UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 6-K
______________
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
The Securities Exchange Act of 1934
For the Month of March, 2010
Commission File Number 333-152305
CHINA MASS MEDIA INTERNATIONAL ADVERTISING CORP.
6th Floor, Tower B, Corporate Square, 35 Finance Street
Xicheng District, Beijing 100032
People’s Republic of China
(86-10) 8809-1099
(Address of Principal Executive Offices)
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F x Form 40-F o
(Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1).)
Yes o No x
(Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7).)
Yes o No x
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)
Yes o No x
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- )
CHINA MASS MEDIA REPORTS FOURTH QUARTER AND YEAR 2009 UNAUDITED FINANCIAL RESULTS
BEIJING, CHINA -- (March 8, 2010) -- China Mass Media Corp. (“China Mass Media” or the “Company”) (NYSE: CMM), a leading media company in China, today announced its unaudited financial results for the fourth quarter and year ended December 31, 2009.
Fourth Quarter 2009 Highlights1
| § | Total net revenues were RMB 117.2 million (US$ 17.2 million), an increase of 51.2% from the fourth quarter of 2008, an increase of 45.2% from the third quarter of 2009 and 11.6% over the top range of the revenue guidance provided previously. |
| § | Operating income was RMB 36.6 million (US$ 5.4 million), an increase of 159.8% from the fourth quarter of 2008 and an increase of 902.0% from the third quarter of 2009. |
| § | Net income was RMB 32.0 million (US$ 4.7 million), an increase of 87.5% from the fourth quarter of 2008 and an increase of 692.2% from the third quarter of 2009. |
| § | During the fourth quarter 2009, net cash used in operating activities was RMB 171.9 million ($25.2 million), compared to net cash provided by operating activities of RMB 81.7 million in the fourth quarter of 2008 and net cash used in operating activities of RMB 396.6 million in the third quarter of 2009. |
Fiscal Year 2009 Financial Highlights
| § | Total net revenues were RMB425.0 million (US$ 62.3 million) in 2009, an increase of 20.4% from fiscal year 2008. |
| § | Operating income was RMB 102.2 million (US$ 15.0 million) in 2009, a decrease of 12.6% from fiscal year 2008. |
| § | Net income was RMB 96.0 million (US$ 14.1 million) in 2009, a decrease of 13.0% from fiscal year 2008. |
| § | Basic and diluted earnings per ADS were RMB 4.02 (US$ 0.59) in 2009, a decrease of 28.6% from RMB 5.63 in fiscal year 2008. |
“We are pleased to announce a strong improvement in our financial results in the past quarter,” commented Mr. Shengcheng Wang, Chairman and Chief Executive Officer of China Mass Media. “The strong growth we achieved both sequentially and compared to the same period one year ago was primarily driven by the recovery of advertising spending in China.”
“Conditions in the Chinese advertising market began to improve towards the end of 2009. We saw our clients start to become much more active in allocating their advertising budgets to both new and old projects during the fourth quarter. We took advantage of our strong media resources to meet their increased demand and higher advertising budgets.
“Back in the second quarter of last year, we took the opportunity during a particularly weak period to initiate number of changes to reposition ourselves for future growth. Since then, we recruited a number of senior sales executives and doubled the size of our sales force. In addition, we restructured our sales team to better cater to our customers and implemented a new incentive scheme to better motivate our sales people. We believe we started to see the full benefit of these moves in the fourth quarter as it allowed us to take full advantage of the recovery in our market.”
“By utilizing our expanded marketing strategy, we were able to seize a number of new market opportunities. We continued to add new clients and were able to effectively increase revenues from our existing clients. In particular, we are proud to report that we secured a number of significant new direct accounts. We will continue to improve our quality of service to meet the demands of our direct customers. Our core products, the ‘Day Time Advertising Package’ and ‘Television Guide’ on CCTV-1 and 2 saw revenue growth of over 35% on a year-over-year basis and more than 80% growth on a quarter-over-quarter basis. We also recorded strong revenue and net profit growth on CCTV-4, which has historically been a loss making channel for us.”
“We are confident that the economy and the advertising industry will remain strong throughout 2010. We closely reviewed our stock of media resources last quarter and decided to intentionally give up certain high risk and low profitability products. We intend to focus our efforts on the sales and marketing of our primary resources to maximize our profit margin.
Mr. Eric Cheung, the Company’s Chief Financial Officer, added, “Our core strategy in 2010 continues to be focused on further strengthening the sales of our media resources by continuing to expand our client base, while simultaneously increasing revenues from existing clients. As always, we will continue to enhance our production and client service capabilities to provide a one-stop comprehensive solution for our clients. Our growth strategy continues to focus on building the business organically through the sales of our media resources, while monitoring the market for potential strategic acquisition opportunities to diversify into different advertising sectors in order to provide a comprehensive and one-stop solution to our customers.
3
Fourth Quarter 2009 Financial Results
Revenues
Revenues from advertising agency services were RMB 117.0 million (US$ 17.1 million) in the fourth quarter of 2009, an increase of 75.3% from RMB 66.8 million in the same period in 2008, and an increase of of 46.6% from RMB 79.8 million in the third quarter of 2009. The increase from the fourth quarter of 2008 resulted primarily from strong advertising spending recovery and seasonality factors, as the fourth quarter is traditionally the peak season for advertising expenditures. The Company also secured new advertisers during the quarter, generating higher revenues from ‘Day Time Advertising Package,’ ‘Television Guide’ and CCTV-4 sales.
Revenues from production and sponsorship services were RMB 5.3 million (US$ 0.78 million) in the fourth quarter of 2009, a decrease of 61.8% from RMB 13.9 million in the fourth quarter of 2008, and an increase of 88.0% from RMB 2.8 million in the third quarter of 2009.
The year over year decrease was mainly attributable to the decreases in commercial advertising production and less sponsorship revenue secured from promotion of public service announcements.
Sequentially, the increase was mainly due to the completion and delivery of several commercial advertisements, including a core branding promotion film produced for CCTV.
Operating costs and expenses
Cost of revenues was RMB 67.3 million (US$ 9.9 million) in the fourth quarter of 2009, an increase of 33.5% from RMB 50.4 million in the fourth quarter of 2008 and an increase of 3.4% from RMB 65.1 million in the third quarter of 2009. The increase from the fourth quarter of 2008 was primarily due to higher media resource underwriting costs for CCTV-4.
Sales and marketing expenses were RMB 6.6 million (US$ 0.96 million) in the fourth quarter of 2009, an increase of 95.1% from RMB 3.4 million in the fourth quarter of 2008 and an increase of 68.3% from RMB 3.9 million in the third quarter of 2009. The increase from both the fourth quarter of 2008 and sequentially was primarily due to the increase in sales commission and higher salaries incurred for the Company’s additional sales management and employees.
General and administrative expenses were RMB 6.6 million (US$ 0.97 million) in the fourth quarter of 2009, a decrease of 31.2% from RMB 9.6 million in the fourth quarter of 2008 and a decrease of 17.5% from RMB 8.0 million in the third quarter of 2009. The decrease from both the fourth quarter of 2008 and sequentially was primarily due to the reversal of bad-debt allowance upon collection of a client’s receivable.
4
Operating income, as a result of the foregoing factors, was RMB 36.6 million (US$ 5.4 million) in the fourth quarter of 2009, an increase of 159.8% from RMB 14.1 million in the fourth quarter of 2008 and an increase of 902.0% from RMB 3.7 million in the third quarter of 2009. The Company’s operating margin was 31.3%, 4.5% and 18.2% for the three months ended December 31, 2009, September 30, 2009 and December 31, 2008, respectively.
Net income was RMB 32.0 million (US$ 4.7 million) in the fourth quarter of 2009, an increase of 87.5% from RMB 17.1 million in the same period of 2008 and an increase of 692.2% from RMB 4.0 million in the third quarter of 2009. The Company’s net margin was 27.3%, 5.0% and 22.0% for the three months ended December 31, 2009, September 30, 2009 and December 31, 2008, respectively.
Basic and diluted earnings per ADS for the fourth quarter of 2009 increase to RMB 1.34 (US$ 0.2), compared to basic and diluted earnings per ADS of RMB 0.71 for the fourth quarter of 2008 and RMB 0.17 for the third quarter of 2009. Each ADS represents 30 ordinary shares.
Fiscal Year 2009 Financial Results
Total Net Revenues
Total net revenues were RMB 425.0 million (US$ 62.3 million) in fiscal year 2009, an increase of 20.4 %, or RMB 72.0 million from RMB 353.0 million in fiscal year 2008. The year-over-year increase was primarily due to the recovery of the Chinese economy, the effective implementation of the Company’s marketing strategy and a substantial increase in the sales of the Company’s ‘Day Time Advertising Package,’ ‘Television Guide,’ CCTV-4 products and recognition of 2008 Beijing Olympics-related special event revenue in 2009.
Operating Costs and Expenses
Operating costs and expenses were RMB 322.8 million (US$ 47.3 million) in fiscal year 2009, an increase of 36.7%, or RMB 86.7 million, from RMB 236.1 million in fiscal year 2008. The year-over-year increase in operating costs and expenses was mainly due to higher media resource underwriting costs for CCTV-4.
Operating Income and Margin
As a result of the foregoing factors, operating income was RMB 102.2 million (US$ 15.0 million) in fiscal year 2009, a decrease of 12.6 %, or RMB 14.7 million, from RMB 116.9 million in fiscal year 2008. Operating margin was 24.0 % in 2009 compared to 33.1% in 2008.
Net Income
Net income was RMB 96.0 million (US$ 14.1 million) in fiscal year 2009, a decrease of 13.0%, or RMB 14.4 million, from RMB 110.4 million in fiscal year 2008. Basic and diluted earnings per ADS were RMB 4.02 (US$ 0.59) in fiscal year 2009, as compared to basic and diluted earnings per ADS of RMB 5.63 (US$0.83) in fiscal year 2008.
5
Cash and cash equivalents
As of December 31, 2009, the Company had cash and cash equivalents of RMB 508.8 million ($74.5 million) compared with RMB 680.6 million at September 30, 2009. The decrease in cash and cash equivalents was mainly due to payments to CCTV and a related party for advertising media fees payables.
Business Outlook
The Company currently expects to generate total net revenues of between RMB58 million to RMB 64 million for the first quarter of 2010, which represents a potential decrease of 57.3% to 61.3 % compared to the first quarter of 2009. The expected decrease will be mainly because the Company no longer owns the advertising rights to CCTV’s Chinese New Year Gala show, and because the Company now has fewer media resources available for sale on CCTV-4 due to efforts to improve profit margins. The guidance also reflects a potential decrease of 45.4% to 50.5% compared to the fourth quarter of 2009, primarily due to seasonality factors.
This forecast reflects the Company’s current and preliminary estimate, which is subject to change.
Conference Call
China Mass Media will host a conference call and live webcast at 8:00 a.m. Eastern Time (EST) (9:00 p.m., Beijing time) on March 8, 2010.
The dial-in details for the live conference call are as follows:
| - U.S. Toll Free Number: | +1 866 761 0748 |
| - International dial-in number: | +1 617 614 2706 |
| - China Toll Free Number: | +10 800 130 0399 |
| - Hong Kong Toll Free Number: | + 800 96 3844 |
| Passcode: | CMM |
A live webcast of the conference call will be available on the investor relations section of the Company’s website at: http://www.chinaThe Company.com. A replay of the webcast will be available for three months.
A telephone replay of the call will be available for twenty-four hours after the conclusion of the conference call. The dial-in details for the replay are as follows:
| - U.S. Toll Free Number: | +1 888 286 8010 |
| - International dial-in number: | +1 617 801 6888 |
| Passcode: | 21500418 |
6
Safe Harbor Statement:
This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking statements involve a number of risks and uncertainties.
A number of factors could cause the Company’s actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Securities and Exchange Commission filings of the Company. China Mass Media does not undertake any obligation to update any forward-looking statements, except as required under applicable law.
About China Mass Media Corp.
As a leading television advertising company in China, the Company provides a full range of advertising services, including advertising agency services, creative production services, public service announcement sponsorship services, and other value added services. The Company currently offers more than 460 minutes of advertising time slots on CCTV Channels 1, 2, 4, E and F. CCTV is the largest television network in China. The Company has produced over 300 advertisements and has won a number of prestigious advertising awards in China.
http://www.chinammia.com
For further information, contact:
China Mass Media Corp.
China Mass Media Julie Sun, +86-10-8809 1050 Vice President of Corporate Development juliesun@chinammia.com |
Christensen Hong Kong: Roger Hu, +852 2117 0861 rhu@ChristensenIR.com | United States: Linda Bergkamp, +1-480-614-3004 lbergkamp@christensenIR.com |
7
CHINA MASS MEDIA CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
| THREE MONTHS ENDED, | ||||||||||||||||
December 31, 2008 | September 30, 2009 | December 31, 2009 | December 31, 2009 | |||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Revenues: | ||||||||||||||||
| Advertising agency services | 66,758,679 | 79,826,310 | 117,037,635 | 17,146,110 | ||||||||||||
| Advertisement production and sponsorship services | 13,945,730 | 2,831,067 | 5,323,586 | 779,910 | ||||||||||||
| Total revenues | 80,704,409 | 82,657,377 | 122,361,221 | 17,926,020 | ||||||||||||
| Less: Business tax | (3,198,067 | ) | (1,959,112 | ) | (5,201,731 | ) | (762,058 | ) | ||||||||
| Total net revenues | 77,506,342 | 80,698,265 | 117,159,490 | 17,163,962 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of revenues | (50,430,360 | ) | (65,123,775 | ) | (67,347,729 | ) | (9,866,498 | ) | ||||||||
| Sales and marketing expenses | (3,361,620 | ) | (3,897,454 | ) | (6,559,458 | ) | (960,966 | ) | ||||||||
| General and administrative expenses | (9,609,843 | ) | (8,020,381 | ) | (6,614,127 | ) | (968,975 | ) | ||||||||
| Total operating costs and expenses | (63,401,823 | ) | (77,041,610 | ) | (80,521,314 | ) | (11,796,439 | ) | ||||||||
| Operating income | 14,104,519 | 3,656,655 | 36,638,176 | 5,367,523 | ||||||||||||
| Interest and investment income | 5,021,924 | 1,647,683 | 1,090,272 | 159,726 | ||||||||||||
| Other expense / (income), net | 363,420 | (189,169 | ) | 458,323 | 67,145 | |||||||||||
| Income before tax | 19,489,863 | 5,115,169 | 38,186,771 | 5,594,394 | ||||||||||||
| Income tax expense | (2,419,222 | ) | (1,075,459 | ) | (6,182,705 | ) | (905,771 | ) | ||||||||
| Net income | 17,070,641 | 4,039,710 | 32,004,066 | 4,688,623 | ||||||||||||
| Earnings per ordinary share, basic and diluted | 0.02 | 0.006 | 0.045 | 0.007 | ||||||||||||
| Earnings per ADS, basic and diluted | 0.71 | 0.17 | 1.34 | 0.20 | ||||||||||||
| Shares used in calculating earnings per ordinary share, basic | 716,375,000 | 716,375,000 | 716,375,000 | 716,375,000 | ||||||||||||
| Shares used in calculating earnings per ordinary share, diluted | 716,375,000 | 721,319,072 | 718,460,480 | 718,460,480 | ||||||||||||
| Shares used in calculating earnings per ADS, basic | 23,879,167 | 23,879,167 | 23,879,167 | 23,879,167 | ||||||||||||
| Shares used in calculating earnings per ADS, diluted | 23,879,167 | 24,043,989 | 23,948,683 | 23,948,683 | ||||||||||||
8
CHINA MASS MEDIA CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| YEAR ENDED, | ||||||||||||||||
December 31, 2007 | December 31, 2008 | December 31, 2009 | December 31, 2009 | |||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Revenues: | ||||||||||||||||
| Advertising agency services | 202,637,180 | 334,052,626 | 397,279,413 | 58,201,763 | ||||||||||||
| Special events services | 15,990,464 | - | 14,600,000 | 2,138,912 | ||||||||||||
| Advertisement production and sponsorship services | 60,018,223 | 34,934,895 | 30,304,634 | 4,439,654 | ||||||||||||
| Total revenues | 278,645,867 | 368,987,521 | 442,184,047 | 64,780,329 | ||||||||||||
| Less: Business tax | (23,110,351 | ) | (16,005,683 | ) | (17,189,579 | ) | (2,518,288 | ) | ||||||||
| Total net revenues | 255,535,516 | 352,981,838 | 424,994,468 | 62,262,041 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of revenues | (30,147,760 | ) | (203,399,803 | ) | (270,239,024 | ) | (39,590,241 | ) | ||||||||
| Sales and marketing expenses | (5,599,870 | ) | (8,204,365 | ) | (19,362,444 | ) | (2,836,614 | ) | ||||||||
| General and administrative expenses | (8,504,520 | ) | (24,486,814 | ) | (33,193,760 | ) | (4,862,913 | ) | ||||||||
| Total operating costs and expenses | (44,252,150 | ) | (236,090,982 | ) | (322,795,228 | ) | (47,289,768 | ) | ||||||||
| Operating income | 211,283,366 | 116,890,856 | 102,199,240 | 14,972,273 | ||||||||||||
| Interest and investment income | 10,773,971 | 15,102,846 | 9,494,036 | 1,390,884 | ||||||||||||
| Other expense / (income), net | (3,128,447 | ) | (1,441,420 | ) | 532,325 | 77,986 | ||||||||||
| Income before tax | 218,928,890 | 130,552,282 | 112,225,601 | 16,441,143 | ||||||||||||
| Income tax expense | (10,618,863 | ) | (20,138,650 | ) | (16,196,322 | ) | (2,372,774 | ) | ||||||||
| Net income | 208,310,027 | 110,413,632 | 96,029,279 | 14,068,369 | ||||||||||||
| Net income allocated to participating preferred shares | (36,495,917 | ) | (9,751,329 | ) | - | - | ||||||||||
| Net income available to ordinary shareholders | 171,814,110 | 100,662,303 | 96,029,279 | 14,068,369 | ||||||||||||
| Earnings per ordinary share, basic and diluted | 0.42 | 0.19 | 0.13 | 0.02 | ||||||||||||
| Earnings per ADS, basic | 12.50 | 5.63 | 4.02 | 0.59 | ||||||||||||
| Earnings per ADS, diluted | 12.50 | 5.63 | 4.01 | 0.59 | ||||||||||||
| Shares used in calculating earnings per ordinary share, basic | 412,400,000 | 536,149,385 | 716,375,000 | 716,375,000 | ||||||||||||
| Shares used in calculating earnings per ordinary share, diluted | 412,400,000 | 536,149,385 | 718,755,755 | 718,755,755 | ||||||||||||
| Shares used in calculating earnings per ADS, basic | 13,746,667 | 17,871,646 | 23,879,167 | 23,879,167 | ||||||||||||
| Shares used in calculating earnings per ADS, diluted | 13,746,667 | 17,871,646 | 23,958,525 | 23,958,525 | ||||||||||||
9
CHINA MASS MEDIA CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2008 | December 31, 2009 | December 31, 2009 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | 566,889,261 | 508,778,014 | 74,536,400 | |||||||||
| Short-term investments | 500,000,000 | 80,000,000 | 11,720,066 | |||||||||
| Notes receivable | - | 1,937,450 | 283,838 | |||||||||
| Accounts receivable, net of allowance for doubtful accounts of RMB 4,319,808 and RMB 6,507,638 as of December 31, 2008 and 2009 | 14,367,193 | 375,568 | 55,021 | |||||||||
| Prepaid expenses and other current assets | 68,301,523 | 64,560,752 | 9,458,204 | |||||||||
| Deposit paid to a related party | 1,000,000 | - | - | |||||||||
| Total current assets | 1,150,557,977 | 655,651,784 | 96,053,529 | |||||||||
| Non-current assets: | ||||||||||||
| Property and equipment, net | 57,261,208 | 55,464,401 | 8,125,581 | |||||||||
| Total non-current assets | 57,261,208 | 55,464,401 | 8,125,581 | |||||||||
| Total Assets | 1,207,819,185 | 711,116,185 | 104,179,110 | |||||||||
| Liabilities and Shareholder’s Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | 330,085,426 | 35,846,460 | 5,251,536 | |||||||||
| Customer advances | 75,422,483 | 20,657,147 | 3,026,289 | |||||||||
| Dividend payable | 96,335,115 | - | - | |||||||||
| Accrued expenses and other current liabilities | 13,765,090 | 18,133,340 | 2,656,549 | |||||||||
| Taxes payable | 51,958,677 | 23,198,999 | 3,398,673 | |||||||||
| Amount due to related parties | 252,209,794 | 127,068,624 | 18,615,659 | |||||||||
| Total current liabilities | 819,776,585 | 224,904,570 | 32,948,706 | |||||||||
| Total Liabilities | 819,776,585 | 224,904,570 | 32,948,706 | |||||||||
| Commitments and Contingencies | ||||||||||||
| Shareholders’ equity: | ||||||||||||
| Ordinary shares ($0.001 par value; 900,000,000,000 shares authorized; 716,375,000 issued and outstanding as of December 31, 2008 and 2009) | 4,893,500 | 4,893,500 | 716,902 | |||||||||
| Additional paid-in capital | 330,214,330 | 332,354,066 | 48,690,146 | |||||||||
| Statutory reserves | 25,000,000 | 25,000,000 | 3,662,520 | |||||||||
| Retained earnings | 27,934,770 | 123,964,049 | 18,160,836 | |||||||||
| Total Shareholders’ Equity | 388,042,600 | 486,211,615 | 71,230,404 | |||||||||
| Total Liabilities and Shareholder’s Equity | 1,207,819,185 | 711,116,185 | 104,179,110 | |||||||||
10
CHINA MASS MEDIA CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| THREE MONTHS ENDED | ||||||||||||||||
December 31, 2008 | September 30, 2009 | December 31, 2009 | December 31, 2009 | |||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income | 17,070,641 | 4,039,710 | 32,004,066 | 4,688,622 | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Depreciation expense | 337,967 | 766,329 | 795,561 | 116,550 | ||||||||||||
| Investment income | (2,341,877 | ) | (956,768 | ) | (703,452 | ) | (103,056 | ) | ||||||||
| Exchange loss/ (gain) | (356,177 | ) | 202,609 | 36,929 | 5,410 | |||||||||||
| Share-based compensation | 844,190 | 443,108 | (332,378 | ) | (48,694 | ) | ||||||||||
| Changes in assets and liabilities: | ||||||||||||||||
| Notes receivable | - | (2,392,460 | ) | 455,010 | 66,659 | |||||||||||
| Accounts receivable | (1,156,339 | ) | 3,763,062 | 345,110 | 50,559 | |||||||||||
| Prepaid expense and other current assets | (8,721,551 | ) | (887,194 | ) | (29,549,357 | ) | (4,329,005 | ) | ||||||||
| Deposit paid to a related party | - | 391,664 | 1,000,000 | 146,501 | ||||||||||||
| Other non-current assets | - | - | - | |||||||||||||
| Accounts payable | 16,234,690 | (303,994,566 | ) | (135,696,443 | ) | (19,879,641 | ) | |||||||||
| Customer advances | 37,266,895 | 29,770,913 | (39,071,097 | ) | (5,723,948 | ) | ||||||||||
| Accrued expenses and other current liabilities | 5,076,807 | (3,656,772 | ) | 2,377,819 | 348,352 | |||||||||||
| Taxes payable | 1,639,875 | (366,530 | ) | 4,838,147 | 708,793 | |||||||||||
| Amount due to related parties | 15,789,345 | (123,772,918 | ) | (8,364,352 | ) | (1,225,384 | ) | |||||||||
| Net cash (used in) / provided by operating activities | 81,684,466 | (396,649,813 | ) | (171,864,437 | ) | (25,178,282 | ) | |||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchase of short-term investments | (100,000,000 | ) | (50,000,000 | ) | - | - | ||||||||||
| Purchase of property and equipment | (6,337,232 | ) | (415,185 | ) | (644,551 | ) | (94,427 | ) | ||||||||
| Proceeds from investment income | 1,986,603 | 923,891 | 726,247 | 106,396 | ||||||||||||
| Net cash provided by / (used in) investing activities | (104,350,629 | ) | (49,491,294 | ) | 81,696 | 11,969 | ||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Payment for issuance of ordinary shares | (2,690,942 | ) | - | - | - | |||||||||||
| Net cash used in financing activities | (2,690,942 | ) | - | - | - | |||||||||||
| Effect of foreign currency exchange | 356,177 | (202,609 | ) | (36,931 | ) | (5,410 | ) | |||||||||
| Net decrease in cash and cash equivalents | (25,000,928 | ) | (446,343,716 | ) | (171,819,672 | ) | (25,171,723 | ) | ||||||||
| Cash and cash equivalents at beginning of the period | 591,890,189 | 1,126,941,402 | 680,597,686 | 99,708,123 | ||||||||||||
| Cash and cash equivalents at end of the period | 566,889,261 | 680,597,686 | 508,778,014 | 74,536,400 | ||||||||||||
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CHINA MASS MEDIA CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| YEAR ENDED | ||||||||||||||||
December 31, 2007 | December 31, 2008 | December 31, 2009 | December 31, 2009 | |||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income | 208,310,027 | 110,413,632 | 96,029,279 | 14,068,369 | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Depreciation expense | 1,202,418 | 1,045,357 | 3,074,157 | 450,367 | ||||||||||||
| Deemed related party contribution | 1,977,497 | - | - | - | ||||||||||||
| Investment income | (2,040,583 | ) | (9,772,000 | ) | (5,994,921 | ) | (878,261 | ) | ||||||||
| Exchange loss | - | 1,440,592 | 363,439 | 53,244 | ||||||||||||
| Share-based compensation | - | 1,699,429 | 2,139,736 | 313,473 | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||
| Notes receivable | - | - | (1,937,450 | ) | (283,838 | ) | ||||||||||
| Accounts receivable | (5,105,931 | ) | (9,067,862 | ) | 13,991,625 | 2,049,785 | ||||||||||
| Prepaid expense and other current assets | (4,093,197 | ) | (13,963,074 | ) | (27,448,791 | ) | (4,021,271 | ) | ||||||||
| Amount due from a related party | - | (1,000,000 | ) | 1,000,000 | 146,501 | |||||||||||
| Other non-current assets | 1,930,830 | - | - | - | ||||||||||||
| Accounts payable | 191,910,225 | 211,538,660 | (294,238,966 | ) | (43,106,252 | ) | ||||||||||
| Customer advances | 52,467,975 | (24,463,189 | ) | (54,765,336 | ) | (8,023,167 | ) | |||||||||
| Accrued expenses and other current liabilities | (867,638 | ) | 9,010,938 | 4,368,249 | 639,952 | |||||||||||
| Taxes payable | 8,415,217 | 5,693,062 | 1,821,883 | 266,907 | ||||||||||||
| Amount due to related parties | - | 169,162,446 | (87,952,669 | ) | (12,885,139 | ) | ||||||||||
| Net cash (used in) / provided by operating activities | 454,106,840 | 451,737,991 | (349,549,765 | ) | (51,209,330 | ) | ||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchase of short-term investments | (280,000,000 | ) | (280,000,000 | ) | ||||||||||||
| Proceed from short-term investments | - | - | 420,000,000 | 61,530,348 | ||||||||||||
| Proceed from sale of long-term investment held on behalf of shareholder | - | 15,037,390 | - | - | ||||||||||||
| Purchase of property and equipment | (255,257 | ) | (6,685,021 | ) | (23,451,242 | ) | (3,435,626 | ) | ||||||||
| Proceeds from investment income | 1,861,139 | 9,153,918 | 6,602,921 | 967,333 | ||||||||||||
| Net cash provided by / (used in) investing activities | (278,394,118 | ) | (262,493,713 | ) | 403,151,679 | 59,062,055 | ||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from issuance of ordinary shares | - | 287,744,060 | - | - | ||||||||||||
| Proceeds from issuance of preferred shares | - | 603 | - | - | ||||||||||||
| Movement of shareholder’s cash and investment accounts/payable to shareholder | 766,967 | (15,043,236 | ) | - | - | |||||||||||
| Cash distributed and payment for fixed assets transferred in connection with the Reorganization | (370,828,921 | ) | (2,683,208 | ) | (15,000,000 | ) | (2,197,512 | ) | ||||||||
| Dividends distributed | (177,390,728 | ) | (29,194,814 | ) | (96,335,115 | ) | (14,113,174 | ) | ||||||||
| Net cash (used in) / provided by financing activities | (547,452,682 | ) | 240,823,405 | (111,335,115 | ) | (16,310,686 | ) | |||||||||
| Effect of foreign currency exchange | (912,908 | ) | (1,440,592 | ) | (378,046 | ) | (55,385 | ) | ||||||||
| Net (decrease) / increase in cash and cash equivalents | (372,652,868 | ) | 428,627,091 | (58,111,247 | ) | (8,513,346 | ) | |||||||||
| Cash and cash equivalents at beginning of the year | 510,915,038 | 138,262,170 | 566,889,261 | 83,049,746 | ||||||||||||
| Cash and cash equivalents at end of the year | 138,262,170 | 566,889,261 | 508,778,014 | 74,536,400 | ||||||||||||
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CHINA MASS MEDIA CORP.
SELECTED OPERATING DATA
THREE MONTHS ENDED | ||||||||||||
December 31, 2008 | September 30, 2009 | December 31, 2009 | ||||||||||
Number of programs secured during the period | 40 | 41 | 41 | |||||||||
Total advertising time obtained (seconds) | 2,927,880 | 2,938,860 | 2,933,640 | (1) | ||||||||
Total advertising time sold (seconds) | 249,379 | 264,660 | 746,667 | (2) | ||||||||
| (1) | Represents the total amount of time during regular television programs secured through our contracts with CCTV, including 549,000 seconds from CCTV-1, CCTV-2 and CCTV-4 and 2,384,640 seconds from CCTV-E and CCTV-F. |
| (2) | During the three-month periods ended December 31, 2008, September 30, 2009 and December 31, 2009, the company has sold nil, 27,840 seconds and 392,160 seconds of advertisements in CCTV-E and CCTV-F |
YEAR ENDED | ||||||||||||
December 31, 2007 | December 31, 2008 | December 31, 2009 | ||||||||||
Number of programs secured during the period | 3 | 40 | 41 | |||||||||
Total advertising time obtained (seconds)(3) | 783,240 | 6,818,220 | 11,660,760 | (3) | ||||||||
Total advertising time sold (seconds)(4) | 631,620 | 1,022,861 | 2,127,473 | (4) | ||||||||
| (3) | Represents the total amount of time during regular television programs secured through our contracts with CCTV, including 2,199,960 seconds from CCTV-1, CCTV-2 and CCTV-4 and 9,460,800 seconds from CCTV-E and CCTV-F. |
| (4) | During the year ended December 31, 2007, 2008 and 2009, the company has sold nil, nil and 1,038,840 seconds of advertisements in CCTV-E and CCTV-F. |
RECONCILIATIONS OF UNAUDITED NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES (*)
Three months ended December 31, 2008 | Three months ended December 31, 2009 | |||||||||||||||||||||||
| GAAP Result | Adjustment | Non-GAAP Result | GAAP Result | Adjustment | Non-GAAP Result | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| Operating income | 14,104,519 | 844,190 | 14,948,709 | 36,638,176 | (332,378 | ) | 36,305,798 | |||||||||||||||||
| Net income | 17,070,641 | 844,190 | 17,914,831 | 32,004,066 | (332,378 | ) | 31,671,688 | |||||||||||||||||
Year ended December 31, 2008 | Year ended December 31, 2009 | |||||||||||||||||||||||
| GAAP Result | Adjustment | Non-GAAP Result | GAAP Result | Adjustment | Non-GAAP Result | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||
| Operating income | 116,890,856 | 1,699,429 | 118,590,285 | 102,199,240 | 2,139,736 | 104,338,976 | ||||||||||||||||||
| Net income | 110,413,632 | 1,699,429 | 112,113,061 | 96,029,279 | 2,139,736 | 98,169,015 | ||||||||||||||||||
(*) The adjustment is for share-based compensation expenses.
13
Non-GAAP Disclosure
In addition to the unaudited consolidated financial information presented in accordance with US GAAP, management uses a non-GAAP measure of net income excluding non-cash share-based compensation. Company management believes excluding the share-based compensation expenses from non-GAAP financial measures is useful for the investors’ understanding of overall current financial performance. Nevertheless, the limitation of using non-GAAP financial measures excluding share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in the Company’s business.
The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures” set forth above, which shall be read in conjunction with the preceding financial information presented in accordance with US GAAP.
14
| CHINA MASS MEDIA INTERNATIONAL ADVERTISING CORP. | |||
| (Registrant) | |||
| Date: March 8, 2010 | By: | /s/ Shengcheng Wang | |
| Name: Shengcheng Wang | |||
| Title: Chairman and Chief Executive Officer | |||
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