Ku6 Media Reports Third Quarter 2010 Results

2010年11月15日 17:15美通社 】 【打印共有评论0

BEIJING, Nov. 15, 2010 / PRNewswire-Asia/ -- Ku6 Media Co., Ltd. ("Ku6 Media"or the "Company", Nasdaq: KUTV) a leader in online video portal operations inChina, today announced unaudited financial results for its third quarter endedSeptember 30, 2010.

Background

On August 17, 2010, Ku6 Media (formerly named as Hurray! Holding Co., Ltd.),sold its wireless value-added services ("WVAS") and recorded music businesses toShanda Interactive Entertainment Limited ("Shanda") in exchange for an aggregateof US$37,243,904 in cash and acquired 100% equity interest of Shanghai YishengNetwork Technology Co., Ltd. ("Yisheng"), an online radio business, from Shandain exchange for 415,384,615 newly issued ordinary shares and a minorityshareholder in exchange for 138,461,539 newly issued ordinary shares,respectively. Accordingly this release covers the third quarter and nine monthsended September 30, 2010, as well as the comparable periods of 2009, and presentthe results of Yisheng and WVAS and recorded music businesses prior to thedisposal to Shanda.

The above transactions were considered as transactions between entities undercommon control. Therefore the transaction is recorded at carryover basis and anydifference between the carrying value and the amount received or paid arerecorded in shareholders' equity. The consolidated financial statements havebeen prepared as if Yisheng had been in existence in the current corporatestructure upon the time Hurray! Holding Co., Ltd. was acquired by Shanda inAugust 2009 and the operating results of WVAS and recorded music were presentedas "Operating Results of Discontinued Operations" in the income statements.

Highlights for the Third Quarter of2010Total revenues from continuing operations, representing advertising revenuescontributed by online video portal and online radio operations, grew to $4.0million in the third quarter of 2010, up 35.1% from $2.9 million in the secondquarter of 2010.Net loss from continuing operations narrowed to $12.7 million in the thirdquarter of 2010, a decrease of 18.0% from a loss of $15.5 million in the secondquarter of 2010.Business Results

Because Ku6 was acquired in January 2010 and Yisheng was assumed to betransferred from Shanda from August 2009, the results of operations for thethree and nine months ended September 30, 2010 including Ku6's online videobusiness and Yisheng's online radio business as well as the WVAS and recordedmusic business presented in discontinued operations before disposal may not becomparable to those ended September 30, 2009, which only included Yisheng'soperating results from August 2009 and the WVAS and recorded music business indiscontinued operations.

Continuing Operations –Advertising

Total revenues from continuing operations, representing the advertisingrevenue from online video portal and online radio operation were $4.0 million inthe third quarter of 2010, up 35.1% from $2.9 million in the second quarter of2010. The substantial increase in advertising revenues was mainly driven by theexpansion of video advertisement demand, and marketing and promotion efforts.Continuous investment in content in prior quarters also made Ku6 Media moreattractive to both users and advertisers. In the third quarter of 2010, the topfive companies that had placed advertisements on Ku6's website were Lenovo,Dell, P&G, Master Kong and Wang Laoji (soft drink name).

Gross loss of continuing operations was $5.6 million in the third quarter of2010 compared with a gross loss of $8.7 million in the second quarter of 2010.The decrease in gross loss was mainly because of the increase in revenue andreduction in cost.

Operating expenses of continuing operations were $7.1 million in the thirdquarter of 2010 and compared with $6.8 million in the second quarter of 2010.

Net loss from continuing operations was $12.7 million in the third quarter of2010, a decrease of 18.0 % from a loss of $15.5 million in the second quarter of2010.

Discontinued Operations – WVAS andRecorded Music Businesses

Net loss from discontinued operations was $0.4 million in the third quarterof 2010. The net income of discontinued operations in the second quarter of 2010amounted to $2.9 million, which included a gain of $4.5 million from thedisposal of Beijing Huayi Brothers Music Co., Ltd ("Huayi Music") in May2010. Net loss of discontinued operations in the third quarter of 2009was $3.0 million. Excluding the gain from disposal of Huayi Music, thesequential decrease of net loss from discontinued operations was mainly due tothe restructure of certain WVAS businesses and resources.

Overall

Net loss attributable to Ku6 Media was $12.8 million in the third quarter of2010, $12.4 million in the second quarter of 2010, and $5.2 million in the thirdquarter of 2009.

Net loss attributable to Ku6 Media per basic and diluted ADS was $0.40 in thethird quarter of 2010, $0.42 in the second quarter of 2010, and $0.24 in thethird quarter of 2009. Weighted average basic and diluted ADS used to calculatediluted ADS per share was 31.9 million ADS in the third quarter of 2010, 29.2million ADS in the second quarter of 2010, and 22.0 million ADS in the thirdquarter of 2009.

Loss before interest expense and interest income, income taxes, depreciation,and amortization ("EBITDA", a non-GAAP measure) was $11.4 million in the thirdquarter of 2010, $11.1 million in the second quarter of 2010, and $4.1 millionin the third quarter of 2009. A reconciliation between net loss attributable toKu6 Media under U.S. generally accepted accounting principles (GAAP) and EBITDAis shown at the end of this news release.

As of September 30, 2010, the Company had $40.1 million in cash and cashequivalents, compared to $13.8 million as of June 30, 2010, and $49.7 million asof December 31, 2009.

In the third quarter of 2010, Ku6 Media has further grown into a centralsource of news and entertainment for China's online video viewers. Ku6 Media'sreports covered most of the significant domestic and international events suchas the South African World Cup in July, Zhouqu mudslide in August, and ShanghaiWorld Expo etc. Through the new channel "Warner Zone" in www.juchang.com, Ku6 Media started to offerlatest TV series and library title movies produced by Warner Brothers. Thenumber of Ku6 Media's self-produced contents was increasing stably, included the24-hour live-broadcast internet reality shows Crazy Soccer Fans,Modern Girls, and other hit programs.

Mr. Shanyou (Kevin) Li, the Chief Executive Officer of Ku6 Media, commented,"We are encouraged to see our advertising revenues increasing and net loss keptnarrowing continuously, after the completion of the massive businessrealignments. In the quarter, we started to cooperate with two major Hollywoodstudios to offer more international contents to our users. We also believe thesuccess of our self-produced programs will further differentiate Ku6 Media fromour industry peers and sharpen our competitive edge in China's online videoadvertising market."

Note to the Financial Information

The unaudited financial information disclosed above is preliminary. Theresults for the nine months ended September 30, 2010 are not necessarilyindicative of the results expected for the full year or for any future period.Adjustments to the financial statements may be made when audit work iscompleted, which could result in significant differences between the auditedfinancial statements and the preliminary unaudited financial informationcontained in this press release.

Conference Call

Ku6's management team will host a conference call on Monday, November 15,2010 at 7:00 a.m. EST, which is Monday, November 15, 2010 at 8:00 p.m. inBeijing and Hong Kong, to present an overview of the company's financialperformance and business operations.

Dial-in numbers:

U.S.A.:

+1- 866-770-7129

International:

+1- 617-213-8067

Password:

37011537

A replay will be available from November 15, 2010 for 7 days.

USA:

+1- 888-286-8010

International:

+1- 617-801-6888

Password:

23187271

A live and archived webcast of the conference call will also be available athttp://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=187793&eventID=3509097

About Ku6 Media Co., Ltd.

Ku6 Media Co., Ltd. (Nasdaq: KUTV) is a leading online video company inChina. Through its two premier online brands and online videowebsites, www.ku6.com and www.juchang.com, Ku6 provides video informationservices and entertainment in China.

As a leading online video portal, www.ku6.com provides a video platform forsharing and watching user-generated content. It also provides online video news,reports, and other interactive entertainment programs for its users.

Ku6's www.juchang.com offers a broad array of copyright compliant content,such as movies, television series, and other video programs sourced from Ku6'sglobal content partners, with all content having high definition quality andfast speeds for seamless viewing. For more information about Ku6, pleasevisit http://www.ku6.com/about/ku6/.

Shanghai Yisheng Network Technology Co., Ltd. ("Yisheng") is one of theleading online audio service operators in China. It provides the completesolutions based on the internet audio system, such as online radio channel,online games built-in radio and other services to its customers. CurrentlyYisheng has set up about 20 online game built-in radio channels, covering morethan 80% of Chinese popular online games. Yisheng is a wholly-owned subsidiaryof Ku6 Media. For more information about Yisheng, please visithttp://www.radio-arts.com/

Hurray! Holding Co., Ltd., changed its name to Ku6 Media Co., Ltd., on August17, 2010.

Investors are cautioned that the size and businesses of Ku6 Media changed onAugust 17, 2010, and that the financial results presented here are provided as amatter of record and do not reflect Ku6 Media's businesses as they exist fromAugust 17, 2010 onward.

Forward-looking Statements

This news release contains statements of a forward-looking nature. Thesestatements are made under the "safe harbor" provisions of the U.S. PrivateSecurities Litigation Reform Act of 1995. You can identify these forward-lookingstatements by terminology such as "believes," "could," "expects," "may,""might," "should," "will," or "would," and by similar statements. The accuracyof these statements may be affected by a number of business risks anduncertainties that could cause actual results to differ materially from thoseprojected or anticipated, including risks related to: continued competitivepressures in China's internet video and audio portal market; changes intechnology and consumer demand in this market; the risk that Ku6 Media may notbe able to control its expenses in future periods; changes in the policies inChina or the laws governing the operations and content of internet video andaudio portal websites; the success of Ku6 Media's ability to sell brandadvertising and other services on its websites; and other risks outlined in theCompany's filings with the Securities and Exchange Commission, including theCompany's (filed under the name of Hurray! Holding Co., Ltd.) annual report onForm 20-F. Ku6 Media does not undertake any obligation to update thisforward-looking information, except as required under law.

For more information, pleasecontact:

Mr. Matthew Zhao (English andChinese)

Investor Relations Officer

Telephone +86 10 5758 6818 inBeijing

ir@ku6.com

Ku6 Media Co.,Ltd.

Unaudited Condensed ConsolidatedBalance Sheets

As of September

30,2010

As of December

31,2009

U.S. dollars inthousands

(Revised)*

Assets

Current assets:

Cash and cashequivalents

$40,148

$49,744

Short-terminvestment

-

10,000

Accounts receivable, net of allowancefor doubtful accounts

7,718

4,010

Accounts receivable due from relatedparty

160

52

Prepaid expenses and other currentassets

3,043

1,890

Other receivable due from relatedparties

3,087

63

Inventories

23

202

Total currentassets

54,179

65,961

Deposits

-

332

Property and equipment,net

7,861

1,472

Acquired intangible assets,net

27,770

1,645

Goodwill

10,057

2,099

Total assets

$99,867

$71,509

Liabilities and shareholders'equity

Currentliabilities:

Accounts payable

$14,702

$4,880

Accounts payable due to relatedparty

2,508

-

Accrued expenses and other currentliabilities

11,938

6,332

Other payable due to relatedparties

4,697

1,904

Income taxpayable

-

655

Current deferred taxliabilities

-

12

Total currentliabilities

33,845

13,783

Long-term payable

-

18

Non-current deferred taxliabilities

4,936

403

Total liabilities

38,781

14,204

Redeemable non-controllinginterest

-

371

Shareholders'equity:

Ordinary shares

174

110

Additional paid-incapital

129,557

76,606

Accumulateddeficit

(67,682)

(31,595)

Accumulated other comprehensiveincome

(879)

9,956

Total Ku6 Media Co., Ltd.shareholders' equity

61,170

55,077

Non-controllinginterests

(84)

1,857

Total shareholders'equity

61,086

56,934

*: The balance as of December 31, 2009includes the assets and liabilities of the WVAS and recorded music business aswell as Yisheng’s online radio business due to common control transactions,while the balance as of September 30, 2010 only reflects the assets andliabilities of Ku6’s online video business acquired in 2010 and Yisheng’s onlineaudio business.

Ku6 Media Co., Ltd.

Unaudited Condensed ConsolidatedStatements of Operations

For the three monthsended

For the nine monthsended

September 30,

September 30,

September 30,

September 30,

2010

2009

(Revised)

2010

2009

(Revised)*

(in thousands of U.S. dollars, exceptshare and per share data)

Revenues:

Advertising

3,961

266

9,151

266

Third parties

3,802

108

8,637

108

Related parties

159

158

514

158

Total revenues

3,961

266

9,151

266

Cost of revenues:

Advertising

9,548

129

27,996

129

Third parties

8,883

129

26,092

129

Related parties

665

-

1,904

-

Total cost ofrevenues

9,548

129

27,996

129

Gross loss

(5,587)

137

(18,845)

137

Operatingexpenses:

Productdevelopment

-

-

-

-

Selling andmarketing

3,983

123

9,576

204

General andadministrative

3,147

2,343

9,722

4,652

Total operatingexpenses

7,130

2,466

19,298

4,856

Operating loss from continuingoperations

(12,717)

(2,329)

(38,143)

(4,719)

Interest income

23

74

50

298

Other income

-

-

-

2

Interest expense

(19)

0

(31)

0

Loss before income taxexpense

(12,713)

(2,255)

(38,124)

(4,419)

Income taxexpense

10

3

31

3

Net loss from continuingoperations

(12,703)

(2,252)

(38,093)

(4,416)

Discontinuedoperations:

Net loss from discontinuedoperations, net of tax

(407)

(3,032)

(3,139)

(14,087)

Gain from disposal of discontinuedoperations, net of tax

-

-

4,487

222

Net income (loss) from discontinuedoperations, net of tax

(407)

(3,032)

1,348

(13,865)

Net loss

(13,110)

(5,284)

(36,745)

(18,281)

Less: Net loss attributable to thenon-controlling interest

271

50

658

50

Net loss attributable to Ku6 MediaCo., Ltd.

(12,839)

(5,234)

(36,087)

(18,231)

Loss per share-basic anddiluted

Loss from continuing operationsattributable to Ku6 Media Co., Ltd. ordinary shareholders

($0.00)

($0.00)

($0.01)

($0.00)

Income (loss) from discontinuedoperations attributable to Ku6 Media Co., Ltd. ordinaryshareholders

($0.00)

($0.00)

$0.00

($0.01)

Net loss attributable to Ku6 MediaCo., Ltd. ordinary shareholders

($0.00)

($0.00)

($0.01)

($0.01)

Loss per ADS-basic anddiluted

Loss from continuing operationsattributable to Ku6 Media Co., Ltd. ordinary shareholders

($0.39)

($0.10)

($1.26)

($0.20)

Income (loss) from discontinuedoperations attributable to Ku6 Media Co., Ltd. Ordinaryshareholders

($0.01)

($0.14)

$0.04

($0.63)

Net loss attributable to Ku6 MediaCo., Ltd. ordinary shareholders

($0.40)

($0.24)

($1.22)

($0.83)

Weighted average shares used in pershare calculation-basic and diluted

3,194,781,254

2,196,177,940

2,967,456,124

2,195,793,818

Weighted average ADSs used in per ADScalculation-basic and diluted

31,947,813

21,961,779

29,674,561

21,957,938

*: Operating results for the three andnine months ended September 30, 2010 include Ku6's online video business andYisheng's online radio business as well as the WVAS and recorded music businesspresented in discontinued operations before disposal, which are not comparableas those as of September 30, 2009, which only included Yisheng's operating results fromAugust 2009 and the WVAS and recorded music business in discontinued operations.

The use of non-GAAP financial measures:

To supplement its consolidated financial statements presented in accordancewith generally accepted accounting principles ("GAAP") in the United States, Ku6Media uses a non-GAAP measure EBITDA, which is adjusted based on resultsprepared in accordance with GAAP excluding certain expenses. Ku6 Media'smanagement believes the use of this non-GAAP financial measure provides usefulinformation to both management and investors by excluding certain expenses. Thisnon-GAAP financial measure also facilitates management's internal comparisons tothe Company's historical performance and our competitors' operating results. Ku6Media believes this non-GAAP financial measure is useful to investors inallowing for greater transparency with respect to supplemental information usedby management in its financial and operational decision making. The presentationof this additional financial information is not intended to be considered inisolation or as a substitute for the financial information prepared andpresented in accordance with GAAP. Please see below financial table for areconciliation of EBITDA.

Reconciliation of Net loss attributable to Ku6 Media under GAAP to EBITDA forthe following periods:

For the three monthsended

For the nine monthsended

September 30,

September 30,

September 30,

September 30,

2010

2009

2010

2009

(in thousands of U.S. dollars, except

share and per sharedata)

(in thousands of U.S. dollars, except

share and per sharedata)

Net loss attributable to Ku6 MediaCo., Ltd.

(12,839)

(5,234)

(36,087)

(18,231)

Add (deduct):

Interest expense

5

3

25

9

Income tax expense (benefit)

(30)

683

(56)

224

Depreciation andamortization

1,496

549

3,732

2,083

Interest income

(18)

(97)

(87)

(372)

EBITDA

(11,386)

(4,096)

(32,473)

(16,287)

SOURCEKu6 Media Co., Ltd

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