Acorn Reports First Quarter 2007 Financial Results

Acorn Reports First Quarter 2007 Financial Results

Acorn International, (NYSE: ATV), a leading integrated multi-platform marketing company in China engaged in developing, promoting and selling consumer products and services, announced its first quarter results for the three months ended March 31, 2007.

Highlights for first quarter 2007:
Net revenues in the first quarter of 2007 were $68.0 million, an increase of 18.2% compared with $57.5 million in the first quarter of 2006.
Gross margin was 55.2% in the first quarter of 2007, which compares to 55.6% in the same period of 2006.
Income from operations was $6.2 million in the first quarter of 2007, an increase of 36.2% compared to $4.6 million in the first quarter of 2006. Excluding share-based compensation expenses (non-GAAP), income from operations was $7.6 million, up 49.7% compared to $5.1 million in the same period of 2006.
Operating margin was 9.2% in the first quarter of 2007, compared to 8.0% in the first quarter of 2006. Excluding share-based compensation expenses (non-GAAP), operating margin was 11.2%, compared to 8.8% in the first quarter of 2006.
Net income was $7.3 million in the first quarter of 2007 (including a $1.5 million investment gain), an increase of 35.8% compared to $5.4 million in the first quarter of 2006. Excluding share-based compensation expenses (non-GAAP), net income was $8.6 million, an increase of 47.4% compared to $5.9 million in the same period of 2006.
Diluted income per ordinary share was $0.10. Excluding share-based compensation expenses (non-GAAP), diluted income per ordinary share was $0.12.
Share-based compensation expenses were $1.3 million for the first quarter of 2007, compared with $0.5 million in the first quarter of 2006.

Commenting on the results, James Hu, Chairman and CEO of Acorn International said: “Our strong performance in the first quarter of 2007 marks a significant turnaround from a few regulatory and other setbacks we faced last year, and puts us back on track for growth. We achieved record TV direct sales and generated the highest quarterly net revenues in our history. Our leading market position and strong track record have been essential in attracting high-quality business partners and expanding our joint sales and marketing service arrangements with established consumer product and service companies. As a result, we have seen strong growth in sales from third-party products and an expansion in the number of our sales partners and marketing service clients. As we look forward, we believe our strong sales and marketing capabilities for new products and services will help us gain additional ground in the industry.”

BUSINESS HIGHLIGHTS
Acorn further solidified its position as the preferred TV direct sales partner among major domestic handset suppliers, adding Gionee and UTStarcom handsets to its third-party TV direct sales product portfolio.
Acorn continued to provide unique value-added marketing services to China Unicom.
Acorn began providing marketing services to China Pacific Insurance, an important step in addressing the significant potential market opportunities in TV sales of insurance products.