SHANGHAI, Nov. 22, 2010 /PRNewswire-Asia/ -- Focus Media Holding Limited , China's leading digital media group, today announced its unaudited financial results for the third quarter ended September 30, 2010.
Highlights for Third Quarter 2010: -- Total net revenue for the third quarter of 2010 was $137.4 million, of which -- Aggregate net revenue from the LCD display network (including the movie theater network), in-store network and poster frame network was $128.4 million, which exceeded by approximately 6% the mid-point of the Company's guidance range of $120-123 million. It represented an increase of 14% from $112.2 million for the second quarter of 2010 and an increase of 45% from $88.7 million for the third quarter of 2009; -- The net revenue from the traditional outdoor billboard network for the third quarter of 2010 was $8.9 million. The net revenue of the internet business from July 1, 2010 till July 31, 2010, the date of disposal, was $16.8 million. The internet business was reclassified as discontinued operations for all periods presented due to disposal in the early part of the third quarter of 2010 and hence, the net revenue of $16.8 million was not included in the total net revenue of $137.4 million. For detailed results of Internet business, please see note 2 to unaudited condensed consolidated statements of operations. Aggregate net revenue from the traditional outdoor billboard network and Internet advertising services (through the date of disposal) for the third quarter of 2010 was $25.7 million, which exceeded by approximately 23% the mid-point of the guidance range of $20-22 million. -- GAAP net income attributable to Focus Media was $112.7 million, compared to $25.3 million for the second quarter of 2010, and net loss attributable to Focus Media of $127.6 million for the third quarter of 2009. The GAAP net income for the third quarter of 2010 includes a non-recurring income of $79.0 million resulting from the sale of our Internet business. -- Non-GAAP net income attributable to Focus Media for the third quarter of 2010 was $51.8 million, also exceeding the mid-point of Company's guidance range of $48-$49 million by 7%, compared to non-GAAP net income attributable to Focus Media of $44.3 million for the second quarter of 2010 and non-GAAP net income attributable to Focus Media of $7.9 million for the third 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 attributable to Focus Media per fully diluted ADS was $0.76, compared to $0.17 per fully diluted ADS for the second quarter of 2010 and a loss of $0.99 per ADS in the third quarter of 2009. -- Non-GAAP net income attributable to Focus Media per fully diluted ADS was $0.35, compared to $0.30 per fully diluted ADS for the second quarter of 2010, and $0.06 per fully diluted ADS for the third quarter of 2009. Highlights for Balance Sheet and Cash Flow Results of Third Quarter 2010: -- Cash, cash equivalents and investments in held-to-maturity debt securities was $499.4 million as of September 30, 2010, declining from $588.3 million as of June 30, 2010 primarily due to cash spending in share repurchases. The Company invested $116.1 million during the third quarter of 2010 in held-to-maturity debt securities. -- Net accounts receivable for the LCD display network (including the movie theater network), in-store network and poster frame network was $153.5 million as of September 30, 2010, an increase of 14% from $134.6 million as of June 30, 2010, mainly due to increase in revenue in the third quarter versus the second quarter. Days sales outstanding on a rolling basis was 92 days in the third quarter of 2010 versus 86 days for the second quarter of 2010. -- Net cash inflow from operation activities in the third quarter of 2010 was $34.2 million, slightly declining by 9% from $37.8 million for the second quarter of 2010 mainly due to negative working capital contributed by the internet business prior to disposition. -- Capital expenditures were $6.7 million for the third quarter of 2010. -- Purchase of subsidiaries related to historical acquisitions paid in the third quarter of 2010 was $3.8 million, primarily attributable to the poster frame network.
Jason Jiang, the Chairman and the Chief Executive Officer of the Company said, "In the third quarter of 2010, we managed to achieve record high combined LCD display network and in-store network revenue, exceeding the last best performing quarter in the history of the Company, the third quarter of 2008. If we were to exclude revenue contribution from the acquired in-store CGEN network in the third quarter of 2008, the total revenues of our core business in the third quarter of 2010 also achieved a historical high. We are thankful of the hard work and dedication of the Focus Media team, and the competitive underlying strength of our core business. We will continue striving to sustain and leverage our strategic and competitive operational strength to enhance the value of the Company."
Kit Low, the Chief Financial Officer of the Company added, "In the third quarter of 2010, the Company achieved aggregate net revenue year on year growth in our LCD display, in-store and poster frame business of 45%, and quarter on quarter growth of 14%. GAAP net income and Non-GAAP net income for the third quarter of 2010 are $112.7 million and $51.8 million, respectively. In the third quarter of 2010, the Company generated a net cash inflow from operating activities after deducting the purchase of equipment and subsidiaries (including earn-out payments) of $23.8 million. In the first three quarters of 2010, the Company cumulatively generated a net cash inflow from operating activities and purchase of equipment and subsidiaries of $39.3 million."
Third Quarter 2010 financial results
Advertising net revenue from the LCD display network (including the movie theatre network) was $86.8 million for the third quarter of 2010, representing an increase of 14% from $76.1 million for the second quarter of 2010 and an increase of 47% from $58.9 million for the third quarter of 2009.
Advertising net revenue from the poster frame network was $32.2 million for the third quarter of 2010, representing an increase of 28% from $25.2 million for the second quarter of 2010 and an increase of 46% from $22.1 million for the third quarter of 2009.
Advertising net revenue from the in-store network was $9.4 million for the third quarter of 2010, representing a decrease of 14% from $10.9 million for the second quarter of 2010 mainly due to a beverage advertising heat in the second quarter of 2010 and an increase of 24% from $7.6 million for the third quarter of 2009.
As of September 30, 2010, the total installed base of LCD displays in our LCD display network was 149,913 nationwide, including 144,392 displays through our directly owned networks, and 5,521 displays through our regional distributors, as compared to total LCD displays of 142,305 as of June 30, 2010. The total number of non-digital frames available for sale in our poster frame network was 276,504 as of September 30, 2010, as compared to 238,689 as of June 30, 2010. In addition, as of September 30, 2010, we had 35,983 digital frames installed in our poster frame network, as compared to 35,835 as of June 30, 2010. The total number of displays installed in our in-store network was 45,613 as of September 30, 2010, as compared to 45,686 as of June 30, 2010.
Advertising net revenue from the traditional outdoor billboard network was $8.9 million for the third quarter of 2010, representing a decrease of 14% from $10.3 million for the second quarter of 2010 and a decrease of 7% from $9.6 million for the third quarter of 2009.
Non-GAAP gross profit from the LCD display network (including the movie theatre network) for the third quarter of 2010 was $65.6 million, representing an increase of 9% from $60.2 million for the second quarter of 2010 and an increase of 89% from $34.8 million for the third quarter of 2009.
Non-GAAP gross profit from the poster frame network for the third quarter of 2010 was $12.2 million, representing an increase of 61% from $7.6 million for the second quarter of 2010, and an increase of 6.2 times from $1.7 million for the third quarter of 2009.
Non-GAAP gross profit from the in-store network for the third quarter of 2010 was $3.4 million, representing a decrease of 28% from $4.7 million for the second quarter of 2010 due to decline of the net revenue quarter over quarter and compared to non-GAAP gross loss of $3.3 million for the third quarter of 2009.
Non-GAAP gross profit from the traditional outdoor billboard network for the third quarter of 2010 was $2.3 million, representing a 12% decline from $2.6 million for the second quarter of 2010 and $2.6 million for the third quarter of 2009 respectively.
Non-GAAP operating expense for the third quarter of 2010 was $32.2 million, an increase of 11% from $28.9 million for the second quarter of 2010 and an increase of 37% from $23.5 million for the third quarter of 2009.
Net cash provided by operating activities for the third quarter of 2010 was $34.2 million.
Net cash used in investing activities for the third quarter was $53.1 million. In the third quarter of 2010, the Company incurred capital expenditures of $6.7 million, subsidiary acquisition payments of $3.8 million. During the third quarter of 2010, the Company also invested $116.1 million in held-to-maturity debt securities and received net proceeds of $73.3 million from the disposal of the internet business.
Net cash used in financing activities for the third quarter was $193.2 million. In the third quarter of 2010, the Company spent $200 million to repurchase the shares of the Company from Fosun International, our largest shareholder.
Business Outlook for Fourth Quarter 2010
Prior to the start of the third quarter of 2010, the core business of the Company consisted of the LCD display network, the movie theatre 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 presented it in the category of LCD display network and other. Following the re-categorization, the core business of the Company consists of the LCD display network and other, 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) from the third quarter of 2010.
The Company provides the following guidance with respect to the fourth quarter ending December 31, 2010:
Net revenues for the core business (inclusive of the LCD display network and other, the in-store network and the poster frame network) are expected to be in the range of $130 -$132 million, the mid-point of which would represent quarter-on-quarter growth of 2% and year-on-year growth of 30%. Net revenues for the non-core business (the traditional outdoor billboard network) are expected to be in the range of $10 - $11 million. The Company's non-GAAP net income is expected to be in the range of $52-$53 million. The Company estimates the weighted average fully diluted ADS count for the quarter at 142 million, assuming no further share repurchases during the quarter.
The Company incurred cumulative earn-out payments of $25.1 million in the first three quarters of 2010. Based on the existing business outlook, the Company expects earn-out payments remaining in the fourth quarter of 2010, or partially spilled over into the first quarter of 2011, to be no more than $9.9 million and cumulatively no more than $35 million for 2010 versus our previous guidance of $38 million.
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 November 22, 2010, the Company has cumulatively spent $237 million in share repurchases.
Foreign Currency Translation
Assets and liabilities are translated at the exchange rate as of September 30, 2010, which was $1 to RMB 6.7011. Equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the third quarter of 2010, which was $1 to RMB 6.7803. 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, Impairment and termination charges related to ceasing expansion of digital poster frame networks and boat-based advertising platform charges from expensing IPO expenditures as a result of termination of the IPO process of Allyes and the profit from the disposal of the internet business 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 a consistent method from quarter to quarter, mostly including Share-based compensation, amortization of acquired intangible assets, profit or loss from disposal of previously acquired subsidiaries and impairment charges. 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 September 30, 2010 GAAP (1) (2) ---- --- --- Gross Profit LCD display and other: 64,225 286 1,105 -LCD display network 63,875 286 1,090 -Movie theater network 350 - 15 Poster frame network 10,557 - 1,668 In-store network 3,411 - - Traditional outdoor billboard network 1,872 - 431 ----- --- --- Total Gross Profit 80,065 286 3,204 ------ --- ----- General and administrative 24,942 (11,526) - Selling and marketing 24,474 (1,257) (1,036) Other operating expenses (income), net (2,699) - - ------ --- --- Total operating expense 46,717 (12,783) (1,036) ------ ------- ------ Operating profit from continuing operations 33,348 13,069 4,240 Profit before tax from continuing operations 36,015 13,069 4,240 Net income attributable to Focus Media 112,737 13,069 4,262 ======= ====== ===== Basic net income from continuing operations per ADS 0.24 Diluted net income from continuing operations per ADS 0.23 Basic net income from discontinued operations per ADS 0.56 Diluted net income from discontinued operations per ADS 0.54 Basic net income attributable to Focus Media per ADS 0.79 Diluted net income attributable to Focus Media per ADS 0.76 ==== ADS used in calculating basic income per ADS 141,944,371 ----------- ADS used in calculating diluted income per ADS 147,490,755 ----------- (3) (4) Non-GAAP --- --- --------- Gross Profit LCD display and other: - 65,616 -LCD display network - - 65,251 -Movie theater network - - 365 Poster frame network - 12,225 In-store network - 3,411 Traditional outdoor billboard network - 2,303 --- ----- Total Gross Profit - 83,555 --- ------ General and administrative - 13,416 Selling and marketing - 22,181 Other operating expenses (income), net (733) (3,432) ---- ------ Total operating expense (733) 32,165 ---- ------ Operating profit from continuing operations 733 51,390 Profit before tax from continuing operations 733 54,057 Net income attributable to Focus Media (79,000) 733 51,801 ======= === ====== Basic net income from continuing operations per ADS 0.36 Diluted net income from continuing operations per ADS 0.35 Basic net income from discontinued operations per ADS 0.00 Diluted net income from discontinued operations per ADS 0.00 Basic net income attributable to Focus Media per ADS 0.36 Diluted net income attributable to Focus Media per ADS 0.35 ==== ADS used in calculating basic income per ADS 141,944,371 ----------- ADS used in calculating diluted income per ADS 147,490,755 ----------- (1). Share-based compensation. (2). Amortization of acquired intangible assets. (3). Profit from disposal of the internet business. (4). Loss from disposal of previously acquired subsidiaries, all attributable to poster frame business. Three months ended June 30, 2010 GAAP (1) (2) (3) Non- GAAP ---- --- --- --- --------- Gross Profit LCD display network and other: 58,916 283 1,036 - 60,235 -LCD display network 58,043 283 1,021 - 59,347 -Movie theater network 873 - 15 - 888 Poster frame network 5,939 - 1,634 - 7,573 In-store network 4,745 - - - 4,745 Traditional outdoor billboard network 2,168 - 427 - 2,595 ----- --- --- --- ----- Total Gross Profit 71,768 283 3,097 - 75,148 ------ --- ----- --- ------ General and administrative 16,737 (11,400) - - 5,337 Selling and marketing 28,729 (1,244) (1,018) - 26,467 Other operating expenses (income), net (1,353) - - (1,524) (2,877) ------ --- --- ------ ------ Total operating expense 44,113 (12,644) (1,018) (1,524) 28,927 ------ ------- ------ ------ ------ Operating profit from continuing operations 27,655 12,927 4,115 1,524 46,221 Profit before tax from continuing operations 28,719 12,927 4,115 1,524 47,285 Net income attributable to Focus Media 25,336 12,927 4,482 1,524 44,269 ====== ====== ===== ===== ====== Basic net income from continuing operations per ADS 0.17 0.29 Diluted net income from continuing operations per ADS 0.16 0.29 Basic net income from discontinued operations per ADS 0.02 0.02 Diluted net income from discontinued operations per ADS 0.02 0.02 Basic net income attributable to Focus Media per ADS 0.18 0.31 Diluted net income attributable to Focus Media per ADS 0.17 0.30 ADS used in calculating basic income per ADS 143,787,178 143,787,178 ----------- ----------- ADS 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 September 30, 2009 GAAP (1) (2) (3) ---- --- --- --- Gross Profit LCD display network and other: 18,193 306 3,623 - -LCD display network 17,177 306 3,608 - -Movie theater network 1,016 - 15 - Poster frame network (30,420) - 5,131 - In-store network (3,844) - - - Traditional outdoor billboard network 1,984 - 647 - ----- --- --- --- Total Gross Profit (14,087) 306 9,401 - ------- --- ----- --- General and administrative 16,125 (4,733) - - Selling and marketing 21,137 (3,734) (2,608) - Impairment loss 16,203 - - - Other operating expenses (income), net 15,861 - - (16,649) ------ --- --- ------- Total operating Expense 69,326 (8,467) (2,608) (16,649) ------ ------ ------ ------- Operating profit from continuing operations (83,413) 8,773 12,009 16,649 Profit before tax from continuing operations (82,432) 8,773 12,009 16,649 Net income (loss) attributable to Focus Media (127,599) 8,773 13,865 25,944 ======== ===== ====== ====== Basic net income (loss) from continuing operations per ADS (0.60) Diluted net income (loss) from continuing operations per ADS (0.60) Basic net income (loss) from discontinued operations per ADS (0.36) Diluted net income (loss) from discontinued operations (0.36) Basic net income (loss) attributable to Focus Media per ADS (0.99) Diluted net income (loss) attributable to Focus Media per ADS (0.99) ADS used in calculating basic loss per ADS 129,308,337 ----------- ADS used in calculating diluted loss per ADS 129,308,337 ----------- (4) (5) Non-GAAP --- --- --------- Gross Profit LCD display network and other: 3,168 9,462 34,752 -LCD display network 3,168 9,462 33,721 -Movie theater network - - 1,031 Poster frame network - 26,983 1,694 In-store network - 516 (3,328) Traditional outdoor billboard network - - 2,631 --- --- ----- Total Gross Profit 3,168 36,961 35,749 ----- ------ ------ General and administrative - - 11,392 Selling and marketing - - 14,795 Impairment loss (16,203) - - Other operating expenses (income), net - (1,872) (2,660) --- ------ ------ Total operating Expense (16,203) (1,872) 23,527 ------- ------ ------ Operating profit from continuing operations 19,371 38,833 12,222 Profit before tax from continuing operations 19,371 38,833 13,203 Net income (loss) attributable to Focus Media 57,300 29,593 7,876 ====== ====== ===== Basic net income (loss) from continuing operations per ADS 0.07 Diluted net income (loss) from continuing operations per ADS 0.07 Basic net income (loss) from discontinued operations per ADS 0.02 Diluted net income (loss) from discontinued operations 0.02 Basic net income (loss) attributable to Focus Media per ADS 0.06 Diluted net income (loss) attributable to Focus Media per ADS 0.06 ADS used in calculating basic loss per ADS 129,308,337 ----------- ADS used in calculating diluted loss per ADS 129,440,410 ----------- (1). Share-based compensation (2). Amortization of acquired intangible assets. (3). Loss from disposal of previously acquired subsidiaries, of which loss from disposal of subsidiaries was $3.7 million, loss from partial disposal of equity interests in subsidiaries was $14.9 million and loss from impairment of certain other assets was $7.3 million. (4). Impairment charges of certain assets, including acquired intangible assets and goodwill. (5). Impairment and termination charges related to ceasing expansion of digital poster frame networks and boat-based advertising platform. Focus Media Holding Ltd. Reconciliation of GAAP to non-GAAP (U.S. Dollar in thousands, except percentages, share and per-share data) (Unaudited) Nine months ended September 30, 2010 GAAP (1) (2) ---- --- --- Gross Profit LCD display network and other: 161,186 848 2,995 -LCD display network 157,129 848 2,949 -Movie theater network 4,057 - 46 Poster frame network 22,847 - 4,941 In-store network 10,600 - - Traditional outdoor billboard network 5,420 - 1,286 ----- --- ----- Total Gross Profit 200,053 848 9,222 ------- --- ----- General and administrative 62,997 (34,217) - Selling and marketing 73,795 (3,732) (3,070) Impairment loss 5,736 - - Other operating (income), net (7,848) - - ------ --- --- Total operating expense 134,680 (37,949) (3,070) ------- ------- ------ Operating profit from continuing operations 65,373 38,797 12,292 Profit before tax from continuing operations 69,533 38,797 12,292 Net income attributable to Focus Media 137,119 38,797 13,058 ======= ====== ====== Basic net income (loss) from continuing operations per ADS 0.39 Diluted net income (loss) from continuing operations per ADS 0.38 Basic net income (loss) from discontinued operations per ADS 0.58 Diluted net income (loss) from discontinued operations per ADS 0.56 Basic net income (loss) attributable to Focus Media per ADS 0.95 Diluted net income (loss) attributable to Focus Media per ADS 0.93 ==== ADS used in calculating basic income per ADS 143,584,320 ----------- ADS used in calculating diluted income per ADS 148,090,998 ----------- Nine months ended September 30, 2010 (3) (4) Non-GAAP --- --- --------- Gross Profit LCD display network and other: - - 165,029 -LCD display network - - 160,926 -Movie theater network - - 4,103 Poster frame network - - 27,788 In-store network - - 10,600 Traditional outdoor billboard network - - 6,706 --- --- ----- Total Gross Profit - - 210,123 --- --- ------- General and administrative - - 28,780 Selling and marketing - - 66,993 Impairment loss (5,736) - - Other operating (income), net - (2,257) (10,105) --- ------ ------- Total operating expense (5,736) (2,257) 85,668 ------ ------ ------ Operating profit from continuing operations 5,736 2,257 124,455 Profit before tax from continuing operations 5,736 3,545 129,903 Net income attributable to Focus Media 5,736 (75,455) 119,255 ===== ======= ======= Basic net income (loss) from continuing operations per ADS 0.81 Diluted net income (loss) from continuing operations per ADS 0.78 Basic net income (loss) from discontinued operations per ADS 0.03 Diluted net income (loss) from discontinued operations per ADS 0.03 Basic net income (loss) attributable to Focus Media per ADS 0.83 Diluted net income (loss) attributable to Focus Media per ADS 0.81 ==== ADS used in calculating basic income per ADS 143,584,320 ----------- ADS used in calculating diluted income per ADS 148,090,998 ----------- (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). Profit from disposal of previously acquired business, including $79M profit from internet disposal and $3.5M loss from the write- off of certain assets of previously acquired subsidiaries. Nine months ended September 30, 2009 GAAP (1) (2) (3) (4) ---- --- --- --- --- Gross Profit LCD display network and other: 84,817 1,219 3,751 - 3,729 -LCD display network 82,883 1,219 3,705 - 3,729 -Movie theater network 1,934 - 46 - - Poster frame network (5,587) - 5,131 - - In-store network 1,175 - 15 - - Traditional outdoor billboard network 9,993 - 2,457 - - ----- --- ----- --- --- Total Gross Profit 90,398 1,219 11,354 - 3,729 ------ ----- ------ --- ----- General and administrative 56,471 (13,213) - - - Selling and marketing 60,649 (13,160) (3,648) - (247) Impairment loss 51,246 - - - (51,246) Other operating (income), net 15,052 - - (17,861) - ------ --- --- ------- --- Total operating Expense 183,418 (26,373) (3,648) (17,861) (51,493) ------- ------- ------ ------- ------- Operating (loss) profit from continuing operations (93,020) 27,592 15,002 17,861 55,222 Profit (loss) before tax from continuing operations (89,411) 27,592 15,002 17,861 55,222 Net income (loss) attributable to Focus Media (156,263) 27,592 22,607 27,156 99,017 ======== ====== ====== ====== ====== Basic net income (loss) from continuing operations per ADS (0.71) Diluted net income (loss) from continuing operations per ADS (0.71) Basic net income (loss) from discontinued operations per ADS (0.47) Diluted net income (loss) from discontinued operations per ADS (0.47) Basic net income (loss) attributable to Focus Media per ADS (1.21) Diluted net income (loss) attributable to Focus Media per ADS (1.21) ===== ADS used in calculating basic income per ADS 129,232,838 ----------- ADS used in calculating diluted income per ADS 129,232,838 ----------- (5) (6) (7) Non-GAAP --- --- --- --------- Gross Profit LCD display network and other: 9,462 - - 102,978 -LCD display network 9,462 - - 100,998 -Movie theater network - - - 1,980 Poster frame network 26,983 - - 26,527 In-store network 516 - - 1,706 Traditional outdoor billboard network - - - 12,450 --- --- --- ------ Total Gross Profit 36,961 - - 143,661 ------ --- --- ------- General and administrative - - - 43,258 Selling and marketing - - - 43,594 Impairment loss - - - - Other operating (income), net (1,872) - (2,528) (7,209) ------ --- ------ ------ Total operating Expense (1,872) - (2,528) 79,643 ------ --- ------ ------ Operating (loss) profit from continuing operations 38,833 - 2,528 64,018 Profit (loss) before tax from continuing operations 38,833 - 2,528 67,627 Net income (loss) attributable to Focus Media 29,593 2,466 2,528 54,696 ====== ===== ===== ====== Basic net income (loss) from continuing operations per ADS 0.43 Diluted net income (loss) from continuing operations per ADS 0.43 Basic net income (loss) from discontinued operations per ADS 0.02 Diluted net income (loss) from discontinued operations per ADS 0.02 Basic net income (loss) attributable to Focus Media per ADS 0.42 Diluted net income (loss) attributable to Focus Media per ADS 0.42 ==== ADS used in calculating basic income per ADS 129,232,838 ----------- ADS used in calculating diluted income per ADS 129,312,459 ----------- (1). Share-based compensation (2). Amortization of acquired intangible assets. (3). Loss from disposal of previously acquired subsidiaries, of which loss from disposal of subsidiaries was $4.9 million, loss from partial disposal of equity interests in subsidiaries was $14.9 million and loss from impairment of certain other assets was $7.3 million. (4). Impairment charges of goodwill and other long-lived assets. (5). Impairment and termination charges related to ceasing expansion of digital poster frame networks and boat-based advertising platform. (6). One-off charges from expensing IPO expenditures as a result of termination of IPO process of Allyes. (7). Write-off of receivables from ex-shareholders of disposed business. CONFERENCE CALL
The Company will host a conference call to discuss the third quarter 2010 results at 8:00 p.m. U.S. Eastern Time on November 22, 2010 (5:00 p.m. U.S. Pacific Time on November 22, 2010 and 9:00 a.m. Beijing/Hong Kong Time on November 23, 2010). The dial-in details for the live conference call are set forth below: U.S. Toll Free Number +1.866.783.2145, Hong Kong dial-in number +852.3002.1672, International dial-in number +1.857.350.1604; Pass code: 99191997.
A replay of the call will be available from November 22, 2010 11:00 pm until November 30, 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 82337763. 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 and LED digital billboard. As of September 30, 2010, Focus Media's digital out-of-home advertising network had approximately 150,000 LCD displays in its LCD display network and approximately 312,000 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) 2010-9-30 2010-6-30 ASSETS Current assets Cash and cash equivalents 383,253 588,252 Held-to-maturity investments 116,100 - Accounts receivable, net 165,235 202,059 Prepaid expenses and other current assets 31,632 31,468 Deposit paid for acquisition of subsidiaries 1,045 1,480 Rental deposits 45,543 47,431 Other current assets 1,984 3,393 ----- ----- Total current assets 744,792 874,083 Rental deposits, non-current 7,086 7,924 Equipment, net 68,302 69,464 Acquired intangible assets, net 27,895 43,188 Goodwill 415,014 415,019 Other long term assets 14,209 14,806 Total assets 1,277,298 1,424,484 ========= ========= LIABILITIES AND EQUITY Current liabilities Accounts payable 19,333 66,888 Accrued expenses and other current liabilities 90,413 96,632 Income taxes payable 8,774 14,277 Amount due to related parties - 5,362 Deferred tax liabilities 11,850 11,694 ------ ------ Total current liabilities 130,370 194,853 Deferred tax liabilities, non- current 4,560 5,952 ----- ----- Total liabilities 134,930 200,805 ------- ------- Equity Ordinary shares 33 36 Additional paid in capital 1,680,616 1,867,533 Subscription receivable (980) (1,266) Accumulated deficit (610,107) (722,846) Accumulated other comprehensive income 71,642 63,554 ------ ------ Total Focus Media equity 1,141,204 1,207,011 Noncontrolling interests 1,164 16,668 ----- ------ Total equity 1,142,368 1,223,679 --------- --------- Total liabilities and equity 1,277,298 1,424,484 ========= ========= 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 ------------------ 2010-9-30 2010-6-30 2009-9-30 Revenues LCD display network and other: 96,182 83,931 63,583 -LCD display network 91,654 80,056 60,509 -Movie theater network 4,528 3,875 3,074 In-store network 10,389 11,997 8,450 Poster frame network 35,496 27,623 24,155 Traditional outdoor billboard network 9,135 10,504 9,728 ----- ------ ----- Total gross revenues 151,202 134,055 105,916 Less: Sales taxes 13,850 11,547 7,647 ------ ------ ----- Total net revenue (note 1) 137,352 122,508 98,269 ------- ------- ------ Cost of revenues LCD display network and other: 22,551 17,138 40,747 -LCD display network 19,023 14,487 38,830 -Movie theater network 3,528 2,651 1,917 In-store network 5,997 6,123 11,490 Poster frame network 21,670 19,298 52,550 Traditional outdoor billboard network 7,069 8,181 7,569 ----- ----- ----- Total cost of revenues 57,287 50,740 112,356 ------ ------ ------- Gross profit (loss) 80,065 71,768 (14,087) ------ ------ ------- Operating expenses General and administrative 24,942 16,737 16,125 Selling and marketing 24,474 28,729 21,137 Impairment loss - - 16,203 Other operating expenses (income), net (2,699) (1,353) 15,861 ------ ------ ------ Total operating expenses 46,717 44,113 69,326 ------ ------ ------ Operating profit (loss) 33,348 27,655 (83,413) Interest income 2,667 1,064 981 Investment loss - - - Income (loss) from continuing operations before income taxes 36,015 28,719 (82,432) Provision for income taxes 2,561 4,945 (4,820) ----- ----- ------ Net income (loss) from continuing operations 33,454 23,774 (77,612) Net income (loss) from discontinued operations, net of tax (note 2) 79,341 3,027 (47,029) ------ ----- ------- Net income (loss) 112,795 26,801 (124,641) Less: Net income attributable to noncontrolling interests 58 1,465 2,958 --- ----- ----- Net income (loss) attributable to Focus Media 112,737 25,336 (127,599) ======= ====== ======== Net income (loss) from continuing operations per ADS -basic 0.24 0.17 (0.60) -diluted 0.23 0.16 (0.60) Net income (loss) from discontinued operations per ADS -basic 0.56 0.02 (0.36) -diluted 0.54 0.02 (0.36) Net income (loss) attributable to Focus Media per ADS -basic 0.79 0.18 (0.99) ==== ==== ===== -diluted 0.76 0.17 (0.99) ==== ==== ===== ADS used in calculating basic income (loss) per ADS 141,944,371 143,787,178 129,308,337 =========== =========== =========== ADS used in calculating diluted income (loss) per ADS 147,490,755 148,162,497 129,308,337 Nine months ended ----------------- 2010-9-30 2009-9-30 Revenues LCD display network and other: 241,362 165,799 -LCD display network 227,137 158,764 -Movie theater network 14,225 7,035 In-store network 30,875 25,365 Poster frame network 90,532 79,216 Traditional outdoor billboard network 28,489 40,643 ------ ------ Total gross revenues 391,258 311,023 Less: Sales taxes 34,643 24,762 ------ ------ Total net revenue (note 1) 356,615 286,261 ------- ------- Cost of revenues LCD display network and other: 57,269 66,676 -LCD display network 48,455 61,795 -Movie theater network 8,814 4,881 In-store network 17,339 21,782 Poster frame network 59,416 77,752 Traditional outdoor billboard network 22,538 29,653 ------ ------ Total cost of revenues 156,562 195,863 ------- ------- Gross profit (loss) 200,053 90,398 ------- ------ Operating expenses General and administrative 62,997 56,471 Selling and marketing 73,795 60,649 Impairment loss 5,736 51,246 Other operating expenses (income), net (7,848) 15,052 ------ ------ Total operating expenses 134,680 183,418 ------- ------- Operating profit (loss) 65,373 (93,020) Interest income 5,448 3,609 Investment loss (1,288) - Income (loss) from continuing operations before income taxes 69,533 (89,411) Provision for income taxes 13,699 2,733 ------ ----- Net income (loss) from continuing operations 55,834 (92,144) Net income (loss) from discontinued operations, net of tax (note 2) 83,172 (60,918) ------ ------- Net income (loss) 139,006 (153,062) Less: Net income attributable to noncontrolling interests 1,887 3,201 ----- ----- Net income (loss) attributable to Focus Media 137,119 (156,263) ======= ======== Net income (loss) from continuing operations per ADS -basic 0.39 (0.71) -diluted 0.38 (0.71) Net income (loss) from discontinued operations per ADS -basic 0.58 (0.47) -diluted 0.56 (0.47) Net income (loss) attributable to Focus Media per ADS -basic 0.95 (1.21) ==== ===== -diluted 0.93 (1.21) ==== ===== ADS used in calculating basic income (loss) per ADS 143,584,320 129,232,838 =========== =========== ADS used in calculating diluted income (loss) per ADS 148,090,998 129,232,838 Note 1: Details of net revenues by segment are as follows (U.S. Dollars in thousands): Three months ended ------------------ 2010-9-30 2010-6-30 2009-9-30 Gross revenues LCD display network 91,654 80,056 60,509 Movie theater network 4,528 3,875 3,074 In-store network 10,389 11,997 8,450 Poster frame network 35,496 27,623 24,155 Traditional outdoor billboard network 9,135 10,504 9,728 Total gross revenues 151,202 134,055 105,916 ------- ------- ------- Less: Sales taxes LCD display network 8,755 7,526 4,502 Movie theater network 651 351 141 In-store network 981 1,129 804 Poster frame network 3,269 2,386 2,025 Traditional outdoor billboard network 194 155 175 Total sales tax 13,850 11,547 7,647 ------ ------ ----- Net revenues LCD display network 82,899 72,530 56,007 Movie theater network 3,877 3,524 2,933 In-store network 9,408 10,868 7,646 Poster frame network 32,227 25,237 22,130 Traditional outdoor billboard network 8,941 10,349 9,553 Total net revenues 137,352 122,508 98,269 Nine months ended ----------------- 2010-9-30 2009-9-30 Gross revenues LCD display network 227,137 158,764 Movie theater network 14,225 7,035 In-store network 30,875 25,365 Poster frame network 90,532 79,216 Traditional outdoor billboard network 28,489 40,643 Total gross revenues 391,258 311,023 ------- ------- Less: Sales taxes LCD display network 21,553 14,086 Movie theater network 1,354 220 In-store network 2,936 2,408 Poster frame network 8,269 7,051 Traditional outdoor billboard network 531 997 Total sales tax 34,643 24,762 ------ ------ Net revenues LCD display network 205,584 144,678 Movie theater network 12,871 6,815 In-store network 27,939 22,957 Poster frame network 82,263 72,165 Traditional outdoor billboard network 27,958 39,646 Total net revenues 356,615 286,261 Note 2: Discontinued operations represent the internet business which was sold in the early part of third quarter of 2010. Details of gross revenues, net revenues and cost of sales of internet business for the period from July 1 till July 31, 2010 (the date of disposal of the internet business) are as follows (U.S. Dollars in thousands): 2010-7-01 to 2010-7-31 Gross revenue 18,125 Less: sales tax 1,309 ----- Net revenue 16,816 Cost of sales 13,538 ------ Gross profit 3,278 Focus Media Holding Limited UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (U.S. Dollar in thousands) Three months ended Nine months ended ------------ ----------------- 2010-9-30 2009-9-30 2010-9-30 2009-9-30 Operating activities: Net income (loss) 112,795 (124,641) 139,006 (153,062) Adjustments to reconcile net loss to net cash provided by operating activities: Bad debt expenses 867 7,602 1,205 26,122 Share-based compensation 13,069 8,773 38,797 27,592 Depreciation 6,721 26,353 21,792 27,517 Amortization of acquired intangible assets 4,262 13,865 13,058 22,607 Investment income - - - (185) (Profit) loss on disposal of subsidiaries and equity investment (79,000) 18,659 (76,167) 18,535 Impairment charges for goodwill, acquired intangible assets and fixed assets - 96,134 5,736 139,342 Impairment charges for certain other assets 7,285 7,285 Others 129 955 242 1,185 Net changes in current assets and current liabilities, net of effects of acquisitions (24,594) (18,199) (66,440) (28,476) ------- ------- ------- ------- Net cash provided by operating activities 34,249 36,786 77,229 88,462 ------ ------ ------ ------ Investing activities: Purchase of equipment and other long term assets (6,675) (854) (11,600) (9,668) Payment paid to acquired subsidiaries (3,767) (5,311) (26,306) (73,110) Proceeds received from the sale of short term investments - - 29,290 - Proceeds used in investment in held-to- maturity investment (116,100) - (116,100) (28,715) Proceeds received from disposal of fixed assets 166 - 309 196 Others - 324 - 324 Disposal of subsidiaries 73,278 (17,403) 76,067 (17,988) Net cash received from/ (used in) investing activities (53,098) (23,244) (48,340) (128,961) ------- ------- ------- -------- Financing activities: Cash used for share repurchase (200,000) - (236,715) - Collection (payment) of deposit for share repurchase 6,265 - (36) - Capital injection from minority shareholders 11 - 10,980 - Proceeds from issuance of ordinary shares, net of issuance costs 568 1,919 2,387 2,062 Net cash provided by/ (used in) financing activities (193,156) 1,919 (223,384) 2,062 -------- ----- -------- ----- Effect of exchange rate changes 7,006 (238) 9,589 (1,372) ----- ---- ----- ------ Net increase (decrease) in cash and cash equivalents (204,999) 15,223 (184,906) (39,809) Cash and cash equivalents, beginning of period 588,252 367,884 568,159 422,916 ------- ------- ------- ------- Cash and cash equivalents, end of period 383,253 383,107 383,253 383,107 ======= ======= ======= ======= Supplemental disclosure of cash flow information: Income taxes paid 3,854 1,597 27,793 10,178 ===== ===== ====== ====== Supplemental disclosure of non-cash investing activity: Accrual for acquisition of subsidiaries 1,900 16,967 4,667 16,967 ===== ====== ===== ======
Focus Media Holding Limited
CONTACT: Jing Lu, +86-21-2216-4155, ir@focusmedia.cn
Web Site: http://ir.focusmedia.cn/
