Focus Media Reports Third Quarter 2012 Results
Focus Media Reports Third Quarter 2012 Results
PR Newswire
SHANGHAI, Nov. 27, 2012
SHANGHAI, Nov. 27, 2012 /PRNewswire/ -- Focus Media Holding Limited (Nasdaq:
FMCN) today announced its unaudited financial results for the third quarter
ended September 30, 2012.
Highlights for Third Quarter 2012:
o Total net revenue for the third quarter of 2012 was $256.3 million, of
which
o aggregate net revenues from the LCD display network, in-store
network, poster frame network and movie theater network was $247.7
million, which exceeded by approximately 2% the mid-point of the
Company's guidance range of $241-$243 million. This represented a
year-on-year increase of 26% from $196.1 million for the third
quarter of 2011 and a quarter-on-quarter increase of 13% from $219.3
million for the second quarter of 2012;
o net revenue from the traditional outdoor billboard network for the
third quarter of 2012 was $8.6 million, below the guidance of $13-$14
million which was primarily due to classification of the revenues of
a number of subsidiaries into "Net income from discontinued
operations". Due to medium term advertising spending uncertainties
and the continued view of the Company that the traditional outdoor
billboard network is not a core business segment, the Company has
decided to downsize this business segment by divesting of four
entities within the segment. Two of which have been divested prior to
end of this third quarter while the remaining two are expected to be
completed before the end of 2012. Consequently, the revenues of these
four entities are reclassified into "Net income from discontinued
operations" in statements of income.
o GAAP net income attributable to Focus Media for the third quarter of 2012
was $64.6 million, representing a year-on-year increase of 4% from $62.2
million for the third quarter of 2011 and a quarter-on-quarter increase of
10% from $58.9 million for the second quarter of 2012.
o Non-GAAP net income attributable to Focus Media was $94.6 million,
exceeding the mid-point of the Company's guidance range of $92-$94 million
by 2%, and representing a year-on-year increase of 14% from non-GAAP net
income attributable to Focus Media of $82.7 million for the third quarter
of 2011 and a quarter-on-quarter increase of 16% from non-GAAP net income
attributable to Focus Media of $81.9 million for the second quarter of
2012. Please see the below sections on "Use of Non-GAAP Financial
Measures" and "Reconciliation of GAAP to non-GAAP" for more information
about the non-GAAP measures referred to within this announcement.
o GAAP net income attributable to Focus Media per fully diluted ADS was
$0.48, representing a year-on-year increase of 9% from $0.44 per fully
diluted ADS for the third quarter of 2011 and a quarter-on-quarter
increase of 9% from $0.44 per fully diluted ADS for the second quarter of
2012.
o Non-GAAP net income attributable to Focus Media per fully diluted ADS was
$0.71, representing a year-on year increase of 20% from $0.59 per fully
diluted ADS for the third quarter of 2011 and a quarter-on-quarter
increase of 15% from $0.62 per fully diluted ADS for the second quarter of
2012.
Highlights for Balance Sheet and Cash Flow Results of Third Quarter 2012:
o Cash, cash equivalents, restricted cash and short-term investments were
$901.1 million as of September 30, 2012, as compared to $856.9 million as
of June 30, 2012. Restricted cash is deposited in bank accounts as
security for bank borrowings. These deposits earn fixed interest rates and
are released when the related bank borrowings are settled by the Company.
Restricted cash was $198.0 million as of September 30, 2012, as compared
to $206.1 million as of June 30, 2012, and was comprised of current
restricted cash of $99.0 million and non-current restricted cash of $99.0
million. Short-term investments, consisting of longer term dated cash
deposits that earn higher interest rates as compared to cash and cash
equivalent, were $211.2 million as of September 30, 2012 as compared to
$211.4 million as of June 30, 2012.
o Bank loans were $200.0 million inclusive of short-term bank loans of
$100.0 million and long-term bank loans of $100.0 million as of September
30, 2012, as compared to bank loans of $207.5 million as of June 30, 2012,
which were used to finance the Company's share repurchases and dividend
payouts. Operationally, as the Company generates cash inflow in Renminbi
onshore, offshore bank loans are used to increase our offshore USD base
cash resources mainly for future dividend payouts or share repurchases.
The entire bank loan facility was extended based on an equivalent Renminbi
onshore cash deposit, which was deposited as restricted cash.
o Net accounts receivable for the LCD display network, in-store network,
poster frame network and movie theater network was $284.1 million as of
September 30, 2012, an increase of 19% from $238.4 million as of June 30,
2012 due to sequential growth of revenues. Days sales outstanding was 92
days in the third quarter of 2012, similar to 91 days for the second
quarter of 2012.
o Net cash inflow from operating activities in the third quarter of 2012 was
$77.9 million, representing year-on-year decline of 10% from $86.3 million
for the third quarter of 2011 and a quarter-on-quarter decline of 16% from
$93.1 million for the second quarter of 2012. The decline was mainly due
to the slower cash collection particularly in the LCD display network in
the third quarter of 2012 as compared to the third quarter of 2011 and the
second quarter of 2012. Despite slightly slower cash collection, the
Company believes that overall accounts receivable remain healthy and has
provided adequately for potential bad debt.
o Net cash inflow from operating activities for the third quarter of 2012,
after deducting the purchase of equipment and subsidiaries as well as net
cash outflows derived from disposition of subsidiaries was $71.7 million,
slightly decreasing by 2% from the $72.9 million for the third quarter of
2011 and a quarter-on-quarter contraction of 18% from $87.2 million for
the second quarter of 2012 which was mainly to the decline of net cash
inflow from operating activities.
o Capital expenditures were $5.0 million for the third quarter of 2012,
mostly attributable to the deployment of next generation interactive
screens in a few of tier-2 cities in the LCD display network.
o Cash paid for the acquisition of subsidiaries in the third quarter of 2012
was $0.6 million, which was mainly attributable to the LCD display
network.
Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, "In the
third quarter of 2012, we continue to see macroeconomic uncertainties impact
on overall advertising spending in China despite we exceeded the previous
guidance of the company. We expect similar trend to continue through the
fourth quarter. Particularly the recent pressure on Japanese automotive sales
in China also resulted in advertising budget cut-backs from a number of
Japanese automotive labels. Despite near and possibly medium term pressure, we
believe that our media platform remain strong and robust to weather these
challenges."
Kit Low, the Company's Chief Financial Officer added, "In the third quarter of
2012, the Company achieved aggregate net revenue year-on-year growth in our
LCD display, poster frame business, in-store and movie theater network of 26%.
GAAP net income attributable to Focus Media and Non-GAAP net income
attributable to Focus Media for the third quarter of 2012 was $64.6 million
and $94.6 million, respectively. In the third quarter of 2012, the Company
generated a net cash inflow from operating activities after deducting the
purchases of equipment and subsidiaries as well as net cash outflows derived
from disposition of subsidiaries of $71.7 million."
Third Quarter 2012 financial results
Advertising net revenue from the LCD display network was $128.4 million for
the third quarter of 2012, representing an increase of 6% from $120.6 million
for the third quarter of 2011 and an increase of 5% from $122.1 million for
the second quarter of 2012.
Advertising net revenue from the poster frame network was $81.6 million for
the third quarter of 2012, representing an increase of 75% from $46.6 million
for the third quarter of 2011 and an increase of 19% from $68.6 million for
the second quarter of 2012.
Advertising net revenue from the in-store network was $14.5 million for the
third quarter of 2012, representing a decrease of 9% from $15.9 million for
the third quarter of 2011 and an increase of 7% from $13.6 million for the
second quarter of 2012.
Advertising net revenue from the movie theater network was $23.2 million for
the third quarter of 2012, representing an increase of 78% from $13.0 million
for the third quarter of 2011 and an increase of 53% from $15.2 million for
the second quarter of 2012
Advertising net revenue from the traditional outdoor billboard network was
$8.6 million for the third quarter of 2012, representing a decrease of 30%
from $12.2 million for the third quarter of 2011 and a decrease of 11% from
$9.7 million for the second quarter of 2012. Due to medium term advertising
spending uncertainties and the continued view of the Company that the
traditional outdoor billboard network is not a core business segment, the
Company has decided to downsize this business segment by divesting of four
entities within the segment. Two of which have been divested prior to end of
this third quarter while the remaining two are expected to be completed before
the end of 2012. Consequently, the revenues of these four entities have been
reclassified into "Net income from discontinued operations" in statements of
income during the period. Therefore, $4.6 million revenues of these four
entities were reclassified into "Net income from discontinued operations" in
statements of income in the third quarter of 2012 and as a comparison, $2.4
million and $4.0 million revenues of these four entities were also
reclassified respectively in the third quarter of 2011 and in the second
quarter of 2012 in this press release.
Non-GAAP gross profit from the LCD display network for the third quarter of
2012 was $99.8 million, slightly increasing from $99.5 million for the third
quarter of 2011 and an increase of 3% from $96.7 million for the second
quarter of 2012.
Non-GAAP gross profit from the poster frame network for the third quarter of
2012 was $52.5 million, more than doubling the $19.6 million for the third
quarter of 2011 due to significant year-on-year growth of revenues, and
representing an increase of 36% from $38.6 million for the second quarter of
2012.
Non-GAAP gross profit from the in-store network for the third quarter of 2012
was $9.1 million, representing a decrease of 9% from $10.0 million for the
third quarter of 2011 due to year-on-year decline of revenues and an increase
of 10% from $8.3 million for the second quarter of 2012.
Non-GAAP gross profit from the movie theater network for the third quarter of
2012 was $14.5 million, more than doubling both the $6.4 million for the third
quarter of 2011 and the $6.6 million for the second quarter of 2012 which was
due to robust revenue growth in the third quarter of 2012
Non-GAAP gross loss from the traditional outdoor billboard network for the
third quarter of 2012 was $0.4 million, as compared to non-GAAP gross profit
of $2.0 million for the third quarter of 2011 and non-GAAP gross profit of
$0.6 million for the second quarter of 2012. The decrease in non-GAAP gross
profit was mainly due to higher fixed costs associated with the expansion of
the traditional outdoor billboard network areas around intercity high-speed
rail lines dragged down the overall gross profit margin of this segment during
the quarter.
Non-GAAP operating expenses for the third quarter of 2012 was $57.5 million,
an increase of 23% from $46.6 million for the third quarter of 2011, which was
attributable to an increase in selling and marketing expenses from
year-on-year revenue growth and professional fee increase in general and
administrative expenses. It also represented a decrease of 14% from $66.7
million for the second quarter of 2012
Net cash inflow from operating activities in the third quarter of 2012 was
$77.9 million, representing year-on-year decline of 10% from $86.3 million for
the third quarter of 2011 and a quarter-on-quarter decline of 16% from $93.1
million for the second quarter of 2012. The decline was mainly due to the
slower cash collection particularly in the LCD display network in the third
quarter of 2012 as compared to the third quarter of 2011 and the second
quarter of 2012. Despite slightly slower collection, the Company continues to
monitor account receivables very closely, and believes that overall accounts
receivable remain healthy and has provided adequately for potential bad debt.
Net cash provided by investing activities for the third quarter of 2012 was
$0.9 million. In the third quarter of 2012, the Company incurred capital
expenditures of $5.0 million and subsidiary acquisition payments of $0.6
million. Meanwhile, the Company incurred net cash inflows from net investment
in short-term investments and deposits in restricted cash of $7.2 million
during the quarter. Short-term investments are longer term dated cash deposits
normally with maturities between three and twelve months that earn higher
interest rates as compared to cash and cash equivalents. Restricted cash is
deposited in bank accounts as security for bank borrowings.
Net cash used by financing activities for the third quarter of 2012 was $24.9
million. In the third quarter of 2012, the Company repaid bank loans of $7.5
million. Meanwhile, the Company paid $17.4 million for the dividend payout
for the second quarter of 2012.
Cash and cash equivalents in held-for-sale assets as of September 30, 2012 was
$1.0 million.
Operating Data Summary
The Company is providing a breakdown of operating data as follows:
1) The approximate number of displays in the LCD display network was as
follows:
As of September 30, 2012 As of June 30, 2012
LCD screens 136,870 135,001
LCD 2.0 digital picture screens 35,535 35,112
Total for LCD display network 172,405 170,113
(note)
Note: LCD screens have excluded LCD 1.0 picture frame devices since the
fourth quarter of 2011. The increase in the total number of LCD screens and
LCD 2.0 digital picture screens as of September 30, 2012 as compared to that
as of June 30, 2012 was due to organic network expansion. Of the total LCD
screens of 136,870 as of September 30, 2012, 9,589 screens were operated
through our regional distributors as compared to 9,734 screens as of June 30,
2012.
2) The approximate number of devices in the poster frame network was as
follows:
As of September 30, 2012 As of June 30, 2012
Frame 1.0 picture frames (note) 497,269 484,145
Frame 2.0 digital picture screens 35,892 35,616
Total 533,161 519,761
Note: Frame 1.0 picture frames have included LCD 1.0 picture frame devices
since the fourth quarter of 2011. The increase in the total number of Frame
1.0 picture frames as of September 30, 2012 as compared to that as of June 30,
2012 was due to organic network expansion.
3) The total number of displays installed in our in-store network was
approximately 53,239 as of September 30, 2012, as compared to 51,995 as of
June 30, 2012. The increase was due to organic network expansion.
4) The number of movie screens on which the Company had the right to lease
advertising time as of September 30, 2012 was approximately 2,470, as compared
to 2,320 as of June 30, 2012. The increase was due to organic network
expansion.
Business Outlook for Fourth Quarter 2012
The Company provides the following guidance with respect to the quarter ending
December 31, 2012:
Net revenues for the core business (inclusive of the LCD display network, the
in-store network, the poster frame network and the movie theater network) are
expected to be in the range of $237-$246 million, the mid-point of which would
represent year-on-year growth of 1% and quarter on quarter decline of 3%. Net
revenues for the non-core business (the traditional outdoor billboard network)
are expected to be in the range of $6-$7 million. The Company's non-GAAP net
income is expected to be in the range of $93-$98 million. The Company
estimates the weighted average fully diluted ADS count for the quarter at
133.2 million.
Announced Receipt of "Going Private" Proposal
As previously announced on August 13, 2012, the Company's Board of Directors
received a preliminary non-binding proposal letter, dated August 12, 2012,
from affiliates of The Carlyle Group , FountainVest Partners, CITIC Capital
Partners, CDH Investments, China Everbright Limited and Mr. Jason Nanchun
Jiang, Chairman of the Board and Chief Executive Officer of Focus Media
(together, the "Consortium Members"), that proposes a "going-private"
transaction (the "Transaction") for $27.00 in cash per American depositary
share, or $5.40 in cash per ordinary share. The committee of independent
directors formed by the board to consider the proposal (the "Independent
Committee") is continuing to consider the proposed transaction. No decisions
have been made by the Independent Committee with respect to the Company's
response to the Transaction. There can be no assurance that any definitive
offer will be made, that any agreement will be executed or that this or any
other transaction will be approved or consummated. The Company does not
undertake any obligation to provide any updates with respect to this or any
other transaction, except as required under applicable law.
Announced Share Repurchase Program
As of November 27, 2012, the Company has cumulatively spent $491 million in
share repurchases out of the share repurchase program totaling $650 million.
Arrangements regarding announced recurring payout
Focus Media announced on January 10, 2012 that the Company is committed to a
55% annual payout based on prior year non-GAAP net income. Of which 25% of the
payout is expected to be dividend payments paid on a quarterly basis, which
will be paid out in the following calendar year to shareholders of record as
of March 31, June 30, September 30 and December 31 respectively, while the
remaining 30% payout is expected to be either dividend payments and/or share
repurchases. The payout commenced in 2012 in respect of Focus Media's non-GAAP
net income for 2011.
Based on the Company 2011 non-GAAP net income of $284.1 million, a cash
dividend of US$0.0274 per ordinary share (or US$0.137 per American Depositary
Share) was paid on April 16, 2012 to shareholders of record as of the close of
business on March 30, 2012, a cash dividend of US$0.0272 per ordinary share
(or US$0.136 per American Depositary Share) was paid on July 16, 2012 to
shareholders of record as of the close of business on July 10, 2012 and a cash
dividend of US$0.0272 per ordinary share (or US$0.136 per American Depositary
Share) was paid on October 16, 2012 to shareholders of record as of the close
of business on September 28, 2012.
The board has resolved to postpone approval of future cash dividends through
December 31, 2012 due to ongoing considerations relating to the going private
proposal. The board will make a determination regarding the remaining
dividends in respect of 2011 non-GAAP net income at that time, depending on
the status of the going private proposal.
Value-added tax reform in Shanghai and Beijing
The government implemented a value-added tax reform pilot program, which
replaced the business tax with value-added tax on selected sectors including
the advertising sector, in Shanghai effective January 1, 2012 and in Beijing
effective September 1, 2012. The value-added tax rate applicable to the
subsidiaries of our group in Shanghai and Beijing is 6% as compared to the 5%
business tax rate which was applicable prior to the reform.
Foreign Currency Translation
Assets and liabilities are translated at the exchange rate as of September 30,
2012, which was $1 to RMB 6.3410. Equity accounts are translated at
historical exchange rates and revenues, expenses, gains and losses are
translated using the average rate for the third quarter of 2012, which was $1
to RMB 6.3257. Translation adjustments are reported as cumulative translation
adjustments and are a separate component of other comprehensive income.
USE OF NON-GAAP FINANCIAL MEASURES
In addition to Focus Media's consolidated financial results under GAAP, the
Company also provides non-GAAP financial measures, including non-GAAP gross
profit (cumulatively and by segment), non-GAAP operating expenses, non-GAAP
operating profit (loss), non-GAAP net income and non-GAAP fully-diluted
earnings per ADR, all excluding share-based compensation expenses,
amortization of acquired intangible assets, loss from equity method investee
and goodwill impairment. Management uses these non-GAAP financial measures to
better assess operating performance of the Company. The Company believes that
these non-GAAP financial measures provide investors with another method for
assessing Focus Media's operating results in a manner that is focused on the
performance of its ongoing operations. Readers are cautioned not to view
non-GAAP results on a stand-alone basis or as a substitute for results under
GAAP, or as being comparable to results reported or forecasted by other
companies, and should refer to the reconciliation of GAAP results with
non-GAAP results in the attached financial information. The Company believes
that both management and investors benefit from referring to these non-GAAP
financial measures in assessing the performance of Focus Media and when
planning and forecasting for future periods. The Company computes its
non-GAAP financial measures using a consistent method from quarter to quarter,
mostly excluding share-based compensation expenses, amortization of acquired
intangible assets, loss from equity method investee and goodwill impairment.
The accompanying tables have more details on the GAAP financial measures that
are most directly comparable to non-GAAP financial measures and the related
reconciliation between these financial measures.
Focus Media Holding Ltd.
Reconciliation of GAAP to non-GAAP
(U.S. Dollars in thousands, except percentages, share and per-share data)
(Unaudited)
Three months ended September 30, 2012
GAAP (1) (2) (3) (4) Non-GAAP
Gross Profit (loss)
LCD display network 98,443 495 813 — — 99,751
Poster frame network 52,341 — 129 — — 52,470
In-store network 9,082 — — — — 9,082
Movie theater network 14,470 — — — — 14,470
Traditional outdoor billboard (906) — 462 — — (444)
network
Total Gross Profit 173,430 495 1,404 — — 175,329
General and administrative 36,132 (14,884) — — — 21,248
Selling and marketing 53,123 (1,438) (552) — — 51,133
Other operating income, net (14,890) — — — — (14,890)
Total operating expense 74,365 (16,322) (552) — — 57,491
Operating profit from 99,065 16,817 1,956 — — 117,838
continuing operations
Profit from continuing
operations before income
taxes and loss 103,146 16,817 1,956 — — 121,919
from equity method
investee
Net profit from continuing 66,135 16,817 1,956 9,499 — 94,407
operations
Net loss from discontinued (1,809) — 806 — 908 (95)
operations
Net income attributable to 64,590 16,817 2,762 9,499 908 94,576
Focus Media
Basic net income from
continuing operations 0.52 0.74
attributable to Focus Media
per ADS
Diluted net income from
continuing attributable to 0.49 0.71
Focus Media operations per
ADS
Basic net income from
discontinued operations (0.01) 0.00
attributable to Focus Media
per ADS
Diluted net income from
discontinued operations (0.01) 0.00
attributable to Focus Media
per ADS
Basic net income attributable 0.51 0.74
to Focus Media per ADS
Diluted net income
attributable to Focus Media 0.48 0.71
per ADS
ADS used in calculating basic 127,777,021 127,777,021
income per ADS
ADS used in calculating 133,518,344 133,518,344
diluted income per ADS
(1). Share-based
compensation.
(2). Amortization of acquired
intangible assets.
(3). Loss from equity method
investee (VisionChina)
(4). Goodwill impairment
Three months ended June 30, 2012
GAAP (1) (2) (3) Non-GAAP
Gross Profit (loss)
LCD display network 95,315 488 903 — 96,706
Poster frame network 38,453 — 180 — 38,633
In-store network 8,300 — — — 8,300
Movie theater network 6,562 — — — 6,562
Traditional outdoor billboard 164 — 462 — 626
network
Total Gross Profit 148,794 488 1,545 — 150,827
General and administrative 37,791 (14,604) — — 23,187
Selling and marketing 51,110 (1,418) (570) — 49,122
Other operating income, net (5,587) — — — (5,587)
Total operating expense 83,314 (16,022) (570) — 66,722
Operating profit from continuing 65,480 16,510 2,115 — 84,105
operations
Profit from continuing operations
before income taxes and loss 70,564 16,510 2,115 — 89,189
from equity method investee
Net profit from continuing 59,505 16,510 2,115 3,436 81,566
operations
Net loss from discontinued (1,469) — 938 — (531)
operations
Net income attributable to Focus 58,907 16,510 3,053 3,436 81,906
Media
Basic net income from continuing
operations attributable to Focus 0.47 0.64
Media per ADS
Diluted net income from
continuing attributable to Focus 0.45 0.62
Media operations per ADS
Basic net income from
discontinued operations (0.01) 0.00
attributable to Focus Media per
ADS
Diluted net income from
discontinued operations (0.01) 0.00
attributable to Focus Media per
ADS
Basic net income attributable to 0.46 0.64
Focus Media per ADS
Diluted net income attributable 0.44 0.62
to Focus Media per ADS
ADS used in calculating basic 128,227,213 128,227,213
income per ADS
ADS used in calculating diluted 133,103,155 133,103,155
income per ADS
(1). Share-based compensation.
(2). Amortization of acquired
intangible assets.
(3). Loss from equity method
investee (VisionChina)
Three months ended September 30, 2011
GAAP (1) (2) (3) Non-GAAP
Gross Profit (loss)
LCD display network 98,196 200 1,101 — 99,497
Poster frame network 18,588 — 989 — 19,577
In-store network 10,022 — — — 10,022
Movie theater network 6,390 — 11 — 6,401
Traditional outdoor billboard 1,501 — 456 — 1,957
network
Total Gross Profit 134,697 200 2,557 — 137,454
General and administrative 32,562 (14,423) — — 18,139
Selling and marketing 32,506 (934) (1,051) — 30,521
Other operating income, net (2,052) — — — (2,052)
Total operating expense 63,016 (15,357) (1,051) — 46,608
Operating profit from continuing 71,681 15,557 3,608 — 90,846
operations
Profit before tax from continuing 76,943 15,557 3,608 — 96,108
operations
Net profit from continuing 62,106 15,557 3,608 985 82,256
operations
Net profit from discontinued 560 — 362 — 922
operations
Net income attributable to Focus 62,229 15,557 3,970 985 82,741
Media
Basic net income from continuing
operations attributable to Focus 0.47 0.62
Media per ADS
Diluted net income from
continuing attributable to Focus 0.44 0.59
Media operations per ADS
Basic net income from
discontinued operations 0.00 0.00
attributable to Focus Media per
ADS
Diluted net income from
discontinued operations 0.00 0.00
attributable to Focus Media per
ADS
Basic net income attributable to 0.47 0.62
Focus Media per ADS
Diluted net income attributable 0.44 0.59
to Focus Media per ADS
ADS used in calculating basic 133,718,768 133,718,768
income per ADS
ADS used in calculating diluted 139,866,888 139,866,888
income per ADS
(1). Share-based compensation.
(2). Amortization of acquired
intangible assets.
(3). Loss from equity method
investee (VisionChina)
Focus Media Holding Ltd.
Reconciliation of GAAP to non-GAAP
(U.S. Dollar in thousands, except share and per-share data)
(Unaudited)
Nine months ended September 30, 2012
GAAP (1) (2) (3) (4) Non-GAAP
Gross Profit
(loss)
LCD display 254,915 1,467 2,659 — — 259,041
network
Poster frame 127,097 — 522 — — 127,619
network
In-store network 24,443 — — — — 24,443
Movie theater 33,069 — — — — 33,069
network
Traditional
outdoor billboard (583) — 1,387 — — 804
network
Total Gross Profit 438,941 1,467 4,568 — — 444,976
General and 103,736 (44,922) — — — 58,814
administrative
Selling and 142,123 (4,258) (1,738) — — 136,127
marketing
Other operating (24,691) — — — — (24,691)
income, net
Total operating 221,168 (49,180) (1,738) — — 170,250
expense
Operating profit
from continuing 217,773 50,647 6,306 — — 274,726
operations
Profit before tax
from continuing 230,296 50,647 6,306 — — 287,249
operations
Net profit from
continuing 163,048 50,647 6,306 15,961 — 235,962
operations
Net profit/ (loss)
from discontinued (3,174) — 2,831 — 908 565
operations
Net income
attributable to 161,406 50,647 9,137 908 238,059
Focus Media
15,961
Basic net income
from continuing
operations 1.28 1.86
attributable to
Focus Media per
ADS
Diluted net income
from continuing
attributable to 1.23 1.80
Focus Media
operations per ADS
Basic net income
from discontinued
operations (0.02) (0.01)
attributable to
Focus Media per
ADS
Diluted net income
from discontinued
operations (0.02) (0.01)
attributable to
Focus Media per
ADS
Basic net income
attributable to 1.26 1.85
Focus Media per
ADS
Diluted net income
attributable to 1.21 1.79
Focus Media per
ADS
ADS used in
calculating basic 128,428,818 128,428,818
income per ADS
ADS used in
calculating 133,359,921 133,359,921
diluted income per
ADS
(1). Share-based
compensation.
(2). Amortization
of acquired
intangible assets.
(3). Loss from
equity method
investee
(VisionChina).
(4). Goodwill
impairment
Nine months ended September 30, 2011
GAAP (1) (2) (3) Non-GAAP
Gross Profit
LCD display network 246,336 593 3,309 — 250,238
Poster frame network 40,043 — 3,285 — 43,328
In-store network 22,995 — — — 22,995
Movie theater network 11,280 — 43 — 11,323
Traditional outdoor billboard 6,017 — 1,349 — 7,366
network
Total Gross Profit 326,671 593 7,986 — 335,250
General and administrative 89,426 (42,852) — — 46,574
Selling and marketing 96,786 (2,775) (3,165) — 90,846
Other operating income, net (7,967) — — — (7,967)
Total operating expense 178,245 (45,627) (3,165) — 129,453
Operating profit from 148,426 46,220 11,151 — 205,797
continuing operations
Profit before tax from 159,195 46,220 11,151 — 216,566
continuing operations
Net profit from continuing 124,753 46,220 11,151 4,750 186,874
operations
Net profit from discontinued 560 — 363 — 923
operations
Net income attributable to 125,585 46,220 11,514 4,750 188,069
Focus Media
Basic net income from
continuing operations 0.93 1.39
attributable to Focus Media per
ADS
Diluted net income from
continuing attributable to 0.89 1.34
Focus Media operations per ADS
Basic net income from
discontinued operations 0.00 0.00
attributable to Focus Media per
ADS
Diluted net income from
discontinued operations 0.00 0.00
attributable to Focus Media per
ADS
Basic net income attributable 0.93 1.39
to Focus Media per ADS
Diluted net income attributable 0.89 1.34
to Focus Media per ADS
ADS used in calculating basic 134,972,295 134,972,295
income per ADS
ADS used in calculating diluted 140,567,619 140,567,619
income per ADS
(1). Share-based compensation.
(2). Amortization of acquired
intangible assets.
(3). Loss from equity method
investee (VisionChina)
CONFERENCE CALL
1) The Company will host a conference call to discuss the third quarter 2012
results at 8:00 p.m. U.S. Eastern Time on November 27, 2012 (5:00 p.m. U.S.
Pacific Time on November 27, 2012 and 9:00 a.m. Beijing/Hong Kong Time on
November 28, 2012). The dial-in details for the live conference call are set
forth below:
International Toll Dial-In Number: + 65.6723.9381
Local Dial-In Number(s):
China, Domestic Mobile: 400.620.8038
China, Domestic: 800.819.0121
Hong Kong: +852.2475.0994
United States: +1.718.354.1231
International Toll Free Dial-in Number(s):
Hong Kong: +852.800.930.346
United States: +1.866.519.4004
Conference ID # 71489860
2) A replay of the call will be available from November 27, 2012 11:00pm until
December 5, 2012 7:59am (U.S. Eastern Time). The dial-in details for the
replay are set forth below:
International Toll Dial-In Number: +61.2.8199.0299
Local Dial-In Number(s):
Hong Kong: +852.3051.2780
United States: +1.646.254.3697
International Toll Free Dial-in Number(s):
China 400: 400.120.0932
China 800: 800.870.0205
Hong Kong: +852.800.963.117
United States: +1.855.452.5696
Conference ID # 71489860
Additionally, a live and archived web cast of this call will be available on
the Focus Media web site at http://ir.focusmedia.cn.
SAFE HARBOR: FORWARD-LOOKING STATEMENTS
This press release includes statements that may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates" and similar statements,
as well as the consideration of the going private proposal and the impact on
the Company resulting from the success or failure of that proposal. Focus
Media may also make written or oral forward-looking statements in its periodic
reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K,
in its annual report to shareholders, in press releases and other written
materials and in oral statements made by its officers, directors or employees
to third parties. Statements that are not historical facts, including
statements about Focus Media's beliefs and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. A number of important factors could cause actual
results to differ materially from those contained in any forward-looking
statement. Potential risks and uncertainties include, but are not limited to,
risks outlined in Focus Media's filings with the U.S. Securities and Exchange
Commission, including its registration statements on Form F-1, F-3 and 20-F,
in each case as amended. Focus Media does not undertake any obligation to
update any forward-looking statement, except as required under applicable
law.
This release is not an offer of securities for sale in the United States.
Securities may not be offered or sold in the United States absent registration
or an exemption from registration. Any public offering of securities to be
made in the United States will be made by means of a prospectus that may be
obtained from the issuer or selling security holder and that will contain
detailed information about the company and management, as well as financial
statements.
ABOUT FOCUS MEDIA HOLDING LIMITED
Focus Media Holding Limited (Nasdaq: FMCN) operates China's largest lifestyle
targeted interactive digital media network. The Company offers one of the most
comprehensive targeted interactive digital media platforms aimed at Chinese
consumers at various urban locations. The increasingly fragmented and mobile
lifestyle of Chinese urban consumers has created the need for more efficient
media means to capture consumer attention. Focus Media's mission is to build
an increasingly comprehensive and measurable interactive urban media network
that reaches consumers at various out-of-home locations.
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S Dollars in Thousands)
2012-09-30 2012-06-30 2011-09-30
ASSETS
Current assets
Cash and cash equivalents 491,729 439,383 435,322
Restricted cash 99,043 106,809 —
Short-term investments 211,238 211,444 204,567
Accounts receivable, net 294,102 254,429 230,552
Prepaid expenses and other current assets 71,616 73,299 39,060
Rental deposits 60,739 63,064 56,143
Available-for-sale assets-current 4,660 — —
Other current assets 2,262 2,308 8,098
Total current assets 1,235,389 1,150,736 973,742
Restricted cash 99,043 99,295 —
Rental deposits, non-current 3,252 4,027 4,770
Equipment, net 66,044 71,383 68,786
Acquired intangible assets, net 4,776 28,529 39,242
Goodwill 439,201 459,294 452,201
Investment under equity method 5,040 14,586 59,148
Available-for-sale assets-non-current 21,008 — —
Other long term assets 14,642 10,527 17,354
Total assets 1,888,395 1,838,377 1,615,243
LIABILITIES AND EQUITY
Current liabilities
Short-term bank loan 100,000 107,514 30,000
Accounts payable 16,828 20,428 22,146
Accrued expenses and other current 188,569 173,947 132,449
liabilities
Income taxes payable 43,745 29,946 10,943
Amount due to related parties 1,554 1,581 4,175
Available-for-sale liabilities-current 9,468 — —
Deferred tax liabilities 29,339 29,414 24,532
Total current liabilities 389,503 362,830 224,245
Long-term loan 100,000 100,000 —
Long-term payable — 11,829 12,995
Available-for-sale liabilities-non-current 6,159 — —
Deferred tax liabilities, non-current 13,190 18,573 16,102
Total liabilities 508,852 493,232 253,342
Equity
Ordinary shares 32 32 33
Additional paid in capital 1,548,446 1,531,628 1,668,269
Subscription receivable — (21) (1,236)
Accumulated deficit (291,226) (321,106) (437,368)
Accumulated other comprehensive income 113,318 116,303 111,572
Total Focus Media equity 1,370,570 1,326,836 1,341,270
Non-controlling interests 8,973 18,309 20,631
Total equity 1,379,543 1,345,145 1,361,901
Total liabilities and equity 1,888,395 1,838,377 1,615,243
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(U.S Dollars in thousands, except earnings per ADS and ADS data)
Three months ended Nine months ended
2012-09-30 2012-06-30 2011-9-30 2012-09-30 2011-09-30
Revenues
LCD display 135,777 129,130 132,555 356,918 336,097
network
In-store network 14,879 13,954 17,367 41,838 44,111
Poster frame 86,056 73,177 51,023 229,843 131,953
network
Movie theater 23,753 15,578 13,614 58,233 31,672
network
Traditional
outdoor billboard 8,554 10,069 12,404 28,692 36,116
network
Total gross 269,019 241,908 226,963 715,524 579,949
revenues
Less: Sales taxes 12,742 12,900 18,670 35,869 46,119
Total net revenue 256,277 229,008 208,293 679,655 533,830
(note 1)
Cost of revenues
LCD display 29,976 26,737 22,364 83,110 60,619
network
In-store network 5,384 5,259 5,849 16,250 17,324
Poster frame 29,268 30,113 28,056 88,782 80,858
network
Movie theater 8,762 8,599 6,601 23,737 18,773
network
Traditional
outdoor billboard 9,457 9,506 10,726 28,835 29,585
network
Total cost of 82,847 80,214 73,596 240,714 207,159
revenues
Gross profit 173,430 148,794 134,697 438,941 326,671
Operating expenses
General and 36,132 37,791 32,562 103,736 89,426
administrative
Selling and 53,123 51,110 32,506 142,123 96,786
marketing
Other operating (14,890) (5,587) (2,052) (24,691) (7,967)
income, net
Total operating 74,365 83,314 63,016 221,168 178,245
expenses
Operating profit 99,065 65,480 71,681 217,773 148,426
Interest income 5,366 6,334 5,395 16,178 10,902
Interest Expense (1,285) (1,250) (133) (3,655) (133)
Income from
continuing
operations
before income 103,146 70,564 76,943 230,296 159,195
taxes and loss
from equity
method investee
Provision for 27,512 7,623 13,852 51,287 29,692
income taxes
Loss from equity 9,499 3,436 985 15,961 4,750
method investee
Net income from
continuing 66,135 59,505 62,106 163,048 124,753
operations
Net income (loss)
from discontinued (1,809) (1,469) 560 (3,174) 560
operations,
net of tax
Net Income (loss) 64,326 58,036 62,666 159,874 125,313
Less: Net income
attributable to
(264) (871) 437 (1,532) (272)
non-controlling
interests
Net income
attributable to 64,590 58,907 62,229 161,406 125,585
Focus Media
Net income from
continuing
operations
attributable
to Focus Media per
ADS
-basic 0.52 0.47 0.47 1.28 0.93
-diluted 0.49 0.45 0.44 1.23 0.89
Net income (loss)
from discontinued
operations
attributable
to Focus Media per
ADS
-basic (0.01) (0.01) 0.00 (0.02) 0.00
-diluted (0.01) (0.01) 0.00 (0.02) 0.00
Net income
attributable to
Focus Media
per ADS
-basic 0.51 0.46 0.47 1.26 0.93
-diluted 0.48 0.44 0.44 1.21 0.89
ADS used in
calculating basic 128,227,213 133,718,768 128,428,818 134,972,295
income 127,777,021
per ADS
ADS used in
calculating 133,518,344 133,103,155 139,866,888 133,359,921 140,567,619
diluted income
per ADS
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(U.S Dollars in thousands, except earnings per ADS and ADS data)
Three months ended Nine months ended
2012-09-30 2012-06-30 2011-09-30 2012-09-30 2011-09-30
Net income 64,326 58,036 62,666 159,874 125,313
Other
comprehensive
income, net of tax
Foreign currency
translation (2,964) (4,983) 15,419 (7,051) 31,934
adjustments
Share of
post-acquisition
movements in
equity (43) 242 413 476 1,383
investee's
other
comprehensive
income
Comprehensive 61,319 53,295 78,498 153,299 158,630
income
Comprehensive
income (loss)
attributable to (286) (963) 638 (1,629) (62)
non-controlling
interests
Comprehensive
income 61,605 54,258 77,860 154,928 158,692
attributable
to Focus Media
Note 1: Details of net revenues by segment are as follows (U.S. Dollars in
thousands):
Three months ended Nine months ended
2012-09-30 2012-06-30 2011-09-30 2012-09-30 2011-09-30
Gross revenues
LCD display network 135,777 129,130 132,555 356,918 336,097
In-store network 14,879 13,954 17,367 41,838 44,111
Poster frame network 86,056 73,177 51,023 229,843 131,953
Movie theater network 23,753 15,578 13,614 58,233 31,672
Traditional outdoor 8,554 10,069 12,404 28,692 36,116
billboard network
Total gross revenues 269,019 241,908 226,963 715,524 579,949
Less: Sales taxes
LCD display network 7,358 7,078 11,995 18,893 29,142
In-store network 413 395 1,496 1,145 3,792
Poster frame network 4,447 4,611 4,379 13,964 11,052
Movie theater network 521 417 623 1,427 1,619
Traditional outdoor 3 399 177 440 514
billboard network
Total sales taxes 12,742 12,900 18,670 35,869 46,119
Net revenues
LCD display network 128,419 122,052 120,560 338,025 306,955
In-store network 14,466 13,559 15,871 40,693 40,319
Poster frame network 81,609 68,566 46,644 215,879 120,901
Movie theater network 23,232 15,161 12,991 56,806 30,053
Traditional outdoor 8,551 9,670 12,227 28,252 35,602
billboard network
Total net revenues 256,277 229,008 208,293 679,655 533,830
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
(U.S. Dollars in thousands)
Three months ended Nine months ended
2012-09-30 2012-09-30 2011-09-30
2011-09-30
Operating activities:
Net income 64,326 2,666 159,874 125,313
Adjustments to reconcile
net income to net cash — — — —
provided by operating
activities:
Bad debt expenses 4,002 4,466 9,159 10,258
Share-based compensation 16,817 15,557 50,647 46,220
Depreciation 8,366 7,291 22,920 21,398
Amortization of acquired 2,762 3,970 9,137 11,514
intangible assets
Loss from equity method 9,499 985 15,961 4,750
investee
Change in fair value of
contingent consideration
liabilities for 211 — 1,179 —
acquisition of
subsidiaries
Write-off of long-term — — — 990
assets
Others 1,346 1,798 2,143 1,940
Net changes in current
assets and current (29,413) (10,465) (55,215) (71,018)
liabilities, net of
effects of acquisitions
Net cash provided by 77,916 86,268 215,805 151,365
operating activities
Investing activities:
Purchase of equipment and (5,010) (6,058) (14,838) (23,425)
other long term assets
Payment to acquire
subsidiaries, net of cash (577) (7,262) (2,929) (12,622)
acquired
Proceeds from disposal of 1,126 — 1,126 7,296
subsidiaries
Cash of disposed entities (1,782) — (1,782) —
Investment in equity — — — (61,003)
method investee
Cash deposited as — — (26,514) —
restricted cash
Cash received from the 7,495 — 26,366 —
release of restricted cash
Proceeds received from the
sale of short-term 93,844 490,972 356,061 878,037
investments
Proceeds used in
investment in short-term (94,174) (505,921) (342,658) (937,663)
investments
Proceeds received from — 125 340 572
disposal of fixed assets
Net cash provided by/
(used in) investing 922 (28,144) (4,828) (148,808)
activities
Financing activities:
Proceeds received from — 30,000 63,794 30,000
bank loans
Repayment of short-term (7,514) — (34,017) —
bank loans
Share repurchase — (66,106) (41,445) (69,106)
Dividend payout (17,365) — (35,302) —
(Repayment to) capital
injection from — — — (76)
non-controlling interests
Proceeds from issuance of
ordinary shares, net of 21 1,260 34 1,828
issuance costs
Net cash used in financing (24,858) (34,846) (46,936) (37,354)
activities
Effect of exchange rate (651) 7,340 (2,548) 15,643
changes
Net increase (decrease) in 53,329 30,618 161,493 (19,154)
cash and cash equivalents
Cash and cash equivalents, 439,383 404,704 331,219 454,476
beginning of period
Less: Cash and cash
equivalents in 983 — 983 —
held-for-sale assets
Cash and cash equivalents, 491,729 435,322 491,729 435,322
end of period
Supplemental disclosure of
cash flow information:
Income taxes paid 9,201 3,321 37,107 24,612
Interest paid 1,306 105 3,398 105
Supplemental disclosure of
non-cash investing
activity:
Accrual for acquisition 665 22,092 665 22,092
of subsidiaries
SOURCE Focus Media Holding Limited
Website: http://ir.focusmedia.cn
Contact: Jing Lu, +86 21 22164155, ir@focusmedia.cn
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