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:

  oTotal net revenue for the third quarter of 2012 was $256.3 million, of
    which

       oaggregate 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;
       onet 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.

  oGAAP 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. 
  oNon-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.
  oGAAP 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.
  oNon-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:

  oCash, 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.
  oBank 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.
  oNet 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.
  oNet 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.
  oNet 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.
  oCapital 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.
  oCash 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 investingactivities 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
operationsbefore 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)
                           Threemonthsended                                 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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