FAB Universal Reports EPS of $0.28 on Revenue of $25.9 Million

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FAB Universal Reports EPS of $0.28 on Revenue of $25.9 Million

EPS of $0.42 for the First Six Months of 2013

Management Reaffirms 2013 Revenue and Net Income Guidance


PITTSBURGH--(BUSINESS WIRE)-- FAB Universal (NYSE MKT: FU), a worldwide distributor of digital media and entertainment, today announced financial results for the second quarter ending June 30, 2013.

"FAB Universal delivered its third consecutive quarter of EPS growth, led by continued gains from our fast-growing, high-margin digital segment, which includes our Intelligent Media Kiosk business. On a sequential basis, gross profit grew by 47.4%, outpacing the 41% revenue increase to reach a gross margin of 80.3%," said Chris Spencer, CEO of FAB Universal. "We continued to expand our network of Intelligent Kiosks, adding over 2,000 for a total now of nearly 16,000, and intend to aggressively build out our network during the second half of the year."

Spencer added, "Based on our performance to date, we remain confident that we will achieve revenue of $98.9 million to $102.6 million and net income of $19.3 million to $20.1 million for the full year. However, because we have experienced variances between reported results and our guidance for both the first and second quarter of 2013, reflecting variability in the timing of signing new kiosk contracts, we are revising our guidance policy and going forward will only offer revenue and EPS guidance on an annual basis. Our established media and entertainment distribution platform and the power of the FAB brand give us the fundamentals to continue to drive strong organic growth."

Second Quarter and Year-to-Date Financial Review

FAB Universal acquired DEI Ltd. on September 26, 2012. Therefore year-over-year comparisons of the company's financial results largely reflect the addition of DEI.

Total revenue for the second quarter ended June 30, 2013 was $25.9 million compared $0.9 million for the second quarter of 2012 and $22.6 million for the first quarter ended March 31, 2013, a sequential increase of 14.6%. Revenue for the wholesale business unit was $14.0 million for the second quarter of 2013 compared to none in the year ago period and $13.8 million for the first quarter of 2013. Revenue for the digital business unit was $9.6 million for the second quarter of 2013 compared to $0.9 million for the second quarter of 2012 and $6.9 million for the first quarter of 2013. Revenue for the retail business unit was $2.3 million for the second quarter of 2013 compared to none in the comparable period of 2012 and $2.0 million for the first quarter of 2013.

Second quarter 2013 gross profit was $11.5 million compared to $0.5 million for the second quarter of 2012 and $8.4 million for the first quarter of 2013, a sequential increase of 36.9%. The second quarter 2013 gross margin was 44.4% compared to 58.2% for the second quarter of 2012 and 37.2% for the first quarter of 2013. The second quarter sequential increases in revenue and gross profit reflect continued rapid growth of FAB's digital business.

Operating expenses for the second quarter of 2013 were $4.0 million compared to $1.0 million for the second quarter of 2012 and $4.1 million for the first quarter of 2013. Net Income in the second quarter ended June 30, 2013 was $5.7 million, or $0.28 per share, compared to a net loss of $0.3 million, or $(0.06) per share, for the comparable period of 2012 and net income of $3.0 million, or $0.15 per share, for the first quarter ended March 31, 2013. Weighted average shares outstanding were 20.8 million for the second quarter compared to 8.7 million for the second quarter of 2012 and 20.6 million for the first quarter of 2013.

For the six months ended June 30, 2013, FAB Universal reported revenue of $48.5 million compared to $1.7 million for the comparable period of 2012. Gross profit in the six month period was $19.9 million compared to $1.1 million for the first six months of 2012. Operating expenses for the six months totaled $8.2 million compared to $2.7 million for the comparable period of 2012. Net income was $8.7 million, or $0.42 cents per share, compared to a net loss of $(1.3) million, or $(0.16) per share for the six month period ended June 30, 2012.

For a more detailed discussion of the financial and other information included in this press release, please also refer to the Company's Form 10-Q for the three month period ended June 30, 2013 that will be filed with the Securities and Exchange Commission (www.sec.gov) on August 14, 2013.

Second Quarter Earnings Conference Call

Management will host a conference call today, August 14, 2013, at 10:00am EDT. During the call Chris Spencer, CEO, and John Busshaus, CFO, will discuss the quarterly operational and financial results and the outlook for the balance of 2013 before opening the call for investor questions. To participate in the conference call, please dial 1-877-407-0778 (U.S. callers); 201-689-8565 (international callers) 10 minutes prior to the call. Please reference conference ID #419057.

A live webcast of the conference call will be available at http://www.fabuniversal.com/news-events/. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.

A telephone replay of the conference call will be available from 12:00pm EDT on August 14, 2013 until 11:59pm EDT August 17, 2013 and may be accessed by calling (877) 660-6853 (domestic dial-in) or (201) 612-7415 (international dial-in) and reference conference ID # 419057. An archived replay of the conference call will also be available in the investor relations section of the Company's website.

About FAB Universal Corp.

FAB Universal Corp. is a global leader in digital media entertainment sales and distribution. FAB delivers media to its customers worldwide through Intelligent Kiosks, Retail Stores and Franchises, and online through Apple iTunes and Google Android. We distribute billions of movie, music, podcast, TV show and other digital files to consumers in 240 countries through three business units: Digital Media Services, Retail Media Sales and Wholesale Media Distribution. Sales of digital media are generated through the kiosks networks, subscription sales for mobile devices, smartphone Apps and Netflix-like subscription models. In 2011, we distributed billions of downloads of copyrighted music, video games, ringtones, ebooks, movies and podcasts to over 50 million people worldwide through iPods, iPhones, iPads, iTunes, Blackberrys, Windows Phones, Androids and many other devices and destinations. We are a publicly held, Pittsburgh based company with thousands of shareholders and a world-class team. Visit us on the web at www.fabuniversal.com, email us at contact@fabuniversal.com.

Legal Notice

Legal Notice Regarding Forward-Looking Statements: "Forward-looking Statements" as defined in the Private Securities litigation Reform Act of 1995 may be included in this news release. These statements relate to future events or our future financial performance. These statements are only predictions and may differ materially from actual future results or events. We disclaim any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments or otherwise. There are important risk factors that could cause actual results to differ from those contained in forward-looking statements, including, but not limited to risks associated with changes in general economic and business conditions, actions of our competitors, the extent to which we are able to develop new services and markets for our services, the time and expense involved in such development activities, the level of demand and market acceptance of our services or changes in our business strategies.

        
 

FAB UNIVERSAL CORP AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 
ASSETSJune 30, 2013

December 31,
2012

CURRENT ASSETS:
Cash$27,675,214$19,671,937
Accounts receivable, net9,125,660[1]6,927,045[1]
Advances to suppliers, net-154,770
Inventory7,372,8765,207,008
Deferred tax assets, current2,326,1301,771,799
Other current assets 387,815  979,021 
Total current assets46,887,69534,711,580
 
Property, and equipment, net16,661,13716,720,637
Goodwill61,406,84760,652,957
Intangible assets, net25,581,98127,875,748
Deferred tax assets, non-current4,542,0503,346,166
Long-term deposits 39,536,333  24,488,131 
Total assets$194,616,043 $167,795,219 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank loans$1,909,093$2,072,619
Accounts payable6,674,9236,471,270
Accrued expenses2,745,8093,077,785
Deferred revenue11,970,2018,250,402
Taxes payable2,375,5241,603,821
Due to related parties122,08641,341
Other payable 1,951,595  1,910,378 
Total current liabilities27,749,23123,427,616
 
Long-term deposits from customers2,512,5462,474,604
Deferred revenue18,912,9647,923,450
Long-term payables -  39,204 
Total liabilities49,174,74133,864,874
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock-[2]-[2]
Common stock20,806[3]20,469[4]
Additional paid-in capital207,529,540206,786,139
Accumulated other comprehensive income3,418,4241,384,365
Accumulated deficit (65,527,468) (74,260,628)
Total stockholders' equity 145,441,302  133,930,345 
Total liabilities and stockholders' equity$194,616,043 $167,795,219 
 
 
    [1]net of $14,000 allowance
[2]$.001 par value, 10,000,000 shares authorized, 290 shares issued and outstanding
[3]$.001 par value, 200,000,000 shares authorized, 20,805,860 shares issued and outstanding
[4]$.001 par value, 200,000,000 shares authorized, 20,468,860 shares issued and outstanding
 
 
        
 

FAB UNIVERSAL CORP AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

  

For the Three Months Ended
June 30,

For the Six Months Ended
June 30,

2013  20122013  2012
Revenue$25,857,239$870,164$48,493,632$1,717,483
Cost of Revenue 14,362,500  363,342  28,624,131  662,196 
Gross Profit 11,494,739  506,822  19,869,501  1,055,287 
 
OPERATING EXPENSES
Selling expenses1,039,85028,1611,976,17196,600
General and administrative2,487,458726,7895,117,7901,487,257
Consulting fees446,460205,019930,592960,436
Research and development 73,189  69,867  140,539  135,749 
Total Expenses 4,046,957  1,029,836  8,165,092  2,680,042 
Income (loss) from continuing operations 7,447,782  (523,014) 11,704,409  (1,624,755)
 
OTHER INCOME (EXPENSE):
Gain on disposal of assets-6,000-6,000
Interest income-2228,55986
Interest (expense)(4,004)-(43,154)-
Other income (expense) (55,773) 325  (54,970) (903)
Total Other Income (Expense) (59,777) 6,347  (69,565) 5,183 
Income (loss) from continuing operations before income taxes7,388,005(516,667)11,634,844(1,619,572)
 
Income tax expense1,658,842-2,901,684-
    
Net income (loss) from continuing operations5,729,163(516,667)8,733,160(1,619,572)
 
Net income from discontinued operations, net of tax-186,528-292,204
    
Net Income (loss)5,729,163(330,139)8,733,160(1,327,368)
 
Other comprehensive income
Foreign currency translation gain1,543,850-2,034,059-
    
COMPREHENSIVE INCOME (LOSS)$7,273,013 $(330,139)$10,767,219 
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