SHANGHAI, Aug. 23 /PRNewswire-Asia-FirstCall/ -- Focus Media Holding Limited , China's leading digital media group, today announced its unaudited financial results for the second quarter ended June 30, 2010.
Highlights for Second Quarter 2010: -- Total net revenue for the second quarter of 2010 was $158.2 million, representing an increase of 27% from $124.9 million for the first quarter of 2010 and an increase of 22% from $129.5 million for the second quarter of 2009, of which: - aggregate net revenue from the LCD display network, in-store network and poster frame network was $108.6 million, which exceeded by approximately 8% the mid-point of the Company's guidance range of $99-101.5 million. It represented an increase of 31% from $82.6 million for the first quarter of 2010 and an increase of 22% from $89.8 million for the second quarter of 2009; - aggregate net revenue from the movie theater and traditional outdoor billboard network and Internet advertising services was $49.5 million, which exceeded by approximately 13% the mid-point of the guidance range of $43-45 million. It also represented an increase of 17% from $42.2 million for the first quarter of 2010 and an increase of 25% from $39.7 million for the second quarter of 2009. -- GAAP net income attributable to Focus Media was $25.3 million, compared to net loss attributable to Focus Media of $1.0 million for the first quarter of 2010, and net loss attributable to Focus Media of $23.0 million for the second quarter of 2009. -- Non-GAAP net income attributable to Focus Media for the second quarter of 2010 was $44.3 million, also exceeding the mid-point of Company's guidance range of $35.5-$37.5 million by 21%, compared to non-GAAP net income attributable to Focus Media of $23.2 million for the first quarter of 2010 and non-GAAP net income attributable to Focus Media of $28.2 million for the second quarter of 2009. Please see below section on "Use of non-GAAP financial measures" for more information about the non-GAAP measures referred to within this announcement. -- GAAP net income per ADS was $0.17, compared to a loss of $0.01 per ADS for the first quarter of 2010 and a loss of $0.18 per ADS in the second quarter of 2009. -- Non-GAAP net income per fully diluted ADS was $0.30, compared to $0.16 per fully diluted ADS for the first quarter of 2010, and $0.22 per fully diluted ADS for the second quarter of 2009. Highlights for Balance Sheet and Cash Flow Results of Second Quarter 2010: -- Cash, cash equivalents and short-term investment was $588.3 million as of June 30, 2010, slightly declining from $598.6 million as of March 31, 2010 primarily due to cash spending in share repurchases. -- Net accounts receivable for the LCD display network, in-store network and poster frame network was $128.7 million as of June 30, 2010, an increase of 31% from $98.4 million as of March 31, 2010. Days sales outstanding on a rolling basis was 86 days in the second quarter of 2010 versus 96 days for the first quarter of 2010. -- Net accounts receivable for the Internet advertising services, traditional outdoor billboard network, and movie theater network was $73.4 million as of June 30, 2010, an increase of 9% from $67.4 million as of March 31, 2010 primarily due to higher net revenue in the second quarter of 2010 versus that in the first quarter of 2010. -- Net cash flow from operations in the second quarter of 2010 was $37.8 million, significantly increasing by 627% from $5.2 million for the first quarter of 2010. -- Capital expenditures were $3.8 million for the second quarter of 2010. -- Earn-out payments related to historical acquisitions paid in the second quarter of 2010 were $7.3 million, primarily attributable to the poster frame network.
Jason Jiang, the Chairman and the Chief Executive Officer of the Company said, "The first half of 2010 has seen a broad based recovery of the advertising market from the first half of 2009. According to Nielsen Research, the Chinese advertising market grew 15% year on year during the first half of 2010. The Company managed to grow the core business 24% year over year during the same period, indicating that we continue to gain market share in the Chinese advertising market. We are confident that as we further stabilize and strengthen our core business, we can strive to continue our market share gain in the second half of 2010."
Kit Low, the Chief Financial Officer of the Company added, "In the second quarter of 2010, the Company achieved aggregate net revenue year on year growth in our LCD display, in-store and poster frame business of 22%, and quarter on quarter growth of 31%. GAAP net income and Non-GAAP net income for the second quarter of 2010 are $25.3 million and $44.3 million, respectively. The Company has improved its free cash flow generation, defined as operating plus investing cash flows, as compared to the first quarter of 2010. In the second quarter of 2010, the Company generated a net cash flow from operating cash flow and investing cash flow of $26.6 million. We will continue our focus to improve our free cash flow generation going forward."
Second Quarter 2010 financial results
Advertising net revenue from the LCD display network was $72.5 million for the second quarter of 2010, representing an increase of 44% from $50.2 million for the first quarter of 2010 and an increase of 34% from $54.3 million for the second quarter of 2009.
Advertising net revenue from the poster frame network was $25.2 million for the second quarter of 2010, representing a slight increase of 2% from $24.8 million for the first quarter of 2010 and a slight decrease of 5% from $26.5 million for the second quarter of 2009.
Advertising net revenue from the in-store network was $10.9 million for the second quarter of 2010, increasing by 42% from $7.7 million from the first quarter of 2010 and by 21% from $9.0 million for the second quarter of 2009.
As of June 30, 2010, the total installed base of LCD displays in our LCD display network was 142,305 nationwide, including 137,071 displays through our directly owned networks, and 5,234 displays through our regional distributors, as compared to total LCD displays of 132,485 as of March 31, 2010. The total number of non-digital frames available for sale in our poster frame network was 238,689 as of June 30, 2010, as compared to 235,160 as of March 31, 2010. In addition, as of June 30, 2010, we had 35,835 digital frames installed in our poster frame network, as compared to 35,599 as of March 31, 2010. The total number of displays installed in our in-store network was 45,686 as of June 30, 2010, as compared to 40,848 as of March 31, 2010.
Internet advertising service net revenue was $35.7 million in the second quarter of 2010, increasing by 27% from $28.1 million for the first quarter of 2010 and by 43% from $25.0 million for the second quarter of 2009.
Advertising net revenue from the traditional outdoor billboard network and movie theater was $13.9 million for the second quarter of 2010, on par with $14.1 million for the first quarter of 2010 but decreasing by 6% from $14.8 million for the second quarter of 2009, primarily due to lower seasonal revenue from the movie theater network.
Non-GAAP gross profit from the LCD display network for the second quarter of 2010 was $59.3 million, representing an increase of 63% from $36.3 million for the first quarter of 2010 and an increase of 34% from $44.3 million for the second quarter of 2009.
Non-GAAP gross profit from the poster frame network for the second quarter of 2010 was $7.6 million, representing a decrease of 5% from $8.0 million for the first quarter of 2010, and a decrease of 44% from $13.6 million for the second quarter of 2009.
Non-GAAP gross profit from the in-store network for the second quarter of 2010 was $4.7 million, representing an increase of 96% from $2.4 million for the first quarter of 2010 and an increase of 62% from $2.9 million for the second quarter of 2009.
Non-GAAP gross profit from our Internet advertising services for the second quarter of 2010 was $10.1 million, representing an increase of 77%, from $5.7 million for the first quarter of 2010 and an increase of 166% from $3.8 million for the second quarter of 2009.
Non-GAAP gross profit from the traditional outdoor billboard network and movie theater network for the second quarter of 2010 was $3.5 million, representing a 26% decline, from $4.7 million for the first quarter of 2010 and from $4.7 million for the second quarter of 2009.
Non-GAAP operating expense for the second quarter of 2010 was $34.9 million, an increase of 22% from $28.7 million for the first quarter of 2010 and a decline of 11% from $39.1 million for the second quarter of 2009 primarily due to higher sales and marketing costs (resulted from higher advertising revenue).
Provision for income tax for the second quarter of 2010 was $5.7 million, which benefited from a downward adjustment of approximately $1.8 million from the first quarter of 2010 as the Company completed the application process and commenced the public announcement in the second quarter for High/New Technology Enterprise ("HNTE") for one of its subsidiaries.
Net cash provided by operating activities for the second quarter of 2010 was $37.8 million.
Net cash used in investing activities for the second quarter was $11.2 million. In the second quarter of 2010, the Company incurred capital expenditures of $3.8 million and earn-out payments of $7.3 million.
Net cash used in financing activities for the second quarter was $39.3 million. In the second quarter of 2010, the Company transferred the cash deposit of $43.0 million to a broker for share repurchase, of which $36.7 million has been spent to repurchase the shares of the Company with the remaining $6.3 million for future share repurchase.
Business Outlook for Third Quarter 2010
Prior to the start of the third quarter of 2010, the core business of the Company consisted of the LCD display network, poster frame network and in-store network. The non-core business consisted of the traditional outdoor billboard network, Internet advertising services and the movie theater network. From the third quarter of 2010, the Company re-categorized the movie theater network from non-core business to core business and grouped it into the LCD display network when reporting. Following the re-categorization, the core business of the Company consists of the LCD display network, movie theater network, poster frame network and In-store network, and the non-core business of the Company consists of the traditional outdoor billboard network only (the Internet advertising services have been sold in the early part of third quarter of 2010).
On that basis, the Company provides the following guidance with respect to the third quarter ending September 30, 2010:
The net revenues for the core business (inclusive of movie theater network of $5 million for the third quarter of 2010 as compared to the net revenues of $3.5 million for the second quarter of 2010) are expected to be in the range of $120-$123 million, the mid-point of which would represent quarter-on-quarter growth of 8% and year-on-year growth of 37%, or quarter-on-quarter growth of 7% and year-on-year growth of 36% excluding movie theater network's assumed contribution. Net revenues for the non-core business (contribution through to the date of disposal of Internet advertising services of approximately $10 million) are expected to be in the range of $20-$22 million. The Company's non-GAAP net income is expected to be in the range of $48-$49 million. The Company estimates the weighted average fully diluted ADS count for the quarter at 147 million, assuming no further share repurchases during the quarter.
In the second quarter of 2010, the Company completed the application process for HNTE for one of the Company's subsidiaries. The subsidiary has commenced the public announcement in the second quarter. As of second quarter's press release date, the subsidiary successfully passed the 15 announcement days, and is currently waiting to receive the certificate. The Company believes the subsidiary will obtain the certificate in 2010 and thus be eligible for a tax holiday (i.e. two-year tax exemption followed by a three-year 50% tax reduction). With the application of 0% tax rate to that particular subsidiary effective from January 1, 2010, the expected effective tax rate for fiscal year 2010 for the Company will be 15%-16%.
The Company incurred cumulative earn-out payments of $22.5 million in the first half of 2010. Based on the existing business outlook, the Company expects earn-out payments remaining in the second half of 2010 to be no more than $15 million versus our previous guidance of cumulatively no more than $40 million for 2010.
Announced Share Repurchase Program
On August 3, 2010, Focus Media announced its intention to increase the size of its previously announced share repurchase program from $200 million to $300 million and to extend the termination date of the repurchase plan to June 2011 from February 2011. As of August 23, 2010, the Company has cumulatively spent $36.7 million in share repurchases.
Foreign Currency Translation
Assets and liabilities are translated at the exchange rate as of June 30, 2010, which was $1 to RMB 6.7909. Equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the second quarter of 2010, which was $1 to RMB 6.8335. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income in the statement of equity and comprehensive income (loss).
USE OF NON-GAAP FINANCIAL MEASURES
In addition to Focus Media's consolidated financial results under GAAP, the Company also provides non-GAAP financial measures, including non-GAAP gross profit (cumulatively and by segment), non-GAAP operating expenses, non- GAAP operating profit (loss), non-GAAP net income and non-GAAP fully-diluted EPS, all excluding share-based compensation expenses, amortization of acquired intangible assets, loss from disposal of previously acquired subsidiaries and equity affiliates, impairment charges of long-lived assets and goodwill, write-off of receivables from ex-shareholders of disposed business and charges from expensing IPO expenditures as a result of termination of the IPO process of Allyes. Management uses these non-GAAP financial measures to better assess operating performance of the Company. The Company believes that these non-GAAP financial measures provide investors with another method for assessing Focus Media's operating results in a manner that is focused on the performance of its ongoing operations. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results in the attached financial information. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of Focus Media and when planning and forecasting future periods. The Company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliation between these financial measures.
Focus Media Holding Ltd. Reconciliation of GAAP to non-GAAP (U.S. Dollar in thousands, except percentages, share and per-share data) (Unaudited) Three months ended June 30, 2010 GAAP (1) (2) (3) Non-GAAP Gross Profit LCD display network 58,044 283 1,021 -- 59,348 Poster frame network 5,939 -- 1,634 -- 7,573 In-store network 4,745 -- -- -- 4,745 Internet advertising 9,866 -- 207 -- 10,073 Movie theater and outdoor billboard network 3,040 -- 443 -- 3,483 Total Gross Profit 81,634 283 3,305 -- 85,222 General and administrative 20,021 (11,400) -- -- 8,621 Selling and marketing 31,962 (1,244) (1,177) -- 29,541 Other operating expenses (income), net (1,719) -- -- (1,524) (3,243) Total operating expense 50,264 (12,644) (1,177) (1,524) 34,919 Operating profit 31,370 12,927 4,482 1,524 50,303 Profit before tax 32,466 12,927 4,482 1,524 51,399 Net income attributable to Focus Media 25,336 12,927 4,482 1,524 44,269 Basic net income per ADS 0.18 0.31 Diluted net income per ADS 0.17 0.30 Shares used in calculating basic income per ADS 143,787,178 143,787,178 Shares used in calculating diluted income per ADS 148,162,497 148,162,497 (1). Share-based compensation. (2). Amortization of acquired intangible assets. (3). Loss from disposal of previously acquired subsidiaries, all attributable to poster frame business. Three months ended March 31, 2010 GAAP (1) (2) (3) (4) Non-GAAP Gross Profit LCD display network 35,210 280 839 -- 36,329 Poster frame network 6,351 -- 1,639 -- 7,990 In-store network 2,443 -- -- -- 2,443 Internet advertising 5,452 -- 207 -- 5,659 Movie theater and outdoor billboard network 4,216 -- 442 -- 4,658 Total Gross Profit 53,672 280 3,127 -- 57,079 General and administrative 23,780 (11,290) -- -- -- 12,490 Selling and marketing 23,294 (1,232)(1,187) -- -- 20,875 Impairment loss 5,736 -- -- (5,736) -- -- Other operating expenses (income), net (4,675) -- -- -- -- (4,675) Total operating expense 48,135 (12,522)(1,187) (5,736) -- 28,690 Operating profit 5,537 12,802 4,314 5,736 -- 28,389 Profit before tax 6,087 12,802 4,314 5,736 1,288 30,227 Net income (loss) attributable to Focus Media (954) 12,802 4,314 5,736 1,288 23,186 Basic and diluted net income (loss) per ADS (0.01) 0.16 Shares used in calculating basic loss per ADS 145,055,601 145,055,601 Shares used in calculating diluted loss per ADS 145,055,601 148,482,403 (1). Share-based compensation. (2). Amortization of acquired intangible assets. (3). Impairment charges of goodwill as a result of earn-out payments in poster frame business. (4). Loss from disposal in investment of equity affiliate. Three months ended June 30, 2009 GAAP (1) (2) (3) (4) (5) Non-GAAP Gross Profit LCD display network 43,668 667 -- -- -- -- 44,335 Poster frame network 13,641 -- -- -- -- -- 13,641 In-store network 2,942 -- 6 -- -- -- 2,948 Internet advertising 2,462 -- 817 -- 561 -- 3,840 Movie theater and outdoor billboard network 3,877 -- 868 -- -- -- 4,745 Total Gross Profit 66,590 667 1,691 -- 561 -- 69,509 General and administrative 27,578 (3,721) -- -- -- -- 23,857 Selling and marketing 26,380 (6,309) (1,130) -- (247) -- 18,694 Impairment loss 25,773 -- -- -- (25,773) -- -- Other operating expenses (income), net 244 -- -- (1,212) -- (2,528) (3,496) Total operating Expense 79,975 (10,030) (1,130) (1,212) (26,020) (2,528) 39,055 Operating (loss) profit (13,385) 10,697 2,821 1,212 26,581 2,528 30,454 Profit (loss) before tax (12,093) 10,697 2,821 1,212 26,581 2,528 31,746 Net income (loss) attributable to Focus Media (22,971) 10,697 4,280 1,212 32,447 2,528 28,193 Basic and diluted net income (loss) per ADS (0.18) 0.22 Shares used in calculating basic loss per ADS 129,223,942 129,223,942 Shares used in calculating diluted loss per ADS 129,223,942 129,282,527 (1). Share-based compensation (2). Amortization of acquired intangible assets. (3). Loss from disposal of previously acquired subsidiaries. (4). Impairment charges of goodwill and other long-lived assets. (5). Write-off of receivables from ex-shareholders of disposed business. Focus Media Holding Ltd. Reconciliation of GAAP to non-GAAP (U.S. Dollar in thousands, except percentages, share and per-share data) (Unaudited) Six months ended June 30, 2010 GAAP (1) (2) (3) (4) Non-GAAP Gross Profit LCD display network 93,254 562 1,860 -- -- 95,676 Poster frame network 12,290 -- 3,273 -- -- 15,563 In-store network 7,189 -- -- -- -- 7,189 Internet advertising 15,318 -- 414 -- -- 15,732 Movie theater and outdoor billboard network 7,255 -- 885 -- -- 8,140 Total Gross Profit 135,306 562 6,432 -- -- 142,300 General and administrative 43,802 (22,691) -- -- -- 21,111 Selling and marketing 55,256 (2,475)(2,364) -- -- 50,417 Impairment loss 5,736 -- -- (5,736) -- -- Other operating (income), net (6,394) -- -- -- (1,524) (7,918) Total operating expense 98,400 (25,166)(2,364) (5,736)(1,524) 63,610 Operating profit 36,906 25,728 8,796 5,736 1,524 78,690 Profit before tax 38,553 25,728 8,796 5,736 2,812 81,625 Net income attributable to Focus Media 24,382 25,728 8,796 5,736 2,812 67,454 Basic net income per ADS 0.17 0.47 Diluted net income per ADS 0.16 0.45 Shares used in calculating basic income per ADS 144,705,951 144,705,951 Shares used in calculating diluted income per ADS 149,081,270 149,081,270 (1). Share-based compensation. (2). Amortization of acquired intangible assets. (3). Impairment charges of goodwill as a result of earn-out payments in poster frame business. (4). Loss from disposal of previously acquired business. Six months ended June 30, 2009 GAAP (1) (2) (3) Gross Profit LCD display network 66,368 913 -- -- Poster frame network 24,833 -- -- -- In-store network 5,019 -- 15 -- Internet advertising 6,336 -- 1,638 -- Movie theater and outdoor billboard network 8,925 -- 1,840 -- Total Gross Profit 111,481 913 3,493 -- General and administrative 51,300 (8,480) -- -- Selling and marketing 45,820 (9,426) (2,340) -- Impairment loss 35,044 -- -- -- Other operating (income), net (3,105) -- -- (1,212) Total operating Expense 129,059 (17,906) (2,340) (1,212) Operating (loss) profit (17,578) 18,819 5,833 1,212 Profit (loss) before tax (14,711) 18,819 5,833 1,212 Net income (loss) attributable to Focus Media (28,666) 18,819 8,742 1,212 Basic and diluted net income (loss) per ADS (0.22) Shares used in calculating basic income per ADS 129,216,342 Shares used in calculating diluted income per ADS 129,216,342 Six months ended June 30, 2009 (4) (5) (6) Non-GAAP Gross Profit LCD display network -- -- -- 67,281 Poster frame network -- -- -- 24,833 In-store network -- -- -- 5,034 Internet advertising 561 -- -- 8,535 Movie theater and outdoor billboard network -- -- -- 10,765 Total Gross Profit 561 -- -- 116,448 General and administrative -- (2,466) -- 40,354 Selling and marketing (247) -- -- 33,807 Impairment loss (35,044) -- -- -- Other operating (income), net -- -- (2,528) (6,845) Total operating Expense (35,291) (2,466) (2.528) 67,316 Operating (loss) profit 35,852 2,466 2,528 49,132 Profit (loss) before tax 35,852 2,466 2,528 51,999 Net income (loss) attributable to Focus Media 41,718 2,466 2,528 46,819 Basic and diluted net income (loss) per ADS 0.36 Shares used in calculating basic income per ADS 129,216,342 Shares used in calculating diluted income per ADS 129,277,356 (1). Share-based compensation (2). Amortization of acquired intangible assets. (3). Loss from disposal of previously acquired subsidiaries. (4). Impairment charges of goodwill and other long-lived assets. (5). One-off charges from expensing IPO expenditures as a result of termination of IPO process of Allyes. (6). Write-off of receivables from ex-shareholders of disposed business. CONFERENCE CALL
The Company will host a conference call to discuss the second quarter 2010 results at 9:00 p.m. U.S. Eastern Time on August 23, 2010 (6:00 p.m. U.S. Pacific Time on August 23, 2010 and 9:00 a.m. Beijing/Hong Kong Time on August 24, 2010). The dial-in details for the live conference call are set forth below: U.S. Toll Free Number +1.800.591.6923, Hong Kong dial-in number +852.3002.1672, International dial-in number +1.617.614.4907; Pass code: 61351600.
A replay of the call will be available from August 24, 2010 12:00 am until August 31, 2010 (US Eastern Time). The dial-in details for the replay are set forth below: U.S. Toll Free Number +1-888-286-8010, International dial-in number +1-617-801-6888; Pass code 43827029. Additionally, a live and archived web cast of this call will be available on the Focus Media web site at http://ir.focusmedia.cn/ .
SAFE HARBOR: FORWARD-LOOKING STATEMENTS
This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the 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. Focus Media may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K., 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 Focus Media's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in Focus Media's filings with the U.S. Securities and Exchange Commission, including its registration statements on Form F-1, F-3 and 20-F, in each case as amended. Focus Media does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.
ABOUT FOCUS MEDIA HOLDING LIMITED
Focus Media Holding Limited is China's leading multi-platform digital media company, operating the largest out-of-home advertising network in China using audiovisual digital displays, based on the number of locations and number of flat-panel television displays in our network. Through Focus Media's multi-platform digital advertising network, the company reaches urban consumers at strategic locations and point-of-interests over a number of media formats, including audiovisual television displays in buildings and stores, advertising poster frames and other new and innovative media, such as outdoor light-emitting diode or LED digital billboard and Internet advertising platforms. As of June 30, 2010, Focus Media's digital out-of-home advertising network had approximately 142,000 LCD displays in its LCD display network and approximately 275,000 advertising in-elevator poster and digital frames, installed in over 90 cities throughout China. For more information about Focus Media, please visit our website at http://ir.focusmedia.cn/ .
Focus Media Holding Limited UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. Dollars in Thousands) 2010-6-30 2010-3-31 ASSETS Current assets Cash and cash equivalents 588,252 598,561 Accounts receivable, net 202,059 165,830 Prepaid expenses and other current assets 31,468 32,688 Deposit paid for acquisition of subsidiaries 1,480 2,957 Rental deposits 47,431 37,129 Other current assets 3,393 3,770 Total current assets 874,083 840,935 Rental deposits, non-current 7,924 7,772 Equipment, net 69,464 71,913 Acquired intangible assets, net 43,188 47,471 Goodwill 415,019 410,372 Other long term assets 14,806 14,485 Total assets 1,424,484 1,392,948 LIABILITIES AND EQUITY Current liabilities Accounts payable 66,888 58,853 Accrued expenses and other current liabilities 96,632 81,687 Income taxes payable 14,277 18,772 Amount due to related parties 5,362 175 Deferred tax liabilities 11,694 11,633 Total current liabilities 194,853 171,120 Deferred tax liabilities, non-current 5,952 5,902 Total liabilities 200,805 177,022 Equity Ordinary shares 36 36 Additional paid in capital 1,867,533 1,891,351 Subscription receivable (1,266) (3,082) Accumulated deficit (722,846) (748,180) Accumulated other comprehensive income 63,554 60,209 Total Focus Media equity 1,207,011 1,200,334 Noncontrolling interests 16,668 15,592 Total equity 1,223,679 1,215,926 Total liabilities and equity 1,424,484 1,392,948 Focus Media Holding Limited UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. Dollar in thousands, except earnings per ADS and ADS data) Three months ended Six months ended 2010-6-30 2010-3-31 2009-6-30 2010-6-30 2009-6-30 Revenues LCD display network 80,056 55,428 59,943 135,484 98,256 In-store network 11,997 8,488 9,900 20,485 16,915 Poster frame network 27,623 27,413 29,254 55,036 55,062 Movie theater and outdoor billboard network 14,379 14,672 15,030 29,051 34,876 Internet advertising 37,131 29,440 26,397 66,571 48,883 Total gross revenues 171,186 135,441 140,524 306,627 253,992 Less: Sales taxes 13,019 10,562 10,983 23,582 19,745 Total net revenue (note) 158,167 124,879 129,541 283,045 234,247 Cost of revenues LCD display network 14,486 14,945 10,677 29,431 22,304 In-store Network 6,123 5,219 6,025 11,341 10,292 Poster frame network 19,298 18,448 12,858 37,746 25,203 Movie theater and outdoor billboard network 10,833 9,922 10,886 20,755 25,048 Internet advertising 25,793 22,673 22,505 48,466 39,919 Total cost of revenues 76,533 71,207 62,951 147,739 122,766 Gross profit 81,634 53,672 66,590 135,306 111,481 Operating expenses General and administrative 20,021 23,780 27,578 43,802 51,300 Selling and marketing 31,962 23,294 26,380 55,256 45,820 Impairment loss -- 5,736 25,773 5,736 35,044 Other operating expenses (income), net (1,719) (4,675) 244 (6,394) (3,105) Total operating expenses 50,264 48,135 79,975 98,400 129,059 Operating profit (loss) 31,370 5,537 (13,385) 36,906 (17,578) Interest income 1,096 1,838 1,292 2,935 2,867 Non-operating expense -- (1,288) -- (1,288) -- Income (loss) from continuing operations before income taxes 32,466 6,087 (12,093) 38,553 (14,711) Provision for income taxes 5,665 6,678 5,849 12,343 8,832 Net income (loss) from continuing operations 26,801 (591) (17,942) 26,210 (23,543) Net loss from discontinued operations, net of tax -- -- (4,806) -- (4,880) Net income (loss) 26,801 (591) (22,748) 26,210 (28,423) Less: Net income attributable to noncontrolling interests 1,465 363 223 1,828 243 Net income (loss) attributable to Focus Media 25,336 (954) (22,971) 24,382 (28,666) Net income (loss) per ADS -basic 0.18 (0.01) (0.18) 0.17 (0.22) -diluted 0.17 (0.01) (0.18) 0.16 (0.22) Shares used in calculating basic loss per ADS 143,787,178 145,055,601 129,223,942 144,705,951 129,216,342 Shares used in calculating diluted loss per ADS 148,162,497 145,055,601 129,223,942 149,081,270 129,216,342 Note: Details of net revenues by segment are as follows (U.S. Dollars in thousands): Three months ended Six months ended 2010-6-30 2010-3-31 2009-6-30 2010-6-30 2009-6-30 Gross revenues LCD display network 80,056 55,428 59,943 135,484 98,256 In-store network 11,997 8,488 9,900 20,485 16,915 Poster frame network 27,623 27,413 29,254 55,036 55,062 Movie theater and outdoor billboard network 14,379 14,672 15,030 29,051 34,876 Internet advertising 37,131 29,440 26,397 66,571 48,883 Total gross revenues 171,186 135,441 140,524 306,627 253,992 Less: Sales taxes LCD display network 7,526 5,273 5,597 12,799 9,584 In-store network 1,129 826 933 1,955 1,604 Poster frame network 2,386 2,614 2,755 5,000 5,026 Movie theater and outdoor billboard network 506 534 268 1,041 903 Internet advertising 1,472 1,315 1,430 2,787 2,628 Total sales tax 13,019 10,562 10,983 23,582 19,745 Net revenues LCD display network 72,530 50,155 54,346 122,685 88,672 In-store network 10,868 7,662 8,967 18,530 15,311 Poster frame network 25,237 24,799 26,499 50,036 50,036 Movie theater and outdoor billboard network 13,873 14,138 14,762 28,010 33,973 Internet advertising 35,659 28,125 24,967 63,784 46,255 Total net revenues 158,167 124,879 129,541 283,045 234,247 FOCUS MEDIA HOLDING LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (U.S. Dollar in thousands) Three months ended Six months ended 2010-6-30 2009-6-30 2010-6-30 2009-6-30 Operating activities: Net income (loss) 26,801 (22,748) 26,210 (28,423) Adjustments to reconcile net loss to net cash provided by operating activities: Bad debt expenses (1,518) 11,240 337 18,520 Share-based compensation 12,927 10,697 25,728 18,819 Depreciation 7,428 671 15,071 1,164 Amortization of acquired intangible assets 4,482 4,280 8,796 8,742 Loss on disposal of equity interest of subsidiaries and impairment of other long-lived assets 1,545 115 2,833 (124) Gain on earn-out payment renegotiation -- 1,052 -- -- Impairment charges for goodwill, acquired intangible assets and equipment -- 33,938 5,736 43,209 Others 80 113 115 (41) Net changes in current assets and current liabilities, net of effects of acquisitions (13,953) (11,544) (41,845) (10,189) Net cash provided by operating activities 37,792 27,814 42,981 51,677 Investing activities: Purchase of equipment and other long-term assets (3,849) (2,787) (4,925) (8,814) Earn-out payment paid to acquire subsidiaries (7,325) (61,446) (22,538) (67,799) Proceeds received from the sale of short-term investments -- -- 29,290 574 Proceeds used in investment in short-term investments -- (146) -- (29,290) Proceeds received from disposal fixed assets 142 195 142 197 Disposal of subsidiaries (140) -- 2,789 (584) Net cash received from/(used in) investing activities (11,172) (64,184) 4,758 (105,716) Financing activities: Cash used for share repurchase (36,715) -- (36,715) -- Cash deposit for share repurchase (6,301) -- (6,301) -- Capital injection from minority shareholders 1,924 -- 10,968 -- Proceeds from issuance of ordinary shares, net of issuance costs 1,819 -- 1,819 143 Net cash provided by/(used in) financing activities (39,273) -- (30,229) 143 Effect of exchange rate changes 2,344 672 2,583 (1,136) Net increase (decrease) in cash and cash equivalents (10,309) (35,698) 20,093 (55,032) Cash and cash equivalents, beginning of period 598,561 403,582 568,159 422,916 Cash and cash equivalents, end of period 588,252 367,884 588,252 367,884 Supplemental disclosure of cash flow information: Income taxes paid 9,367 3,728 23,940 8,581 Supplemental disclosure of non-cash investing activity: Acquisition of subsidiaries: Accounts payable 7,178 1,842 7,178 1,842
Focus Media Holding Limited
CONTACT: Investors and Medias, Jing Lu, +86-21-2216-4155,
ir@focusmedia.cn
Web site: http://ir.focusmedia.cn/
