Focus Media Reports Second Quarter 2011 Results

Aug 22, 2011, 17:00 ET from Focus Media Holding Limited

SHANGHAI, Aug. 22, 2011 /PRNewswire-Asia/ -- Focus Media Holding Limited (Nasdaq: FMCN), China's largest out-of-home lifestyle interactive targeted digital media group, today announced its unaudited financial results for the second quarter ended June 30, 2011.

Highlights for Second Quarter 2011:

  • Total net revenue for the second quarter of 2011 was $179.0 million, of which
    • Aggregate net revenue from the LCD display network (including the movie theater network), in-store network and poster frame network was $166.1 million, which exceeded by approximately 11% the mid-point of the Company's guidance range of $149-151 million.  This represented year-on-year growth of 48% from $112.2 million for the second quarter of 2010 and quarter-on-quarter growth of 22% from $136.1 million for the first quarter of 2011.
    • Net revenue from the traditional outdoor billboard network for the second quarter of 2011 was $12.9 million, which exceeded by approximately 8% the midpoint of the Company's guidance of $11-13 million.  This represented year-on-year growth of 25% from $10.3 million for the second quarter of 2010.  
  • GAAP net income attributable to Focus Media for the second quarter of 2011 was $42.8 million, representing an increase of 109% from $20.5 million for the first quarter of 2011 and an increase of 69% from $25.3 million for the second quarter of 2010.  
  • Non-GAAP net income attributable to Focus Media for the second quarter of 2011 was $62.9 million, exceeding the mid-point of the Company's guidance range of $54-$56 million by 14%, representing year-on-year growth of 42% from non-GAAP net income attributable to Focus Media of $44.3 million for the second quarter of 2010 and quarter-on-quarter growth of 48% from non-GAAP net income attributable to Focus Media of $42.4 million for the first quarter of 2011. Please see the sections on "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to non-GAAP" elsewhere in this announcement for more information about the non-GAAP measures referred to within this announcement.
  • GAAP net income attributable to Focus Media per fully diluted ADS for the second quarter of 2011 was $0.30, representing an increase of 100% from $0.15 per fully diluted ADS for the first quarter of 2011 and an increase of 76% from $0.17 per ADS in the second quarter of 2010.
  • Non-GAAP net income attributable to Focus Media per fully diluted ADS for the second quarter of 2011 was $0.44, representing year-on year growth of 47% from $0.30 per fully diluted ADS for the second quarter of 2010 and quarter-on-quarter growth of 47% from $0.30 for the first quarter of 2011.  

Highlights for Balance Sheet and Cash Flow Results of Second Quarter 2011:

  • Cash, cash equivalents and short-term investments were $590.9 million as of June 30, 2011, increasing by 6% from $557.9 million as of March 31, 2011.
  • Net cash inflow from operating activities in the second quarter of 2011 was $50.6 million, increased by 249% from $14.5 million for the first quarter of 2011 and a 34% increase from $37.8 million for the second quarter of 2010.
  • Net accounts receivable for the LCD display network (including the movie theater network), in-store network and poster frame network was $184.8 million as of June 30, 2011, an increase of 15% from $161.2 million as of March 31, 2011 as a result of sequential increase of revenues. Days sales outstanding on a rolling basis was 87 days in the second quarter of 2011 versus 95 days for the first quarter of 2011 due to improving cash collection in the second quarter as the first quarter is usually the slow cash collection season of the year.  
  • Capital expenditures were $11.5 million for the second quarter of 2011, mostly attributable to upgrading our LCD screens into interactive screens in seven major cities of China.
  • Cash used in investment in equity method investee amounted to $12.2 million in the second quarter of 2011, representing the remaining payment for 15% stake in VisionChina, compared to $48.8 million in the first quarter of 2011, which was attributable to the initial payment for our acquisition of a 15% stake in VisionChina.
  • Cash used in the purchase of subsidiaries in the second quarter of 2011 was $1.7 million, primarily attributable to acquisitions in the poster frame network business as part of our ongoing strategy in expanding into additional cities.

Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, "We are on schedule to complete installation of Focus Media's interactive screens in seven cities by October. We believe installation of these interactive screens is a vital revolutionary step that will transform our relationships with Chinese consumers by forming an intimate and interactive tie between the Focus media platform and Chinese consumers, providing advertisers with an interactive and measurable advertising media platform that can make a direct sales impact. We believe our offering of an interactive and measurable media platform will not only meaningfully expand our media resources, but it will also greatly enhance our value proposition and pricing power to advertisers."

Kit Low, the Company Chief Financial Officer added, "In the second quarter of 2011, the Company achieved aggregate net revenue year on year growth in our LCD display (including the movie theater network), in-store and poster frame businesses of 48%. GAAP net income attributable to Focus Media and non-GAAP net income attributable to Focus Media for the second quarter of 2011 was $42.8 million and $62.9 million, respectively.  We achieved a positive net cash inflow from operating activities after deducting the purchase of equipment and subsidiaries of $37.3 million in the second quarter of 2011 as compared to a net cash inflow of $5.0 million in the first quarter of 2011 and a net cash inflow of $26.6 million in the second quarter of 2010. We believe our investment in interactive capability afford us to build an online to offline media platform that offer tremendous value to advertisers. Our investment will pay off in the form of propelling us to sustain an above average revenue growth."

Second Quarter 2011 financial results

Advertising net revenue from the LCD display network (including the movie theatre network) was $113.0 million for the second quarter of 2011, representing an increase of 48% from $76.1 million for the second quarter of 2010 and an increase of 25% from $90.5 million for the first quarter of 2011.

Advertising net revenue from the poster frame network was $38.2 million for the second quarter of 2011, representing an increase of 52% from $25.2 million for the second quarter of 2010 and an increase of 6% from $36.1 million for the first quarter of 2011.

Advertising net revenue from the in-store network was $14.9 million for the second quarter of 2011, representing an increase of 37% from $10.9 million for the second quarter of 2010 and an increase of 57% from $9.5 million for the first quarter of 2011.

As of June 30, 2011, the total installed base of LCD displays in our LCD display network was 169,798 nationwide, including 162,244 displays through our directly owned networks, and 7,554 displays through our regional distributors, as compared to total LCD displays of 170,104 as of March 31, 2011 due to optimization of the network.  The total number of non-digital frames ready to use in our poster frame network was 354,945 as of June 30, 2011, as compared to 342,728 as of March 31, 2011.  In addition, as of June 30, 2011, we had 35,217 digital frames installed in our poster frame network, a slight decrease from 35,685 as of March 31, 2011 due to optimization of the network.  The total number of displays installed in our in-store network was 50,129 as of June 30, 2011, as compared to 48,826 as of March 31, 2011.  

Advertising net revenue from the traditional outdoor billboard network was $12.9 million for the second quarter of 2011, representing an increase of 25% from $10.3 million for the second quarter of 2010 and an increase of 23% from $10.5 million for the first quarter of 2011.

Non-GAAP gross profit from the LCD display network (including the movie theatre network) for the second quarter of 2011 was $89.7 million, representing an increase of 49% from $60.2 million for the second quarter of 2010 and an increase of 36% from $66.0 million for the first quarter of 2011.

Non-GAAP gross profit from the poster frame network for the second quarter of 2011 was $12.2 million, representing an increase of 61% from $7.6 million for the second quarter of 2010 and an increase of 5% from $11.6 million for the first quarter of 2011.

Non-GAAP gross profit from the in-store network for the second quarter of 2011 was $9.2 million, an increase of 96% from $4.7 million for the second quarter of 2010 and an increase of 142% from $3.8 million for the first quarter of 2011.

Non-GAAP gross profit from the traditional outdoor billboard network for the second quarter of 2011 was $3.6 million, representing an increase of 38% from $2.6 million for the second quarter of 2010 and representing a 100% increase from $1.8 million for the first quarter of 2011.

Non-GAAP operating expense for the second quarter of 2011 was $45.9 million, represented an increase of 24% from $37.0 million for the first quarter of 2011, which was mainly attributable to: 1) an increase of bad debt expenses in the amount of $1.8 million in the second quarter of 2011 in line with the sequential growth of revenue; 2) an increase of sales and marketing expenses also resulted by the sequential revenue growth; and 3) a decrease of government subsidies in the amount of $2.1 million compared with the first quarter of 2011 due to the government subsidies are highly subject to the tax paid while the first quarter is traditionally the peak season for tax payment.  It also represented an increase of 59% from $28.9 million for the second quarter of 2010 mainly due to a reversal of bad debt in the amount of $3.6 million in the second quarter of 2010 as well as sales and marketing expenses increase as a result of year-on-year revenue growth.    

Net cash inflow from operating activities in the second quarter of 2011 was $50.6 million, increased by 249% from $14.5 million for the first quarter of 2011 and a 34% increase from $37.8 million for the second quarter of 2010.

Net cash used in investing activities for the second quarter of 2011 was $12.1 million. In the second quarter of 2011, the Company incurred capital expenditures of $11.5 million, mostly attributable to upgrading our LCD screens into interactive screens in seven major cities of China, a payment of $12.2 million representing the remaining 20% payment for the acquisition of 15% stake in VisionChina, as well as $1.7 million consideration paid for our poster frame related acquisitions, partially offset by the net proceeds of $13.2 million from the short-term investments.

Business Outlook for Third Quarter 2011

The Company provides the following guidance with respect to the third quarter ending September 30, 2011:

Net revenues for the core business (inclusive of the LCD display network and other, the in-store network and the poster frame network) are expected to be in the range of $175-$177million, the mid-point of which would represent year-on-year growth of 37% and quarter-on-quarter growth of 6%. Net revenues for the non-core business (the traditional outdoor billboard network) are expected to be in the range of $11-$13 million. The Company's non-GAAP net income is expected to be in the range of $68-$70 million. Our non-GAAP net income guidance excludes any contribution from our 15% stake in VisionChina.  The Company estimates the weighted average fully diluted ADS count for the quarter at 141.5 million, assuming no further share repurchases during the quarter.

In the second quarter of 2011, the Company obtained the "HNTE" (High and New Technology Enterprises) certification for one of the Company's subsidiaries and thus, this subsidiary is eligible for a tax holiday (i.e. two-year tax exemption followed by a three-year 50% tax reduction) effective from January 1, 2010. With the application of a 0% tax rate to that particular subsidiary in this year, the effective tax rate for fiscal year 2011 for the Company is expected to be approximately 14%-15%.  

Announced Share Repurchase Program

On June 22, 2011, Focus Media announced an increase in the size of its share repurchase program to US$450 million and to extend the termination date of the repurchase plan to December 31, 2013. As of August 22, 2011, the Company has cumulatively spent approximately $306 million in share repurchases.  

2011 Annual General Meeting of Shareholders

The Company announced that it scheduled to hold its annual general meeting of shareholders of 2011 on November 1, 2011.

Management Changes

The Company announced that the Vice President of Finance, Mr. Ge Xu, is resigning from his current role, effective August 31, 2011.  "I feel lucky for being able to work with Jason and other members of Focus Media's management team. The good memory will accompany me all the time," said Mr. Ge Xu.

"We greatly appreciate the contribution of Mr. Ge Xu and we wish him every success in his future endeavors," said Mr. Kit Low, the Chief Financial Officer of Focus Media.

Foreign Currency Translation

Assets and liabilities are translated at the exchange rate as of June 30, 2011, which was $1 to RMB6.4716.  Equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the second quarter of 2011, which was $1 to RMB6.4999.  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 disposal of previously acquired subsidiaries, gain or loss from equity method investee and impairment charges of goodwill.  Management uses these non-GAAP financial measures to better assess operating performance of the Company.  The Company believes that these non-GAAP financial measures provide investors with another method for assessing Focus Media's operating results in a manner that is focused on the performance of its ongoing operations.  Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results in the attached financial information.  The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of Focus Media and when planning and forecasting future periods.  The Company computes its non-GAAP financial measures using a consistent method from quarter to quarter and the reconciliation items mostly include share-based compensation expenses, amortization of acquired intangible assets, profit or loss from disposal of previously acquired subsidiaries, gain or loss from equity method investee and impairment charges. The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliation between these financial measures.

Focus Media Holding Ltd.

Reconciliation of GAAP to non-GAAP

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

(Unaudited)

Three months ended June 302011

GAAP

(1)

(2)

(3)

Non-GAAP

Gross Profit

LCD display and other:

88,382

198

1,130

89,710

LCD display network

85,260

198

1,114

86,572

Movie theater network

3,122

16

3,138

Poster frame network

11,080

1,118

12,198

Instore network

9,162

9,162

Traditional outdoor billboard network

3,129

449

3,578

Total Gross Profit

111,753

198

2,697

114,648

General and administrative

30,240

(14,274)

15,966

Selling and marketing

33,079

(924)

(1,056)

31,099

Other operating income, net

(1,209)

(1,209)

Total operating expense

62,110

(15,198)

(1,056)

45,856

Operating profit from continuing operations

49,643

15,396

3,753

68,792

Profit before tax from continuing operations

52,790

15,396

3,753

71,939

Net profit from continuing operations

42,863

15,396

3,753

992

63,004

Net profit from discontinued operations

Net income attributable to Focus Media

42,804

15,396

3,753

992

62,945

Basic net income from continuing operations per ADS

0.32

0.46

Diluted net income from continuing operations per ADS

0.30

0.45

Basic net income from discontinued operations per ADS

Diluted net income from discontinued operations per ADS

Basic net income attributable to Focus Media per ADS

0.32

0.46

Diluted net income attributable to Focus Media per ADS

0.30

0.44

ADS used in calculating basic income per ADS

135,624,717

135,624,717

ADS used in calculating diluted income per ADS

141,562,763

141,562,763

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Loss from equity method investee

Three months ended March 31, 2011

GAAP

(1)

(2)

(3)

Non-GAAP

Gross Profit

LCD display and other:

64,649

196

1,110

65,955

LCD display network

62,880

196

1,094

64,170

Movie theater network

1,769

16

1,785

Poster frame network

10,374

1,178

11,552

Instore network

3,811

3,811

Traditional outdoor billboard network

1,387

445

1,832

Total Gross Profit

80,221

196

2,733

83,150

General and administrative

26,624

(14,154)

12,470

Selling and marketing

31,201

(917)

(1,058)

29,226

Other operating income, net

(4,705)

(4,705)

Total operating expense

53,120

(15,071)

(1,058)

36,991

Operating profit from continuing operations

27,101

15,267

3,791

46,159

Profit before tax from continuing operations

29,462

15,267

3,791

48,520

Net profit from continuing operations

19,781

15,267

3,791

2,774

41,613

Net profit from discontinued operations

Net income attributable to Focus Media

20,549

15,267

3,791

2,774

42,381

Basic net income from continuing operations per ADS

0.15

0.31

Diluted net income from continuing operations per ADS

0.14

0.30

Basic net income from discontinued operations per ADS

Diluted net income from discontinued operations per ADS

Basic net income attributable to Focus Media per ADS

0.15

0.31

Diluted net income attributable to Focus Media per ADS

0.15

0.30

ADS used in calculating basic income per ADS

135,594,008

135,594,008

ADS used in calculating diluted income per ADS

140,394,354

140,394,354

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Loss from equity method investee

Three months ended June 302010

GAAP

(1)

(2)

(3)

Non-GAAP

Gross Profit

LCD display and other:

58,917

283

1,036

60,236

LCD display network

58,044

283

1,021

59,348

Movie theater network

873

15

888

Poster frame network

5,939

1,634

7,573

Instore network

4,745

4,745

Traditional outdoor billboard network

2,167

427

2,594

Total Gross Profit

71,768

283

3,097

75,148

General and administrative

16,737

(11,400)

5,337

Selling and marketing

28,729

(1,244)

(1,018)

26,467

Other operating expenses (income), net

(1,352)

(1,524)

(2,876)

Total operating expense

44,114

(12,644)

(1,018)

(1,524)

28,928

Operating profit from continuing operations

27,654

12,927

4,115

1,524

46,220

Profit before tax from continuing operations

28,719

12,927

4,115

1,524

47,285

Net profit from continuing operations

23,869

12,927

4,115

1,524

42,435

Net profit from discontinued operations

2,932

367

3,299

Net income attributable to Focus Media

25,336

12,927

4,482

1,524

44,269

Basic net income from continuing operations per ADS

0.17

0.30

Diluted net income from continuing operations per ADS

0.16

0.29

Basic net income from discontinued operations per ADS

0.02

0.02

Diluted net income from discontinued operations per ADS

0.02

0.02

Basic net income attributable to Focus Media per ADS

0.18

0.31

Diluted net income attributable to Focus Media per ADS

0.17

0.30

Shares used in calculating basic income per ADS

143,787,178

143,787,178

Shares used in calculating diluted income per ADS

148,162,497

148,162,497

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Loss from disposal of previously acquired subsidiaries, all attributable to poster frame business.

Focus Media Holding Ltd.

Reconciliation of GAAP to non—GAAP

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

(Unaudited)

Six months ended June 302011

GAAP

(1)

(2)

(3)

Non-GAAP

Gross Profit

LCD display and other:

153,031

394

2,240

155,665

LCD display network

148,140

394

2,208

150,742

Movie theater network

4,891

32

4,923

Poster frame network

21,454

2,296

23,750

Instore network

12,973

12,973

Traditional outdoor billboard network

4,516

894

5,410

Total Gross Profit

191,974

394

5,430

197,798

General and administrative

56,864

(28,428)

28,436

Selling and marketing

64,280

(1,841)

(2,114)

60,325

Other operating income, net

(5,914)

(5,914)

Total operating expense

115,230

(30,269)

(2,114)

82,847

Operating profit from continuing operations

76,744

30,663

7,544

114,951

Profit before tax from continuing operations

82,252

30,663

7,544

120,459

Net profit from continuing operations

62,644

30,663

7,544

3,766

104,617

Net profit from discontinued operations

Net income attributable to Focus Media

63,353

30,663

7,544

3,766

105,326

Basic net income from continuing operations per ADS

0.46

0.77

Diluted net income from continuing operations per ADS

0.44

0.74

Basic net income from discontinued operations per ADS

Diluted net income from discontinued operations per ADS

Basic net income attributable to Focus Media per ADS

0.47

0.78

Diluted net income attributable to Focus Media per ADS

0.45

0.75

ADS used in calculating basic income per ADS

135,609,448

135,609,448

ADS used in calculating diluted income per ADS

140,998,683

140,998,683

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Loss from equity method investee.

Six months ended June 302010

GAAP

(1)

(2)

(3)

(4)

Non-GAAP

Gross Profit

LCD display and other:

96,961

562

1,890

99,413

LCD display network

93,254

562

1,860

95,676

Movie theater network

3,707

30

3,737

Poster frame network

12,290

3,273

15,563

Instore network

7,189

7,189

Traditional outdoor billboard network

3,548

855

4,403

Total Gross Profit

119,988

562

6,018

126,568

General and administrative

38,055

(22,691)

15,364

Selling and marketing

49,321

(2,475)

(2,035)

44,811

Impairment loss

5,736

(5,736)

Other operating (income), net

(5,147)

(1,524)

(6,671)

Total operating expense

87,965

(25,166)

(2,035)

(5,736)

(1,524)

53,504

Operating profit from continuing operations

32,023

25,728

8,053

5,736

1,524

73,064

Profit before tax from continuing operations

33,517

25,728

8,053

5,736

2,812

75,846

Net profit from continuing operations

22,472

25,728

8,053

5,736

2,812

64,801

Net profit from discontinued operations

3,736

744

4,480

Net income attributable to Focus Media

24,382

25,728

8,797

5,736

2,812

67,455

Basic net income from continuing operations per ADS

0.16

0.45

Diluted net income from continuing operations per ADS

0.15

0.43

Basic net income from discontinued operations per ADS

0.03

0.03

Diluted net income from discontinued operations per ADS

0.03

0.03

Basic net income attributable to Focus Media per ADS

0.17

0.47

Diluted net income attributable to Focus Media per ADS

0.16

0.45

Shares used in calculating basic income per ADS

144,705,951

144,705,951

Shares used in calculating diluted income per ADS

149,081,270

149,081,270

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

(3). Impairment charges of goodwill as a result of earn-out payments in poster frame business.

(4). Loss from disposal of previously acquired poster frame subsidiaries.

CONFERENCE CALL

The Company will host a conference call to discuss the second quarter  2011 results at 9:00 p.m. U.S. Eastern Time on August 22, 2011 (6:00 p.m. U.S. Pacific Time on August 22, 2011 and 9:00 a.m. Beijing/Hong Kong Time on August 23, 2011). The dial-in details for the live conference call are set forth below: U.S. Toll Free Number 1.877.556.5921, Hong Kong dial-in number +852.3002.1672, International dial-in number 1.617.597.5474; Pass code: 77298094.

A replay of the call will be available from August 23, 2011 12:00 am until August 30, 2011 (US Eastern Time). The dial-in details for the replay are set forth below: U.S. Toll Free Number 1 888 286.8010, International dial-in number +1 617 801.6888; Pass code 13703580.  Additionally, a live and archived web cast of this call will be available on the Focus Media web site at http://ir.focusmedia.cn

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Focus Media may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Focus Media's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in Focus Media's filings with the U.S. Securities and Exchange Commission, including its registration statements on Form F-1, F-3 and 20-F, in each case as amended. Focus Media does not undertake any obligation to update any forward-looking statement, except as required under applicable law.  

This release is not an offer of securities for sale in the United States.  Securities may not be offered or sold in the United States absent registration or an exemption from registration.  Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

ABOUT FOCUS MEDIA HOLDING LIMITED

Focus Media Holding Limited (Nasdaq: FMCN) operates China's largest lifestyle targeted interactive digital media network. The Company offers one of the most comprehensive targeted interactive digital media platforms aimed at Chinese consumers at various urban locations. The increasingly fragmented and mobile lifestyle of Chinese urban consumers has created the need for more efficient media means to capture consumer attention. Focus Media's mission is to build an increasingly comprehensive and measurable interactive urban media network that reaches consumers at various out-of-home locations.  As of June 30, 2011, Focus Media's out-of-home lifestyle interactive digital media network had approximately 170,000 LCD displays in about 95,000 commercial buildings that covered more than 90 cities, 390,000 in-elevator poster and digital picture frames in residential buildings that covered more than 30 cities, approximately 50,000 LCD displays in more than 2,700 hypermarkets, supermarkets and convenience stores and approximately 1,900 movie screens in about 280 movie theaters throughout China. 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S Dollars in Thousands)

2011-06-30

2011-03-31

ASSETS

Current assets

Cash and cash equivalents                                                                     

404,704

361,061

Short-term investments

186,198

196,852

Accounts receivable, net

200,660

175,045

Prepaid expenses and other current assets

44,053

42,591

Deposit paid for acquisition of subsidiaries

618

1,174

Rental deposits

50,557

46,797

Other current assets

1,722

1,951

Total current assets

888,512

825,471

Rental deposits, non-current

5,722

5,166

Equipment, net

65,807

67,699

Acquired intangible assets, net

17,553

20,918

Goodwill

429,525

427,252

Investment under equity method

58,209

58,474

Other long term assets

19,273

12,424

Total assets

1,484,601

1,417,404

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

18,330

17,603

Accrued expenses and other current liabilities

117,155

119,560

Income taxes payable

314

292

Amount due to Related parties

1,842

2,336

Deferred tax liabilities

24,180

23,867

Total current liabilities

161,821

163,658

Deferred tax liabilities, non-current

9,995

9,982

Total liabilities

171,816

173,640

Equity

Ordinary shares

34

34

Additional paid in capital

1,716,322

1,700,879

Subscription receivable

(203)

Accumulated deficit

(499,597)

(542,403)

Accumulated other comprehensive income

95,815

85,307

Total Focus Media equity

1,312,574

1,243,614

Noncontrolling interests

211

150

Total equity

1,312,785

1,243,764

Total liabilities and equity

1,484,601

1,417,404

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three months ended

Six months ended

2011-06-30

2011-03-31

2010-06-30

2011-06-30

2010-06-30

Revenues

LCD display network and other:

123,142

98,458

83,931

221,600

145,181

-LCD display network

113,518

90,024

80,056

203,542

135,484

-Movie theater network

9,624

8,434

3,875

18,058

9,697

In-store network

16,339

10,405

11,997

26,744

20,485

Poster frame network

41,648

39,282

27,623

80,930

55,036

Traditional outdoor billboard network

13,090

10,622

10,504

23,712

19,354

Total gross revenues

194,219

158,767

134,055

352,986

240,056

Less: Sales taxes

15,257

12,192

11,547

27,449

20,795

Total net revenue (note 1)

178,962

146,575

122,508

325,537

219,261

Cost of revenues

LCD display network and other:

24,614

25,813

17,137

50,427

34,717

-LCD display network

18,630

19,624

14,486

38,254

29,431

-Movie theater network

5,984

6,189

2,651

12,173

5,286

In-store network

5,774

5,701

6,123

11,475

11,341

Poster frame network

27,098

25,705

19,298

52,803

37,746

Traditional outdoor billboard network

9,723

9,135

8,182

18,858

15,469

Total cost of revenues

67,209

66,354

50,740

133,563

99,273

Gross profit

111,753

80,221

71,768

191,974

119,988

Operating expenses

General and administrative

30,240

26,624

16,737

56,864

38,055

Selling and marketing

33,079

31,201

28,729

64,280

49,321

Impairment loss

5,736

Other operating income, net

(1,209)

(4,705)

(1,352)

(5,914)

(5,147)

Total operating expenses

62,110

53,120

44,114

115,230

87,965

Operating profit

49,643

27,101

27,654

76,744

32,023

Interest income

3,147

2,361

1,065

5,508

2,782

Investment loss

1,288

Income from continuing operations before income taxes

52,790

29,462

28,719

82,252

33,517

Provision for income taxes

8,935

6,907

4,850

15,842

11,045

Loss from equity method investee

992

2,774

3,766

Net income from continuing operations

42,863

19,781

23,869

62,644

22,472

Net income from discontinued operations, net of tax

2,932

3,738

Net income

42,863

19,781

26,801

62,644

26,210

Less: Net income (loss) attributable to noncontrolling interests

59

(768)

1,465

(709)

1,828

Net income attributable to Focus Media

42,804

20,549

25,336

63,353

24,382

Net income from continuing operations per ADS

-basic

0.32

0.15

0.17

0.46

0.16

-diluted

0.30

0.14

0.16

0.44

0.15

Net income from discontinued operations per ADS

-basic

0.02

0.03

-diluted

0.02

0.03

Net income attributable to Focus Media per ADS

-basic

0.32

0.15

0.18

0.47

0.17

-diluted

0.30

0.15

0.17

0.45

0.16

ADS used in calculating basic income per ADS

135,624,717

135,594,008

143,787,178

135,609,448

144,705,951

ADS used in calculating diluted income per ADS

141,562,763

140,394,354

148,162,497

140,998,683

149,081,270

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

Three months ended

Six months ended

2011-06-30

2011-03-31

2010-06-30

2011-06-30

2010-06-30

Gross revenues

LCD display network

113,518

90,024

80,056

203,542

135,484

Movie theater network

9,624

8,434

3,875

18,058

9,697

In-store network

16,339

10,405

11,997

26,744

20,485

Poster frame network

41,648

39,282

27,623

80,930

55,036

Traditional outdoor billboard network

13,090

10,622

10,504

23,712

19,354

Total gross revenues

194,219

158,767

134,055

352,986

240,056

Less: Sales taxes

LCD display network

9,628

7,519

7,526

17,147

12,799

Movie theater network

519

477

351

996

704

In-store network

1,403

893

1,129

2,296

1,955

Poster frame network

3,470

3,203

2,386

6,673

5,000

Traditional outdoor billboard network

237

100

155

337

337

Total sales tax

15,257

12,192

11,547

27,449

20,795

Net revenues

LCD display network

103,890

82,505

72,530

186,395

122,685

Movie theater network

9,105

7,957

3,524

17,062

8,993

In-store network

14,936

9,512

10,868

24,448

18,530

Poster frame network

38,178

36,079

25,237

74,257

50,036

Traditional outdoor billboard network                                                

12,853

10,522

10,349

23,375

19,017

Total net revenues

178,962

146,575

122,508

325,537

219,261

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS

(U.S. Dollar in thousands)

Three months ended

Six months ended

2011-06-30

2010-06-30

2011-06-30

2010-06-30

Operating activities:

Net income

42,863

26,801

62,644

26,210

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

Bad debt expenses  

3,792

(1,518)

5,792

337

Share-based compensation  

15,396

12,927

30,663

25,728

Depreciation

7,030

7,428

14,107

15,071

Amortization of acquired intangible assets

3,753

4,482

7,544

8,796

Loss from disposal of previously acquired subsidiaries

1,524

1,524

Loss on disposal of equity method investment

1,288

Loss from equity method investee

992

3,766

Impairment charges for goodwill, acquired intangible assets and fixed assets

5,736

Write-off of long-term assets

990

990

Others

108

101

143

136

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

(24,345)

(13,953)

(60,552)

(41,845)

Net cash provided by operating activities  

50,579

37,792

65,097

42,981

Investing activities:

Purchase of equipment and other long term assets  

(11,498)

(3,849)

(17,367)

(4,925)

Payment paid to acquired subsidiaries

(1,749)

(7,325)

(5,360)

(22,538)

Investment in equity method investee

(12,201)

(61,003)

Investment in short-term investments

(318,777)

(431,742)

Proceeds from the sale of short-term investments

332,010

387,065

29,290

Proceeds received from disposal of fixed assets

149

142

447

142

Disposal of subsidiaries

(140)

7,296

2,789

Net cash (used in)/provided by investing activities

(12,066)

(11,172)

(120,664)

4,758

Financing activities:

Cash used for share repurchase

(36,715)

(3,000)

(36,715)

Cash deposit for share repurchase

(6,301)

(6,301)

Capital injection  from (repayment to) noncontrolling interests

1,924

(76)

10,968

Proceeds from issuance of ordinary shares,  

251

1,819

568

1,819

Net cash provided by/(used in) financing activities  

251

(39,273)

(2,508)

(30,229)

Effect of exchange rate changes  

4,879

2,344

8,303

2,583

Net increase (decrease) in cash and cash equivalents  

43,643

(10,309)

(49,772)

20,093

Cash and cash equivalents, beginning of period

361,061

598,561

454,476

568,159

Cash and cash equivalents, end of period

404,704

588,252

404,704

588,252

Supplemental disclosure of cash flow information:

Income taxes paid  

6,525

9,367

21,291

23,940

Supplemental disclosure of non-cash investing activity:

 Accrual for acquisition of subsidiaries

3,858

7,178

3,858

7,178

SOURCE Focus Media Holding Limited



RELATED LINKS

http://ir.focusmedia.cn