Market Overview

Focus Media Reports Third Quarter 2012 Results

SHANGHAI, Nov. 27, 2012 /PRNewswire/ -- Focus Media Holding Limited (Nasdaq: FMCN) today announced its unaudited financial results for the third quarter ended September 30, 2012.

Highlights for Third Quarter 2012:

  • Total net revenue for the third quarter of 2012 was $256.3 million, of which
    • aggregate net revenues from the LCD display network, in-store network, poster frame network and movie theater network was $247.7 million, which exceeded by approximately 2% the mid-point of the Company's guidance range of $241-$243 million.  This represented a year-on-year increase of 26% from $196.1 million for the third quarter of 2011 and a quarter-on-quarter increase of 13% from $219.3 million for the second quarter of 2012;
    • net revenue from the traditional outdoor billboard network for the third quarter of 2012 was $8.6 million, below the guidance of $13-$14 million which was primarily due to classification of the revenues of a number of subsidiaries into "Net income from discontinued operations".   Due to medium term advertising spending uncertainties and the continued view of the Company that the traditional outdoor billboard network is not a core business segment, the Company has decided to downsize this business segment by divesting of four entities within the segment. Two of which have been divested prior to end of this third quarter while the remaining two are expected to be completed before the end of 2012. Consequently, the revenues of these four entities are reclassified into "Net income from discontinued operations" in statements of income.
  • GAAP net income attributable to Focus Media for the third quarter of 2012 was $64.6 million, representing a year-on-year increase of 4% from $62.2 million for the third quarter of 2011 and a quarter-on-quarter increase of 10% from $58.9 million for the second quarter of 2012.    
  • Non-GAAP net income attributable to Focus Media was $94.6 million, exceeding the mid-point of the Company's guidance range of $92-$94 million by 2%, and representing a year-on-year increase of 14% from non-GAAP net income attributable to Focus Media of $82.7 million for the third quarter of 2011 and a quarter-on-quarter increase of 16% from non-GAAP net income attributable to Focus Media of $81.9 million for the second quarter of 2012.  Please see the below sections on "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to non-GAAP" 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 $0.48, representing a year-on-year increase of 9% from $0.44 per fully diluted ADS for the third quarter of 2011 and a quarter-on-quarter increase of 9% from $0.44 per fully diluted ADS for the second quarter of 2012.
  • Non-GAAP net income attributable to Focus Media per fully diluted ADS was $0.71, representing a year-on year increase of 20% from $0.59 per fully diluted ADS for the third quarter of 2011 and a quarter-on-quarter increase of 15% from $0.62 per fully diluted ADS for the second quarter of 2012.

Highlights for Balance Sheet and Cash Flow Results of Third Quarter 2012:

  • Cash, cash equivalents, restricted cash and short-term investments were $901.1 million as of September 30, 2012, as compared to $856.9 million as of June 30, 2012.  Restricted cash is deposited in bank accounts as security for bank borrowings. These deposits earn fixed interest rates and are released when the related bank borrowings are settled by the Company.  Restricted cash was $198.0 million as of September 30, 2012, as compared to $206.1 million as of June 30, 2012, and was comprised of current restricted cash of $99.0 million and non-current restricted cash of $99.0 million.   Short-term investments, consisting of longer term dated cash deposits that earn higher interest rates as compared to cash and cash equivalent, were $211.2 million as of September 30, 2012 as compared to $211.4 million as of June 30, 2012.
  • Bank loans were $200.0 million inclusive of short-term bank loans of $100.0 million and long-term bank loans of $100.0 million as of September 30, 2012, as compared to bank loans of $207.5 million as of June 30, 2012, which were used to finance the Company's share repurchases and dividend payouts.  Operationally, as the Company generates cash inflow in Renminbi onshore, offshore bank loans are used to increase our offshore USD base cash resources mainly for future dividend payouts or share repurchases.   The entire bank loan facility was extended based on an equivalent Renminbi onshore cash deposit, which was deposited as restricted cash.
  • Net accounts receivable for the LCD display network, in-store network, poster frame network and movie theater network was $284.1 million as of September 30, 2012, an increase of 19% from $238.4 million as of June 30, 2012 due to sequential growth of revenues.  Days sales outstanding was 92 days in the third quarter of 2012, similar to 91 days for the second quarter of 2012.
  • Net cash inflow from operating activities in the third quarter of 2012 was $77.9 million, representing year-on-year decline of 10% from $86.3 million for the third quarter of 2011 and a quarter-on-quarter decline of 16% from $93.1 million for the second quarter of 2012.  The decline was mainly due to the slower cash collection particularly in the LCD display network in the third quarter of 2012 as compared to the third quarter of 2011 and the second quarter of 2012.  Despite slightly slower cash collection, the Company believes that overall accounts receivable remain healthy and has provided adequately for potential bad debt.
  • Net cash inflow from operating activities for the third quarter of 2012, after deducting the purchase of equipment and subsidiaries as well as net cash outflows derived from disposition of subsidiaries was $71.7 million, slightly decreasing by 2% from the $72.9 million for the third quarter of 2011 and a quarter-on-quarter contraction of 18% from $87.2 million for the second quarter of 2012 which was mainly to the decline of net cash inflow from operating activities.
  • Capital expenditures were $5.0 million for the third quarter of 2012, mostly attributable to the deployment of next generation interactive screens in a few of tier-2 cities in the LCD display network.
  • Cash paid for the acquisition of subsidiaries in the third quarter of 2012 was $0.6 million, which was mainly attributable to the LCD display network.

Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, "In the third quarter of 2012, we continue to see macroeconomic uncertainties impact on overall advertising spending in China despite we exceeded the previous guidance of the company. We expect similar trend to continue through the fourth quarter. Particularly the recent pressure on Japanese automotive sales in China also resulted in advertising budget cut-backs from a number of Japanese automotive labels. Despite near and possibly medium term pressure, we believe that our media platform remain strong and robust to weather these challenges."

Kit Low, the Company's Chief Financial Officer added, "In the third quarter of 2012, the Company achieved aggregate net revenue year-on-year growth in our LCD display, poster frame business, in-store and movie theater network of 26%. GAAP net income attributable to Focus Media and Non-GAAP net income attributable to Focus Media for the third quarter of 2012 was $64.6 million and $94.6 million, respectively.  In the third quarter of 2012, the Company generated a net cash inflow from operating activities after deducting the purchases of equipment and subsidiaries as well as net cash outflows derived from disposition of subsidiaries of $71.7 million."

Third Quarter 2012 financial results

Advertising net revenue from the LCD display network was $128.4 million for the third quarter of 2012, representing an increase of 6% from $120.6 million for the third quarter of 2011 and an increase of 5% from $122.1 million for the second quarter of 2012. 

Advertising net revenue from the poster frame network was $81.6 million for the third quarter of 2012, representing an increase of 75% from $46.6 million for the third quarter of 2011 and an increase of 19% from $68.6 million for the second quarter of 2012.

Advertising net revenue from the in-store network was $14.5 million for the third quarter of 2012, representing a decrease of 9% from $15.9 million for the third quarter of 2011 and an increase of 7% from $13.6 million for the second quarter of 2012.

Advertising net revenue from the movie theater network was $23.2 million for the third quarter of 2012, representing an increase of 78% from $13.0 million for the third quarter of 2011 and an increase of 53% from $15.2 million for the second quarter of 2012

Advertising net revenue from the traditional outdoor billboard network was $8.6 million for the third quarter of 2012, representing a decrease of 30% from $12.2 million for the third quarter of 2011 and a decrease of 11% from $9.7 million for the second quarter of 2012.  Due to medium term advertising spending uncertainties and the continued view of the Company that the traditional outdoor billboard network is not a core business segment, the Company has decided to downsize this business segment by divesting of four entities within the segment.  Two of which have been divested prior to end of this third quarter while the remaining two are expected to be completed before the end of 2012.  Consequently, the revenues of these four entities have been reclassified into "Net income from discontinued operations" in statements of income during the period.  Therefore, $4.6 million revenues of these four entities were reclassified into "Net income from discontinued operations" in statements of income in the third quarter of 2012 and as a comparison, $2.4 million and $4.0 million revenues of these four entities were also reclassified respectively in the third quarter of 2011 and in the second quarter of 2012 in this press release.

Non-GAAP gross profit from the LCD display network for the third quarter of 2012 was $99.8 million, slightly increasing from $99.5 million for the third quarter of 2011 and an increase of 3% from $96.7 million for the second quarter of 2012.    

Non-GAAP gross profit from the poster frame network for the third quarter of 2012 was $52.5 million, more than doubling the $19.6 million for the third quarter of 2011 due to significant year-on-year growth of revenues, and representing an increase of 36% from $38.6 million for the second quarter of 2012.

Non-GAAP gross profit from the in-store network for the third quarter of 2012 was $9.1 million, representing a decrease of 9% from $10.0 million for the third quarter of 2011 due to year-on-year decline of revenues and an increase of 10% from $8.3 million for the second quarter of 2012.

Non-GAAP gross profit from the movie theater network for the third quarter of 2012 was $14.5 million, more than doubling both the $6.4 million for the third quarter of 2011 and the $6.6 million for the second quarter of 2012 which was due to robust revenue growth in the third quarter of 2012

Non-GAAP gross loss from the traditional outdoor billboard network for the third quarter of 2012 was $0.4 million, as compared to non-GAAP gross profit of $2.0 million for the third quarter of 2011 and non-GAAP gross profit of $0.6 million for the second quarter of 2012.  The decrease in non-GAAP gross profit was mainly due to higher fixed costs associated with the expansion of the traditional outdoor billboard network areas around intercity high-speed rail lines dragged down the overall gross profit margin of this segment during the quarter.

Non-GAAP operating expenses for the third quarter of 2012 was $57.5 million, an increase of 23% from $46.6 million for the third quarter of 2011, which was attributable to an increase in selling and marketing expenses from year-on-year revenue growth and professional fee increase in general and administrative expenses. It also represented a decrease of 14% from $66.7 million for the second quarter of 2012

Net cash inflow from operating activities in the third quarter of 2012 was $77.9 million, representing year-on-year decline of 10% from $86.3 million for the third quarter of 2011 and a quarter-on-quarter decline of 16% from $93.1 million for the second quarter of 2012.  The decline was mainly due to the slower cash collection particularly in the LCD display network in the third quarter of 2012 as compared to the third quarter of 2011 and the second quarter of 2012.  Despite slightly slower collection, the Company continues to monitor account receivables very closely, and believes that overall accounts receivable remain healthy and has provided adequately for potential bad debt.

Net cash provided by investing activities for the third quarter of 2012 was $0.9 million.  In the third quarter of 2012, the Company incurred capital expenditures of $5.0 million and subsidiary acquisition payments of $0.6 million.  Meanwhile, the Company incurred net cash inflows from net investment in short-term investments and deposits in restricted cash of $7.2 million during the quarter. Short-term investments are longer term dated cash deposits normally with maturities between three and twelve months that earn higher interest rates as compared to cash and cash equivalents.  Restricted cash is deposited in bank accounts as security for bank borrowings.

Net cash used by financing activities for the third quarter of 2012 was $24.9 million.  In the third quarter of 2012, the Company repaid bank loans of $7.5 million.  Meanwhile, the Company paid $17.4 million for the dividend payout for the second quarter of 2012.

Cash and cash equivalents in held-for-sale assets as of September 30, 2012 was $1.0 million.

Operating Data Summary

The Company is providing a breakdown of operating data as follows:

1) The approximate number of displays in the LCD display network was as follows:


As of September 30, 2012

As of June 30, 2012

LCD screens

136,870

135,001

LCD 2.0 digital picture screens

35,535

35,112

Total for LCD display network (note)

172,405

170,113

Note:  LCD screens have excluded LCD 1.0 picture frame devices since the fourth quarter of 2011.  The increase in the total number of LCD screens and LCD 2.0 digital picture screens as of September 30, 2012 as compared to that as of June 30, 2012 was due to organic network expansion.  Of the total LCD screens of 136,870 as of September 30, 2012, 9,589 screens were operated through our regional distributors as compared to 9,734 screens as of June 30, 2012.

2) The approximate number of devices in the poster frame network was as follows:


As of September 30, 2012

As of June 30, 2012

Frame 1.0 picture frames (note)

497,269

484,145

Frame 2.0 digital picture screens

35,892

35,616

Total

533,161

519,761

Note: Frame 1.0 picture frames have included LCD 1.0 picture frame devices since the fourth quarter of 2011. The increase in the total number of Frame 1.0 picture frames as of September 30, 2012 as compared to that as of June 30, 2012 was due to organic network expansion.

3) The total number of displays installed in our in-store network was approximately 53,239 as of September 30, 2012, as compared to 51,995 as of June 30, 2012.  The increase was due to organic network expansion.

4) The number of movie screens on which the Company had the right to lease advertising time as of September 30, 2012 was approximately 2,470, as compared to 2,320 as of June 30, 2012.  The increase was due to organic network expansion.

Business Outlook for Fourth Quarter 2012

The Company provides the following guidance with respect to the quarter ending December 31, 2012:

Net revenues for the core business (inclusive of the LCD display network, the in-store network, the poster frame network and the movie theater network) are expected to be in the range of $237-$246 million, the mid-point of which would represent year-on-year growth of 1% and quarter on quarter decline of 3%.  Net revenues for the non-core business (the traditional outdoor billboard network) are expected to be in the range of $6-$7 million.  The Company's non-GAAP net income is expected to be in the range of $93-$98 million.  The Company estimates the weighted average fully diluted ADS count for the quarter at 133.2 million.

Announced Receipt of "Going Private" Proposal

As previously announced on August 13, 2012, the Company's Board of Directors received a preliminary non-binding proposal letter, dated August 12, 2012, from affiliates of The Carlyle Group , FountainVest Partners, CITIC Capital Partners, CDH Investments, China Everbright Limited and Mr. Jason Nanchun Jiang, Chairman of the Board and Chief Executive Officer of Focus Media (together, the "Consortium Members"), that proposes a "going-private" transaction (the "Transaction") for $27.00 in cash per American depositary share, or $5.40 in cash per ordinary share. The committee of independent directors formed by the board to consider the proposal (the "Independent Committee") is continuing to consider the proposed transaction.  No decisions have been made by the Independent Committee with respect to the Company's response to the Transaction. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

Announced Share Repurchase Program

As of November 27, 2012, the Company has cumulatively spent $491 million in share repurchases out of the share repurchase program totaling $650 million

Arrangements regarding announced recurring payout

Focus Media announced on January 10, 2012 that the Company is committed to a 55% annual payout based on prior year non-GAAP net income. Of which 25% of the payout is expected to be dividend payments paid on a quarterly basis, which will be paid out in the following calendar year to shareholders of record as of March 31, June 30, September 30 and December 31 respectively, while the remaining 30% payout is expected to be either dividend payments and/or share repurchases. The payout commenced in 2012 in respect of Focus Media's non-GAAP net income for 2011.

Based on the Company 2011 non-GAAP net income of $284.1 million, a cash dividend of US$0.0274 per ordinary share (or US$0.137 per American Depositary Share) was paid on April 16, 2012 to shareholders of record as of the close of business on March 30, 2012, a cash dividend of US$0.0272 per ordinary share (or US$0.136 per American Depositary Share) was paid on July 16, 2012 to shareholders of record as of the close of business on July 10, 2012 and a cash dividend of US$0.0272 per ordinary share (or US$0.136 per American Depositary Share) was paid on October 16, 2012 to shareholders of record as of the close of business on September 28, 2012. 

The board has resolved to postpone approval of future cash dividends through December 31, 2012 due to ongoing considerations relating to the going private proposal. The board will make a determination regarding the remaining dividends in respect of 2011 non-GAAP net income at that time, depending on the status of the going private proposal. 

Value-added tax reform in Shanghai and Beijing

The government implemented a value-added tax reform pilot program, which replaced the business tax with value-added tax on selected sectors including the advertising sector, in Shanghai effective January 1, 2012 and in Beijing effective September 1, 2012.  The value-added tax rate applicable to the subsidiaries of our group in Shanghai and Beijing is 6% as compared to the 5% business tax rate which was applicable prior to the reform. 

Foreign Currency Translation

Assets and liabilities are translated at the exchange rate as of September 30, 2012, which was $1 to RMB 6.3410.  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 2012, which was $1 to RMB 6.3257.  Translation adjustments are reported as cumulative translation adjustments and are a separate component of other comprehensive income.

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 ADR, all excluding share-based compensation expenses, amortization of acquired intangible assets, loss from equity method investee and goodwill impairment.  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 for future periods.  The Company computes its non-GAAP financial measures using a consistent method from quarter to quarter, mostly excluding share-based compensation expenses, amortization of acquired intangible assets, loss from equity method investee and goodwill impairment.  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 percentages, share and per-share data)

(Unaudited)



Three months ended September 30, 2012


GAAP

(1)

(2)

(3)

(4)

Non-GAAP








Gross Profit (loss)







LCD display network

98,443

495

813

99,751

Poster frame network

52,341

129

52,470

In-store network

9,082

9,082

Movie theater network

14,470

14,470

Traditional outdoor billboard network

(906)

462

(444)

Total Gross Profit

173,430

495

1,404

175,329








General and administrative

36,132

(14,884)

21,248

Selling and marketing

53,123

(1,438)

(552)

51,133

Other operating  income, net

(14,890)

(14,890)

Total operating expense

74,365

(16,322)

(552)

57,491








Operating profit from continuing operations

99,065

16,817

1,956

117,838








Profit from continuing operations before income taxes and loss
    from equity method investee

103,146

16,817

1,956

121,919








Net profit from continuing operations

66,135

16,817

1,956

9,499

94,407

Net loss from discontinued operations

(1,809)

806

908

(95)








Net income attributable to Focus Media

64,590

16,817

2,762

9,499

908

94,576








Basic net income from continuing operations attributable to Focus Media per ADS

0.52





0.74

Diluted net income from continuing attributable to Focus Media operations per ADS

0.49





0.71








Basic net income from discontinued operations attributable to Focus Media per ADS

(0.01)





0.00

Diluted net income from discontinued operations attributable to Focus Media per ADS

(0.01)





0.00








Basic net income attributable to Focus Media per ADS

0.51





0.74

Diluted net income attributable to Focus Media per ADS

0.48





0.71

ADS used in calculating basic income per ADS

127,777,021





127,777,021

ADS used in calculating diluted income per ADS

133,518,344





133,518,344








 

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Loss from equity method investee (VisionChina)

(4). Goodwill impairment







 


Three months ended June 30, 2012


GAAP

(1)

(2)

(3)

Non-GAAP







Gross Profit (loss)






LCD display network

95,315

488

903

96,706

Poster frame network

38,453

180

38,633

In-store network

8,300

8,300

Movie theater network

6,562

6,562

Traditional outdoor billboard network

164

462

626

Total Gross Profit

148,794

488

1,545

150,827







General and administrative

37,791

(14,604)

23,187

Selling and marketing

51,110

(1,418)

(570)

49,122

Other operating  income, net

(5,587)

(5,587)

Total operating expense

83,314

(16,022)

(570)

66,722







Operating profit from continuing operations

65,480

16,510

2,115

84,105







Profit from continuing operations before income taxes and loss
    from equity method investee

70,564

16,510

2,115

89,189







Net profit from continuing operations

59,505

16,510

2,115

3,436

81,566

Net loss from discontinued operations

(1,469)

938

(531)







Net income attributable to Focus Media

58,907

16,510

3,053

3,436

81,906







Basic net income from continuing operations attributable to Focus Media per ADS

0.47




0.64

Diluted net income from continuing attributable to Focus Media operations per ADS

0.45




0.62







Basic net income from discontinued operations attributable to Focus Media per ADS

(0.01)




0.00

Diluted net income from discontinued operations attributable to Focus Media per ADS

(0.01)




0.00







Basic net income attributable to Focus Media per ADS

0.46




0.64

Diluted net income attributable to Focus Media per ADS

0.44




0.62







ADS used in calculating basic income per ADS

128,227,213




128,227,213

ADS used in calculating diluted income per ADS

133,103,155




133,103,155







 

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Loss from equity method investee (VisionChina)

 






 


Three months ended September 30, 2011


GAAP

(1)

(2)

(3)

Non-GAAP







Gross Profit (loss)






LCD display network

98,196

200

1,101

99,497

Poster frame network

18,588

989

19,577

In-store network

10,022

10,022

Movie theater network

6,390

11

6,401

Traditional outdoor billboard network

1,501

456

1,957

Total Gross Profit

134,697

200

2,557

137,454







General and administrative

32,562

(14,423)

18,139

Selling and marketing

32,506

(934)

(1,051)

30,521

Other operating  income, net

(2,052)

(2,052)

Total operating expense

63,016

(15,357)

(1,051)

46,608







Operating profit from continuing operations

71,681

15,557

3,608

90,846







Profit before tax from continuing operations

76,943

15,557

3,608

96,108







Net profit from continuing operations

62,106

15,557

3,608

985

82,256

Net profit from discontinued operations

560

362

922







Net income attributable to Focus Media

62,229

15,557

3,970

985

82,741







Basic net income from continuing operations attributable to Focus Media per ADS

0.47




0.62

Diluted net income from continuing attributable to Focus Media operations per ADS

0.44




0.59







Basic net income from discontinued operations attributable to Focus Media per ADS

0.00




0.00

Diluted net income from discontinued operations attributable to Focus Media per ADS

0.00




0.00







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)

 






 


Focus Media Holding Ltd.

Reconciliation of GAAP to non-GAAP

(U.S. Dollar in thousands, except share and per-share data)

(Unaudited)

 

Nine months ended September 30, 2012


GAAP

(1)

(2)

(3)

(4)

Non-GAAP








Gross Profit (loss)







LCD display network

254,915

1,467

2,659

259,041

Poster frame network

127,097

522

127,619

In-store network

24,443

24,443

Movie theater network

33,069

33,069

Traditional outdoor billboard network

(583)

1,387

804

Total Gross Profit

438,941

1,467

4,568

444,976








General and administrative

103,736

(44,922)

58,814

Selling and marketing

142,123

(4,258)

(1,738)

136,127

Other operating  income, net

(24,691)

(24,691)

Total operating expense

221,168

(49,180)

(1,738)

170,250








Operating profit from continuing operations

217,773

50,647

6,306

274,726








Profit before tax from continuing operations

230,296

50,647

6,306

287,249

Net profit from continuing operations

163,048

50,647

6,306

15,961

235,962

Net profit/ (loss) from discontinued operations

(3,174)

2,831

908

565

Net income attributable to Focus Media

161,406

50,647

9,137

 

 

15,961

908

238,059








Basic net income from continuing operations attributable to Focus Media per ADS

1.28





1.86

Diluted net income from continuing attributable to Focus Media operations per ADS

1.23





1.80








Basic net income from discontinued operations attributable to Focus Media per ADS

(0.02)





(0.01)

Diluted net income from discontinued operations attributable to Focus Media per ADS

(0.02)





(0.01)








Basic net income attributable to Focus Media per ADS

1.26





1.85

Diluted net income attributable to Focus Media per ADS

1.21





1.79








ADS used in calculating basic income per ADS

128,428,818





128,428,818

ADS used in calculating diluted income per ADS

133,359,921





133,359,921















 

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Loss from equity method investee (VisionChina).

(4). Goodwill impairment

 








Nine months ended September 30, 2011


GAAP

(1)

(2)

(3)

Non-GAAP







Gross Profit






LCD display network

246,336

593

3,309

250,238

Poster frame network

40,043

3,285

43,328

In-store network

22,995

22,995

Movie theater network

11,280

43

11,323

Traditional outdoor billboard network

6,017

1,349

7,366

Total Gross Profit

326,671

593

7,986

335,250







General and administrative

89,426

(42,852)

46,574

Selling and marketing

96,786

(2,775)

(3,165)

90,846

Other operating  income, net

(7,967)

(7,967)

Total operating expense

178,245

(45,627)

(3,165)

129,453







Operating profit from continuing operations

148,426

46,220

11,151

205,797







Profit before tax from continuing operations

159,195

46,220

11,151

216,566







Net profit from continuing operations

124,753

46,220

11,151

4,750

186,874

Net profit from discontinued operations

560

363

923

Net income attributable to Focus Media

125,585

46,220

11,514

4,750

188,069







Basic net income from continuing operations attributable to Focus Media per ADS

0.93




1.39

Diluted net income from continuing attributable to Focus Media operations per ADS

0.89




1.34







Basic net income from discontinued operations attributable to Focus Media per ADS

0.00




0.00

Diluted net income from discontinued operations attributable to Focus Media per ADS

0.00




0.00







Basic net income attributable to Focus Media per ADS

0.93




1.39

Diluted net income attributable to Focus Media per ADS

0.89




1.34







ADS used in calculating basic income per ADS

134,972,295




134,972,295

ADS used in calculating diluted income per ADS

140,567,619




140,567,619













 

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Loss from equity method investee (VisionChina)

 






CONFERENCE CALL

1) The Company will host a conference call to discuss the third quarter 2012 results at 8:00 p.m. U.S. Eastern Time on November 27, 2012 (5:00 p.m. U.S. Pacific Time on November 27, 2012 and 9:00 a.m. Beijing/Hong Kong Time on November 28, 2012). 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):
China, Domestic Mobile: 400.620.8038
China, Domestic: 800.819.0121
Hong Kong: +852.2475.0994
United States: +1.718.354.1231

International Toll Free Dial-in Number(s):
Hong Kong: +852.800.930.346
United States: +1.866.519.4004

Conference ID # 71489860

2) A replay of the call will be available from November 27, 2012 11:00pm until December 5, 2012 7:59am (U.S. Eastern Time). The dial-in details for the replay are set forth below:

International Toll Dial-In Number: +61.2.8199.0299

Local Dial-In Number(s):
Hong Kong: +852.3051.2780  

United States: +1.646.254.3697

International Toll Free Dial-in Number(s):
China 400: 400.120.0932
China 800: 800.870.0205
Hong Kong: +852.800.963.117
United States: +1.855.452.5696

Conference ID # 71489860

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, as well as the consideration of the going private proposal and the impact on the Company resulting from the success or failure of that proposal. 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. 

 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S Dollars in Thousands)




2012-09-30

2012-06-30

2011-09-30





ASSETS




Current assets




Cash and cash equivalents

491,729

439,383

435,322

Restricted cash

99,043

106,809

Short-term investments

211,238

211,444

204,567

Accounts receivable, net

294,102

254,429

230,552

Prepaid expenses and other current assets

71,616

73,299

39,060

Rental deposits

60,739

63,064

56,143

Available-for-sale assets-current

4,660

Other current assets

2,262

2,308

8,098

Total current assets

1,235,389

1,150,736

973,742

Restricted cash

99,043

99,295

Rental deposits, non-current

3,252

4,027

4,770

Equipment, net

66,044

71,383

68,786

Acquired intangible assets, net

4,776

28,529

39,242

Goodwill

439,201

459,294

452,201

Investment under equity method

5,040

14,586

59,148

Available-for-sale assets-non-current

21,008

Other long term assets

14,642

10,527

17,354

Total assets

1,888,395

1,838,377

1,615,243





LIABILITIES AND EQUITY




Current liabilities




Short-term bank loan

100,000

107,514

30,000

 Accounts payable

16,828

20,428

22,146

 Accrued expenses and other current liabilities

188,569

173,947

132,449

 Income taxes payable

43,745

29,946

10,943

Amount due to related parties

1,554

1,581

4,175

Available-for-sale liabilities-current

9,468

Deferred tax liabilities

29,339

29,414

24,532

Total current liabilities

389,503

362,830

224,245

Long-term loan

100,000

100,000

Long-term payable

11,829

12,995

Available-for-sale liabilities-non-current

6,159

Deferred tax liabilities, non-current

13,190

18,573

16,102

Total liabilities

508,852

493,232

253,342





Equity




Ordinary shares

32

32

33

Additional paid in capital

1,548,446

1,531,628

1,668,269

Subscription receivable

(21)

(1,236)

Accumulated deficit

(291,226)

(321,106)

(437,368)

Accumulated other comprehensive income

113,318

116,303

111,572

Total Focus Media equity

1,370,570

1,326,836

1,341,270

Non-controlling interests

8,973

18,309

20,631

Total equity

1,379,543

1,345,145

1,361,901

Total liabilities and equity

1,888,395

1,838,377

1,615,243

 

 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(U.S Dollars in thousands, except earnings per ADS and ADS data)



Three months ended

Nine months ended


2012-09-30

2012-06-30

2011-9-30

2012-09-30

2011-09-30







Revenues






LCD display network

135,777

129,130

132,555

356,918

336,097

In-store network

14,879

13,954

17,367

41,838

44,111

Poster frame network

86,056

73,177

51,023

229,843

131,953

Movie theater network

23,753

15,578

13,614

58,233

31,672

Traditional outdoor billboard network

8,554

10,069

12,404

28,692

36,116

Total gross revenues

269,019

241,908

226,963

715,524

579,949

Less: Sales taxes

12,742

12,900

18,670

35,869

46,119

Total net revenue (note 1)

256,277

229,008

208,293

679,655

533,830







Cost of revenues






LCD display network

29,976

26,737

22,364

83,110

60,619

In-store network

5,384

5,259

5,849

16,250

17,324

Poster frame network

29,268

30,113

28,056

88,782

80,858

Movie theater network

8,762

8,599

6,601

23,737

18,773

Traditional outdoor billboard network

9,457

9,506

10,726

28,835

29,585

Total cost of revenues

82,847

80,214

73,596

240,714

207,159

Gross profit

173,430

148,794

134,697

438,941

326,671







Operating expenses






General and administrative

36,132

37,791

32,562

103,736

89,426

Selling and marketing

53,123

51,110

32,506

142,123

96,786

Other operating income, net

(14,890)

(5,587)

(2,052)

(24,691)

(7,967)

Total operating expenses

74,365

83,314

63,016

221,168

178,245







Operating profit

99,065

65,480

71,681

217,773

148,426

Interest income

5,366

6,334

5,395

16,178

10,902

Interest Expense

(1,285)

(1,250)

(133)

(3,655)

(133)

Income from continuing operations
    before income taxes and loss
    from equity method investee

103,146

70,564

76,943

230,296

159,195

Provision for income taxes

27,512

7,623

13,852

51,287

29,692

Loss from equity method investee

9,499

3,436

985

15,961

4,750

Net income from continuing operations

66,135

59,505

62,106

163,048

124,753

Net income (loss) from discontinued
    operations, net of tax

(1,809)

(1,469)

560

(3,174)

560

Net Income (loss)

64,326

58,036

62,666

159,874

125,313

Less: Net income attributable to
    non-controlling interests

(264)

(871)

437

(1,532)

(272)

Net income attributable to Focus Media

64,590

58,907

62,229

161,406

125,585







Net income from continuing operations
    attributable to Focus Media per ADS






-basic

0.52

0.47

0.47

1.28

0.93

-diluted

0.49

0.45

0.44

1.23

0.89







Net income (loss) from discontinued operations
    attributable to Focus Media per ADS






-basic

(0.01)

(0.01)

0.00

(0.02)

0.00

-diluted

(0.01)

(0.01)

0.00

(0.02)

0.00







Net income attributable to Focus Media
    per ADS






-basic

0.51

0.46

0.47

1.26

0.93

-diluted

0.48

0.44

0.44

1.21

0.89







ADS used in calculating basic income
    per ADS

 

127,777,021

128,227,213

133,718,768

128,428,818

134,972,295

ADS used in calculating diluted income
    per ADS

133,518,344

133,103,155

139,866,888

133,359,921

140,567,619











 

 

 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(U.S Dollars in thousands, except earnings per ADS and ADS data)








Three months ended

Nine months ended


2012-09-30

2012-06-30

2011-09-30

2012-09-30

2011-09-30

Net income

64,326

58,036

62,666

159,874

125,313

Other comprehensive income, net of tax






Foreign currency translation adjustments

(2,964)

(4,983)

15,419

(7,051)

31,934

Share of post-acquisition movements in equity
    investee's other comprehensive income

(43)

242

413

476

1,383

Comprehensive income

61,319

53,295

78,498

153,299

158,630

Comprehensive income (loss) attributable to
    non-controlling interests

(286)

(963)

638

(1,629)

(62)

Comprehensive income attributable
    to Focus Media

61,605

54,258

77,860

154,928

158,692

 

Note 1: Details of net revenues by segment are as follows (U.S. Dollars in thousands):


Three months ended

Nine months ended


2012-09-30

2012-06-30

2011-09-30

2012-09-30

2011-09-30

Gross revenues






LCD display network

135,777

129,130

132,555

356,918

336,097

In-store network

14,879

13,954

17,367

41,838

44,111

Poster frame network

86,056

73,177

51,023

229,843

131,953

Movie theater network

23,753

15,578

13,614

58,233

31,672

Traditional outdoor billboard network

8,554

10,069

12,404

28,692

36,116

Total gross revenues

269,019

241,908

226,963

715,524

579,949

Less: Sales taxes






LCD display network

7,358

7,078

11,995

18,893

29,142

In-store network

413

395

1,496

1,145

3,792

Poster frame network

4,447

4,611

4,379

13,964

11,052

Movie theater network

521

417

623

1,427

1,619

Traditional outdoor billboard network

3

399

177

440

514

Total sales taxes

12,742

12,900

18,670

35,869

46,119

Net revenues






LCD display network

128,419

122,052

120,560

338,025

306,955

In-store network

14,466

13,559

15,871

40,693

40,319

Poster frame network

81,609

68,566

46,644

215,879

120,901

Movie theater network

23,232

15,161

12,991

56,806

30,053

Traditional outdoor billboard network

8,551

9,670

12,227

28,252

35,602

Total net revenues

256,277

229,008

208,293

679,655

533,830

 

 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS

(U.S. Dollars in thousands)


Three months ended

Nine months ended


                         2012-09-30

                         

2011-09-30

                    2012-09-30

                      2011-09-30

Operating activities:





Net income

64,326

2,666

159,874

125,313

Adjustments to reconcile net income to net cash provided by operating activities:

Bad debt expenses 

4,002

4,466

9,159

10,258

Share-based compensation 

16,817

15,557

50,647

46,220

Depreciation

8,366

7,291

22,920

21,398

Amortization of acquired intangible assets

2,762

3,970

9,137

11,514

Loss from equity method investee

9,499

985

15,961

4,750

Change in fair value of contingent consideration liabilities for acquisition of subsidiaries

211

1,179

Write-off of long-term assets

990

Others

1,346

1,798

2,143

1,940

Net changes in current assets and current liabilities, net of effects of acquisitions

(29,413)

(10,465)

(55,215)

(71,018)

Net cash provided by operating activities 

77,916

86,268

215,805

151,365






Investing activities:





Purchase of equipment and other long term assets 

(5,010)

(6,058)

(14,838)

(23,425)

Payment to acquire subsidiaries, net of cash acquired

(577)

(7,262)

(2,929)

(12,622)

Proceeds from disposal of subsidiaries              

1,126

1,126

7,296

Cash of disposed entities

(1,782)

(1,782)

Investment in equity method investee

(61,003)

Cash deposited as restricted cash

(26,514)

Cash received from the release of restricted cash

7,495

26,366

Proceeds received from the sale of short-term investments

93,844

490,972

356,061

878,037

Proceeds used in investment in short-term investments

(94,174)

(505,921)

(342,658)

(937,663)

Proceeds received from disposal of fixed assets

125

340

572






Net cash provided by/ (used in) investing activities

922

(28,144)

(4,828)

(148,808)






Financing activities:





Proceeds received from bank loans

30,000

63,794

30,000

Repayment of short-term bank loans

(7,514)

(34,017)

Share repurchase

(66,106)

(41,445)

(69,106)

Dividend payout

(17,365)

(35,302)

(Repayment to) capital injection  from non-controlling interests

(76)

Proceeds from issuance of ordinary shares, net of issuance costs

21

1,260

34

1,828

Net cash used in financing activities 

(24,858)

(34,846)

(46,936)

(37,354)

Effect of exchange rate changes 

(651)

7,340

(2,548)

15,643






Net increase (decrease) in cash and cash equivalents 

53,329

30,618

161,493

(19,154)

Cash and cash equivalents, beginning of period

439,383

404,704

331,219

454,476

Less: Cash and cash equivalents in held-for-sale assets

983

983






Cash and cash equivalents, end of period

491,729

435,322

491,729

435,322






Supplemental disclosure of cash flow information:





Income taxes paid 

9,201

3,321

37,107

24,612

Interest paid

1,306

105

3,398

105






Supplemental disclosure of non-cash investing activity:





  Accrual for acquisition of subsidiaries

665

22,092

665

22,092

 



 

SOURCE Focus Media Holding Limited

 

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