | — | 62 | |||||||||||||||||||||||||
Share-based compensation | — | — | — | 19,105 | — | — | 19,105 | |||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 2,584 | 2,584 | 2,584 | ||||||||||||||||||||||||
Net income | — | — | — | — | (5,110 | ) | — | (5,110 | ) | (5,110 | ) | |||||||||||||||||||||
Balance as of December 31, 2007 | 133,425,925 | 133 | — | 263,130 | (8,535 | ) | 2,877 | 257,605 | (2,526 | ) | ||||||||||||||||||||||
Ordinary shares issued for share based compensation | 1,000,000 | 1 | — | 788 | — | — | 789 | |||||||||||||||||||||||||
Share-based compensation | — | — | — | 4,963 | — | — | 4,963 | |||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 7,175 | 7,175 | 7,175 | ||||||||||||||||||||||||
Net income | — | — | — | — | 30,198 | — | 30,198 | 30,198 | ||||||||||||||||||||||||
Balance as of December 31, 2008 | 134,425,925 | 134 | — | 268,881 | 21,663 | 10,052 | 300,730 | 37,373 | ||||||||||||||||||||||||
Ordinary shares issued for share based compensation | 46,566 | 1 | — | 1,279 | — | — | 1,280 | |||||||||||||||||||||||||
Share repurchase | (3,293,004 | ) | (3 | ) | — | (7,384 | ) | — | — | (7,387 | ) | |||||||||||||||||||||
Share-based compensation | — | — | — | 5,766 | — | — | 5,766 | |||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | (108 | ) | (108 | ) | (108 | ) | |||||||||||||||||||||
Net income | — | — | — | — | (37,239 | ) | — | (37,239 | ) | (37,239 | ) | |||||||||||||||||||||
Balance as of December 31, 2009 | 131,179,487 | 132 | — | 268,542 | (15,576 | ) | 9,944 | 263,042 | (37,347 | ) | ||||||||||||||||||||||
F-59
Table of Contents
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENTS OF CASH FLOWS
(In U.S. dollars in thousands)
For the years ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income/(loss) | $ | (5,110 | ) | $ | 30,198 | $ | (37,239 | ) | ||||
Equity in (earnings) loss of subsidiaries | (12,863 | ) | (32,813 | ) | 32,041 | |||||||
Share-based compensation | 19,105 | 4,963 | 5,766 | |||||||||
CHANGES IN WORKING CAPITAL ACCOUNTS | ||||||||||||
Other current assets | (595 | ) | 3,310 | 31 | ||||||||
Other current liabilities | (513 | ) | (1,986 | ) | 381 | |||||||
Amount due to subsidiaries | (210 | ) | (614 | ) | 22 | |||||||
Amount due from subsidiaries | (4,358 | ) | (122,689 | ) | (19,871 | ) | ||||||
Net cash (used in) provided by operating activities | (4,544 | ) | (119,631 | ) | (18,869 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Acquisition of subsidiaries, net of cash acquired | — | (327 | ) | (6,000 | ) | |||||||
Prepayment for contingent consideration | — | (6,334 | ) | |||||||||
Net cash used in investing activities | (39,659 | ) | (6,661 | ) | (6,000 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from issuance of Series A convertible redeemable preferred shares | 2,920 | — | — | |||||||||
Proceeds from issuance of Series B convertible redeemable preferred shares, net of issuance of $1,000 | 39,000 | — | — | |||||||||
Proceed from issuance of ordinary shares | 190,812 | — | — | |||||||||
IPO expense paid | (2,044 | ) | — | — | ||||||||
Share repurchase | — | — | (7,387 | ) | ||||||||
Proceeds from stock options exercises | — | 789 | 1,279 | |||||||||
Net cash provided by (used in) financing activities | 230,688 | 789 | (6,108 | ) | ||||||||
Net increase (decrease) in cash | 186,485 | (125,503 | ) | (30,977 | ) | |||||||
Cash, at beginning of year | 16 | 186,501 | 60,998 | |||||||||
Cash, at end of year | $ | 186,501 | $ | 60,998 | $ | 30,021 | ||||||
F-60
Table of Contents
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
(In U.S. dollars in thousands)
1. | BASIS FOR PREPARATION |
2. | INVESTMENTS IN SUBSIDIARIES AND VARIABLE INTEREST ENTITIES |
3. | INCOME TAXES |
F-61