SHANGHAI, Nov. 17, 2011 /PRNewswire-Asia/ -- Focus Media Holding Limited (Nasdaq: FMCN), China's largest out-of-home lifestyle interactive targeted digital media group, today announced its unaudited financial results for the third quarter ended September 30, 2011.
Highlights for Third Quarter 2011:
-- Total net revenue for the third quarter of 2011 was $210.7 million, of which -- Aggregate net revenue from the LCD display network (including the movie theater network), in-store network and poster frame network was $196.1 million, which exceeded by approximately 11% the mid-point of the Company's guidance range of $175-177 million. This represented year-on-year growth of 53% from $128.4 million for the third quarter of 2010 and quarter-on-quarter growth of 18% from $166.1 million for the second quarter of 2011. -- Net revenue from the traditional outdoor billboard network for the third quarter of 2011 was $14.6 million, which exceeded by approximately 22% the midpoint of the Company's guidance of $11-13 million. This represented year-on-year growth of 64% from $8.9 million for the third quarter of 2010 and quarter-on-quarter growth of 13% from $12.9 million for the second quarter of 2011. -- GAAP net income attributable to Focus Media for the third quarter of 2011 was $62.2 million, representing an increase of 45% from $42.8 million for the second quarter of 2011 and compared to $112.7 million for the third quarter of 2010 (which included one-off 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 2011 was $82.7 million, exceeding the mid-point of the Company's guidance range of $68-$70 million by 20%, representing year-on-year growth of 60% from non-GAAP net income attributable to Focus Media of $51.8 million for the third quarter of 2010 and quarter-on-quarter growth of 31% from non-GAAP net income attributable to Focus Media of $62.9 million for the second quarter of 2011. Please see the sections on "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to non-GAAP" elsewhere in this announcement for more information about the non-GAAP measures referred to within this announcement. -- GAAP net income attributable to Focus Media per fully diluted ADS for the third quarter of 2011 was $0.44, comparing to $0.76 per fully diluted ADS in the third quarter of 2010 which was boosted by one-off income of $79.0 million resulting from the sale of our Internet business and representing a growth of 47% from $0.30 per fully diluted ADS for the second quarter of 2011. -- Non-GAAP net income attributable to Focus Media per fully diluted ADS for the third quarter of 2011 was $0.59, representing year-on year growth of 69% from $0.35 per fully diluted ADS for the third quarter of 2010 and quarter-on-quarter growth of 34% from $0.44 for the second quarter of 2011.
Highlights for Balance Sheet and Cash Flow Results of Third Quarter 2011:
-- Cash, cash equivalents and short-term investments were $639.9 million as of September 30, 2011, increasing by 8% from $590.9 million as of June 30, 2011. -- Short term bank loan was $30 million as of September 30 2011 which was used to finance a portion of the Company's share repurchases during the quarter. Operationally, the Company generates cash inflow in Renminbi onshore and offshore bank loans are used to increase our offshore USD base cash resources. -- Net cash inflow from operating activities in the third quarter of 2011 was $86.3 million, an increase of 71% from $50.6 million for the second quarter of 2011 and more than doubled the $34.2 million for the third quarter of 2010. -- Net accounts receivable for the LCD display network (including the movie theater network), in-store network and poster frame network was $215.3 million as of September 30, 2011, an increase of 17% from $184.8 million as of June 30, 2011 as a result of sequential increase of revenues. Days sales outstanding were 85 days in the third quarter of 2011 versus 87 days for the second quarter of 2011. -- Capital expenditures were $6.1 million for the third quarter of 2011, mostly attributable to upgrading our LCD screens into interactive screens in seven major cities in China. -- Cash used in the purchase of subsidiaries in the third quarter of 2011 was $4.1 million, primarily attributable to acquisitions in the poster frame network and the traditional outdoor billboard network as part of our ongoing strategy to expand into additional cities for poster frame network and increasing media resources in the traditional outdoor billboard network. -- Cash used for repurchasing shares in the third quarter of 2011 was $66.1 million.
Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, "We reached two important historical milestones in the third quarter of 2011. Not only did we achieve record high total revenue in our core business, but we also opened up a new chapter in the history of the Company whereby we have taken our media into an interactive age. Driven by positive secular domestic consumption trend in the PRC, we believe for the rest of the year and 2012 advertising demand for our media will continue to be healthy and robust. Over the next several years, leveraging our media interactive capability, we will strive to retain our brand advertising leadership in the industry as well as endeavor to become one of the key default promotional media platforms in the PRC."
Kit Low, the Company Executive Director and Chief Financial Officer added, "In the third quarter of 2011, the Company achieved aggregate net revenue year on year growth in our LCD display (including the movie theater network), in-store and poster frame businesses of 53%. GAAP net income attributable to Focus Media and non-GAAP net income attributable to Focus Media for the third quarter of 2011 was $62.2 million and $82.7 million, respectively. We achieved a positive net cash inflow from operating activities after deducting the purchase of equipment and subsidiaries of $76.1 million in the third quarter of 2011 as compared to a net cash inflow of $37.3 million in the second quarter of 2011 and a net cash inflow of $23.8 million in the third quarter of 2010. In the first three quarters of 2011, the Company cumulatively generated net cash inflow from operating activities net of capital expenditure and acquisitions of subsidiaries of $118.5 million."
Third Quarter 2011 financial results
Advertising net revenue from the LCD display network (including the movie theatre network) was $133.6 million for the third quarter of 2011, representing an increase of 54% from $86.8 million for the third quarter of 2010 and an increase of 18% from $113.0 million for the second quarter of 2011.
Advertising net revenue from the poster frame network was $46.6 million for the third quarter of 2011, representing an increase of 45% from $32.2 million for the third quarter of 2010 and an increase of 22% from $38.2 million for the second quarter of 2011.
Advertising net revenue from the in-store network was $15.9 million for the third quarter of 2011, representing an increase of 69% from $9.4 million for the third quarter of 2010 and an increase of 7% from $14.9 million for the second quarter of 2011.
As of September 30, 2011, the total installed base of LCD displays in our LCD display network was 178,382 nationwide, including 169,810 displays through our directly owned networks, and 8,572 displays through our regional distributors, as compared to total LCD displays of 169,798 as of June 30, 2011. The total number of non-digital frames available for use in our poster frame network was 391,304 as of September 30, 2011, as compared to 354,945 as of June 30, 2011. In addition, as of September 30, 2011, we had 34,711 digital frames installed in our poster frame network, a slight decrease from 35,217 as of June 30, 2011 due to optimization of the network. The total number of displays installed in our in-store network was 50,696 as of September 30, 2011, as compared to 50,129 as of June 30, 2011.
Advertising net revenue from the traditional outdoor billboard network was $14.6 million for the third quarter of 2011, representing an increase of 64% from $8.9 million for the third quarter of 2010 and an increase of 13% from $12.9 million for the second quarter of 2011.
Non-GAAP gross profit from the LCD display network (including the movie theatre network) for the third quarter of 2011 was $105.9 million, representing an increase of 61% from $65.6 million for the third quarter of 2010 and an increase of 18% from $89.7 million for the second quarter of 2011.
Non-GAAP gross profit from the poster frame network for the third quarter of 2011 was $19.6 million, representing an increase of 61% from $12.2 million for the third quarter of 2010 and an increase of 61% from $12.2 million for the second quarter of 2011.
Non-GAAP gross profit from the in-store network for the third quarter of 2011 was $10.0 million, almost tripling the $3.4 million for the third quarter of 2010 and an increase of 9% from $9.2 million for the second quarter of 2011.
Non-GAAP gross profit from the traditional outdoor billboard network for the third quarter of 2011 was $3.2 million, representing an increase of 39% from $2.3 million for the third quarter of 2010 and representing a decrease of 11% from $3.6 million for the second quarter of 2011.
Non-GAAP operating expense for the third quarter of 2011 was $46.9 million, representing an increase of 46% from $32.2 million for the third quarter of 2010, which was mainly attributable to: 1) an increase of bad debt provision expenses in the amount of $3.6 million in the third quarter of 2011; 2) an increase of sales commission expenses resulted from revenue growth; and 3) an increase of employees' salary and welfare in the amount of $2.2 million in the third quarter of 2011; and 4) the Company incurred the disposal loss for fixed assets in the amount of $1.6 million in the third quarter of 2011 to prepare for upgrading most of the screens in seven major cities into the next generation interactive screens for the fourth quarter of 2011. It also represented a slight increase of 2% from $45.9 million for the second quarter of 2011.
Net cash inflow from operating activities in the third quarter of 2011 was $86.3 million, increasing by 71% from $50.6 million for the second quarter of 2011 and more than doubling the $34.2 million for the third quarter of 2010.
Net cash used in investing activities for the third quarter of 2011 was $28.1 million. In the third quarter of 2011, the Company incurred capital expenditures of $6.1 million, mostly attributable to upgrading our LCD screens into interactive screens in seven major cities in China, as well as consideration payments of $4.1 million for our poster frame and traditional outdoor billboard related acquisitions, and net investments of $14.9 million in short-term investments (as part of our ongoing effort to improve our interest income by depositing some cash into longer term dated deposits).
Business Outlook for Fourth Quarter 2011
The Company provides the following guidance with respect to the fourth quarter ending December 31, 2011:
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 $212-$214 million, the mid-point of which would represent year-on-year growth of 45% and quarter-on-quarter growth of 9%. Net revenues for the non-core business (the traditional outdoor billboard network) are expected to be in the range of $14-$16 million. The Company's non-GAAP net income is expected to be in the range of $88-$90 million. The Company estimates the weighted average ADS outstanding for the calculation of fully diluted earnings per ADS in the fourth quarter is 140 million, assuming no further share repurchases during the quarter.
Announced Share Repurchase Program
On October 3, 2011, Focus Media announced an increase in the size of its share repurchase program to US$650 million from $450 million. As of November 17, 2011, the Company has cumulatively spent approximately $355 million in share repurchases.
Foreign Currency Translation
The reporting currency of the Company is the US dollar. The financial records of the Company's subsidiaries are maintained in its local currency, the Renminbi ("RMB"), which is the functional currency. Assets and liabilities are translated at the exchange rate as of September 30, 2011, which was $1 to RMB6.3549. 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 2011, which was $1 to RMB6.4132. 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 earnings per ADS, all excluding share-based compensation expenses, amortization of acquired intangible assets, profit or loss from disposal of previously acquired subsidiaries, loss from equity method investee and impairment charges of goodwill. 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 and the reconciliation items mostly include share-based compensation expenses, amortization of acquired intangible assets, profit or loss from disposal of previously acquired subsidiaries, loss from equity method investee and goodwill 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. Dollars in thousands, except share and per-share data) (Unaudited)
Three months ended September 30, 2011 GAAP (1) (2) (3) Non-GAAP ---- --- --- --- -------- Gross Profit LCD display and other: 104,586 200 1,112 - 105,898 -LCD display network 98,196 200 1,101 - 99,497 -Movie theater network 6,390 - 11 - 6,401 Poster frame network 18,588 - 989 - 19,577 In-store network 10,022 - - - 10,022 Traditional outdoor billboard network 2,364 - 818 - 3,182 ----- --- --- --- ----- Total Gross Profit 135,560 200 2,919 - 138,679 ------- --- ----- --- ------- General and administrative 32,588 (14,424) - - 18,164 Selling and marketing 32,594 (933) (1,051) - 30,610 Other operating income, net (1,919) - - - (1,919) ------ --- --- --- ------ Total operating expense 63,263 (15,357) (1,051) - 46,855 ------ ------- ------ --- ------ Operating profit from continuing operations 72,297 15,557 3,970 - 91,824 Profit before tax from continuing operations 77,692 15,557 3,970 - 97,219 Net profit from continuing operations 62,666 15,557 3,970 985 83,178 Net profit from discontinued operations -- - - - - Net income attributable to Focus Media 62,229 15,557 3,970 985 82,741 ====== ====== ===== === ====== Basic net income from continuing operations per ADS 0.47 0.62 Diluted net income from continuing operations per ADS 0.45 0.59 Basic net income from discontinued operations per ADS - - Diluted net income from discontinued operations per ADS - - Basic net income attributable to Focus Media per ADS 0.47 0.62 Diluted net income attributable to Focus Media per ADS 0.44 0.59 ==== ==== ADS used in calculating basic income per ADS 133,718,768 133,718,768 ----------- ----------- ADS used in calculating diluted income per ADS 139,866,888 139,866,888 ----------- -----------
(1). Share-based compensation. (2). Amortization of acquired intangible assets. (3). Loss from equity method investee (VisionChina)
Three months ended June 30, 2011 GAAP (1) (2) (3) Non-GAAP ---- --- --- --- -------- Gross Profit LCD display and other: 88,382 198 1,130 - 89,710 -LCD display network 85,260 198 1,114 - 86,572 -Movie theater network 3,122 - 16 - 3,138 Poster frame network 11,080 - 1,118 - 12,198 In-store network 9,162 - - - 9,162 Traditional outdoor billboard network 3,129 - 449 - 3,578 ----- --- --- --- ----- Total Gross Profit 111,753 198 2,697 - 114,648 ------- --- ----- --- ------- General and administrative 30,240 (14,274) - - 15,966 Selling and marketing 33,079 (924) (1,056) - 31,099 Other operating income, net (1,209) - - - (1,209) ------ --- --- --- ------ Total operating expense 62,110 (15,198) (1,056) - 45,856 ------ ------- ------ --- ------ Operating profit from continuing operations 49,643 15,396 3,753 - 68,792 Profit before tax from continuing operations 52,790 15,396 3,753 - 71,939 Net profit from continuing operations 42,863 15,396 3,753 992 63,004 Net profit from discontinued operations - - - - - Net income attributable to Focus Media 42,804 15,396 3,753 992 62,945 ====== ====== ===== === ====== Basic net income from continuing operations per ADS 0.32 0.46 Diluted net income from continuing operations per ADS 0.30 0.45 Basic net income from discontinued operations per ADS - - Diluted net income from discontinued operations per ADS - - Basic net income attributable to Focus Media per ADS 0.32 0.46 Diluted net income attributable to Focus Media per ADS 0.30 0.44 ==== ==== ADS used in calculating basic income per ADS 135,624,717 135,624,717 ----------- ----------- ADS used in calculating diluted income per ADS 141,562,763 141,562,763 ----------- -----------
(1). Share-based compensation. (2). Amortization of acquired intangible assets. (3). Loss from equity method investee (VisionChina)
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 profit from continuing operations 33,454 13,069 4,240 Net profit from discontinued operations 79,341 - 22 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 -----------
Three months ended September 30, 2010 (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 profit from continuing operations - 733 51,496 Net profit from discontinued operations (79,000) - 363 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.
Focus Media Holding Ltd. Reconciliation of GAAP to non-GAAP (U.S. Dollars in thousands, except share and per-share data) (Unaudited) Nine months ended September 30, 2011
GAAP (1) (2) ---- --- --- Gross Profit LCD display and other: 257,618 593 3,352 -LCD display network 246,338 593 3,309 -Movie theater network 11,280 - 43 Poster frame network 40,043 - 3,285 In-store network 22,996 - - Traditional outdoor billboard network 6,880 - 1,712 ----- --- ----- Total Gross Profit 327,537 593 8,349 ------- --- ----- General and administrative 89,452 (42,852) - Selling and marketing 96,874 (2,775) (3,165) Other operating income, net (7,833) - - ------ --- --- Total operating expense 178,493 (45,627) (3,165) ------- ------- ------ Operating profit from continuing operations 149,044 46,220 11,514 Profit before tax from continuing operations 159,947 46,220 11,514 Net profit from continuing operations 125,313 46,220 11,514 Net profit from discontinued operations - - - Net income attributable to Focus Media 125,585 46,220 11,514 ======= ====== ====== Basic net income from continuing operations per ADS 0.93 Diluted net income from continuing operations per ADS 0.89 Basic net income from discontinued operations per ADS - Diluted net income from discontinued operations per ADS - Basic net income attributable to Focus Media per ADS 0.93 Diluted net income attributable to Focus Media per ADS 0.89 ==== ADS used in calculating basic income per ADS 134,972,295 ----------- ADS used in calculating diluted income per ADS 140,567,619 -----------
(3) Non- GAAP --- --------- Gross Profit LCD display and other: - 261,563 -LCD display network - 250,240 -Movie theater network - 11,323 Poster frame network - 43,328 In-store network - 22,996 Traditional outdoor billboard network - 8,592 --- ----- Total Gross Profit - 336,479 --- ------- General and administrative - 46,600 Selling and marketing - 90,934 Other operating income, net - (7,833) --- ------ Total operating expense - 129,701 --- ------- Operating profit from continuing operations - 206,778 Profit before tax from continuing operations - 217,681 Net profit from continuing operations 4,750 187,797 Net profit from discontinued operations - - Net income attributable to Focus Media 4,750 188,069 ===== ======= Basic net income from continuing operations per ADS 1.39 Diluted net income from continuing operations per ADS 1.34 Basic net income from discontinued operations per ADS - Diluted net income from discontinued operations per ADS - Basic net income attributable to Focus Media per ADS 1.39 Diluted net income attributable to Focus Media per ADS 1.34 ==== ADS used in calculating basic income per ADS 134,972,295 ----------- ADS used in calculating diluted income per ADS 140,567,619 -----------
(1). Share-based compensation. (2). Amortization of acquired intangible assets. (3). Loss from equity method investee (VisionChina)
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 profit from continuing operations 55,928 38,797 12,292 Net profit from discontinued operations 83,078 - 766 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 profit from continuing operations 5,736 3,545 116,298 Net profit from discontinued operations - (79,000) 4,844 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). Net 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.
Conference Call
The Company will host a conference call to discuss the third quarter 2011 results at 8:00 p.m. U.S. Eastern Time on November 17, 2011 (5:00 p.m. U.S. Pacific Time on November 17, 2011 and 9:00 a.m. Beijing/Hong Kong Time on November 18, 2011). The dial-in details for the live conference call are set forth below:
International Toll Dial-In Number: + 65.6723.9381 Local Dial-In Number(s): Hong Kong: +852.2475.0994 United States: +1.718.354.1231 International Toll Free Dial-in Number(s): China, Domestic Mobile: 400.620.8038 China, Domestic: 800.819.0121 Hong Kong: +852.800.930.346 United States: +1.866.519.4004 Conference ID #: 24920812
A replay of the call will be available from November 17, 2011 23:00 until November 26, 2011 10:59pm (US Eastern Time). The dial-in details for the replay are set forth below:
International Toll Dial-In Number: +61.2.8235.5000 Local Dial-In Number(s): China: 400.692.0026 United States: +1.718.354.1232 International Toll Free Dial-in Number(s): China North: 10800.714.0386 China South: 10800.140.0386 Hong Kong: +852. 800.901.596 United States: +1.866.214.5335 Conference ID #: 24920812
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 (Nasdaq: FMCN) operates China's largest lifestyle targeted interactive digital media network. The Company offers one of the most comprehensive targeted interactive digital media platforms aimed at Chinese consumers at various urban locations. The increasingly fragmented and mobile lifestyle of Chinese urban consumers has created the need for more efficient media means to capture consumer attention. Focus Media's mission is to build an increasingly comprehensive and measurable interactive urban media network that reaches consumers at various out-of-home locations. As of September 30, 2011, Focus Media's out-of-home lifestyle interactive digital media network had approximately 178,000 LCD displays in about 100,000 commercial buildings that covered more than 100 cities, 426,000 in-elevator poster and digital picture frames in residential buildings that covered 35 cities, approximately 51,000 LCD displays in more than 2,800 hypermarkets, supermarkets and convenience stores and approximately 2,000 movie screens in about 300 movie theaters throughout China.
Focus Media Holding Limited UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (U.S Dollars in Thousands)
2011-09-30 2011-06-30 Note 1 ASSETS Current assets Cash and cash equivalents 435,322 404,704 Short-term investments 204,567 186,198 Accounts receivable, net 230,552 200,660 Prepaid expenses and other current assets 39,060 44,053 Deposit paid for acquisition of subsidiaries - 618 Rental deposits 56,143 50,557 Other current assets 8,098 1,722 ----- ----- Total current assets 973,742 888,512 Rental deposits, non-current 4,770 5,722 Equipment, net 68,786 65,807 Acquired intangible assets, net 26,995 17,553 Goodwill 463,894 429,525 Investment under equity method 59,148 58,209 Other long term assets 17,354 19,273 Total assets 1,614,689 1,484,601 ========= ========= LIABILITIES AND EQUITY Current liabilities Short-term bank loan 30,000 - Accounts payable 22,146 18,330 Accrued expenses and other current liabilities 132,625 117,155 Income taxes payable 10,943 314 Amount due to Related parties 4,175 1,842 Deferred tax liabilities 25,172 24,180 ------ ------ Total current liabilities 225,061 161,821 Long-term payable 14,051 - Deferred tax liabilities, non- current 12,617 9,995 ------ ----- Total liabilities 251,729 171,816 ------- ------- Equity Ordinary shares 33 34 Additional paid in capital 1,668,269 1,716,322 Subscription receivable (1,236) - Accumulated deficit (437,368) (499,597) Accumulated other comprehensive income 111,447 95,815 ------- ------ Total Focus Media equity 1,341,145 1,312,574 Noncontrolling interests 21,815 211 ------ --- Total equity 1,362,960 1,312,785 --------- --------- Total liabilities and equity 1,614,689 1,484,601
Note 1: The Company acquired 51% interests in 4 subsidiaries engaged in outdoor billboard business for an aggregate consideration of approximately $21.4 million in the third quarter of 2011 as part of the traditional outdoor billboard network strategy to expand its media resources. The aggregate consideration is the maximum possible consideration likely to be paid over a three year period base on achieving certain operating targets. The Company has performed a preliminary purchase price allocation to allocate the purchase consideration to the estimated fair values of the assets and liabilities of the subsidiaries acquired as of September 30, 2011. The amounts may be subject to change when the Company finalizes the purchase price allocation, with the assistance of a third-party valuation expert.
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 ------------------ 2011-09-30 2011-06-30 2010-9-30 Note 1 Revenues LCD display network and other: 146,169 123,142 96,182 -LCD display network 132,555 113,518 91,654 -Movie theater network 13,614 9,624 4,528 In-store network 17,367 16,339 10,389 Poster frame network 51,023 41,648 35,496 Traditional outdoor billboard network 14,886 13,090 9,135 ------ ------ ----- Total gross revenues 229,445 194,219 151,202 Less: Sales taxes 18,783 15,257 13,850 ------ ------ ------ Total net revenue (Note 2) 210,662 178,962 137,352 ------- ------- ------- Cost of revenues LCD display network and other: 28,965 24,614 22,551 -LCD display network 22,364 18,630 19,023 -Movie theater network 6,601 5,984 3,528 In-store network 5,849 5,774 5,997 Poster frame network 28,056 27,098 21,670 Traditional outdoor billboard network 12,232 9,723 7,069 ------ ----- ----- Total cost of revenues 75,102 67,209 57,287 ------ ------ ------ Gross profit 135,560 111,753 80,065 ------- ------- ------ Operating expenses General and administrative 32,588 30,240 24,942 Selling and marketing 32,594 33,079 24,474 Impairment loss - - - Other operating income, net (1,919) (1,209) (2,699) ------ ------ ------ Total operating expenses 63,263 62,110 46,717 ------ ------ ------ Operating profit 72,297 49,643 33,348 Interest income 5,395 3,147 2,667 Investment loss - - - Income from continuing operations before income taxes 77,692 52,790 36,015 Provision for income taxes 14,041 8,935 2,561 Loss from equity method investee 985 992 - --- --- --- Net income from continuing operations 62,666 42,863 33,454 Net income from discontinued operations, net of tax - - 79,341 --- --- ------ Net income 62,666 42,863 112,795 Less: Net income (loss) attributable to noncontrolling interests 437 59 58 --- --- --- Net income attributable to Focus Media 62,229 42,804 112,737 ====== ====== ======= Net income from continuing operations per ADS -basic 0.47 0.32 0.24 -diluted 0.45 0.30 0.23 Net income from discontinued operations per ADS -basic - - 0.56 -diluted - - 0.54 Net income attributable to Focus Media per ADS -basic 0.47 0.32 0.79 ==== ==== ==== -diluted 0.44 0.30 0.76 ==== ==== ==== ADS used in calculating basic income per ADS 133,718,768 135,624,717 141,944,371 =========== =========== =========== ADS used in calculating diluted income per ADS 139,866,888 141,562,763 147,490,755
Nine months ended ----------------- 2011-09-30 2010-09-30 Note 1 Revenues LCD display network and other: 367,770 241,362 -LCD display network 336,098 227,137 -Movie theater network 31,672 14,225 In-store network 44,111 30,875 Poster frame network 131,953 90,532 Traditional outdoor billboard network 38,598 28,489 ------ ------ Total gross revenues 582,432 391,258 Less: Sales taxes 46,229 34,643 ------ ------ Total net revenue (Note 2) 536,203 356,615 ------- ------- Cost of revenues LCD display network and other: 79,392 57,269 -LCD display network 60,619 48,455 -Movie theater network 18,773 8,814 In-store network 17,324 17,339 Poster frame network 80,859 59,416 Traditional outdoor billboard network 31,091 22,538 ------ ------ Total cost of revenues 208,666 156,562 ------- ------- Gross profit 327,537 200,053 ------- ------- Operating expenses General and administrative 89,452 62,997 Selling and marketing 96,874 73,795 Impairment loss - 5,736 Other operating income, net (7,833) (7,848) ------ ------ Total operating expenses 178,493 134,680 ------- ------- Operating profit 149,044 65,373 Interest income 10,903 5,448 Investment loss - (1,288) Income from continuing operations before income taxes 159,947 69,533 Provision for income taxes 29,884 13,605 Loss from equity method investee 4,750 - ----- --- Net income from continuing operations 125,313 55,928 Net income from discontinued operations, net of tax - 83,078 --- ------ Net income 125,313 139,006 Less: Net income (loss) attributable to noncontrolling interests (272) 1,887 ---- ----- Net income attributable to Focus Media 125,585 137,119 ======= ======= Net income from continuing operations per ADS -basic 0.93 0.39 -diluted 0.89 0.38 Net income from discontinued operations per ADS -basic - 0.58 -diluted - 0.56 Net income attributable to Focus Media per ADS -basic 0.93 0.95 ==== ==== -diluted 0.89 0.93 ==== ==== ADS used in calculating basic income per ADS 134,972,295 143,584,320 =========== =========== ADS used in calculating diluted income per ADS 140,567,619 148,090,998
Note 1: The Company acquired 51% interests in 4 subsidiaries engaged in outdoor billboard business for an aggregate consideration of approximately $21.4 million in the third quarter of 2011 as part of the traditional outdoor billboard network strategy to expand its media resources. The aggregate consideration is the maximum possible consideration likely to be paid over a three year period base on achieving certain operating targets. The Company has performed a preliminary purchase price allocation to allocate the purchase consideration to the estimated fair values of the assets and liabilities of the subsidiaries acquired as of September 30, 2011. The amounts may be subject to change when the Company finalizes the purchase price allocation, with the assistance of a third-party valuation expert.
Note 2: Details of net revenues by segment are as follows (U.S. Dollars in thousands):
Three months ended Nine months ended ------------------ ----------------- 2011-09-30 2011-06-30 2010-09-30 2011-09-30 2010-09-30 Gross revenues LCD display network 132,555 113,518 91,654 336,098 227,137 Movie theater network 13,614 9,624 4,528 31,672 14,225 In-store network 17,367 16,339 10,389 44,111 30,875 Poster frame network 51,023 41,648 35,496 131,953 90,532 Traditional outdoor billboard network 14,886 13,090 9,135 38,598 28,489 Total gross revenues 229,445 194,219 151,202 582,432 391,258 ------- ------- ------- ------- ------- Less: Sales taxes LCD display network 11,995 9,628 8,755 29,141 21,553 Movie theater network 623 519 651 1,619 1,354 In-store network 1,496 1,403 981 3,791 2,936 Poster frame network 4,379 3,470 3,269 11,051 8,269 Traditional outdoor billboard network 290 237 194 627 531 Total sales tax 18,783 15,257 13,850 46,229 34,643 ------ ------ ------ ------ ------ Net revenues LCD display network 120,560 103,890 82,899 306,957 205,584 Movie theater network 12,991 9,105 3,877 30,053 12,871 In-store network 15,871 14,936 9,408 40,320 27,939 Poster frame network 46,644 38,178 32,227 120,902 82,263 Traditional outdoor billboard network 14,596 12,853 8,941 37,971 27,958 Total net revenues 210,662 178,962 137,352 536,203 356,615
Focus Media Holding Limited UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (U.S. Dollar in thousands)
Three months ended Nine months ended ------------------ ----------------- 2011-09-30 2010-09-30 2011-09-30 2010-09-30 Operating activities: Net income 62,666 112,795 125,313 139,006 Adjustments to reconcile net income to net cash provided by operating activities: Bad debt expenses 4,466 867 10,258 1,205 Share-based compensation 15,557 13,069 46,220 38,797 Depreciation 7,291 6,721 21,398 21,792 Amortization of acquired intangible assets 3,970 4,262 11,514 13,058 Profit on disposal of previously acquired subsidiaries - (79,000) - (79,000) Loss on disposal of equity method investment - - - 2,833 Loss from equity method investee 985 - 4,750 Impairment charges for goodwill, acquired intangible assets and fixed assets - - - 5,736 Write-off of long- term assets - - 990 - Others 1,798 129 1,940 242 Net changes in current assets and current liabilities, net of effects of acquisitions (10,465) (24,594) (71,018) (66,440) ------- ------- ------- ------- Net cash provided by operating activities 86,268 34,249 151,365 77,229 ------ ------ ------- ------ Investing activities: Purchase of equipment and other long term assets (6,058) (6,675) (23,425) (11,600) Payment paid to acquired subsidiaries (4,115) (3,767) (9,475) (26,306) Investment in equity method investee - - (61,003) - Investment in short- term investments (505,921) (116,100) (937,663) (116,100) Proceeds from the sale of short-term investments 490,972 - 878,037 29,290 Proceeds received from disposal of fixed assets 125 166 572 309 Advances to a related party (3,147) - (3,147) - Disposal of subsidiaries - 73,278 7,296 76,067 Net cash (used in)/provided by investing activities (28,144) (53,098) (148,808) (48,340) ------- ------- -------- ------- Financing activities: Proceeds received from short-term bank loans 30,000 - 30,000 - Cash used for share repurchase (66,106) (200,000) (69,106) (236,715) Cash collection from (deposit for) share repurchase - 6,265 - (36) Capital injection from (repayment to) noncontrolling interests - 11 (76) 10,980 Proceeds from issuance of ordinary shares, 1,260 568 1,828 2,387 Net cash provided by/ (used in) financing activities (34,846) (193,156) (37,354) (223,384) ------- -------- ------- -------- Effect of exchange rate changes 7,340 7,006 15,643 9,589 ----- ----- ------ ----- Net increase (decrease) in cash and cash equivalents 30,618 (204,999) (19,154) (184,906) Cash and cash equivalents, beginning of period 404,704 588,252 454,476 568,159 ------- ------- ------- ------- Cash and cash equivalents, end of period 435,322 383,253 435,322 383,253 ======= ======= ======= ======= Supplemental disclosure of cash flow information: Income taxes paid 3,321 3,854 24,612 27,793 Interest paid 105 - 105 - === === === === Supplemental disclosure of non- cash investing activity: Accrual for acquisition of subsidiaries 22,092 7,284 22,092 7,284 ====== ===== ====== =====
SOURCE Focus Media Holding Limited