Exhibit 99.1
Focus Media Reports Third Quarter 2009 Results
SHANGHAI, China, December 7, 2009 – Focus Media Holding Limited (Nasdaq: FMCN), China’s largest digital media group, today announced its unaudited financial results for the third quarter ended September 30, 2009.
Basis of Presentation
On December 22, 2008, the Company announced that it entered into a definitive agreement with SINA Corporation (“SINA”) to sell substantially all of the assets of Focus Media’s digital out-of-home advertising networks, including the LCD display network, poster frame network and certain in-store network. The assets to be sold to SINA were recorded as an asset group held-for-sale in accordance with US GAAP, and were not depreciated or amortized nor were they subject to the same impairment analysis as assets held and used in continuing operations. Therefore, the GAAP and Non-GAAP financial measures related to the asset group to be sold to SINA for the quarters ended on March 31, 2009 and June 30, 2009did not include any amortization or depreciation expenses related to the intangible and fixed assets or impairment of fixed assets.On September 28, 2009, the Company and SINA jointly reached a decision not to extend the deadline of the agreement announced on December 22, 2008. As such, the assets proposed to be sold to SINA, were reclassified for financial reporting purpose, as assets to be held and used. In accordance with US GAAP, the Company recorded depreciation expense of $17.0 million on September 28, which represented the cumulative catch-up of depreciation expenses the Company would have recorded during the period from December 22, 2008 to June 30, 2009. During the first quarter of 2009, the Company also announced that it would cease expansion of its digital poster frame networks and, in response to a regulation promulgated by Shanghai Municipality Government in early 2009, the operation of its boat-based advertising platform on the Huangpu River. In accordance with US GAAP, the digital poster frame and the boat-based advertising platform, as part of the asset group to be sold to SINA, were not subject to the same impairment analysis as assets held and used in continuing operations. With the termination of the agreement with SINA in the third quarter of 2009, the assets were reevaluated for impairment, resulting in the Company impairing these assets and recording an impairment charge of $36.0 million in cost of sales for the third quarter of 2009.
The effect of the cumulative catch-up depreciation expenses amounted to $17.0 million, without considering tax effect, and was recorded as cost of sales in both our GAAP and Non-GAAP measures.
In August 2009, the Company started to negotiate with the ex-shareholders of various subsidiaries within the Internet division to sell back part of the equity interests held by the Company in those entities in exchange for the reduction of future earn-out payments. Some of these partial equity disposal transactions were closed towards the end of August. As a result, some of these entities no longer met the criteria for consolidation and were therefore deconsolidated and accounted for as cost or equity method investments from September 2009 onwards. The Company consolidated, in the third quarter of 2009, the results of operations from these entities up to the date of the partial equity disposal transactions. The total net revenues and gross profit for these entities included in the Company’s consolidated statement of income for the third quarter of 2009 was $28.6million and $5.1 million, respectively, without considering tax effect. The net revenues and gross profit from these entities will no longer be consolidated by the Company after the dates of the partial equity disposal transactions.
Highlights for Third Quarter 2009:
| | | lTotal net revenue for third quarter 2009 was $166.6 million, declining 3% from $171.3 million for the second quarter of 2009 and declining 26% from $224.8 million for the third quarter of 2008. The aggregate net revenue for the LCD display network, in-store network and poster frame network (previous classified within discontinued operations) was $85.8 million, surpassing the high end of Company’s previous guidance of $81.5 million; The aggregate net revenue for the movie theatre and outdoor traditional billboard network and Internet advertising services (previously classified within continuing operations) was $80.8 million. The Internet advertising services division had aggregate net revenue of $68.3 million, of which $28.6 million was attributable to subsidiaries that were deconsolidated by the Company in September 2009 and which will be accounted for as cost or equity method investments in future periods. The high end of the Company’s previous guidance for the continuing operations was $47 million for the third quarter of 2009. |
| | | lNet loss attributable to shareholders was $127.6 million or a loss of $0.99 per fully diluted ADS, compared to net loss attributable to shareholders of $23 million for the second quarter of 2009, or a loss of $0.18 per fully diluted ADS and net income attributable to shareholders of $51.4 million for the third quarter of 2008 or an income of $0.38 per fully diluted ADS. |
| | | lNon-GAAP net income for the third quarter of 2009 was $7.9 million, compared to non-GAAP net income of $28.2 million for the second quarter of 2009 and non-GAAP net income of $71.4 million for the third quarter of 2008. The catch-up of depreciation expenses from LCD display network, poster frame network and in-store network reflected in the results of operation for the third quarter of 2009 was $16.9 million or $13.6 million, net of tax; Non-GAAP net income attributable to deconsolidated subsidiaries from Internet advertising services division was $0.9 million, net of tax and minority interests. |
| | | lCash and cash equivalents was $383.1 million as of September 30, 2009, an increase of 4% from $367.9 million as of June 30, 2009. |
| | | lGross accounts receivable for the LCD display network, in-store network and poster frame network (previous classified as discontinued operations) was $141.5 million as of September 30, 2009, a decline of 6.2% from $150.9 million as of June 30, 2009. Gross accounts receivable for the movie theatre and outdoor traditional billboard network and Internet advertising services (previously classified within continuing operations), was $113.2million as of September 30, 2009, a decline of 11% from $127.0 million as of June 30, 2009. |
| | | lCapital expenditures were $0.9 million for the third quarter of 2009. |
| | | lContingent earn-out payments related to historical acquisitions paid in the third quarter of 2009 were $5.3 million, mostly attributable to poster frame network. |
Jason Jiang, chairman and CEO of Focus Media said, “During this quarter, we have been doing restructurings on multiple business divisions, which lined up as follows: Firstly, we partially disposed of our equity ownership in some acquired subsidiaries in the Internet advertising service division and outdoor traditional billboard division. As a result, we expect to significantly reduce the potential earn-out payments in these two business divisions in the future. Secondly, we terminated the acquisition contracts or renegotiated the earn-out payments with a few under-performing subsidiaries in our poster frame division and meanwhile, expedited the integration of those subsidiaries acquired in previous years. In this way, we enhanced the control over these subsidiaries and, on the other hand, significantly reduced the contingent earn-out payments as well. Though during the past few quarters our poster frame business has performed less satisfactorily due to multiple reasons, such as changes in senior management, the ongoing renegotiation over earn-out payments, fierce competition and over-investment in fixed assets in previous years, we believe that this business division will be back on track with the progress of our integration processes and we expect to see improvement for the fourth quarter and the following quarters. Thirdly, the termination of the agreement with SINA in this quarter enabled us to reevaluate some non-performing assets on our balance sheet, such as the idle digital frames due to ceasing expansion of our digital frame network and the boat-based advertising platform in response to certain new regulations. As a result of these reevaluations, we made impairment charges of $38.8 million on those assets. Through the above mentioned measures, we believe that the assets impairment and disposal losses, which have been negatively affecting our company since the last quarter of 2008 will come to the end by early 2010.”
Jason continued, “Going forward, we will focus on our core business and primarily seek organic growth. At the same time, financial discipline will be rigorously followed in our decision-making processes.”
Third Quarter 2009 financial results
Advertising net revenue from the LCD display network was $56.0 million for the third quarter of 2009, a slight increase of 4% from $54.3 million for the second quarter of 2009 but a 32% decline from $73.7 million for the third quarter of 2008.
Advertising net revenue from the poster frame network was $22.1 million for the third quarter of 2009, declining from $26.5 million for the second quarter of 2009 and from $44.0 million for the third quarter of 2008 by 17% and 50%, respectively.
Advertising net revenue from the in-store network was $7.6 million for the third quarter of 2009, a 16% decline from $9.0 million for the second quarter of 2009 and a slight increase of 7% from $7.1 million for the third quarter of 2008.
As of September 30, 2009, the total installed base of LCD displays in our commercial location network was 130,890 nationwide, including 125,467 displays through our directly owned networks, and 5,423 displays through our regional distributors, as compared to 133,514 as of June 30, 2009. The total number of non-digital frames available for sale in our poster frame network was 225,762 as of September 30, 2009, as compared to 246,095 as of June 30, 2009. In addition, as of September 30, 2009, we had 36,539 digital frames installed in our poster frame network, as compared to 38,893 as of June 30, 2009. The decline in the number of displays and frames was primarily attributable to continuing optimization of our network. The total number of displays installed in our in-store network was 45,195 as of September 30, 2009, as compared to 44,783 as of June 30, 2009.
Advertising net revenue from the movie theater and outdoor traditional billboard network was $12.5 million in the third quarter of 2009, representing a decrease of 15.4% from $14.8 million for the second quarter of 2009 and a 36.3% decrease from $19.6 million for the third quarter of 2008.
Internet advertising service net revenue was $68.3 million in the third quarter of 2009, compared to $66.7 million for the second quarter of 2009 and $70.8 million for the third quarter of 2008. The revenues from fully and partially disposed subsidiaries contributed $28.6 million and $30.9 million to the Internet advertising service revenue for the third quarter and the second quarter of 2009, respectively.
Non-GAAP gross profit for the LCD display network for the third quarter of 2009 was $33.7 million, compared to $44.3 million for the second quarter of 2009 and $58.0 million for the third quarter of 2008. The catch-up of depreciation expenses reflected in the results of operations from the LCD display network was $7.6 million for the third quarter of 2009.
Non-GAAP gross profit for the poster frame network for the third quarter of 2009 was $1.7 million, compared to $13.6 million for the second quarter of 2009 and $29.8 million for the third quarter of 2008. The catch-up of depreciation expenses reflected in the results of operations from the poster frame network was $5.2 million for the third quarter of 2009.
Non-GAAP gross loss for the in-store network for the third quarter of 2009 was $3.3 million, compared to Non-GAAP gross profit of $2.9 million for the second quarter of 2009 and Non-GAAP gross profit of $4.6 million for the third quarter of 2008. The catch-up of depreciation expenses reflected in the results of operations from the in-store network was $3.3 million for the third quarter of 2009.
Non-GAAP gross profit for the movie theater and outdoor billboard networks for the third quarter of 2009 was $3.7 million, representing a 21.2% decline from $4.7 million for the second quarter of 2009 and a 48% decline from $7.1 million for the third quarter of 2008.
Non-GAAP gross profit from our Internet advertising services for the third quarter of 2009 was $13.2 million, increasing by 23% from $10.7 million for the second quarter of 2009 but declining by 21% from $16.8 million for the third quarter of 2008. The gross profit from fully and partially disposed subsidiaries were $5.0 million and $5.0 million for the third quarter and the second quarter of 2009, respectively.
Non-GAAP operating expense for the third quarter of 2009 was $34.6 million, compared to $43.2 million for the second quarter of 2009 and $37.2 million for the third quarter of 2008. The catch-up of depreciation expenses contributed $0.9 million to the operating expense for the third quarter of 2009.
Business Outlook for Fourth Quarter 2009
The Company provides the following guidance with respect to the fourth quarter ending December 31, 2009:
Net revenues for LCD display networks, In-store networks and Poster frame networks are expected to be no less than $92.0 million. Net revenues for Movie theatre and traditional outdoor billboard and internet advertising services are expected to be no less than $39 million.
Announced termination of merger
On September 28, 2009, the Company and SINA jointly reached a decision not to extend the deadline of the agreement announced on December 22, 2008 to sell substantially all of the assets of Focus Media’s digital out-of-home advertising networks, including the LCD display network, poster frame network and certain in-store network.
Continue disposal of equity ownerships in some subsidiaries of our internet advertising business
We plan to continue dispose the equity ownerships in some subsidiaries in our Internet division in the fourth quarter of 2009.
Announced subscription for ordinary shares by Executive Chairman
On September 23, 2009, the Company announced that the Executive Chairman and CEO, Jason Jiang, and the Company entered into a definitive agreement pursuant to which the Company issued and sold to Mr. Jiang, and Mr. Jiang will subscribe for and purchase, 75,000,000 ordinary shares of the Company at a subscription price of US$1.899 per share (equivalent to US$9.495 per ADR), representing the average closing sale price of the Company’s shares (adjusted for the share-to-ADS ratio) during the twenty consecutive trading day period immediately preceding September 23, 2009. The aggregate subscription price was $142,425,000. On November 20, 2009, the Company announced the completion of this subscription.
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, non-GAAP operating expenses, non-GAAP operating profit (loss) and non-GAAP net income , all excluding share-based compensation expenses, amortization of acquired intangible assets, loss from disposal of previously acquired subsidiaries, impairment charges of certain assets, including acquired intangible assets, goodwill, impairment and termination charges related to ceasing expansion of digital poster frame networks and boat-based advertising platform, write-off of receivables from ex-shareholders of disposed business and one-off charges from expensing IPO expenditures as a result of termination of IPO process of Allyes. 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 the same consistent method from quarter to quarter. 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.
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Focus Media Holding Ltd.
Reconciliation of GAAP to non-GAAP
(U.S. Dollar in thousands, except percentages, share and per-share data)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended September 30, 2009 |
| | | GAAP | | (1) | | (2) | | (3) | | (4) | | (5) | | Non- GAAP |
Gross Profit | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LCD display network | | | 17,177 | | | | 306 | | | | 3,607 | | | | — | | | | 3,169 | | | | 9,462 | | | | 33,721 | |
| Poster Frame network | | | (30,420 | ) | | | — | | | | 5,131 | | | | — | | | | — | | | | 26,983 | | | | 1,695 | |
| In-store network | | | (3,844 | ) | | | — | | | | — | | | | — | | | | — | | | | 516 | | | | (3,329 | ) |
| Internet advertising | | | 4,051 | | | | — | | | | 962 | | | | — | | | | 8,185 | | | | — | | | | 13,198 | |
| Movie Theater & Outdoor Billboard network | | | 3,001 | | | | — | | | | 663 | | | | — | | | | — | | | | — | | | | 3,663 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Gross Profit | | | (10,036 | ) | | | 306 | | | | 10,363 | | | | — | | | | 11,354 | | | | 36,961 | | | | 48,949 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Expense | | | 120,320 | | | | (8,467 | ) | | | (3,501 | ) | | | (25,944 | ) | | | (45,946 | ) | | | (1,872 | ) | | | 34,589 | |
Operating profit (loss) | | | (130,355 | ) | | | 8,773 | | | | 13,865 | | | | 25,944 | | | | 57,300 | | | | 38,834 | | | | 14,360 | |
Net income (loss) | | | (127,598 | ) | | | 8,773 | | | | 13,865 | | | | 25,944 | | | | 57,300 | | | | 29,593 | | | | 7,877 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
(3). Loss from disposal of previously acquired subsidiaries, of which loss from disposal of subsidiaries was $3.7 million, loss from partial disposal of equity interests in subsidiaries was $14.9 million and loss from impairment of certain other assets was $7.3 million.
(4). Impairment charges of certain assets, including acquired intangible assets, goodwill.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (5).Impairment and termination charges related to ceasing expansion of digital poster frame networks and boat-based advertising platform. | | Three months ended June 30, 2009 |
| | | GAAP | | | (1 | ) | | | (2 | ) | | | (3 | ) | | | (4 | ) | | | (5 | ) | | Non- GAAP |
Gross Profit | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LCD display network | | | 43,668 | | | | 667 | | | | — | | | | — | | | | — | | | | — | | | | 44,335 | |
| Poster Frame network | | | 13,641 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 13,641 | |
| In-store network | | | 2,942 | | | | — | | | | 6 | | | | — | | | | — | | | | — | | | | 2,948 | |
| Internet advertising | | | 5,748 | | | | — | | | | 1,565 | | | | — | | | | 3,395 | | | | — | | | | 10,708 | |
| Movie Theater & Outdoor Billboard network | | | 3,877 | | | | — | | | | 868 | | | | — | | | | — | | | | — | | | | 4,745 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Gross Profit | | | 69,876 | | | | 667 | | | | 2,439 | | | | — | | | | 3,395 | | | | — | | | | 76,378 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Expense | | | 87,863 | | | | (10,030 | ) | | | (1,841 | ) | | | (1,212 | ) | | | (29,053 | ) | | | (2,528 | ) | | | 43,200 | |
Operating profit (loss) | | | (17,986 | ) | | | 10,697 | | | | 4,280 | | | | 1,212 | | | | 32,447 | | | | 2,528 | | | | 33,178 | |
Net income (loss) | | | (22,971 | ) | | | 10,697 | | | | 4,280 | | | | 1,212 | | | | 32,447 | | | | 2,528 | | | | 28,193 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
(3). Loss from disposal of previously acquired subsidiaries.
(4). Impairment charges of acquired intangible assets and goodwill.
(5). Impairment charges of fixed assets.
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| | | Three months ended September 30, 2008 |
| | | GAAP | | (1) | | (2) | | Non- GAAP |
Gross Profit | | | | | | | | | | | | | | | | |
| LCD display network | | | 56,698 | | | | 438 | | | | 878 | | | | 58,014 | |
| Poster Frame network | | | 27,195 | | | | | | | | 2,618 | | | | 29,813 | |
| In-store network | | | 3,667 | | | | | | | | 897 | | | | 4,564 | |
| Internet advertising | | | 16,061 | | | | | | | | 690 | | | | 16,751 | |
| Movie Theater & Outdoor Billboard network | | | 6,078 | | | | ¡¡ | | | | 976 | | | | 7,054 | |
| | | | | | | | | | | | | | | | | |
Total Gross Profit | | | 109,699 | | | | 438 | | | | 6,060 | | | | 116,197 | |
| | | | | | | | | | | | | | | | | |
Operating Expense | | | 50,789 | | | | (10,372 | ) | | | (3,202 | ) | | | 37,214 | |
Operating profit | | | 58,910 | | | | 10,810 | | | | 9,262 | | | | 78,982 | |
Net income | | | 51,350 | | | | 10,810 | | | | 9,262 | | | | 71,422 | |
| | | | | | | | | | | | | | | | | |
(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
Nine months ended September 30, 2009
GAAP (1) (2) (3) (4) (5) (6) (7) Non- GAAP
Gross Profit
LCD display network 83,543 1,219 3,607 - 3,168 9,462 - - 101,001
Poster Frame network (5,587) - 5,131 - - 26,983 - - 26,528
In-store network 1,175 - 15 - - 516 - - 1,706
Internet advertising 18,779 - 4,097 - 11,580 - - - 34,456
Movie Theater & Outdoor
Billboard network 11,926 - 2,503 - - - - - 14,429
-------- ------- ------ ------- ------- ------ ------ ------ ---------
Total Gross Profit 109,836 1,219 15,353 - 14,748 36,961 - - 178,118
-------- ------- ------ ------- ------- ------ ------ ------ ---------
Operating Expense 262,479 (26,373) (7,254) (27,156) (84,270) (1,872) (2,528) (2,466) 110,560
Operating profit (loss) (152,643) 27,593 22,607 27,156 99,018 38,834 2,528 2,466 67,558
Net income (loss) (156,264) 27,593 22,607 27,156 99,018 29,593 2,528 2,466 54,697
======== ======= ====== ======= ======= ====== ====== ====== =========
(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
(3). Loss from disposal of previously acquired subsidiaries, of which loss from disposal of subsidiaries was $4.9 million, loss from partial disposal of equity interests in subsidiaries was $14.9 million and loss from impairment of certain other assets was $7.3 million.
(4). Impairment charges of certain assets, including acquired intangible assets, goodwill.
(5).Impairment and termination charges related to ceasing expansion of digital poster frame networks and boat-based advertising platform.
(6). Write-off of receivables from ex-shareholders of disposed business.
(7). One-off charges from expensing IPO expenditures as a result of termination of IPO process of Allyes.
| | | | | | | | | | | | | | | | | |
| | | Nine months ended September 30, 2008 |
| | | GAAP | | (1) | | (2) | | Non- GAAP |
Gross Profit | | | | | | | | | | | | | | | | |
| LCD display network | | | 136,597 | | | | 1,162 | | | | 2,846 | | | | 140,605 | |
| Poster Frame network | | | 66,375 | | | | — | | | | 7,314 | | | | 73,689 | |
| In-store network | | | 2,287 | | | | — | | | | 2,636 | | | | 4,923 | |
| Internet advertising | | | 45,399 | | | | — | | | | 4,898 | | | | 50,297 | |
| Movie Theater & Outdoor Billboard network | | | 13,873 | | | | — | | | | 2,869 | | | | 16,742 | |
| | | | | | | | | | | | | | | | | |
Total Gross Profit | | | 264,531 | | | | 1,162 | | | | 20,563 | | | | 286,256 | |
| | | | | | | | | | | | | | | | | |
Operating Expense | | | 133,806 | | | | (28,693 | ) | | | (9,806 | ) | | | 95,307 | |
Operating profit | | | 130,725 | | | | 29,855 | | | | 30,369 | | | | 190,949 | |
Net income from continuing operations | | | 111,690 | | | | 29,855 | | | | 30,369 | | | | 171,914 | |
| | | | | | | | | | | | | | | | | |
(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
CONFERENCE CALL
The Company will host a conference call to discuss the third quarter 2009 results at 8:00 p.m. U.S. Eastern Time on December 7, 2009 (5:00 p.m. U.S. Pacific Time on December 7, 2009 and 9:00 a.m. Beijing/Hong Kong Time on December 8, 2009). The dial-in details for the live conference call are set forth below: U.S. Toll Free Number +1.800.299.0148, Hong Kong dial-in number +852.3002.1672, International dial-in number +1.617.801.9711; Pass code: 18781737.
A replay of the call will be available from December 7, 2009 11:00 pm until December 14, 2009 (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 43877318. 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) is China’s leading multi- platform digital media company, operating the largest out-of-home advertising network in China using audiovisual digital displays, based on the number of locations and number of flat-panel television displays in our network. Through Focus Media’s multi-platform digital advertising network, the company reaches urban consumers at strategic locations and point-of-interests over a number of media formats, including audiovisual television displays in buildings and stores, advertising poster frames and other new and innovative media, such as outdoor light-emitting diode or LED digital billboard and Internet advertising platforms. As of September 30, 2009, Focus Media’s digital out-of-home advertising network had approximately 125,000 LCD display in its LCD display network and approximately 262,000 advertising in-elevator poster and digital frames, installed in over 90 cities throughout China, and approximately 130 outdoor LED billboard displays in Shanghai and Beijing. For more information about Focus Media, please visit our website at http://ir.focusmedia.cn.
Investor and Media contact:
Jing Lu
Tel: +86 21 22164155
Email: ir@focusmedia.cn
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| | | | | | | | | |
| Focus Media Holding Limited |
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
| (U.S. Dollars in Thousands) |
|
| | | | 2009-9-30 | | | | 2009-6-30 | |
ASSETS | | | | | | | | |
Current assets | | | | | | | | |
| Cash and cash equivalents | | | 383,107 | | | | 96,186 | |
| Hold-to-maturity investment | | | 29,287 | | | | — | |
| Accounts receivable, net | | | 222,070 | | | | 121,544 | |
| Prepaid expenses and other current assets | | | 19,800 | | | | 13,537 | |
| Deposit paid for acquisition of subsidiaries | | | 5,914 | | | | 21,859 | |
| Amount due from related parties | | | 8,717 | | | | 7,638 | |
| Rental deposits | | | 32,433 | | | | 9,115 | |
| Other current assets | | | 7,234 | | | | 21,894 | |
| Available-for-sale-assets, current | | | — | | | | 475,531 | |
| | | | | | | | | |
Total current assets | | | 702,648 | | | | 745,445 | |
| | | | | | | | | |
| Rental deposits | | | 5,657 | | | | 114 | |
| Equipment, net | | | 84,916 | | | | 5,438 | |
| Acquired intangible assets, net | | | 71,234 | | | | 63,631 | |
| Goodwill | | | 422,329 | | | | 35,507 | |
| Other long term assets | | | 14,468 | | | | 7,080 | |
| Available-for-sale assets, non-current | | | — | | | | 615,751 | |
Total assets | | | 1,301,252 | | | | 1,472,966 | |
| | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
Current liabilities | | | | | | | | |
| Accounts payable | | | 85,477 | | | | 68,676 | |
| Accrued expenses and other current liabilities | | | 102,305 | | | | 71,242 | |
| Income taxes payable | | | 24,703 | | | | 12,939 | |
| Amount due to related parties | | | 10,585 | | | | 14,491 | |
| Available for sale-liabilities-current | | | — | | | | 108,086 | |
| Deferred tax liabilities | | | 447 | | | | — | |
| | | | | | | | | |
Total current liabilities | | | 223,517 | | | | 275,434 | |
| Available for sale-liabilities-non current | | | — | | | | 1,853 | |
| Deferred tax liabilities | | | 9,635 | | | | 10,146 | |
| | | | | | | | | |
Total liabilities | | | 233,152 | | | | 287,433 | |
| | | | | | | | | |
Shareholders’ equity | | | | | | | | |
| Ordinary shares | | | 32 | | | | 32 | |
| Additional paid in capital | | | 1,689,630 | | | | 1,678,667 | |
| Accumulated deficit | | | (690,232 | ) | | | (562,632 | ) |
| Accumulated other comprehensive income | | | 65,434 | | | | 67,751 | |
| | | | | | | | | |
Total shareholders’ equity | | | 1,064,864 | | | | 1,183,818 | |
| Noncontrolling interests | | | 3,236 | | | | 1,715 | |
| | | | | | | | | |
Total equity | | | 1,068,100 | | | | 1,185,533 | |
| | | | | | | | | |
Total liabilities and shareholders’ equity | | | 1,301,252 | | | | 1,472,966 | |
| | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Focus Media Holding Limited |
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
(U.S. Dollar in thousands, except Earning per ADS and ADS data)
|
|
| | | Three months ended | | Nine months ended |
| | | | | |
| | | | 2009-9-30 | | �� | | 2009-6-30 | | | | 2008-9-30 | | | | 2009-9-30 | | | | 2008-9-30 | |
Revenues | | | | | | | | | | | | | | | | | | | | |
| LCD display network | | | 60,509 | | | | 59,943 | | | | 81,501 | | | | 158,764 | | | | 202,566 | |
| In-store network | | | 8,450 | | | | 9,900 | | | | 18,513 | | | | 25,365 | | | | 56,387 | |
| Poster Frame network | | | 24,155 | | | | 29,254 | | | | 48,187 | | | | 79,216 | | | | 120,791 | |
| Movie Theater & Outdoor Billboard network | | | 12,802 | | | | 15,030 | | | | 20,289 | | | | 47,678 | | | | 57,726 | |
| Internet advertising | | | 69,755 | | | | 68,956 | | | | 73,253 | | | | 187,650 | | | | 203,561 | |
| | | | | | | | | | | | | | | | | | | | | |
Total gross revenues | | | 175,671 | | | | 183,083 | | | | 241,743 | | | | 498,673 | | | | 641,031 | |
| Less: Sales taxes | | | 9,114 | | | | 11,785 | | | | 16,930 | | | | 30,274 | | | | 42,912 | |
| | | | | | | | | | | | | | | | | | | | | |
Net revenue | | | 166,557 | | | | 171,298 | | | | 224,813 | | | | 468,399 | | | | 598,119 | |
| | | | | | | | | | | | | | | | | | | | | |
Cost of revenues | | | | | | | | | | | | | | | | | | | | |
| LCD display network | | | 38,830 | | | | 10,678 | | | | 17,014 | | | | 61,135 | | | | 47,939 | |
| In-store network | | | 11,490 | | | | 6,025 | | | | 13,098 | | | | 21,782 | | | | 48,769 | |
| Poster Frame network | | | 52,550 | | | | 12,858 | | | | 16,766 | | | | 77,752 | | | | 44,078 | |
| Movie Theater & Outdoor Billboard network | | | 9,486 | | | | 10,885 | | | | 13,531 | | | | 34,534 | | | | 41,742 | |
| Internet advertising | | | 64,237 | | | | 60,976 | | | | 54,705 | | | | 163,360 | | | | 151,060 | |
| | | | | | | | | | | | | | | | | | | | | |
Total cost of revenues | | | 176,593 | | | | 101,422 | | | | 115,114 | | | | 358,563 | | | | 333,588 | |
| | | | | | | | | | | | | | | | | | | | | |
Gross profit (loss) | | | (10,036 | ) | | | 69,876 | | | | 109,699 | | | | 109,836 | | | | 264,531 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating expenses | | | | | | | | | | | | | | | | | | | | |
| General and administrative | | | 22,257 | | | | 29,249 | | | | 26,436 | | | | 77,898 | | | | 65,706 | |
| Selling and marketing | | | 36,209 | | | | 31,340 | | | | 28,353 | | | | 89,571 | | | | 78,157 | |
| Impairment loss | | | 37,232 | | | | 27,078 | | | | ¾ | | | | 73,581 | | | | ¾ | |
| Other operating expenses (income), net | | | 24,621 | | | | 195 | | | | (4,000 | ) | | | 21,429 | | | | (10,057 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 120,319 | | | | 87,862 | | | | 50,789 | | | | 262,479 | | | | 133,806 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating income (loss) | | | (130,355 | ) | | | (17,986 | ) | | | 58,910 | | | | (152,643 | ) | | | 130,725 | |
| Interest income | | | 1,049 | | | | 1,342 | | | | 1,747 | | | | 3,980 | | | | 5,267 | |
Income (loss) from continuing operations before income taxes | | | (129,307 | ) | | | (16,644 | ) | | | 60,654 | | | | (148,663 | ) | | | 135,992 | |
| Provision for income taxes | | | (4,667 | ) | | | 6,104 | | | | 8,404 | | | | 4,400 | | | | 22,205 | |
| | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | | (124,639 | ) | | | (22,748 | ) | | | 52,250 | | | | (153,063 | ) | | | 113,787 | |
| Less: Net income(loss) attributable to noncontrolling interests | | | 2,958 | | | | 223 | | | | 900 | | | | 3,201 | | | | 2,097 | |
| | | | | | | | | | | | | | | | | | | | | |
Net Income (loss) from continuing operations | | | (127,598 | ) | | | (22,971 | ) | | | 51,350 | | | | (156,264 | ) | | | 111,690 | |
| | | | | | | | | | | | | | | | | | | | | |
Net Income from discontinued operations, net of tax | | | ¾ | | | | ¾ | | | | ¾ | | | | ¾ | | | | (78,017 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Net Income (loss) attributable to shareholders | | | (127,598 | ) | | | (22,971 | ) | | | 51,350 | | | | (156,264 | ) | | | 33,673 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income (loss) per ADS from continuing operations | | | | | | | | | | | | | | | | | | | | |
| -basic | | | (0.99 | ) | | | (0.18 | ) | | | 0.39 | | | | (1.21 | ) | | | 0.86 | |
| | | | | | | | | | | | | | | | | | | | | |
| -diluted | | | (0.99 | ) | | | (0.18 | ) | | | 0.38 | | | | (1.21 | ) | | | 0.84 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income (loss) per ADS from discontinuing operations | | | | | | | | | | | | | | | | | | | | |
| -basic | | | ¾ | | | | ¾ | | | | ¾ | | | | ¾ | | | | (0.60 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| -diluted | | | ¾ | | | | ¾ | | | | ¾ | | | | ¾ | | | | (0.59 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Income (loss) per ADS | | | | | | | | | | | | | | | | | | | | |
| -basic | | | (0.99 | ) | | | (0.18 | ) | | | 0.39 | | | | (1.21 | ) | | | 0.26 | |
| | | | | | | | | | | | | | | | | | | | | |
| -diluted | | | (0.99 | ) | | | (0.18 | ) | | | 0.38 | | | | (1.21 | ) | | | 0.25 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shares used in calculating basic income/(loss) per ADS | | | 129,308,337 | | | | 129,223,942 | | | | 131,541,174 | | | | 129,232,838 | | | | 130,363,120 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shares used in calculating diluted income/(loss) per ADS | | | 129,308,337 | | | | 129,223,942 | | | | 133,729,070 | | | | 129,232,838 | | | | 133,048,334 | |
| | | | | | | | | | | | | | | | | | | | | |
4
| | | | | | | | | | | | | |
| FOCUS MEDIA HOLDING LIMITED |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS |
| (U.S. Dollar in thousands) |
|
| | | Three months ended |
| | | | 2009-9-30 | | | | 2009-6-30 | | | | 2008-9-30 | |
Operating activities: | | | | | | | | | | | | |
| Net loss | | | (124,639 | ) | | | (22,748 | ) | | | 52,250 | |
| Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | | | | | | | | | | | | |
| Bad debt provision | | | 7,602 | | | | 11,240 | | | | 5,923 | |
| Share-based compensation | | | 8,773 | | | | 10,586 | | | | 10,810 | |
| Depreciation and amortization | | | 26,353 | | | | 671 | | | | 8,150 | |
| Amortization of acquired intangible assets | | | 13,864 | | | | 4,280 | | | | 9,262 | |
| Loss and impairment on disposal of equity interest of subsidiaries and certain other assets | | | 25,944 | | | | 115 | | | | ¾ | |
| Loss from impairment of certain other assets | | | 7,285 | | | | — | | | | — | |
| Gain on earn out payment renegotiation | | | ¾ | | | | 1,052 | | | | ¾ | |
| Impairment charges for goodwill, acquired intangible assets and fixed assets | | | 96,134 | | | | 33,938 | | | | ¾ | |
| Loss on disposal of fixed assets | | | 955 | | | | 113 | | | | 405 | |
| Changes in assets and liabilities, net of effects of acquisitions | | | (18,199 | ) | | | (11,433 | ) | | | (51,381 | ) |
| | | | | | | | | | | | | |
Net cash provided by operating activities | | | 36,786 | | | | 27,814 | | | | 35,418 | |
| | | | | | | | | | | | | |
Investing activities: | | | | | | | | | | | | |
| Purchase of equipment and other long term assets | | | (854 | ) | | | (2,787 | ) | | | (17,028 | ) |
| Purchase of subsidiaries, net of cash acquired | | | (5,311 | ) | | | (61,446 | ) | | | (14,429 | ) |
| Investment in a joint venture | | | ¾ | | | | ¾ | | | | (2,970 | ) |
| Deposits paid to acquire subsidiaries | | | ¾ | | | | ¾ | | | | (901 | ) |
| Disposal of subsidiaries | | | (17,403 | ) | | | ¾ | | | | ¾ | |
| Sales /(purchase) of equity securities and bank notes | | | 324 | | | | (146 | ) | | | 39,025 | |
| Proceeds received from disposal of fixed assets | | | ¾ | | | | 195 | | | | ¾ | |
Net cash provided /(used) in investing activities | | | (23,244 | ) | | | (64,184 | ) | | | 3,697 | |
| | | | | | | | | | | | | |
Financing activities: | | | | | | | | | | | | |
| Proceeds from issuance of ordinary shares, net of issuance costs | | | 1,919 | | | | ¾ | | | | 1,822 | |
| Repurchase of ordinary shares | | | ¾ | | | | ¾ | | | | (29,998 | ) |
| | | | | | | | | | | | | |
Net cash provided by/(used in) financing activities | | | 1,919 | | | | ¾ | | | | (28,176 | ) |
| | | | | | | | | | | | | |
| Effect of exchange rate changes | | | (238 | ) | | | 672 | | | | 717 | |
| | | | | | | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 15,223 | | | | (35,698 | ) | | | 11,656 | |
| Cash and cash equivalents, beginning of period | | | 367,884 | | | | 403,582 | | | | 361,516 | |
| | | | | | | | | | | | | |
Cash and cash equivalents, end of period | | | 383,107 | | | | 367,884 | | | | 373,172 | |
| | | | | | | | | | | | | |
| Supplemental disclosure of cash flow information: | | | | | | | | | | | | |
| Income taxes paid | | | 1,597 | | | | 3,728 | | | | 6,037 | |
| | | | | | | | | | | | | |
| Supplemental disclosure of non-cash investing activity: | | | | | | | | | | | | |
| Acquisition of subsidiaries: | | | | | | | | | | | | |
| Accounts payable | | | 16,967 | | | | 1,842 | | | | 14,777 | |
| | | | | | | | | | | | | |
5
