China Digital TV Announces Unaudited Fourth Quarter and Full Year 2013 Results

China Digital TV Announces Unaudited Fourth Quarter and Full Year 2013 Results

PR Newswire

BEIJING, Feb. 25, 2014

BEIJING, Feb. 25, 2014 /PRNewswire/ -- China Digital TV Holding Co., Ltd.
(NYSE: STV) ("China Digital TV" or the "Company"), the leading provider of
conditional access ("CA") systems to China's expanding digital television
market, today announced its unaudited financial results for the fourth quarter
and full year ended December 31, 2013.

Highlights for the Fourth Quarter 2013

  oNet revenues in the fourth quarter of 2013 were US$25.9 million,
    representing an 11.9% increase from the same period in 2012 and a 12.1%
    increase from the third quarter of 2013.
  oChina Digital TV shipped approximately 4.95 million smart cards in the
    fourth quarter of 2013, compared to 4.07 million in the same period in
    2012 and 4.76 million in the third quarter of 2013.
  oGross margin in the fourth quarter of 2013 was 76.4%, compared to 76.2% in
    the same period in 2012 and 74.0% in the third quarter of 2013.
  oDiluted earnings per American depositary share (one ADS representing one
    ordinary share), or ADS, in the fourth quarter of 2013 were US$0.17,
    compared to US$0.07 in the same period in 2012 and US$0.08 in the third
    quarter of 2013.

Highlights for Full Year 2013

  oNet revenues in 2013 were US$87.2 million, representing a 1.8% decrease
    from 2012.
  oChina Digital TV shipped approximately 17.00 million smart cards in 2013,
    compared to 15.35 million smart cards in 2012.
  oGross margin was 75.1% in 2013, compared to 76.5% in 2012.
  oDiluted earnings per ADS in 2013 were US$0.41 compared to US$0.12 in 2012.

"I am pleased to report that during the fourth quarter of 2013, increased
demand resulted in China Digital TV shipping its highest volume of smart cards
for the year, significantly exceeding our expectations," said Mr. Jianhua Zhu,
China Digital TV's chairman and chief executive officer. "In addition to usual
seasonal factors ahead of the Chinese New Year, the better-than-expected
shipment volume for this quarter was largely due to increased smart card
demand from key Chinese cable TV operators, including in Jiangsu, Guangdong,
Sichuan, Shandong, and Jiangxi provinces. Smart card shipments in 2013
increased 11% from 2012, which was partially driven by the pent up demand
after the completion of network consolidation in most provinces in 2012 led to
delays in smart card purchases by certain cable operators."

Mr. Zhu continued, "The development and optimization of our value-added
services and products, and the leveraging of our core technologies for new
growth, remain key areas of focus for China Digital TV. As part of our ongoing
efforts, in the fourth quarter of 2013, we launched the interactive video on
demand transmission channel IP Quadrature Amplitude Modulation in Fujian
Province and expanded the deployment of our cloud computing platforms to
Kunshan and Changshu. In addition to value-added services, solid growth in the
overseas market continues to be an important driver of our market
diversification strategy, and in the fourth quarter and full year 2013 we made
excellent progress in key markets such as Venezuela, Taiwan and India."

"In 2014, we will continue building on the achievements we made during 2013
solidifying our competitiveness in the mainland China smart card market,
strengthening our smart card position overseas, and developing our
diversification strategy internationally with a focus on new value-added
service areas like video on demand systems and cloud services. In addition, we
will also focus on building out our offering in the Internet TV and mobile TV
sectors, where we believe our core technology should provide China Digital TV
a strategic opportunity to expand into different business sectors," said Mr.
Zhu.

Mr. Zhenwen Liang, China Digital TV's chief financial officer, commented,
"China Digital TV was very pleased with the strong financial performance we
saw in the fourth quarter of 2013. Our strength in the market enabled us to
capitalize on the overall uptick in demand for smart cards, resulting in
improved top and bottom line performance year-on-year and sequentially. In
addition, we have continued to promote our strategy of investing in research
and development to further improve our value-added services."

Fourth Quarter 2013 Results

(Note: Unless otherwise stated, all financial statement measures stated in
this press release are based on generally accepted accounting principles in
the United States ("U.S. GAAP").)

In the fourth quarter of 2013, China Digital TV generated net revenues of
US$25.9 million, an increase of 11.9% from the fourth quarter of 2012 and an
increase of 12.1% from the third quarter of 2013. The year-over-year increase
in net revenues was principally due to an increase in sales of smart cards,
which was partially offset by decreases in sales of others products, such as
surface mounted chips and multimedia home entertainment boxes. The
quarter-over-quarter increase in net revenues was principally due to an
increase in sales of smart cards.

In the fourth quarter of 2013, revenues from the Company's top five customers
accounted for 25.8% of total revenues, compared to 26.2% in the third quarter
of 2013.

Revenue Breakdown

             For the three months ended                For the twelve months
                                                        ended
             December31,  September30,  December31,  December31,  December31,

             2013          2013           2012          2013          2012
             (in U.S. dollars, in thousands)
Products:
Smart Cards  $   23,360    $    21,315    $   19,329    $   78,256    $   75,185
Other            1,576          1,001         2,785         4,670         10,134
products
Subtotal         24,936         22,316        22,114        82,926        85,319
Services:
Head-end
system           531            286           623           2,731         2,175
integration
Head-end
system           484            235           177           1,103         987
development
Licensing        259            335           420           1,098         1,246
income
Royalty          46             279           203           512           382
income
Other            -              1             91            77            135
services
Subtotal         1,320          1,136         1,514         5,521         4,925
Total        $   26,256    $    23,452    $   23,628    $   88,447    $   90,244
revenues

Revenues from smart cards and other products were US$24.9 million in the
fourth quarter of 2013, an increase of 12.8% from the same period in 2012 and
an increase of 11.7% from the third quarter of 2013. Sales of smart cards and
other products accounted for 95.0% of total revenues in the fourth quarter of
2013, compared to 95.2% in the third quarter of 2013. The year-over-year
increase was primarily due to an increase in the shipment volume of smart
cards, which was partially offset by a decrease in sales of other products,
such as surface mounted chips and multimedia home entertainment boxes. The
quarter-over-quarter increase was principally due to increase in the shipment
volume of smart cards.

Revenues from services were US$1.3 million in the fourth quarter of 2013, a
decrease of 12.8% from the same period in 2012 and an increase of 16.2% from
the third quarter of 2013. Service revenues accounted for 5.0% of total
revenues in the fourth quarter of 2013. The year-over-year decrease was
primarily due to a decline in revenues from licensing income, royalty income
and head-end system integration, which was partially offset by an increase in
the revenue from head-end system development. The quarter-over-quarter
increase was principally due to increases in revenues from head-end system
development and head-end system integration, which were partially offset by
decreases in royalty income and licensing income.

Gross profit in the fourth quarter of 2013 was US$19.8 million, an increase of
12.2% from the same period in 2012 and an increase of 15.9% from the third
quarter of 2013. Gross margin, which is equal to gross profit divided by net
revenues, was 76.4% in the fourth quarter of 2013, compared to 76.2% in the
same period in 2012 and 74.0% in the third quarter of 2013. The year-over-year
increase in gross margin was primarily due to an increase in revenues from
sales of smart cards, as well as a decrease in the proportion of total
revenues accounted for by revenues from other products, which have lower
margins than smart cards. The quarter-over-quarter increase in gross margin
was mainly due to an increase in revenues from smart cards sales and a lower
inventory write-down as compared to the third quarter of 2013.

In the fourth quarter of 2013, the average selling price (the "ASP") of smart
cards increased by 5.2% compared to the third quarter of 2013. In addition,
the unit cost of smart cards increased by 10.7% compared to the third quarter
of 2013.

Operating expenses  in the fourth quarter of 2013 were US$10.2 million, a
decrease of 5.1% from the same period in 2012 and a decrease of 9.2% from the
third quarter of 2013.

  oResearch and development expenses for the fourth quarter of 2013 were
    US$4.1 million, a decrease of 8.0% from the same period in 2012 and a
    decrease of 22.3% from the third quarter of 2013. The year-over-year
    decrease was primarily due to decreases in office rent expenses and
    personnel related expenses resulting from lower headcount. The
    quarter-over-quarter decrease was mainly due to decreases in personnel
    related expenses resulting from lower headcount and lower average
    compensation, as well as decreases in project development expenses.
  oSelling and marketing expenses for the fourth quarter of 2013 were US$3.9
    million, a decrease of 2.0% from the same period in 2012 and an increase
    of 11.1% from the third quarter of 2013. The year-over-year decrease was
    mainly attributable to a decrease in marketing expenditures. The
    quarter-over-quarter increase was primarily due to an increase in
    marketing expenditures.
  oGeneral and administrative expenses for the fourth quarter of 2013 were
    US$2.1 million, a decrease of 4.7% from the same period in 2012 and a
    decrease of 10.2% from the third quarter of 2013. The year-over-year
    decrease was mainly due to decreases in allowance for doubtful accounts
    and consulting fees, which was partially offset by an increase in
    personnel related expenses resulting from higher average compensation and
    share-based compensation expenses relating to options granted to employees
    in 2013. The quarter-over-quarter decrease was mainly due to decreases in
    personnel related expenses resulting from lower average compensation and a
    decrease in allowance for doubtful accounts.

Income from operations in the fourth quarter of 2013 was US$9.7 million, a
38.8% increase from the same period in 2012 and a 63.2% increase from the
third quarter of 2013.

Operating margin, defined as income from operations divided by net revenues,
in the fourth quarter of 2013 was 37.3%, compared to 30.1% in the same period
in 2012 and 25.6% in the third quarter of 2013.

Interest income  in the fourth quarter of 2013 was US$ 0.6 million, a 41.5%
decrease from the same period in 2012 and an 18.7% increase from the third
quarter of 2013.

Income tax expenses in the fourth quarter of 2013 were US$1.1 million, a
decrease of 76.7% from the same period in 2012 and a decrease of 50.4% from
the third quarter of 2013. In the fourth quarter of 2013, the Company's PRC
operating subsidiary, Beijing Super TV Co., Ltd., was designated as a "key
software enterprise" for the tax years of 2013 and 2014 by the relevant PRC
government authorities and, as a result, was entitled to a preferential income
tax rate of 10% in each of those years. As the Company accrued income tax
expenses at a rate of 15% in the first three quarters of 2013, the accrued
income tax expenses were partially reversed in this quarter. The
year-over-year decrease was primarily due to the preferential income tax
adjustment in the fourth quarter of 2013, and a US$1.2 million in tax
liabilities that were accrued in relation to certain VAT refunds in the fourth
quarter of 2012. The quarter-over-quarter decrease was mainly due to the
preferential income tax adjustment in the fourth quarter of 2013, which was
partially offset by an increase in taxable income.

Net loss attributable to noncontrolling interest in the fourth quarter of 2013
was US$0.3 million, a decrease of 20.7% from the same period in 2012 and a
decrease of 44.8% from the third quarter of 2013. The year-over-year and
quarter-over-quarter decreases were largely due to a decrease in net loss
incurred by the Company's majority-owned subsidiaries.

Net income attributable to China Digital TV Holding Co., Ltd. in the fourth
quarter of 2013 was US$10.0 million, an increase of 136.6% from the same
period in 2012 and an increase of 111.4% from the third quarter of 2013.

Non-GAAP net income attributable to China Digital TV Holding Co., Ltd.,
defined as net income excluding certain one-time or non-cash expenses, such as
share-based compensation expenses, amortization of acquired intangible assets
from business acquisitions and equity method investments, in the fourth
quarter of 2013 was US$10.4 million, an increase of 136.6% from the same
period in 2012 and an increase of 99.3% from the third quarter of 2013. For
more information on these non-GAAP financial measures, please see the tables
captioned "Reconciliations of non-GAAP measures" set forth at the end of this
release.

Balance Sheet and Cash Flow

As of December 31, 2013, China Digital TV had cash and cash equivalents and
restricted cash totaling US$80.0 million. In the fourth quarter of 2013, cash
flow generated from operations was approximately US$9.9 million.

Full Year 2013 Results

Net revenues in 2013 were US$87.2 million, a 1.8% decrease from US$88.7
million in 2012 primarily due to a decrease in revenues from other products,
such as surface mounted chips and multimedia home entertainment boxes, which
was partially offset by increases in revenues from smart cards sales.

Revenues from smart cards and other products in 2013 were US$82.9 million, a
decrease of 2.8% from 2012, mainly due to a decline in the sales of other
products, such as surface mounted chips and multimedia home entertainment
boxes, which were partially offset by an increase in revenues from sales of
smart cards. Revenues from smart cards and other products represented 93.8% of
total revenues in 2013.

In 2013, revenues from the Company's top five customers accounted for 20.6% of
total revenues, compared to 21.0% in 2012.

Revenues from services were US$5.5 million in 2013, an increase of 12.1% from
2012, primarily due to an increase in head-end system integration. Revenues
from services represented 6.2% of total revenues in 2013.

Gross profit was US$65.5 million in 2013, a decrease of 3.5% from US$67.9
million in 2012. Gross margin was 75.1% in 2013, compared to 76.5% in 2012.
The decrease in gross margin was primarily due to an increase in cost of
revenues, attributable to inventory write-downs with respect to surface
mounted chips, video-on-demand and multimedia home entertainment boxes.

In 2013, the ASP of smart cards decreased by 5.8% compared to 2012. In
addition, the unit cost of smart cards decreased by 14.5% compared to 2012.

Operating expenses in 2013 were US$44.2 million, an increase of 9.2% from
US$40.5 million in 2012.

  oResearch and development  expenses in 2013 increased by 10.6% to US$19.3
    million from US$17.4 million in 2012, mainly due to an increase in
    personnel related expenses resulting from higher headcount of research and
    development staff, as well as increases in project development expenses.
  oSales and marketing expenses in  2013 increased by 9.9% to US$15.0 million
    from US$13.6 million in 2012. The increase was primarily due to an
    increase in marketing expenditures.
  oGeneral and administrative  expenses in 2013 increased by 5.5% to US$10.0
    million from US$9.4 million in 2012. The increase was primarily due to
    increases in allowance for doubtful accounts and personnel related
    expenses resulting from increased headcount of general and administrative,
    which was partially offset by decreases in consulting expenses and
    share-based compensation expenses.

Income from operations in 2013  was US$21.3 million, a decrease of 22.3% from
2012.

Operating margin, defined as income from operations divided by net revenues,
was 24.5% in 2013, compared to 30.9% in 2012.

Net income attributable to China Digital TV Holding Co., Ltd. in 2013 was
US$24.4 million, an increase of 252.4% from US$6.9 million in 2012.

U.S. Federal Income Taxation

Based on the Company's analysis of the value of the Company's assets as of
December 31, 2013, the Company was classified as a passive foreign investment
company ("PFIC") during 2013 for U.S. federal income tax purposes. In
addition, based on analyses of the value of the Company's assets as of the end
of earlier years, the Company was a PFIC during the taxable years 2009 through
2012 for U.S. federal income tax purposes. The Company has substantial passive
assets in the form of cash and cash equivalents, among others, and can provide
no assurance that the Company will not continue to be classified as a PFIC for
the taxable year 2014 or future taxable years, as PFIC status is tested each
year and depends on the Company's assets and income in such year. U.S. holders
of the Company's ADSs during any year in which the Company was treated as a
PFIC will be subject to special rules. Further details about the PFIC rules
are available in the Company's annual reports on Form 20-F for the fiscal
years ended December 31, 2012. U.S. holders of the Company's ADSs should
generally be able to make a mark-to-market election under the PFIC rules. U.S.
holders of Company's ADSs are advised to consult their own tax advisors
regarding the application of the PFIC rules to their particular circumstances,
including the consequences of making a mark-to-market election.

Business Outlook

Based on information available as of February 25, 2014, China Digital TV
expects smart card shipments for the first quarter of 2014 to be in the range
of 3.5 million and 3.8 million. Net revenues for the first quarter of 2014 are
expected to be in the range of US$ 16.4 million and US$ 17.7 million.

Conference Call Information

The Company will hold an earnings conference call at 7:00 p.m. on Tuesday,
February 25, 2014, U.S. Eastern Time (8:00 a.m. on Wednesday, February 26,
2014, Beijing/Hong Kong Time).

Conference Call Dial-in Information
United States Toll Free: +1-866-519-4004
International:           +65-6723-9381
Hong Kong:               +852-2475-0994
China Toll Free:         +400-620-8038 and +800-819-0121
Passcode:                China Digital TV Earnings Call

Please dial-in ten minutes before the call is scheduled to begin and provide
the passcode to join the call.

A replay of the call will be available for one week between 11:00 p.m. on
February 25, 2014 and 11:59 p.m. on March 4, 2014, U.S. Eastern Time.

Replay Information
United States: +1-855-452-5696
International: + 61-2-8199-0299
Conference ID: 90802399

In addition, a live and archived webcast of this conference call will be
accessible through the Investor Relations section of China Digital TV's
website at http://ir.chinadtv.cn .

Safe Harbor Statements

This announcement contains 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. Such forward-looking statements
are made under the "safe harbor" provisions of 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," "may," "should" and similar expressions. Such forward-looking
statements include, without limitation, statements regarding the outlook for
the first quarter of 2014 and comments by management in this announcement
about trends in the CA systems, digital television, cable television and
related industries in the PRC and China Digital TV's strategic and operational
plans and future market positions. China Digital TV may also make
forward-looking statements in its periodic reports filed with the U.S.
Securities and Exchange Commission, in its annual report to shareholders, in
press releases and other written materials and in oral statements made by its
officers, directors or employees to third parties. Statements that are not
historical facts, including statements about China Digital TV's beliefs and
expectations, are forward-looking statements. Forward-looking statements
involve inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from projections contained or implied in
any forward-looking statement, including but not limited to the following:
competition in the CA systems, digital television, cable television and
related industries in the PRC and the impact of such competition on prices,
our ability to implement our business strategies, changes in technology, the
progress of the television digitalization in the PRC, the structure of the
cable television industry or television viewer preferences, changes in PRC
laws, regulations or policies with respect to the CA systems, digital
television, cable television and related industries, including the extent of
non-PRC companies' participation in such industries, and changes in political,
economic, legal and social conditions in the PRC, including the government's
policies with respect to economic growth, foreign exchange and foreign
investment.

Further information regarding these and other risks and uncertainties is
included in our annual report on Form 20-F and other documents filed with the
U.S. Securities and Exchange Commission. China Digital TV does not assume any
obligation to update any forward-looking statements, which apply only as of
the date of this press release.

About China Digital TV

Founded in 2004, China Digital TV is the leading provider of CA systems to
China's expanding digital television market. CA systems enable television
network operators to manage the delivery of customized content and services to
their subscribers. China Digital TV conducts substantially all of its business
through its PRC subsidiary, Beijing Super TV Co., Ltd., and its affiliate,
Beijing Novel-Super Digital TV Technology Co., Ltd., as well as subsidiaries
of its affiliate.

For more information please visit the Investor Relations section of China
Digital TV's website at http://ir.chinadtv.cn. The information contained in
that website is not a part of this announcement.

For investor and media inquiries, please contact:

In China:

Nan Hao
Investor Relations Manager
Tel: +86-10-6297-1199 x 9780
Email: ir@chinadtv.cn

Josh Gartner
Brunswick Group
Tel: +86-10-5960-8610
Email: chinadigital@brunswickgroup.com

In the US:

Cindy Zheng
Brunswick Group
Tel: +1-212-333 3810
E-mail: chinadigital@brunswickgroup.com



China Digital TV Holding Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
(in thousands of U.S. dollars, except share and per share data )
                                      For the three months ended
                                     December 31,  September 30,  December 31,

                                     2013          2013           2012
Revenues:
Products                           $ 24,936      $  22,316      $ 22,114
Services                             1,320          1,136         1,514
Total revenues                         26,256         23,452        23,628
Business and sales related taxes     (339)          (339)         (475)
Net revenues                           25,917         23,113        23,153
Cost of revenues:
Products                             (5,065)        (4,927)       (4,390)
Services                             (1,040)        (1,089)       (1,109)
Total cost of revenues                 (6,105)        (6,016)       (5,499)
Gross Profit                           19,812         17,097        17,654
Operating expenses:
Research and development expenses    (4,127)        (5,309)       (4,484)
Selling and marketing expenses       (3,921)        (3,528)       (4,000)
General and administrative           (2,105)        (2,343)       (2,209)
expenses
Total operating expenses               (10,153)       (11,180)      (10,693)
Income from operations                 9,659          5,917         6,961
Interest income                      603            508           1,031
Other income                         609            4             273
Income before income tax               10,871         6,429         8,265
Income tax (expenses) / benefits
Income tax-current                   (468)          (1,641)       (12,205)
Income tax-deferred                  (598)          (508)         7,636
Net income before net (loss)/income
                                       9,805          4,280         3,696
from equity method investments
Net (loss)/income from equity
method                                 (39)           (29)          200

investments
Net income                             9,766          4,251         3,896
Net loss attributable to               275            498           347
noncontrolling interest
Net income attributable to China
Digital                              $ 10,041      $  4,749       $ 4,243

TV Holding Co., Ltd shareholders
Net income per share attributable
to

ordinary shareholders of China
Digital

TV Holding Co., Ltd
Basic                               $ 0.17        $  0.08        $ 0.07
Diluted                             $ 0.17        $  0.08        $ 0.07
Net income                          $ 9,766       $  4,251       $ 3,896
Other comprehensive income, net of
tax
Foreign currency translation
                                       1,164          189           1,242
adjustment
Comprehensive income                  10,930         4,440         5,138
Comprehensive loss attributable to
                                       263            494           320
noncontrolling interest
Comprehensive income attributable
to

ordinary shareholders of China       $ 11,193      $  4,934       $ 5,458
Digital

TV Holding Co., Ltd
Weighted average shares used in

calculating net income per ordinary

share
Basic                                 59,131,103     59,110,789    59,056,895
Diluted                               59,328,650     59,131,310    59,193,350



China Digital TV Holding Co., Ltd.
Unaudited Condensed Consolidated Balance Sheets
(in thousands of U.S. dollars)
                                                    December 31,  December 31,
ASSETS
                                                    2013          2012
Current assets:
Cash and cash equivalents                 $   79,085    $   130,697
Restricted cash                                919           18
Notes receivable                               4,484         4,101
Accounts receivable, net                       45,905        38,283
Inventories                                    5,027         5,678
Prepaid expenses and other current             4,032         5,245
assets
Deferred costs-current                        141           299
Deferred income taxes - current                2,546         1,503
Total current assets                                   142,139       185,824
Long-term receivable                           224           -
Property and equipment, net                   1,170         1,630
Intangible assets, net                         6             198
Goodwill                                      563           547
Long-term investments - equity method          3,551         4,268
investments
Deferred costs-non-current                     214           301
Deferred income taxes - non-current            939           797
Total assets                                           148,806       193,565
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                              2,207         1,215
Notes payable                                  884           -
Accrued expenses and other current             13,134        12,305
liabilities
Dividend payable                              57            76,999
Deferred revenue – current                    6,542         7,473
Income tax payable                            997           3,476
Deferred income taxes - current                8,222         4,812
Government subsidies - current                 710           -
Total current liabilities                              32,753        106,280
Deferred revenue-non-current                  135           255
Government subsidies-non-current               4,946         3,867
Total Liabilities                                      37,834        110,402
EQUITY
China Digital TV Holding Co., Ltd. shareholders'

equity:
Ordinary shares                               30            30
Additional paid-in capital                    32,037        29,724
Statutory reserve                             17,907        17,856
Retained earnings                              31,122        6,765
Accumulated other comprehensive income        28,940        26,083
Total China Digital TV Holding Co., Ltd
                                                        110,036       80,458
shareholders' equity
Noncontrolling interest                                 936           2,705
Total equity                                            110,972       83,163
TOTAL LIABILITIES AND EQUITY                       $   148,806   $   193,565



China Digital TV Holding Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
(in thousands of U.S. dollars, except share and per share data )
                                                  For the twelve months ended
                                                  December 31,   December 31,

                                                  2013           2012
Revenues:
Products                                        $  82,926      $ 85,319
Services                                           5,521         4,925
Total revenues                                       88,447        90,244
Business and sales related taxes                   (1,283)       (1,501)
Net revenues                                         87,164        88,743
Cost of revenues:
Products                                           (17,009)      (16,880)
Services                                           (4,652)       (3,952)
Total Cost of Revenues                               (21,661)      (20,832)
Gross Profit                                         65,503        67,911
Operating expenses:
Research and development expense                   (19,251)      (17,402)
Selling and marketing expenses                     (14,957)      (13,606)
General and administrative expenses                (9,959)       (9,444)
Total operating expenses                             (44,167)      (40,452)
Income from operations                               21,336        27,459
Interest income                                    1,901         6,318
Interest expense                                   -             (739)
Loss from forward contract                         -             (690)
Impairment loss on long-term investments           -             (4,487)
Other income                                       534           549
Income before income tax                             23,771        28,410
Income tax (expenses) / benefits
Income tax-current                                 1,587         (18,035)
Income tax-deferred                                (2,314)       (4,197)
Net income before net loss from equity
                                                     23,044        6,178
method investments
Net loss from equity method investments            (468)         (640)
Net income                                           22,576        5,538
Net loss attributable to noncontrolling interest     1,832         1,389
Net income attributable to China Digital TV
                                                  $  24,408      $ 6,927
Holding Co., Ltd shareholders
Net income per share attributable to

ordinary shareholders of China Digital TV

Holding Co., Ltd
Basic                                            $  0.41        $ 0.12
Diluted                                          $  0.41        $ 0.12
Net income                                        $  22,576      $ 5,538
Other comprehensive income, net of tax
Foreign currency translation adjustment       2,904         536
Comprehensive income                                 25,480        6,074
Comprehensive income attributable to
                                                     1,785         1,201
noncontrolling interest
Comprehensive income attributable to

ordinary shareholders of China Digital            $  27,265      $ 7,275

TV Holding Co., Ltd
Weighted average shares used in calculating

net income per ordinary share
Basic                                               59,111,594    59,011,396
Diluted                                             59,176,457    59,092,804

Reconciliation of Non-GAAP Measures

Non-GAAP net income attributable to China Digital TV Holding Co., Ltd.
Shareholders excludes certain one-time non-cash expenses, such as share-based
compensation expenses, amortization of intangible assets acquired from
business acquisitions and equity method investments. The Company believes that
the non-GAAP net income provides meaningful supplemental information regarding
the Company's performance and liquidity by excluding certain non-cash expenses
that may not be indicative of its operating performance from a cash flow
perspective. The Company believes that both management and investors benefit
from referring to this additional information in assessing the Company's
performance and when planning and forecasting future periods.

                                     For the three months ended
                                     December 31,  September 30,  December 31,
                                     2013          2013           2012
                                     (in U.S. dollars, in thousands)
Net income attributable to China
Digital TV
                                     $   10,041    $    4,749     $    4,243
Holding Co., Ltd shareholders –
GAAP
Share-based compensation expenses        338            433            114
Amortization of intangible assets
from business
                                         55             54             53
acquisitions and equity method
investments
Net income attributable to China
Digital TV
                                     $   10,434    $    5,236     $    4,410
Holding Co., Ltd shareholders -
Non-GAAP



SOURCE China Digital TV Holding Co., Ltd.

Website: http://ir.chinadtv.cn
 
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