China Yida Announces Second Quarter 2011 Results

FUZHOU, China, Aug. 9, 2011 /PRNewswire-Asia-FirstCall/ -- China Yida Holding Company (Nasdaq: CNYD) ("China Yida" or the "Company"), a leading diversified tourism and entertainment enterprise in China, today announced financial results for the quarter ended June 30, 2011.

Second Quarter 2011 Highlights

• Total net revenue was $11.0 million, a decrease of 32.9% as compared to $16.4 million in the second quarter of 2010
• Net revenue from the tourism business was $2.5 million, a decrease of 64.5% year over year with a gross margin of 51.9%
• Net revenue from the media business was $8.5 million, a decrease of 9.0% year over year with a gross margin of 73.2%
• Gross profit was $7.5 million a decrease of 43.4% to compared to $13.3 million in the same period last year
• Net income attributable to China Yida Holding Company was $3.5 million, a decrease of 57.1% as compared to $8.1 million posted in the same period last year
• Fully diluted EPS was $0.18 per share compared to $0.41 in the second quarter of 2010

"As anticipated, the performance of our tourism segment for the second quarter was below year-ago levels. However, though the continued effects of last year's floods continued to impact tourist traffic at our premier Great Golden Lake destination, we are encouraged by the healthy increase in visitors to the site from the first quarter," said Dr. Chen Minhua, Chairman and Chief Executive Officer of China Yida.

"We remain optimistic about the future of our Company. With three highly appealing tourist destinations in operation, three new projects under development, a newly-formalized tourism marketing entity and a valuable land reserve base, we are well positioned to take advantage of China's rapidly growing tourism industry for years to come, and we still believe that Yida will have a profitable future," concluded Dr. Chen.

Tourism Business

Net revenue from the tourism business was $2.5 million, a decrease of 64.5% from $7.0 million in the second quarter of 2010. The decrease was due to the continued negative impact on tourism to the Company's Great Golden Lake destination as a consequence from the massive flood in southern China last year. The Company has completed its repairing of the site's infrastructure. However, though normal operations have commenced at the Great Golden Lake, renovation of the main road to the Shangqing River is the responsibility of the local authorities and this delay has hindered a full recovery of visitor traffic. As a result of the lower tourism revenue, gross margin from the tourism business was 51.9% for the second quarter of 2011, compared to 82.9% in the comparable year ago quarter.

Great Golden Lake experienced approximately 76,000 visitors during the second quarter of 2011, compared with approximately 200,000 for the same period of 2010. However, the quarter exhibited a sequential 43.4% increase in visitors from the first quarter of 2011 from 53,000 visitors. Revenue from the Great Golden Lake totaled approximately $1.27 million in the second quarter of 2011.

The Hua'An Tulou tourist destination received approximately 59,000 visitors during the second quarter of 2011, as compared to 55,000 visitors in the first quarter of the year. Revenue from this site totaled approximately $0.92 million in the second quarter of 2011.

Yunding Recreational Park attracted 14,000 visitors in the second quarter of 2011, up from 12,000 visitors in the first quarter. Revenue from this tourist attraction totaled approximately $0.31 million in the second quarter of 2011.

Media Business

Net revenue from the media business was $8.5 million, a decrease of 9.0% from the $9.3 million posted in the comparable period a year ago. This decrease was attributable to significantly lower revenue from the Company's train media business due to the current manual broadcasting method its "Journey through China on the Train" infomercial program and the difficulty associated with monitoring its broadcast.  Fujian Education Television Channel ("FETV") also experienced a fall in revenue due to actions by domestic media authorities restricting the broadcasting of certain types of TV advertising.

Gross margin for the media business was 73.2% for the first quarter of 2011, as compared to 79.5% a year ago. The decrease was mainly due to higher production costs associated with acquiring the rights to redistribute its FETV commercial airtime.

Consolidated Operating Results

Gross profit for China Yida's consolidated operations was $7.5 million in the second quarter of 2011, a decrease of 43.4% from the $13.3 million recorded in the second quarter of 2010. The gross margin was 68.4%, compared to 81.0% for the comparable period of 2010, representing a decline of 126 percentage points. The decrease in consolidated gross profits is due to the decline in tourist traffic and its effects on decreased revenue at the Great Golden Lake Resort. The drop in gross margins is also attributable to the decrease in tourism revenue at Great Golden Lake.

Total operating expenses increased by 3.5% to $2.35 million in the second quarter of 2011, compared with $2.27 million in the second quarter of 2010. This increase reflects the additional expenses associated with Yunding, which had not opened as of the second quarter of 2011.

Operating income decreased to $5.2 million in the second quarter, a decrease of 53.0% compared with $11.0 million in the second quarter of 2010. Operating margin for the second quarter of 2011 was 47.0%, compared to 67.1% for the second quarter of 2010.

Provision for income taxes was $1.7 million in the second quarter, compared to $2.9 million in the comparable year ago quarter. The effective tax rate increased to 33.1% from 26.3% in the year ago quarter, due to higher administrative expenses, including share-based compensation incurred with offshore holding companies which were not tax-deductable.

Net income attributable to China Yida Holding Company for the second quarter of 2011 was $3.5 million, or $0.18 per diluted share, as compared to $8.1 million, or $0.41 per diluted share, for the second quarter of 2010.

Six Month Results

Total net revenue decreased by 27.0% to $22.8 million for the six months ended June 30, 2011, compared with $31.2 million for the six months ended June 30, 2010. Net revenue from advertising increased by 1.4% to $18.4 million, compared with $18.1 million for the six months ended June 30, 2010. Net revenue from the tourism business decreased by 66.3% to $4.4 million, compared with $13.1 million for the six months ended June 30, 2010.

Gross profit for the first six months of 2011 decreased 37.3% year over year to $15.8 million with a gross margin of 69.3%. Operating income decreased by 45.2% to $11.3 million in the first six months of 2011, compared with $20.6 million in the first six months of 2010.

Net income for the six months ended June 30, 2011 was $7.4 million, or $0.37 per fully diluted share, a decrease of 51.5% compared with net income of $15.2 million, or $0.77 per share, for the comparable period of 2010.

Financial Condition

As of June 30, 2011, the Company had $20.1 million in cash and cash equivalents on its balance sheet. This represents a substantial increase from cash and cash equivalents of $7.1 million as of the end of 2010. As of June 30, 2011, working capital was $12.1 million and the Company's current ratio was 2.2 times. The Company also had $145.0 million in shareholders' equity as of June 30, 2011 compared to $133.7 million at the end of 2010.

The Company's total debt is $15.2 million as of June 30, 2011, of which the long-term portion is $9.9 million. This is an increase in the Company's total debt of $4.4 million as of the end of 2010. The Company plans to utilize its debt to fund improvements of its current tourist sites, develop its three new tourist destinations, and invest in new properties.

For the second quarter of 2011, China Yida generated $9.4 million in cash flow from operating activities and spent $5.4 million on capital expenditures, $4.0 million of which was targeted to additional construction projects at Yunding Park. The remainder of the Company's expenditures were directed towards continued repair of the infrastructure of Great Golden Lake and initial development activities associated with two of its new projects, China Yang-sheng (Nourishing Life) and the City of Caves.

Management believes that the Company can finance all of its ongoing capital expenditures from cash on hand, cash from operations and bank loans secured with its tourism assets.

Business Update and 2011 Second Half Outlook

The Company's strategic plan is to transition from what is currently a media and tourism company to one that is primarily a tourist company, where revenues derived from its tourism properties account for an ever-increasing percentage of its total revenues. The Company foresees many diverse sources of income emanating from its tourist properties. This further diversifies the contribution of all China Yida's properties so as to drive a sustainable level of total Company revenue growth, high margins and strong future earnings.

Of its existing tourist destinations, The Company anticipates that additional time is required for the Great Golden Lake to return to seasonal levels and that the third quarter will show additional progress towards that goal. At Yunding, the construction of the valley rafting facilities has been completed, and the restaurant in the gorges will be ready to operate at the end of 2011. In addition, the designs for the camping center and shopping plaza have been completed and the process to receive the necessary approval for construction has commenced. Finally, at Tulou, approval to improve the stream area is processing with the goal of reinstating the primitive beauty of the Dadi cluster. Once approved, the Company will enhance the stream area so as to further enrich the site's natural environment.

In order to launch and promote its strategic marketing plan, the Company has formed a wholly owned subsidiary, Fujian Yida Travel Service Co., Ltd. China Yida plans to conduct integrated marketing for its three current tourist destinations and eventually, for its three tourist destinations currently under construction.

In terms of its advertising and broadcast business, as previously disclosed, the Company expects that FETV's advertising revenue will be impacted by controls imposed by domestic media authorities that prohibit specialized channels such as FETV from broadcasting TV shopping programs, TV screen mini ads and certain medical ads. This has impacted the Company's revenues for the most recent quarter as the Company is utilizing media marketing strategies to prevent the continual decline of media revenue. The Company will seek to increase this advertising revenue and ultimately intends to upgrade the TV channel's profile which could lead to a more secure sourcing of advertising revenue.  Finally, as also disclosed, Management continues to expect that its "Journey through China on the Train" infomercial program revenue will decline slightly in 2011 mostly due to an absence of an automatic broadcasting and monitoring system.

In terms of China Yida's three new tourism projects, development and construction events are proceeding according to schedule. The local government has approved most of the complex regulatory approvals necessary to ensure that the demolition, construction and development work will be done in line with the Company's estimates. Approximately $1.4 million in capital expenditures were disbursed during the second quarter for road construction for the Yang-sheng and City of Caves tourist destinations.

Management Share Buyback

The Company announces that Dr. Minhua Chen, Chairman and Chief Executive Officer of China Yida, intends to use his personal funds to purchase up to $250,000 worth of the Company's stock in open market transactions from the date of this announcement to the end of 2011, pursuant to a Rule 10b5-1 plan and subject to the restrictions of and consistent with the Company's securities trading policy.

"The purchase of the Company's shares reflects the confidence I have in the long-term fundamentals and growth prospects of China Yida," said Chairman Chen. "I remain committed to maximizing long-term value for shareholders and realizing the full potential of our business and operations."

Conference Call

China Yida will hold a conference call at on Wednesday, August 10, 2011 at 9:00 a.m. Eastern Time to discuss its second quarter 2011 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1-866-395-5819. International callers may dial + 1-706-643-6986. The conference ID for this call is 87201675. If you are unable to participate in the call at this time, a replay will be available for two weeks starting on Wednesday, August 10, 2011 at 12:00 p.m. ET. To access the replay, dial 855-859-2056, international callers may dial +1-404-537-3406. The Conference Replay pass-code is 87201675.

About China Yida

China Yida is a leading tourism and media enterprise focused on China's fast-growing leisure industry and headquartered in Fuzhou City, Fujian province of China. The Company provides tourism management services and specializes in the development, management and operation of natural, cultural and historic scenic sites.

China Yida currently operates the Great Golden Lake tourist destination (Global Geopark, including Golden Lake, Shangqing River, Zhuangyuan Rock, Luohan Mountain and Taining Old Town), Hua'An Tulou tourist destination (World Culture Heritage, including Dadi Tulou cluster and the Shangping Tulou cluster) and China Yunding Park (National Park, including Flower Terrace, Heavenly Lake, Colorful Waterfall, Red River Valley and Jade Valley). China Yida is also developing three additional tourism projects, Ming Dynasty Entertainment World, China Yang-sheng (Nourishing Life) Tourism Project and the City of Caves.

The Company's media business provides operations management services including content and advertising management for the Fujian Education Television Station ("FETV"), a top-rated provincial education television channel, and "Journey through China on the Train", an advertisement-embedded travel program, currently the only on-board media program from a third party authorized by China's Ministry of Railways.

For further information, please contact the Company directly, or visit its Web site at http://www.yidacn.net.

Forward-Looking Statements

Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as "anticipate, "believe," "expect," "future," "may," "will," "would," "should," "plan," "projected," "intend," and similar expressions. Such forward-looking statements, involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of China Yida Holding Co., Inc. (the "Company") to be materially different from those expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to: (i) the Company's ability to obtain sufficient capital or a strategic business arrangement; (ii) the Company's ability to build and maintain the management and human resources and infrastructure necessary to support the anticipated growth of its business; (iii) competitive factors and developments beyond the Company's control; and (iv) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission, which are available for review at www.sec.gov.

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SOURCE China Yida Holding Company

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