Bona Reports Third Quarter 2012 Financial Results

Bona Reports Third Quarter 2012 Financial Results

BEIJING, Nov. 15, 2012 (GLOBE NEWSWIRE) -- Bona Film Group Limited ("Bona" or
the "Company") (Nasdaq:BONA), a leading film distributor and vertically
integrated film company in China, today announced its unaudited financial
results for the third quarter ended September 30, 2012.

Third Quarter 2012 Financial Highlights

  * Third quarter 2012 net revenues were US$24.6 million, compared with
    US$37.5 million in the third quarter of 2011.
  * Third quarter 2012 gross profit was US$13.6 million, compared with US$21.6
    million in the third quarter of 2011.
  * Third quarter 2012 gross margin was 55.4%, compared with 57.5% in the
    third quarter of 2011.
  * Third quarter 2012 net income attributable to Bona Film Group Limited was
    US$1.3 million, or US$0.02 per diluted ADS^1, compared with net income
    attributable to Bona Film Group Limited of US$7.5 million, or US$0.13 per
    diluted ADS, in the third quarter of 2011.
  * Third quarter 2012 non-GAAP net income^2 was US$2.4 million, or US$0.04
    per diluted ADS, compared to non-GAAP net income of US$8.1 million, or
    US$0.14 per diluted ADS in the third quarter of 2011.
  * Cash and cash equivalents, term deposits and restricted cash totaled
    US$30.7 million as of September 30, 2012.
  * Cash outflow from operations totaled US$12.2 million, compared with a cash
    inflow of US$4.7 million in the third quarter of 2011.

Business Updates and Recent Highlights

  * Announced a multi-picture agreement with Fox International Productions to
    co-produce and distribute Chinese language films throughout China.
  * At the American Film Market in October 2012, secured distribution rights
    in China to Summit Entertainment's action film Red 2, starring Matt McColm
    and directed by Dean Parisot, and Emmet/Furla Films' thriller Broken City,
    starring Mark Wahlberg, Russell Crowe and Catherine Zeta-Jones, directed
    by Allen Hughes.
  * Opened the Company's first IMAX theater, Nongken Bona International
    Cineplex in Tianjin, China on October 02, 2012. This marked Bona's 15th
    theater, increasing the number of Company-owned and operated screens to
    123 nationwide.
  * Announced plans of the Company's founder, chairman and CEO, Mr. YU Dong,
    to purchase up to US$1.0 million in Bona's American depositary shares
    (ADSs) on the open market.
  * Distributed two new films in the third quarter and recognized revenue from
    Seefood, which was released at the end of the second quarter.

"During the third quarter and in early fourth quarter, we reached several
important strategic milestones that we believe will drive our growth in 2013
and over the longer-term. Our recently announced multi-film co-production
agreement with Fox International Productions is expected to provide
substantial benefit, and speaks to the depth of Bona's relationship with our
strategic shareholder News Corporation and its subsidiary companies, which we
hope to leverage through additional collaboration opportunities going
forward," said Bona Founder, Chairman and CEO, YU Dong. "We continued growing
our movie theater business through the opening of our first IMAX theater in
our new Tianjin cineplex and are progressing toward our goal of 20 owned and
operated theaters by year-end. Our North American distribution of Flying
Swords of Dragon Gate was an important step in our international expansion
efforts, while our recent acquisition of rights to distribute Red 2 in China
will give us our first strong import for 2013.

"We are confident that these recent achievements coupled with planned
strategic initiatives will further enhance Bona's already strong foundation
for growth and help take our Company to the next level of success."

Third Quarter 2012 Financial Results

Net Revenues

 
                     3Q12 3Q11 Y-o-Y%
Net Revenues (US$mm) 24.6 37.5 (34.3)%

Net revenues for the third quarter of 2012 decreased 34.3% year-over-year to
US$24.6 million. The decrease in net revenues was primarily due to declines in
distribution and investment and production revenues, as the Company
distributed two films in the third quarter of 2012, compared with four films
in the third quarter of 2011 including the nationwide success, Overheard II.

Net Revenues by Segment Operations

 
             Distribution Investment & Movie   Talent Intersegment Consolidated
                          Production   Theater Agency Elimination
Net Revenues
from
External     10.4         3.2          10.8    0.2    --           24.6
Customers
(US$mm)
Intersegment
Revenues     0.2          7.0          --      --     (7.2)        --
(US$mm)
Total Net
Revenues     10.6         10.2         10.8    0.2    (7.2)        24.6
(US$mm)

Net revenues from distribution totaled US$10.6 million. During the third
quarter of 2012, Bona distributed two new films, Naked Weapon and The Lion
Roars 2, and also recognized revenue from The Three Musketeers and Seefood,
which were released in the second quarter of 2012.

Net revenues from film investment and production were US$10.2 million, mainly
derived from Bona's investments in The Lion Roars 2, released in the third
quarter of 2012, and also from sales of the Company's television series
Bodyguards and Assassins.

Net revenues from the movie theater segment increased to US$10.8 million, with
the increase primarily attributable to the increase in the number of theaters
and screens from the Company's strategic expansion efforts. The Company owned
and operated 15 theaters as of September 30, 2012, compared with 11 as of
September 30, 2011.

Gross Profit and Gross Margin

 
                     3Q12  3Q11  Y-o-Y%
Gross Profit (US$mm) 13.6  21.6  (36.8)%
Gross Margin         55.4% 57.5% --

For the third quarter of 2012, gross profit decreased to US$13.6 million from
US$21.6 million for the third quarter of 2011, with the decrease primarily
attributable to a decline in net revenues, coupled with lower margins from the
Company's distribution segment.

Segment Profit^3 and Segment Margin

 
                         Distribution Investment & Movie   Talent Consolidated
                                      Production   Theater Agency
Segment Profit (US$mm)   3.2          3.9          6.2     0.2    13.5
As % of Total Segment    23.7%        28.8%        45.8%   1.7%   100%
Profit
Segment Margin           30.1%        39.8%        57.0%   100.0% 55.4%

Segment margin for the distribution segment decreased to 30.1% in the third
quarter of 2012 from 41.7% in the third quarter of 2011, primarily as a result
of a lower rate of commission on distribution revenue from The Lion Roars 2
and a decline in overall print and advertising expenses.

Segment margin from the Company's investment and production business was 39.8%
in the third quarter of 2012, compared with a segment margin of 29.1% in the
third quarter of 2011. This improvement in segment margin was mainly due to
the sales of the Company's television series Bodyguards and Assassins in the
third quarter of 2012.

Operating Income and Operating Margin

 
                           3Q12 3Q11  Y-o-Y%
Operating Expenses (US$mm) 12.8 13.4  (4.0)%
Operating Income (US$mm)   1.1  8.2   (87.2)%
Operating Margin           4.3% 21.9% --

Total operating expenses, including participation expenses, general and
administrative expenses, and sales and marketing expenses, decreased 4.0% to
US$12.8 million from US$13.4 million in the third quarter of 2011. The
year-over-year decrease in operating expenses was primarily due to:

  * a decrease in sales and marketing expenses for the promotion and
    advertising of the Company's distributed films, which in the third quarter
    included Naked Weapon and The Lion Roars 2; and
  * an increase in general and administrative expenses related to the
    expansion of the Company's movie theater business.

Third quarter 2012 operating margin was 4.3% compared to 21.9% in the third
quarter 2011. The year-over-year decline in operating margin primarily
resulted from increased general and administrative costs associated with
growth of the Company's movie theater segment. The Company opened one new
theater in the third quarter, and has five new theaters under construction as
of September 30, 2012.

Net Income and Net Income Attributable to Bona Film Group Limited per ADS

 
                                                                 3Q12 3Q11
Net Income (US$mm)                                               1.1  7.5
Net Income Attributable to Bona Film Group Limited per ADS (US$) 0.02 0.13

 
                                                                     3Q12 3Q11
                                                                           
Non-GAAP Net Income (US$mm)                                          2.4  8.1
                                                                           
Non-GAAP Net Income Attributable to Bona Film Group Limited per ADS  0.04 0.14
(US$)                                                                      
 

Excluding share-based compensation expense, non-GAAP net income for the third
quarter of 2012 was US$2.4 million, a decrease of US$5.7 million, or 70.5%,
over non-GAAP net income of US$8.1 million in the third quarter of 2011.

Cash and Cash Flow

As of September 30, 2012, Bona had cash and cash equivalents, term deposits
and restricted cash totaling US$30.7 million, compared with US$30.2 million as
of December 31, 2011. Operating cash flow for the third quarter of 2012 was a
net outflow of approximately US$12.2 million, compared with a net inflow of
US$4.7 million in the third quarter of 2011. The change in cash flow was
mainly attributable to increased investment in films scheduled for release in
the fourth quarter of 2012 and in 2013.

Business Outlook

Based on current market and operating conditions, the Company expects non-GAAP
net income for the fourth quarter of 2012 to be in the range of US$8.6 million
to US$9.2 million.

Based on these expectations for the remainder of 2012, the Company revises its
full year 2012 non-GAAP net income guidance from approximately US$22.0 million
to approximately US$16.0 million. Full year 2012 non-GAAP net income guidance
assumes an effective tax rate of 20.0% for the year, as well as high upfront
costs associated with the opening of nine greenfield cinemas in 2012.

Mr. Yu added, "We achieved a great deal in the first nine months of 2012. With
two potential blockbusters in The Last Tycoon and The Cold Night of Day slated
for release and the planned television premiere of King's Battles in the
fourth quarter of 2012, we are confident we can meet our revised guidance. We
have high hopes that 2013 will be a strong year for us with a solid pipeline
of films including The Grey-Hair Witch, Overheard 3 and Tracks in the Snowy
Forest. We will continue to capitalize on the tremendous opportunities that
exist through the ongoing development of China's film and entertainment
industry. We are pleased with our accomplishments to-date and look forward to
what lies ahead as we work toward our objectives of global expansion, business
growth and the creation of shareholder value."

Third Quarter 2012 Conference Call Details

Bona management will hold the earnings conference call at 8:00 p.m. Eastern
Time on Thursday, November 15, 2012 (9:00 a.m. Beijing/Hong Kong Time on
Friday, November 16, 2012). Management will discuss results and highlights of
the quarter and answer questions from investors.

The dial-in numbers for the earnings conference call are as follows:

U.S. Toll Free: +1-855-500-8701
Hong Kong Toll Free: 800-903-737
China, Domestic: 400-120-0654
International: +65-6723-9385
 
The conference ID # is 49069946

A live and archived webcast of the earnings conference call will be available
on Bona's Investor Relations website at http://ir.bonafilm.cn/events.cfm.

About Bona Film Group Limited

Bona Film Group Limited (Nasdaq:BONA) is a leading film distributor in China,
with an integrated business model encompassing film distribution, film
production, film exhibition and talent representation. Bona distributes films
to Greater China, Korea, Southeast Asia, the United States and Europe, invests
and produces movies in a variety of genres, owns and operates fifteen movie
theaters and manages a range of talented and popular Chinese artists.

For more information about Bona, please visit http://www.bonafilm.cn.

To be added to Bona's email list to receive Company news, please send your
request to bona@tpg-ir.com.

The Bona Film Group Limited logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=15750

Forward Looking Statements

This news release may contain certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and as defined in the
U.S. Private Securities Litigation Reform Act of 1995. These forward-looking
statements can be identified by terminology such as "will," "expects,"
"anticipates," "future," "intends," "plans," "believes," "estimates" and
similar statements. All statements other than statements of historical fact in
this press release are forward-looking statements and involve certain risks
and uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. These forward-looking statements are
based on management's current expectations, assumptions, estimates and
projections about the Company and the industry in which the Company operates,
but involve a number of unknown risks and uncertainties. Further information
regarding these and other risks is included in the Company's filings with the
U.S. Securities and Exchange Commission. The Company undertakes no obligation
to update forward-looking statements to reflect subsequent occurring events or
circumstances, or changes in its expectations, except as may be required by
law. Although the Company believes that the expectations expressed in these
forward-looking statements are reasonable, it cannot assure you that such
expectations will turn out to be correct, and actual results may differ
materially from the anticipated results. You are urged to consider these
factors carefully in evaluating the forward-looking statements contained
herein and are cautioned not to place undue reliance on such forward-looking
statements, which are qualified in their entirety by these cautionary
statements.

Non-GAAP Financial Measures

To supplement Bona's consolidated financial results presented in accordance
with GAAP, Bona uses the following measures defined as non-GAAP financial
measures by the SEC: non-GAAP net income and non-GAAP net income attributable
to Bona Film Group Limited per ADS, which exclude share-based compensation
expenses. The presentation of these non-GAAP financial measures is not
intended to be considered in isolation, as a substitute for, or to be superior
to the financial information prepared and presented in accordance with GAAP.
In addition, Bona's definition of non-GAAP net income may be different from
the definitions used by other companies, and therefore comparability may be
limited.

Bona believes that these non-GAAP financial measures provide meaningful
supplemental information regarding its performance by excluding certain
expenses and expenditures that may not be indicative of its operating
performance. The Company believes that both management and investors benefit
from referring to these non-GAAP financial measures in assessing the Company's
performance and when planning and forecasting future periods. The table
appears at the end of this press release has more details on the
reconciliations between GAAP financial measures that are comparable to
non-GAAP financial measures.

^1 "ADS" is American depositary share. Each two ADSs represent one ordinary
share.

^2 As used in this press release, non-GAAP net income and non-GAAP net income
attributable to Bona Film Group Limited per ADS exclude share-based
compensation. See "Non- GAAP Financial Measures" and "Reconciliation of
Non-GAAP Measures" at the end of this press release.

^3 Segment profit is gross profit less film participation expense by segments
for the periods indicated.

Unaudited Condensed Consolidated Statement of Operations
(in U.S. dollars, except share data)
                                                                    
                               Three-months ended      Nine-months ended 
                               September 30            September 30
                               2012        2011        2012        2011
                                                                    
Net revenue                    24,637,167  37,509,904  89,056,746  73,511,750
Cost of revenue                10,998,168  15,938,833  42,954,146  34,724,215
Gross profit                   13,638,999  21,571,071  46,102,600  38,787,535
                                                                    
Film participation expense      180,673     (188,766)   875,526     55,123
Sales and marketing             2,079,887   5,543,052   12,316,316  10,036,695
General and administrative      10,562,189  7,998,597   28,806,673  19,558,691
Total operating expenses        12,822,749  13,352,883  41,998,515  29,650,509
                                                                    
Government Subsidies            234,211     --          855,015     220,559
                                                                    
Operating income                1,050,461   8,218,188   4,959,100   9,357,585
                                                                    
Interest income                 56,992      73,368      256,439     178,377
Interest expense                (25,396)    (52,334)    (221,088)   (294,397)
Exchange gain (loss)            249,597     229,186     (261,816)   598,146
Other income                    71,429      71,429      216,728     418,802
Investment Loss(income)         --          --          (5,584)     -- 
                                                                    
Income before income tax
provision, equity in earnings   1,403,083   8,539,837   4,943,779   10,258,513
of affiliated companies, and
net of income taxes
                                                                    
Provision for income taxes      280,617     1,077,455   988,757     1,412,597
Equity in earnings of
affiliated companies, net of    --          36,879      5,604       10,540
income taxes
                                                                    
Net income                      1,122,466   7,499,261   3,960,626   8,856,456
                                                                    
Less: Net income (loss)
attributable to the             (175,182)   31,797      (119,001)   60,452
noncontrolling interests
                                                                    
Net income attributable to      1,297,648   7,467,464   4,079,627   8,796,004
Bona Film Group Limited
                                                                    
                                                                    
Net income attributable to
Bona Film Group Limited per                                         
ADS
Basic                          0.02        0.13        0.07        0.15
Diluted                        0.02        0.13        0.07        0.15
                                                                    
                                                                    
Weighted average shares used
in calculating net income per                                       
ordinary share
Basic                          29,528,036  29,352,631  29,464,037  29,350,578
Diluted                        30,219,935  29,727,131  30,096,919  29,869,009

 
 
Unaudited Condensed Statement of Consolidated Comprehensive Income
(in U.S. dollars)
                                                                    
                                                                    
                                  Three-months ended    Nine-months ended 
                                  September 30          September 30
                                  2012       2011       2012       2011
Net income                         1,122,466  7,499,261  3,960,626  8,856,456
Other comprehensive income, net                                     
of tax
 Foreign currency translation      1,065,775  1,193,882  187,794    2,368,294
adjustments
Comprehensive income               2,188,241  8,693,143  4,148,420  11,224,750
Less: comprehensive income
attribute to the noncontrolling    (175,773)  45,672     (132,410)  80,845
interests
Comprehensive income attributable  2,364,014  8,647,471  4,280,830  11,143,905
to Bona Film Group Ltd. 

 
 
Unaudited Condensed Consolidated Balance Sheets
(in U.S. dollars, except share data)
                                          September 30, 2012 December 31, 2011
                                                              
Cash and cash equivalents                  17,070,264         20,107,349
Term Deposit                               4,091,500          6,038,107
Restricted Cash                            9,546,843          4,066,162
Accounts receivable, net of allowance for  25,410,235         41,642,787
doubtful accounts
Prepaid expenses and other current assets  30,108,116         27,335,348
Amount due from related parties            346,154            1,183,083
Current deferred tax assets                15,714             15,697
Inventory                                  253,985            228,412
Total current assets                      86,842,811         100,616,945
                                                              
Distribution rights                        9,195,786          3,663,966
Production costs                           93,139,746         69,844,822
Prepaid film costs                         7,780,257          6,340,770
Property and equipment, net                55,216,218         40,208,447
Acquired intangible assets                 3,364,964          3,993,152
Non-current deferred tax assets            256,388            320,670
Long-term investments                      1,295,468          150,670
Goodwill                                   48,682,879         48,612,487
Total assets                              305,774,517        273,751,929
                                                              
Accounts payable                           25,963,267         27,807,118
Accrued expenses and other current         33,353,183         27,239,987
liabilities
Amounts due to related parties             5,118,064          3,027,872
Income taxes payable                       1,220,647          795,229
Bank borrowing                             22,016,060         12,561,806
Other borrowing                            8,427,930          1,831,658
Current film participation liabilities     16,157,491         16,224,219
Total current liabilities                 112,256,642        89,487,889
                                                              
Deferred income                            885,840           1,056,676
Deferred tax liability                     256,016            413,219
Total liabilities                         113,398,498        90,957,784
                                                              
Ordinary shares (par value of US$0.0005
per share, 85,000,000 shares authorized,
30,402,346 and 29,389,089 shares issued
and outstanding as of December 31, 2011    14,796            14,695
and 30,402,346 and 29,592,663 shares
issued and outstanding as of September
30, 2012.)
Additional paid-in capital                 174,179,170       169,519,847
Statutory reserves                         2,044,870          2,044,870
Accumulated deficit                        6,412,429          2,332,802
Accumulated other comprehensive income     5,637,508          5,436,305
Total Bona Film Group Limited's equity    188,288,773        179,348,519
                                                              
Noncontrolling interests                   4,087,246          3,445,626
Total equity                              192,376,019        182,794,145
                                                              
Total liabilities and equity              305,774,517        273,751,929

 
 
Unaudited Reconciliation of Non-GAAP Measures
(in U.S. dollars)
                                                        
                         Three months ended  Nine months ended
                         September 30,       September 30,
                         2012      2011      2012      2011
                                                        
Net income               1,122,466 7,499,261 3,960,626 8,856,456
                                                        
Share-based compensation 1,271,606 606,583   3,435,897 3,205,755
                                                        
Non-GAAP net income      2,394,072 8,105,844 7,396,523 12,062,211

CONTACT: In China:
         Ms. Lingzi Gui
         Bona Film Group Limited
         Tel: +86-10-5928-3663-264
         Email: ir@bonafilm.cn
        
         In the U.S.:
         The Piacente Group, Inc.
         Investor Relations
         Brandi Floberg or Lee Roth
         Tel: (212) 481-2050
         Email: bona@tpg-ir.com

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