Focus Media Reports Fourth Quarter and Full Year 2011 Results


SHANGHAI, March 19, 2012 /PRNewswire-Asia/ -- Focus Media Holding Limited (Nasdaq: FMCN) today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2011.

Highlights for Fourth Quarter 2011:

  • Total net revenue for the fourth quarter of 2011 was $256.4 million, of which
  • aggregate net revenue from the LCD display network, in-store network, poster frame network and movie theater network was $238.8 million, which exceeded by approximately 12% the mid-point of the Company's guidance range of $212-214 million. This represented an increase of 22% from $196.1 million for the third quarter of 2011 and an increase of 63% from $146.8 million for the fourth quarter of 2010; and
  • net revenue from the traditional outdoor billboard network for the fourth quarter of 2011 was $17.6 million, which exceeded by approximately 17% the mid-point of the guidance range of $14-16 million. This represented an increase of 21% from $14.6 million for the third quarter of 2011 and an increase of 35% from $13.0 million for the fourth quarter of 2010.
  • GAAP net income attributable to Focus Media was $75.4 million, representing an increase of 21% from $62.2 million for the third quarter of 2011 and an increase of 60% from $47.2 million for the fourth quarter of 2010.
  • Non-GAAP net income attributable to Focus Media for the fourth quarter of 2011 was $96.0 million, exceeding the mid-point of the Company's guidance range of $88-$90 million by 8%, and representing an increase of 16% from non-GAAP net income attributable to Focus Media of $82.7 million for the third quarter of 2011 and an increase of 64% from $58.5 million for the fourth quarter of 2010.  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 $0.55, representing an increase of 25% from $0.44 per fully diluted ADS for the third quarter of 2011 and an increase of 67% from $0.33 per fully diluted ADS in the fourth quarter of 2010.
  • Non-GAAP net income attributable to Focus Media per fully diluted ADS was $0.70, representing an increase of 19% from $0.59 per fully diluted ADS for the third quarter of 2011 and an increase of 71% from $0.41 per fully diluted ADS for the fourth quarter of 2010.

Highlights for Full Year 2011:

  • Total net revenue for full year 2011 was $792.6 million, an increase of 54% from $516.3 million for full year 2010, of which
  • aggregate net revenue from the LCD display network, in-store network, poster frame network and movie theater network was $737.0 million, representing an increase of 55% from $475.4 million for full year 2010; and
  • net revenue from the traditional outdoor billboard network was $55.6 million, representing an increase of 36% from $40.9 million for full year 2010.
  • GAAP net income attributable to Focus Media for full year 2011 was $200.9 million, compared to $184.3 million for full year 2010 which benefited from one-off income of $79.0 million from the sale of our Internet business in 2010.
  • Non-GAAP net income attributable to Focus Media for full year 2011 was $284.1 million, representing an increase of 60% from $177.8 million for full year 2010. 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 for full year 2011 was $1.45, compared to $1.26 per fully diluted ADS for full year 2010 which benefited from one-off income of $79.0 million from the sale of our Internet business that contributed $0.54 to GAAP net income attributable to Focus media on a per fully diluted ADS basis for full year 2010.
  • Non-GAAP net income attributable to Focus Media per fully diluted ADS for full year 2011 was $2.05, a 69% increase from $1.21 per fully diluted ADS for full year 2010.

Highlights for Balance Sheet and Cash Flow Results of Fourth Quarter and Full Year 2011:

  • Cash, cash equivalents and short-term investments were $756.6 million as of December 31, 2011, increasing by 18% from $639.9 million as of September 30, 2011. Our short-term investments consist of longer term dated cash deposits that earn higher interest rate as compared to cash and cash equivalent.
  • Bank loans were $171.0 million inclusive of short-term bank loans of $100.0 million and long-term bank loans of $71.0 million as of December 31, 2011, as compared to short-term bank loans of $30.0 million as of September 30 2011, which were used to finance the Company's share repurchases. As of March 19, 2012, the Company has been extended a bank loan facility totaling $300.0 million, of which $100.0 million is long-term bank loans and $200.0 million is short-term bank loans. Out of the total $300.0 million bank loan facility, $171.0 million has been drawn down by the Company as of March 19, 2012. Operationally, as the Company generates cash inflow in Renminbi onshore, offshore bank loans are used to increase our offshore USD base cash resources for future dividend payout or share repurchases. The entire bank loan facility was extended based on an equivalent Renminbi onshore cash deposit.
  • Net accounts receivable for the LCD display network, in-store network, poster frame network and movie theater network was $232.6 million as of December 31, 2011, an increase of 8% from $215.3 million as of September 30, 2011, which was due to the increase of net revenues. Days sales outstanding was 78 days in the fourth quarter of 2011 versus 85 days for the third quarter of 2011. Days sales outstanding was 85 days for full year 2011 versus 88 days for full year 2010.
  • Net cash inflow from operating activities in the fourth quarter of 2011 and full year of 2011 were $128.8 million and $280.2 million, respectively, representing a 19% increase from $108.0 million for the fourth quarter of 2010 and a 51% increase from $185.2 million for full year 2010, respectively.
  • Net cash inflow from operating activities for the fourth quarter of 2011, after deducting the purchase of equipment and subsidiaries was $112.7 million, an increase of 30% from $87.0 million for the fourth quarter of 2010. Net cash inflow from operating activities for full year 2011, after deducting the purchase of equipment and subsidiaries was $228.0 million, representing an increase of 81% from $126.3 million for full year 2010.
  • Capital expenditures were $15.5 million and $38.9 million respectively for the fourth quarter and full year of 2011, mostly attributable to upgrading our LCD screens into interactive screens and network expansion in and into lower tier cities in China.
  • Cash paid for purchase of subsidiaries in the fourth quarter and full year of 2011 were $0.6 million and $13.3 million, respectively, which was attributable to: 1) acquisitions in the poster frame network, the LCD display network and the traditional outdoor billboard network as part of our ongoing strategy to expand into additional cities for poster frame network and LCD display network and our renewed commitment to increase media resources in the traditional outdoor billboard network following the termination of the agreements to partially dispose of those assets; and 2) investment in Enjoy Media.
  • Cash used for repurchasing shares in the fourth quarter and full year of 2011 were $144.3 million and $213.4 million, respectively.

Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, "We are encouraged by our solid operating performance across all our core business lines as we ended 2011 on a strong note. Our strong fourth quarter performance was partially helped by some advertisers starting advertising campaigns in late 2011 due to an earlier Chinese lunar new year in 2012. Despite a weaker first quarter due to seasonality associated with an earlier Chinese new year, we remain confident over the continuous growth of advertising revenues for 2012. As we look forward to 2012, while we stay focused on improving our core businesses performance, we will continue to explore new business models for employing interactive screens."

Kit Low, Chief Financial Officer of the Company, added, "We registered very strong revenue momentum, while achieving encouraging cashflow momentum in 2011. We saw marked margin expansion across all our core business lines in 2011 as we continued to unlock the respective business line operating leverage. In the fourth quarter of 2011, the Company achieved aggregate net revenue year-on-year growth in our LCD display network, in-store network, poster frame network and movie theater network of 63%, and quarter-on-quarter growth of 22%. GAAP net income attributable to Focus Media and non-GAAP net income attributable to Focus Media for the fourth quarter of 2011 was $75.4 million and $96.0 million, respectively. In the fourth quarter of 2011, the Company generated a net cash inflow from operating activities after deducting amounts paid for the purchase of equipment and subsidiaries of $112.7 million. As a result, for the year 2011, the Company achieved: 1) cumulative net cash inflow from operating activities, after deducting the purchase of equipment and subsidiaries, of $228.0 million, an increase of 81% from $126.3 million for full year 2010; and 2) a non-GAAP Return on Tangible Equity of 36% versus 24% in 2010 (note). We will continue our operating and financial discipline in growing cash flow and further improving our Return on Tangible Equity in 2012."

Note: Non-GAAP Return on Tangible Equity represents Non-GAAP net income attributable to Focus Media divided by total shareholders' equity minus goodwill and net acquired intangible assets.

Fourth Quarter 2011 financial results

Advertising net revenue from the LCD display network was $137.4 million for the fourth quarter of 2011, representing an increase of 14% from $120.6 million for the third quarter of 2011 and an increase of 49% from $92.1 million for the fourth quarter of 2010.

Advertising net revenue from the poster frame network was $64.5 million for the fourth quarter of 2011, representing an increase of 38% from $46.6 million for the third quarter of 2011 and an increase of 63% from $39.6 million for the fourth quarter of 2010.

Advertising net revenue from the in-store network was $16.1 million for the fourth quarter of 2011, representing a slight increase of 1% from $15.9 million for the third quarter of 2011 and an increase of 64% from $9.8 million for the fourth quarter of 2010.

Advertising net revenue from the movie theater network was $20.8 million for the fourth quarter of 2011, representing an  increase of 60% from $13.0 million for the third quarter of 2011 and an increase of 300% from $5.2 million for the fourth quarter of 2010.

Advertising net revenue from the traditional outdoor billboard network was $17.6 million for the fourth quarter of 2011, representing an increase of 21% from $14.6 million for the third quarter of 2011 and an increase of 35% from $13.0 million for the fourth quarter of 2010.

Non-GAAP gross profit from the LCD display network for the fourth quarter of 2011 was $113.6 million, representing an increase of 14% from $99.5 million for the third quarter of 2011 and an increase of 53% from $74.2 million for the fourth quarter of 2010 due to operating leverage.

Non-GAAP gross profit from the poster frame network for the fourth quarter of 2011 was $35.9 million, representing an increase of 83% from $19.6 million for the third quarter of 2011, and more than doubling $16.5 million for the fourth quarter of 2010 due to operating leverage.

Non-GAAP gross profit from the in-store network for the fourth quarter of 2011 was $12.8 million, representing an increase of 28% from $10.0 million for the third quarter of 2011 and more than tripling $3.7 million in the fourth quarter of 2010 due to operating leverage.

Non-GAAP gross profit from the movie theater network for the fourth quarter of 2011 was $13.8 million, representing an increase of 116% from $6.4 million for the third quarter of 2011, and significant growth over the $0.2 million for the fourth quarter of 2010 due to operating leverage.

Non-GAAP gross profit from the traditional outdoor billboard network for the fourth quarter of 2011 was $2.6 million, a decrease of 19% from $3.2 million for the third quarter of 2011 and a decrease of 26% from $3.5 million for the fourth quarter of 2010. The decrease of non-GAAP gross profit was due to the costs associated with the investment in establishing the network in the intercity high-speed rail lines starting from the fourth quarter of 2011 but without material revenue contribution during the quarter from that investment.

Non-GAAP operating expense for the fourth quarter of 2011 was $64.0 million, representing an increase of 36% from $46.9 million for the third quarter of 2011, which was mainly attributable to: 1) an increase of bad debt expenses in the amount of $1.3 million in the fourth quarter of 2011 compared to the third quarter of 2011.; 2) the Company incurred professional expenses of $2.3 million in the fourth quarter of 2011 which primarily related to costs for the appointment of two third-party market survey companies for independent surveys of the number of displays on our network and for legal related fees for legal counseling activities during that quarter; and 3) an increase of sales commission expenses of $14.3 million resulting from revenue growth. It also represented an increase of 96% from $32.7 million for the fourth quarter of 2010 which was primarily due to: 1) an increase of bad debt expenses in the amount of $6.5 million in the fourth quarter of 2011 as compared to the fourth quarter of 2010. ; 2) the Company incurred professional expenses of $2.3 million in the fourth quarter of 2011 which primarily related to costs for the appointment of two third-party market survey companies for independent surveys of the number of displays on our network and for legal related fees for legal counseling activities during that quarter; and 3) an increase of sales commission expenses of $15.8 million resulting from revenue growth.

In the fourth quarter of 2011, the provision for income taxes included withholding tax amounting to $6.0 million, which was accrued based on 10% of the amount of dividend to be distributed from domestic operating arm to offshore holding company.

Net cash provided by operating activities for the fourth quarter of 2011 was $128.8 million, an increase of 49% from $86.3 million for the third quarter of 2011.

Net cash used in investing activities for the fourth quarter of 2011 was $35.7 million. In the fourth quarter of 2011, the Company incurred capital expenditures of $15.5 million and subsidiary acquisition payments of $0.6 million. Meanwhile, the Company incurred net cash outflows from investment in short-term investments of $19.7 million during the quarter. Short-term investments are longer term dated cash deposits normally with maturities of between three and twelve months that earn higher interest rate as compared to cash and cash equivalents.

Net cash used for financing activities for the fourth quarter of 2011 was $2.4 million. In the fourth quarter of the 2011, the Company received net cash inflow from the proceeds of bank loans of $141.0 million and the Company spent $144.3 million in share repurchases.

Operating Data Summary

As a supplementary operating metric, the Company has historically provided investors with information regarding the number of displays in our networks. In order to help the investors gain a better understanding of our media platform and the differentiations between different types of devices and to align this operating metrics with our internal financial reporting, starting from the fourth quarter of 2011, the Company has decided to re-categorize the LCD 1.0 picture frame devices from the LCD display network division into the poster frame network division for screen count purposes. As previously discussed in our press releases dated November 22 and November 29, 2011, historically, for screen count purposes the Company categorized the LCD 1.0 picture frame devices in the LCD display network division because those devices were developed by the Company's LCD display network team. For financial reporting purposes, revenues and costs attributable to such LCD 1.0 picture frame devices have been and continue to be in the poster frame division. In order to help investors gain a better understanding of our business, the Company has decided to re-classify LCD 1.0 picture frame devices from the LCD network to the poster frame network to increase the consistency between its operational and financial data. As such, the Company is providing a breakdown of operating data as follows:

1) The approximate number of displays in the LCD display network taking into account the re-categorization described above:

 

As of December 31, 2011

As of September 30, 2011

(as re-categorized)

As of September 30, 2011

(as previously categorized)

LCD screens (Note a)

122,115

116,026

116,026

LCD 2.0 digital picture screens (Note a)

33,636

32,478

32,478

LCD 1.0 picture frame devices (Note b)

-

-

29,878

Total for LCD display network

155,751

148,504

178,382

 

 

 

 

Note a: The increase in the total number of LCD screens and LCD 2.0 digital picture screens as of December 31, 2011 as compared to that as of September 30, 2011, as re-categorized, was due to organic network expansion. Of the total LCD screens of 122,115 as of December 31, 2011, 8,256 screens were operated through our regional distributors.

Note b: We reclassified the LCD 1.0 picture frame devices from the LCD display network division into the poster frame network division from the fourth quarter of 2011.

2). The approximate number of devices in the poster frame network taking into account the re-categorization described above:

 

As of December 31, 2011

As of September 30, 2011

(as re-categorized)

As of September 30, 2011

(as previously categorized)

Frame 1.0 picture frames  (Note c)

445,126

421,182

391,304

Frame 2.0 digital picture screens (Note d)

35,050

34,711

34,711

Total

480,176

455,893

426,015

 

 

 

 

Note c: The increase in the total number of Frame 1.0 picture frames as of December 31, 2011 as compared to that as of September 30, 2011, as re-categorized, was attributable to: 1) organic network expansion, which added approximately 23,018 frames and 2) the re-categorization of the LCD 1.0 picture frame devices from the LCD display network division into the poster frame network division, which added 30,804 frames as of December 31, 2011.

Note d: The increase in the total number of digital picture screens installed in our poster frame network as of December 31, 2011 as compared to that as of September 30, 2011 was due to organic network expansion.

3) The total number of displays installed in our in-store network was approximately 50,076 as of December 31, 2011, as compared to 50,696 as of September 30, 2011 due to the optimization of the network.

4) The number of movie screens on which the Company had right to lease advertising time as of December 31, 2011 was approximately 2,190 as compared to 1,951 as of September 30, 2011.

Business Outlook for First Quarter 2012

The Company provides the following guidance with respect to the quarter ending March 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 $177-$179 million, the mid-point of which would represent year-on-year growth of 31% and quarter on quarter decline of 25% due to seasonality as a result of Chinese lunar new year holidays during the quarter. Net revenues for the non-core business (the traditional outdoor billboard network) are expected to be in the range of $13-$15 million. The Company's non-GAAP net income is expected to be in the range of $58-$60 million. The Company estimates the weighted average fully diluted ADS count for the quarter at 135 million, assuming no further share repurchases during the quarter.

Announced Share Repurchase Program

As of March 19, 2012, the Company has cumulatively spent $456 million in share repurchases out of the share repurchase program totaling $650 million

Payment of announced recurring payout

Focus Media announced on January 10, 2012 that the Company 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 to be 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 commences 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, the board of directors has approved a cash dividend of US$0.0274 per ordinary share (or US$0.137 per American Depositary Share) to be payable on April 16, 2012 to shareholders of record as of the close of business on March 30, 2012.

Investment in Enjoy Media

Focus Media made an investment of approximately US$810,000 for a 51% stake in Shanghai Enjoy Media Advertising & Broadcasting Co., Ltd. ("Enjoy Media") on December 26, 2011. The remaining equity interest is owned by two unrelated third parties. Focus Media has a right of first refusal to purchase the remaining stake in Enjoy Media in the event the other shareholders decide to sell down their stakes.

Focus Media has provided a shareholder loan of approximately RMB40 million (approximately US$6.4 million) to Enjoy Media. The remaining 49% shareholders have also provided a shareholder loan to Enjoy Media in a proportional amount.  Focus Media will, together with the other shareholders of Enjoy Media, seek appropriate opportunities to convert all shareholder loans into equity.

Enjoy Media operates the website q.com.cn and related mobile application. Further investments are expected in the future to support the working capital requirements of Enjoy Media.

Termination of Agreements to Partially Disposal of Traditional Outdoor Billboard Network

The Company also announced that its previously announced arrangements to sell an approximately 49% stake in Shanghai OOH Advertisement Co., Ltd., its traditional outdoor billboard division have been terminated by mutual agreements of the parties in accordance with the terms of the relevant agreements as the transaction did not close within the agreed upon closing period. As a result of the termination, none of GBL III Limited (an entity controlled by Goldman Sachs) nor the entities controlled by certain employees, directors and management members of us and Shanghai OOH Advertisement Co., Ltd. will acquire any equity stake in Shanghai OOH Advertisement Co. Ltd. Shanghai OOH Advertisement Co., Ltd. will continue to be a 100% wholly owned subsidiary of Focus Media and will remain a part of the Company's business. 

Foreign Currency Translation

Assets and liabilities are translated at the exchange rate as of December 31, 2011, which was $1 to RMB 6.3009. Equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the fourth quarter of 2011, which was $1 to RMB 6.3653. 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 ADR, all excluding share-based compensation expenses, amortization of acquired intangible assets, loss from equity method investee, impairment charges of goodwill, loss from the write-off of certain assets of previously acquired subsidiaries and the profit from the disposal of the previously acquired 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 excluding share-based compensation expenses, amortization of acquired intangible assets, loss from equity method investee, impairment charges of goodwill, loss from the write-off of certain assets of previously acquired subsidiaries and the profit from the disposal of the previously acquired business. 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 December 31, 2011

 

GAAP

(1)

(2)

(3)

Non-GAAP

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

LCD display network

112,180

286

1,100

113,566

Poster frame network

35,036

890

35,926

In-store network

12,797

12,797

Movie theater network

13,803

13,803

Traditional outdoor billboard network

1,624

1,020

2,644

Total Gross Profit

175,440

286

3,010

178,736

 

 

 

 

 

 

General and administrative

37,561

(14,267)

23,294

Selling and marketing

50,843

(1,029)

(1,474)

48,340

Other operating  income, net

(7,587)

(7,587)

Total operating expense

80,817

(15,296)

(1,474)

64,047

 

 

 

 

 

 

Operating profit from continuing operations

94,623

15,582

4,484

114,689

 

 

 

 

 

 

Profit before tax from continuing operations

99,260

15,582

4,484

119,326

 

 

 

 

 

 

Net profit from continuing operations

73,765

15,582

4,484

617

94,448

 

 

 

 

 

 

Net income attributable to Focus Media

75,358

15,582

4,484

617

96,041

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income attributable to Focus Media per ADS

0.57

 

 

 

0.73

Diluted net income attributable to Focus Media per ADS

0.55

 

 

 

0.70

 

 

 

 

 

 

ADS used in calculating basic income per ADS

132,073,143

 

 

 

132,073,143

ADS used in calculating diluted income per ADS

136,912,952

 

 

 

136,912,952

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2011

 

GAAP

(1)

(2)

(3)

Non-GAAP

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

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

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 income attributable to Focus Media

62,229

15,557

3,970

985

82,741

 

 

 

 

 

 

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 December 31, 2010

 

GAAP

(1)

(2)

Non- GAAP

 

 

 

 

 

Gross Profit

 

 

 

 

LCD display network

73,000

129

1,082

74,211

Poster frame network

14,558

1,965

16,523

In-store network

3,745

3,745

Movie theater network

188

16

204

Traditional outdoor billboard network

3,080

439

3,519

Total Gross Profit

94,571

129

3,502

98,202

 

 

 

 

 

General and administrative

16,763

(6,056)

10,707

Selling and marketing

29,927

(610)

(1,046)

28,271

Other operating expenses (income), net

(6,296)

(6,296)

Total operating expense

40,394

(6,666)

(1,046)

32,682

 

 

 

 

 

Operating profit from continuing operations

54,177

6,795

4,548

65,520

 

 

 

 

 

Profit before tax from continuing operations

55,989

6,795

4,548

67,332

 

 

 

 

 

Net profit from continuing operations

47,258

6,795

4,548

58,601

 

 

 

 

 

Net income attributable to Focus Media

47,154

6,795

4,548

58,497

 

 

 

 

 

Basic net income attributable to Focus Media per ADS

0.35

 

 

0.43

Diluted net income attributable to Focus Media per ADS

0.33

 

 

0.41

 

 

 

 

 

ADS used in calculating basic income per ADS

135,679,003

 

 

135,679,003

ADS used in calculating diluted income per ADS

141,661,330

 

 

141,661,330

 

 

 

 

 

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

 

Focus Media Holding Ltd.

Reconciliation of GAAP to non-GAAP

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

(Unaudited)

 

 

 

Twelve months ended December 31, 2011

 

GAAP

(1)

(2)

(3)

Non- GAAP

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

LCD display network

358,518

880

4,409

363,807

Poster frame network

75,079

4,175

79,254

In-store network

35,792

35,792

Movie theater network

25,082

43

25,125

Traditional outdoor billboard network

8,505

2,732

11,237

Total Gross Profit

502,976

880

11,359

515,215

 

 

 

 

 

 

General and administrative

127,013

(57,119)

69,894

Selling and marketing

147,716

(3,803)

(4,639)

139,274

Other operating (income), net

(15,421)

(15,421)

Total operating expense

259,308

(60,922)

(4,639)

193,747

 

 

 

 

 

 

Operating profit from continuing operations

243,668

61,802

15,998

321,468

 

 

 

 

 

 

Profit before tax from continuing operations

259,207

61,802

15,998

337,007

 

 

 

 

 

 

Net profit from continuing operations

199,079

61,802

15,998

5,367

282,246

Net profit from discontinued operations

 

 

 

 

 

 

Net income attributable to Focus Media

200,944

61,802

15,998

5,367

284,111

 

 

 

 

 

 

Basic net income from continuing operations per ADS

1.48

 

 

 

2.10

Diluted net income from continuing operations per ADS

1.44

 

 

 

2.04

 

 

 

 

 

 

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

1.50

 

 

 

2.12

Diluted net income attributable to Focus Media per ADS

1.45

 

 

 

2.05

 

 

 

 

 

 

ADS used in calculating basic income per ADS

134,241,550

 

 

 

134,241,550

ADS used in calculating diluted income per ADS

138,320,991

 

 

 

138,320,991

 

 

 

 

 

 

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

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

 

 

Twelve months ended December 31, 2010

 

GAAP

(1)

(2)

(3)

(4)

Non- GAAP

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

LCD display network

230,129

977

4,032

235,138

Poster frame network

37,406

6,905

44,311

In-store network

14,345

14,345

Movie theater network

4,246

62

4,308

Traditional outdoor billboard network

8,499

1,725

10,224

Total Gross Profit

294,625

977

12,724

308,326

 

 

 

 

 

 

 

General and administrative

79,760

(40,272)

39,488

Selling and marketing

103,722

(4,343)

(4,116)

95,263

Impairment loss

5,736

(5,736)

-

Other operating (income), net

(14,144)

(2,257)

(16,401)

Total operating expense

175,074

(44,615)

(4,116)

(5,736)

(2,257)

118,350

 

 

 

 

 

 

 

Operating profit from continuing operations

119,551

45,592

16,840

5,736

2,257

189,976

 

 

 

 

 

 

 

Profit before tax from continuing operations

125,523

45,592

16,840

5,736

3,545

197,236

 

 

 

 

 

 

 

Net profit from continuing operations

103,187

45,592

16,840

5,736

3,545

174,900

Net profit from discontinued operations

83,078

766

(79,000)

4,844

 

 

 

 

 

 

 

Net income attributable to Focus Media

184,274

45,592

17,606

5,736

(75,455)

177,753

 

 

 

 

 

 

 

Basic net income from continuing operations per ADS

0.73

 

 

 

 

1.24

Diluted net income  from continuing operations per ADS

0.71

 

 

 

 

1.20

 

 

 

 

 

 

 

Basic net income  from discontinued operations per ADS

0.59

 

 

 

 

0.03

Diluted net income  from discontinued operations per ADS

0.57

 

 

 

 

0.03

 

 

 

 

 

 

 

Basic net income attributable to Focus Media per ADS

1.30

 

 

 

 

1.26

Diluted net income  attributable to Focus Media per ADS

1.26

 

 

 

 

1.21

 

 

 

 

 

 

 

ADS used in calculating basic income per ADS

141,569,314

 

 

 

 

141,569,314

ADS used in calculating diluted income per ADS

146,331,673

 

 

 

 

146,331,673

 

 

 

 

 

 

 

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Impairment charges of goodwill.

(4). Profit from disposal of previously acquired businesses, including $79.0 million profit from internet disposal and $3.5 million loss from the write-off of certain assets of previously acquired subsidiaries.

CONFERENCE CALL

1) The Company will host a conference call to discuss the fourth quarter and full year 2011 results at 9:00 p.m. U.S. Eastern Time on March 19, 2011 (6:00 p.m. U.S. Pacific Time on March 19, 2012 and 9:00 a.m. Beijing/Hong Kong Time on March 20, 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 #:

60336667

2) A replay of the call will be available from March 20, 2012 12:00am until March 27, 2012 8:59am (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 #: 60336667

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.

 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S Dollars in Thousands)

 

 

 

2011-12-31

2011-09-30

2010-12-31

 

 

 

 

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

530,565

435,322

454,476

Short-term investments

226,047

204,567

137,551

Accounts receivable, net

249,206

230,552

157,329

Prepaid expenses and other current assets

62,604

39,060

54,760

Deposit paid for acquisition of subsidiaries

1,163

Rental deposits

60,913

56,143

46,614

Other current assets

3,220

8,098

468

Total current assets

1,132,555

973,742

852,361

Rental deposits, non-current

4,047

4,770

5,682

Equipment, net

79,042

68,786

68,887

Acquired intangible assets, net

35,025

39,242

24,162

Goodwill

459,113

452,201

425,335

Investment under equity method

58,800

59,148

Other long term assets

11,120

17,354

7,733

Total assets

1,779,702

1,615,243

1,384,160

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities

 

 

 

Short-term bank loan

100,000

30,000

 Accounts payable

19,448

22,146

16,589

 Accrued expenses and other current liabilities

173,754

132,449

121,764

 Income taxes payable

35,463

10,943

8,890

Amount due to related parties

2,196

4,175

1,848

Deferred tax liabilities

33,550

24,532

23,628

Total current liabilities

364,411

224,245

172,719

Long-term loan

71,000

Long-term payable

13,106

12,995

Deferred tax liabilities, non-current

20,099

16,102

9,998

Total liabilities

468,616

253,342

182,717

 

 

 

 

Equity

 

 

 

Ordinary shares

32

33

34

Additional paid in capital

1,533,617

1,668,269

1,685,149

Subscription receivable

(1,236)

(91)

Accumulated deficit

(362,011)

(437,368)

(562,953)

Accumulated other comprehensive income

119,796

111,572

78,340

Total Focus Media equity

1,291,434

1,341,270

1,200,479

Noncontrolling interests

19,652

20,631

964

 Total equity

1,311,086

1,361,901

1,201,443

Total liabilities and equity

1,779,702

1,615,243

1,384,160

 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

Three months ended

Twelve months ended

 

2011-12-31

2011-9-30

2010-12-31

2011-12-31

2010-12-31

 

 

 

 

 

 

Revenues

 

 

 

 

 

LCD display network

150,452

132,555

101,455

486,550

328,592

 

 

 

 

 

 

In-store network

17,559

17,367

10,865

61,669

41,740

Poster frame network

70,595

51,023

43,554

202,548

134,086

Movie theater network

21,658

13,614

5,803

53,330

20,028

Traditional outdoor billboard network

18,052

14,886

13,261

56,650

41,750

Total gross revenues

278,316

229,445

174,938

860,747

566,196

Less: Sales taxes

21,897

18,783

15,238

68,127

49,881

Total net revenue (note 1)

256,419

210,662

159,700

792,620

516,315

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

LCD display network

25,228

22,364

19,058

85,847

67,513

 

 

 

 

 

 

In-store network

3,258

5,849

6,094

20,582

23,432

Poster frame network

29,511

28,056

25,071

110,370

84,487

Movie theater network

6,980

6,601

5,036

25,753

13,849

Traditional outdoor billboard network

16,002

12,232

9,870

47,092

32,409

Total cost of revenues

80,979

75,102

65,129

289,644

221,690

Gross profit

175,440

135,560

94,571

502,976

294,625

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

General and administrative

37,561

32,588

16,763

$127,013

79,760

Selling and marketing

50,843

32,594

29,927

$147,716

103,722

Impairment loss

5,736

Other operating (income) expenses, net

(7,587)

(1,919)

(6,296)

(15,421)

(14,144)

Total operating expenses

80,817

63,263

40,394

259,308

175,074

 

 

 

 

 

 

Operating profit

94,623

72,297

54,177

243,668

119,551

Interest income

4,637

5,395

1,812

15,539

7,260

Other expense

1,288

Income from continuing operations before income taxes

99,260

77,692

55,989

259,207

125,523

Provision for income taxes

24,878

14,041

8,731

54,761

22,336

Loss from equity method investee

617

985

5,367

Net income from continuing operations

73,765

62,666

47,258

199,079

103,187

 

 

 

 

 

 

Net income from discontinued operations, net of tax

83,078

Net income

73,765

62,666

47,258

199,079

186,265

 

 

 

 

 

 

Less: Net income  attributable to noncontrolling interests

(1,593)

437

104

(1,865)

1,991

Net income attributable to Focus Media

75,358

62,229

47,154

200,944

184,274

 

 

 

 

 

 

Net income from continuing operations per ADS

 

 

 

 

 

-basic

0.56

0.47

0.35

1.48

0.73

-diluted

0.54

0.45

0.33

1.44

0.71

 

 

 

 

 

 

Net income from discontinued operations per ADS

 

 

 

 

 

-basic

0.59

-diluted

0.57

 

 

 

 

 

 

Net income attributable to Focus Media per ADS

 

 

 

 

 

-basic

0.57

0.47

0.35

1.50

1.30

-diluted

0.55

0.44

0.33

1.45

1.26

 

 

 

 

 

 

ADS used in calculating basic income per ADS

132,073,143

133,718,768

135,679,003

134,241,550

141,569,314

ADS used in calculating diluted income per ADS

136,912,952

139,866,888

141,661,330

 

138,320,991

146,331,673

 

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

 

Three months ended

Twelve months ended

 

2011-12-31

2011-9-30

2010-12-31

2011-12-31

2010-12-31

Gross revenues

 

 

 

 

 

LCD display network

150,452

132,555

101,455

486,550

328,592

 

 

 

 

 

 

In-store network

17,559

17,367

10,865

61,669

41,740

Poster frame network

70,595

51,023

43,554

202,548

134,086

Movie theater network

21,658

13,614

5,803

53,330

20,028

Traditional outdoor billboard network

18,052

14,886

13,261

56,650

41,750

Total gross revenues

278,316

229,445

174,938

860,747

566,196

Less: Sales taxes

 

 

 

 

 

LCD display network

13,044

11,995

9,397

42,185

30,950

 

 

 

 

 

 

In-store network

1,504

1,496

1,026

5,295

3,963

Poster frame network

6,048

4,379

3,925

17,099

12,193

Movie theater network

875

623

579

2,495

1,933

Traditional outdoor billboard network

426

290

311

1,053

842

Total sales tax

21,897

18,783

15,238

68,127

49,881

Net revenues

 

 

 

 

 

LCD display network

137,408

120,560

92,058

444,365

297,642

 

 

 

 

 

 

In-store network

16,055

15,871

9,839

56,374

37,777

Poster frame network

64,547

46,644

39,629

185,449

121,893

Movie theater network

20,783

12,991

5,224

50,835

18,095

Traditional outdoor billboard network

17,626

14,596

12,950

55,597

40,908

Total net revenues

256,419

210,662

159,700

792,620

516,315

 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS

(U.S. Dollars in thousands)

 

 

 

 

 

 

Three months ended

Twelve months ended

 

2011-12-31

2011-09-30

2010-12-31

2011-12-31

2010-12-31

Operating activities:

 

 

 

 

 

Net income

73,765

62,666

47,258

199,079

186,265

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Bad debt expenses 

5,755

4,466

(750)

16,013

455

Share-based compensation 

15,582

15,557

6,795

61,802

45,592

Depreciation

7,601

7,291

6,478

28,999

28,270

Amortization of acquired intangible assets

4,484

3,970

4,548

15,998

17,606

Loss from equity method investee

617

985

5,367

Profit on disposal of subsidiaries and equity investment and other long-lived assets

(76,167)

Impairment charges for goodwill, acquired intangible assets and fixed assets

5,736

Impairment charges for certain other assets

Interest expenses

584

717

Others

(200)

1,798

77

2,597

318

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

20,605

(10,465)

43,586

(50,413)

(22,853)

Net cash provided by operating activities 

128,793

86,268

107,992

280,159

185,222

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Purchase of equipment and other long term assets 

(15,494)

(6,058)

(7,092)

(38,918)

(18,693)

Payment paid to acquire subsidiaries, net of cash acquired

(606)

(7,262)

(13,881)

(13,255)

(40,186)

Investment in equity method investee

 

(61,003)

Proceeds received from the sale of short-term investments

166,643

490,972

1,044,680

29,290

Proceeds used in investment in short-term investments

(186,371)

(505,921)

(21,450)

(1,124,034)

(137,551)

Proceeds received from disposal of fixed assets

100

125

162

672

471

Disposal of subsidiaries

7,296

76,067

Others

27

Net cash used in investing activities

(35,728)

(28,144)

(42,261)

(184,535)

(90,602)

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Proceeds received from bank loans

216,000

30,000

246,000

Cash used for repayment of short-term bank loans

(75,000)

 

(75,000)

Cash used for share repurchase

(144,269)

(66,106)

(213,375)

(236,716)

Collection (payment) of deposit for share repurchase

(36)

(Repayment to) capital injection  from noncontrolling interests

(321)

(397)

10,980

Proceeds from issuance of ordinary shares, net of issuance costs

1,236

1,260

784

3,063

3,171

Net cash provided by/(used in) financing activities 

(2,354)

(34,846)

784

(39,709)

(222,601)

Effect of exchange rate changes 

4,532

7,340

4,708

20,174

14,298

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents 

95,243

30,618

71,223

76,089

(113,683)

Cash and cash equivalents, beginning of period

435,322

404,704

383,253

454,476

568,159

 

 

 

 

 

 

Cash and cash equivalents, end of period

530,565

435,322

454,476

530,565

454,476

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Income taxes paid 

2,970

3,321

4,238

27,582

32,031

Interest paid

560

105

 

665

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing activity:

 

 

 

 

 

  Accrual for acquisition of subsidiaries

19,584

22,092

4,920

19,584

4,920

 

 

 

 

 

 

 

SOURCE Focus Media Holding Limited

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