Industry News II

Focus Media Reports Second Quarter 2012 Results – Press Releases

August 22, 2012 No Comments »

SHANGHAI, Aug. 22, 2012 /PRNewswire-Asia/ — Focus Media Holding Limited (Nasdaq: FMCN) today announced its unaudited financial results for the second quarter ended June 30, 2012.

Highlights for second Quarter 2012:

  • Total net revenue for the second quarter of 2012 was $233.0 million, of which
    • aggregate net revenues from the LCD display network, in-store network, poster frame network and movie theater network was $219.3 million, which exceeded by approximately 3% the mid-point of the Company's guidance range of $211-213 million.  This represented a year-on-year increase of 32% from $166.1 million for the second quarter of 2011 and a quarter-on-quarter increase of 19% from $184.3 million for the first quarter of 2012;
    • net revenue from the traditional outdoor billboard network for the second quarter of 2012 was $13.7 million, meeting the guidance of $13-15 million.  This represented a year-on-year increase of 6% from $12.9 million for the second quarter of 2011.
  • GAAP net income attributable to Focus Media for the second quarter of 2012 was $58.9 million, representing a year-on-year increase of 38% from $42.8 million for the second quarter of 2011 and a quarter-on-quarter increase of 55% from $37.9 million for the first quarter of 2012.    
  • Non-GAAP net income attributable to Focus Media was $81.9 million, exceeding the mid-point of the Company's guidance range of $78-$80 million by 4%, and representing a year-on-year increase of 30% from non-GAAP net income attributable to Focus Media of $62.9 million for the second quarter of 2011 and a quarter-on-quarter increase of 33% from non-GAAP net income attributable to Focus Media of $61.6 million for the first 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.
  • GAAP net income attributable to Focus Media per fully diluted ADS was $0.44, representing a year-on-year increase of 47% from $0.30 per fully diluted ADS for the second quarter of 2011 and a quarter-on-quarter increase of 57% from $0.28 per fully diluted ADS for the first quarter of 2012.
  • Non-GAAP net income attributable to Focus Media per fully diluted ADS was $0.62, representing a year-on year increase of 41% from $0.44 per fully diluted ADS for the second quarter of 2011 and a quarter-on-quarter increase of 35% from $0.46 per fully diluted ADS for the first quarter of 2012.

Highlights for Balance Sheet and Cash Flow Results of Second Quarter 2012:

  • Cash, cash equivalents, restricted cash and short-term investments were $856.9 million as of June 30, 2012, as compared to $816.8 million as of March 31, 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 $206.1 million as of June 30, 2012, as compared to $226.1 million as of March 31, 2012, and was comprised of current restricted cash of $106.8 million and non-current restricted cash of $99.3 million.   Short-term investments, consisting of longer term dated cash deposits that earn higher interest rates as compared to cash and cash equivalent, were $211.4 million as of June 30, 2012 as compared to $228.5 million as of March 31, 2012.
  • Bank loans were $207.5 million inclusive of short-term bank loans of $107.5 million and long-term bank loans of $100.0 million as of June 30, 2012, as compared to bank loans of $197.6 million as of March 31, 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.
  • Net accounts receivable for the LCD display network, in-store network, poster frame network and movie theater network was $238.4 million as of June 30, 2012, an increase of 5% from $226.4 million as of March 31, 2012 due to sequential growth of revenues.  Days sales outstanding was 91 days in the second quarter of 2012 versus 107 days for the first quarter of 2012 as a result of better cash collection in the second quarter of 2012 as compared to in the first quarter of 2012.
  • Net cash inflow from operating activities in the second quarter of 2012 was $93.1 million, representing year-on-year growth of 84% from $50.6 million for the second quarter of 2011 and a quarter-on-quarter growth of 108% from $44.8 million for the first quarter of 2012.
  • Net cash inflow from operating activities for the second quarter of 2012, after deducting the purchase of equipment and subsidiaries was $87.2 million, a year-on-year growth of 134% from $37.3 million for the second quarter of 2011 and a quarter-on-quarter growth of 126% from $38.5 million for the first quarter of 2012. 
  • Capital expenditures were $4.9 million for the second quarter of 2012, mostly attributable to network expansion in the LCD display network and in the in-store network.
  • Cash paid for the acquisition of subsidiaries in the second quarter of 2012 was $1.0 million, which was attributable to the LCD display network.
  • Cash used for repurchasing shares in the second quarter of 2012 was $35.5 million.

Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, “In the second quarter of 2012, we continue to see our year-on-year revenue growth mainly driven by the strength of our poster frame network due to its exposure to promotional spending budget which tends to be less affected by macroeconomic uncertainty. We saw some improvements in year-on-year growth in our LCD network in the second quarter of 2012 as compared to first quarter of 2012, but still have not seen a return to normalization due to continued impact from cut backs on branding budgets as a result of macroeconomic uncertainties.”

Kit Low, the Company's Chief Financial Officer added, “In the second 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 32%. GAAP net income attributable to Focus Media and Non-GAAP net income attributable to Focus Media for the second quarter of 2012 was $58.9 million and $81.9 million, respectively.  In the second quarter of 2012, the Company generated a net cash inflow from operating activities after deducting the purchases of equipment and subsidiaries of $87.2 million.”

Second Quarter 2012 financial results

Advertising net revenue from the LCD display network was $122.1 million for the second quarter of 2012, representing an increase of 18% from $103.9 million for the second quarter of 2011 and an increase of 39% from $87.6 million for the first quarter of 2012 due to seasonal factors as well as slight improvements in the brand advertising environment. 

Advertising net revenue from the poster frame network was $68.6 million for the second quarter of 2012, representing an increase of 80% from $38.2 million for the second quarter of 2011 which was driven by the continued strength of promotional budget spending in the market as well as a more stabilized competitive environment of the poster frame business.  It also represented an  increase of 4% from $65.7 million for the first quarter of 2012.

Advertising net revenue from the in-store network was $13.6 million for the second quarter of 2012, representing a decrease of 9% from $14.9 million for the second quarter of 2011 partially due to the delay of promotional campaigns from second to the third quarter of 2012 by certain advertisers and an increase of 7% from $12.7 million for the first quarter of 2012.

Advertising net revenue from the movie theater network was $15.2 million for the second quarter of 2012, representing an increase of 67% from $9.1 million for the second quarter of 2011 and a decrease of 17% from $18.4 million for the first quarter of 2012 which was due to seasonality as the first quarter is traditionally a strong season for movie theater business. 

Advertising net revenue from the traditional outdoor billboard network was $13.7 million for the second quarter of 2012, representing an increase of 6% from $12.9 million for the second quarter of 2011 and a decrease of 10% from $15.3 million for the first quarter of 2012.

Non-GAAP gross profit from the LCD display network for the second quarter of 2012 was $96.7 million, an increase of 12% from $86.6 million for the second quarter of 2011 and an increase of 54% from $62.6 million for the first quarter of 2012.    

Non-GAAP gross profit from the poster frame network for the second quarter of 2012 was $38.6 million, more than tripling the $12.2 million for the second quarter of 2011 due to significant year-on-year growth of revenues, and representing an increase of 6% from $36.5 million for the first quarter of 2012.

Non-GAAP gross profit from the in-store network for the second quarter of 2012 was $8.3 million, representing a decrease of 10% from $9.2 million for the second quarter of 2011 due to year-on-year decline of revenues and an increase of 17% from $7.1 million for the first quarter of 2012.

Non-GAAP gross profit from the movie theater network for the second quarter of 2012 was $6.6 million, more than doubling the $3.1 million for the second quarter of 2011 and a decrease of 45% from $12.0 million for the first quarter of 2012 which was mainly attributable to seasonal revenue decline.

Non-GAAP gross profit from the traditional outdoor billboard network for the second quarter of 2012 was $1.0 million, a decrease of 72% from $3.6 million for the second quarter of 2011 and a decrease of 69% from $3.2 million for the first quarter of 2012.   The decrease of non-GAAP gross profit was due to costs associated with the expansion of the traditional outdoor billboard network areas around intercity high-speed rail lines having kicked in but without material revenue contribution during the quarter.

Non-GAAP operating expenses for the second quarter of 2012 was $67.8 million, an increase of 48% from $45.9 million for the second 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 an increase of 43% from $47.3 million for the first quarter of 2012 which was also attributable to an increase in selling and marketing expenses due to sequential revenue growth as well as professional fee increase in general and administrative expenses.

Net cash inflow from operating activities in the second quarter of 2012 was $93.1 million, representing year-on-year growth of 84% from $50.6 million for the second quarter of 2011 and quarter-on-quarter growth of 108% from $44.8 million for the first quarter of 2012.

Net cash inflow provided by investing activities for the second quarter of 2012 was $29.2 million.  In the second quarter of 2012, the Company incurred capital expenditures of $4.9 million and subsidiary acquisition payments of $1.0 million.  Meanwhile, the Company incurred net cash inflows from net investment in short-term investments and deposits in restricted cash of $34.8 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 second quarter of 2012 was $42.6 million.  In the second quarter of 2012, the Company received net cash inflow from the proceeds of bank loans of $10.8 million.  Meanwhile, the Company used $35.5 million for share repurchases and paid $17.9 million for the dividend payout announced in the first quarter of 2012.

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 June 30, 2012

As of March 31, 2012

LCD screens

135,001

128,901

LCD 2.0 digital picture screens

35,112

34,375

Total for LCD display network (note)

170,113

163,276

 

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 June 30, 2012 as compared to that as of March 31, 2012 was due to organic network expansion.  Of the total LCD screens of 135,011 as of June 30, 2012, 9,734 screens were operated through our regional distributors as compared to 9,157 screens as of March 31, 2012.

2) The approximate number of devices in the poster frame network was as follows:

As of June 30, 2012

As of March 31, 2012

Frame 1.0 picture frames (note)

484,145

473,360

Frame 2.0 digital picture screens

35,616

35,575

Total

519,761

508,935

 

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 June 30, 2012 as compared to that as of March 31, 2012 was due to organic network expansion.

3) The total number of displays installed in our in-store network was approximately 51,995 as of June 30, 2012, as compared to 49,330 as of March 31, 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 June 30, 2012 was approximately 2,320, as compared to 2,190 as of March 31, 2012.

Business Outlook for Third Quarter 2012

The Company provides the following guidance with respect to the quarter ending September 30, 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 $241-$243 million, the mid-point of which would represent year-on-year growth of 23% and quarter on quarter growth of 10%.  Net revenues for the non-core business (the traditional outdoor billboard network) are expected to be in the range of $13-$14 million.  The Company's non-GAAP net income is expected to be in the range of $92-$94 million.  The Company estimates the weighted average fully diluted ADS count for the quarter at 133.8 million, assuming no further share repurchases during the quarter.

Announced Receipt of “Going Private” Proposal

On August 13, 2012, the Company announced that its Board of Directors had received a preliminary non-binding proposal letter, dated August 12, 2012, from affiliates of The Carlyle Group , FountainVest Partners,  CITIC Capital Partners, CDH Investments and China Everbright Limited and Mr. Jason Nanchun Jiang, Chairman of the Board and Chief Executive Officer of Focus Media, and his affiliates (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.  According to the proposal letter, the Consortium Members will form an acquisition company for the purpose of implementing the Transaction, and the Transaction is intended to be financed with a combination of debt and equity capital. The proposal letter states that the Consortium Members have been in discussions with Citigroup Global Markets Asia Limited, Credit Suisse AG, Singapore Branch and DBS Bank Ltd. about financing the Transaction and that these banks have provided certain of the Consortium Members with a letter dated August 11, 2012 indicating that they are highly confident of their ability to fully underwrite the debt financing of the Transaction subject to the terms and conditions set out therein. 

The Company's Board of Directors has formed a committee of independent directors (the “Independent Committee”) 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 August 22, 2012, the Company has cumulatively spent $491 million in share repurchases out of the share repurchase program totaling $650 million.  The Company spent $35.5 million in share repurchases in the second quarter of 2012.

Payment of 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 and 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.  Meanwhile, the board of directors has approved a cash dividend of US$0.0272 per ordinary share (or US$0.136 per American Depositary Share) to be payable on October 16, 2012 to shareholders of record as of the close of business on September 28, 2012.

Value-added tax reform in Shanghai

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.  The value-added tax rate applicable to the subsidiaries of our group in Shanghai 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 June 30, 2012, which was $1 to RMB 6.3249.  Equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the second quarter of 2012, which was $1 to RMB 6.3194.  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, and loss from equity method investee.  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, and loss from equity method investee.  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 June 30, 2012

GAAP

(1)

(2)

(3)

Non-GAAP

Gross Profit

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 network

(63)

1,042

979

Total Gross Profit

148,567

488

2,125

151,180

General and administrative

38,077

(14,604)

23,473

Selling and marketing

52,001

(1,418)

(928)

49,655

Other operating  income, net

(5,372)

(5,372)

Total operating expense

84,706

(16,022)

(928)

67,756

Operating profit from continuing operations

63,861

16,510

3,053

83,424

Profit from continuing operations before income

taxes and loss from equity method investee

68,946

16,510

3,053

88,509

Net profit from continuing operations

58,036

16,510

3,053

3,436

81,035

Net income attributable to Focus Media

58,907

16,510

3,053

3,436

81,906

Basic net income attributable to Focus Media per ADS

0.46

0.64

Diluted net income attributable to Focus Media per ADS

0.44

0.62

ADS used in calculating basic income per ADS

128,227,213

128,227,213

ADS used in calculating diluted income per ADS

133,103,155

133,103,155

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

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

 

Three months ended March 31, 2012

GAAP

(1)

(2)

(3)

Non-GAAP

Gross Profit

LCD display network

61,157

483

943

62,583

Poster frame network

36,303

212

36,515

In-store network

7,061

7,061

Movie theater network

12,036

12,036

Traditional outdoor billboard network

2,160

1,044

3,204

Total Gross Profit

118,717

483

2,199

121,399

General and administrative

30,104

(15,435)

14,669

Selling and marketing

38,642

(1,402)

(1,123)

36,117

Other operating  income, net

(3,523)

(3,523)

Total operating expense

65,223

(16,837)

(1,123)

47,263

Operating profit from continuing operations

53,494

17,320

3,322

74,136

Profit from continuing operations before income
taxes and loss from equity method investee

56,853

17,320

3,322

77,495

Net profit from continuing operations

37,511

17,320

3,322

3,025

61,178

Net income attributable to Focus Media

37,911

17,320

3,322

3,025

61,578

Basic net income attributable to Focus Media per ADS

0.29

0.48

Diluted net income attributable to Focus Media per ADS

0.28

0.46

ADS used in calculating basic income per ADS

129,292,048

129, 292,048

ADS used in calculating diluted income per ADS

133,702,219

133, 702,219

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

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

 

Three months ended June 30, 2011

GAAP

(1)

(2)

(3)

Non-GAAP

Gross Profit

LCD display network

85,260

198

1,114

86,572

Poster frame network

11,080

1,118

12,198

In-store network

9,162

9,162

Movie theater network

3,122

16

3,138

Traditional outdoor billboard network

3,129

449

3,578

Total Gross Profit

111,753

198

2,697

114,648

General and administrative

30,240

(14,274)

15,966

Selling and marketing

33,079

(924)

(1,056)

31,099

Other operating  income, net

(1,209)

(1,209)

Total operating expense

62,110

(15,198)

(1,056)

45,856

Operating profit from continuing operations

49,643

15,396

3,753

68,792

Profit before tax from continuing operations         

52,790

15,396

3,753

71,939

Net profit from continuing operations

42,863

15,396

3,753

992

63,004

Net income attributable to Focus Media

42,804

15,396

3,753

992

62,945

Basic net income attributable to Focus Media per ADS

0.32

0.46

Diluted net income attributable to Focus Media per ADS

0.30

0.44

ADS used in calculating basic income per ADS

135,624,717

135,624,717

ADS used in calculating diluted income per ADS

141,562,763

141,562,763

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

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

 

 

Focus Media Holding Ltd.

Reconciliation of GAAP to non-GAAP

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

(Unaudited)

 

Six months ended June 30, 2012

GAAP

(1)

(2)

(3)

Non-GAAP

Gross Profit

LCD display network

156,473

971

1,846

159,290

Poster frame network

74,756

392

75,148

In-store network

15,360

15,360

Movie theater network

18,599

18,599

Traditional outdoor billboard network

2,096

2,086

4,182

Total Gross Profit

267,284

971

4,324

272,579

General and administrative

68,181

(30,039)

38,142

Selling and marketing

90,643

(2,820)

(2,051)

85,772

Other operating  income, net

(8,895)

(8,895)

Total operating expense

149,929

(32,859)

(2,051)

115,019

Operating profit from continuing operations

117,355

33,830

6,375

157,560

Profit before tax from continuing operations

125,799

33,830

6,375

166,004

Net profit from continuing operations

95,547

33,830

6,375

6,461

142,212

Net income attributable to Focus Media

96,818

33,830

6,375

6,461

143,484

Basic net income attributable to Focus Media per ADS

0.75

1.11

Diluted net income attributable to Focus Media per ADS

0.73

1.08

ADS used in calculating basic income per ADS

128,759,562

128,759,562

ADS used in calculating diluted income per ADS

133,393,577

133,393,577

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

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

 

Six months ended June 30, 2011

GAAP

(1)

(2)

(3)

Non-GAAP

Gross Profit

LCD display network

148,140

394

2,208

150,742

Poster frame network

21,454

2,296

23,750

In-store network

12,973

12,973

Movie theater network

4,891

32

4,923

Traditional outdoor billboard network

4,516

894

5,410

Total Gross Profit

191,974

394

5,430

197,798

General and administrative

56,864

(28,428)

28,436

Selling and marketing

64,280

(1,841)

(2,114)

60,325

Other operating  income, net

(5,914)

(5,914)

Total operating expense

115,230

(30,269)

(2,114)

82,847

Operating profit from continuing operations

76,744

30,663

7,544

114,951

Profit before tax from continuing operations

82,252

30,663

7,544

120,459

Net profit from continuing operations

62,644

30,663

7,544

3,766

104,617

Net income attributable to Focus Media

63,353

30,663

7,544

3,766

105,326

Basic net income attributable to Focus Media per ADS

0.47

0.78

Diluted net income attributable to Focus Media per ADS

0.45

0.75

ADS used in calculating basic income per ADS

135,609,448

135,609,448

ADS used in calculating diluted income per ADS

140,998,683

140,998,683

(1). Share-based compensation.

(2). Amortization of acquired intangible assets.

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

CONFERENCE CALL

1) The Company will host a conference call to discuss the second quarter 2012 results at 9:00 p.m. U.S. Eastern Time on August 22, 2012 (6:00 p.m. U.S. Pacific Time on August 22, 2012 and 9:00 a.m. Beijing/Hong Kong Time on August 23, 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 # 19894719

2) A replay of the call will be available from August 23, 2012 12:00am until August 30, 2012 9:59am (US Eastern Time). The dial-in details for the replay are set forth below:

International Toll Dial-In Number: +61.2.8235.5000

Local Dial-In Number(s):
China: 400.692.0026

United States: +1.718.354.1232

International Toll Free Dial-in Number(s):
China North: 10800.714.0386
China South: 10800.140.0386
Hong Kong: +852. 800.901.596
United States: +1.866.214.5335

Conference ID # 19894719

Additionally, a live and archived web cast of this call will be available on the Focus Media web site at http://ir.focusmedia.cn

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

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

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

ABOUT FOCUS MEDIA HOLDING LIMITED

Focus Media Holding Limited (Nasdaq: FMCN) operates China's largest lifestyle targeted interactive digital media network. The Company offers one of the most comprehensive targeted interactive digital media platforms aimed at Chinese consumers at various urban locations. The increasingly fragmented and mobile lifestyle of Chinese urban consumers has created the need for more efficient media means to capture consumer attention. Focus Media's mission is to build an increasingly comprehensive and measurable interactive urban media network that reaches consumers at various out-of-home locations. 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S Dollars in Thousands)

2012-06-30

2012-03-31

2011-06-30

ASSETS

Current assets

Cash and cash equivalents

439,383

362,267

404,704

Restricted cash

106,809

126,291

Short-term investments

211,444

228,453

186,198

Accounts receivable, net

254,429

246,420

200,660

Prepaid expenses and other current assets

73,299

66,424

44,053

Rental deposits

63,064

60,467

50,557

Other current assets

2,308

2,856

2,340

Total current assets

1,150,736

1,093,178

888,512

Restricted cash

99,295

99,778

Rental deposits, non-current

4,027

2,838

5,722

Equipment, net

71,383

76,090

65,807

Acquired intangible assets, net

28,529

31,732

17,553

Goodwill

459,294

459,720

429,525

Investment under equity method

14,586

17,788

58,209

Other long term assets

10,527

10,500

19,273

Total assets

1,838,377

1,791,624

1,484,601

LIABILITIES AND EQUITY

Current liabilities

Short-term bank loan

107,514

126,632

 Accounts payable

20,428

16,810

18,330

 Accrued expenses and other current liabilities

173,947

164,502

117,155

 Income taxes payable

29,946

33,807

314

Amount due to related parties

1,581

1,746

1,842

Deferred tax liabilities

29,414

33,585

24,180

Total current liabilities

362,830

377,082

161,821

Long-term loan

100,000

71,000

Long-term payable

11,829

13,703

Deferred tax liabilities, non-current

18,573

19,020

9,995

Total liabilities

493,232

480,805

171,816

Equity

Ordinary shares

32

32

34

Additional paid in capital

1,531,628

1,550,575

1,716,322

Subscription receivable

(21)

Accumulated deficit

(321,106)

(380,012)

(499,597)

Accumulated other comprehensive income

116,303

120,951

95,815

Total Focus Media equity

1,326,836

1,291,546

1,312,574

Non-controlling interests

18,309

19,273

211

 Total equity

1,345,145

1,310,819

1,312,785

Total liabilities and equity

1,838,377

1,791,624

1,484,601

 

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                 

Six months ended

2012-06-30

2012-03-31

2011-6-30

2012-06-30

2011-06-30

Revenues

LCD display network

129,130

92,011

113,518

221,141

203,542

In-store network

13,954

13,005

16,339

26,959

26,744

Poster frame network

73,177

70,610

41,648

143,787

80,930

Movie theater network

15,578

18,902

9,624

34,480

18,058

Traditional outdoor billboard network

14,190

15,558

13,090

29,748

23,712

Total gross revenues

246,029

210,086

194,219

456,115

352,986

Less: Sales taxes

13,025

10,488

15,257

23,513

27,449

Total net revenue (note 1)

233,004

199,598

178,962

432,602

325,537

Cost of revenues

LCD display network

26,737

26,397

18,630

53,134

38,254

In-store network

5,259

5,607

5,774

10,866

11,475

Poster frame network

30,113

29,401

27,098

59,514

52,803

Movie theater network

8,599

6,377

5,984

14,976

12,173

Traditional outdoor billboard network

13,729

13,099

9,723

26,828

18,858

Total cost of revenues

84,437

80,881

67,209

165,318

133,563

Gross profit

148,567

118,717

111,753

267,284

191,974

Operating expenses

General and administrative

38,077

30,104

30,240

68,181

56,864

Selling and marketing

52,001

38,642

33,079

90,643

64,280

Other operating income, net

(5,372)

(3,523)

(1,209)

(8,895)

(5,914)

Total operating expenses

84,706

65,223

62,110

149,929

115,230

Operating profit

63,861

53,494

49,643

117,355

76,744

Interest income

6,335

4,478

3,147

10,813

5,508

Interest Expense

(1,250)

(1,119)

(2,369)

Income from continuing operations

before income taxes and loss from equity

method investee

68,946

56,853

52,790

125,799

82,252

Provision for income taxes

7,474

16,317

8,935

23,791

15,842

Loss from equity method investee

3,436

3,025

992

6,461

3,766

Net income from continuing operations

58,036

37,511

42,863

95,547

62,644

Net loss attributable to non-controlling interests

(871)

(400)

59

(1,271)

(709)

Net income attributable to Focus Media

58,907

37,911

42,804

96,818

63,353

Net income attributable to Focus Media per ADS

-basic

0.46

0.29

0.32

0.75

0.47

-diluted

0.44

0.28

0.30

0.73

0.45

ADS used in calculating basic income per ADS

128,227,213

129,292,048

135,624,717

128,759,562

135,609,448

ADS used in calculating diluted income per ADS

133,103,155

133,702,219

141,562,763

133,393,577

140,998,683

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                 

                 Six months ended                 

2012-06-30

2012-03-31

2011-06-30

2012-06-30

2011-06-30

Net income from continuing operations

58,036

37,511

42,863

95,547

62,644

Other comprehensive income, net of tax

Foreign currency translation adjustments

(4,983)

897

9,785

(4,086)

16,514

Share of post-acquisition movements in equity investee's

other comprehensive income

242

277

727

519

971

Comprehensive income

53,295

38,685

53,375

91,980

80,129

Comprehensive loss attribute to non-controlling interests

(963)

(379)

61

(1,342)

(699)

Comprehensive income attribute to Focus Media

54,258

39,064

53,314

93,322

80,828

 

 

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

 

                 Three months ended                 

                 Six months ended                 

2012-06-30

2012-03-31

2011-06-30

2012-06-30

2011-06-30

Gross revenues

LCD display network

129,130

92,011

113,518

221,141

203,542

In-store network

13,954

13,005

16,339

26,959

26,744

Poster frame network

73,177

70,610

41,648

143,787

80,930

Movie theater network

15,578

18,902

9,624

34,480

18,058

Traditional outdoor billboard network                              

14,190

15,558

13,090

29,748

23,712

Total gross revenues

246,029

210,086

194,219

456,115

352,986

Less: Sales taxes

LCD display network

7,078

4,457

9,628

11,535

17,147

In-store network

395

337

1,403

732

2,296

Poster frame network

4,611

4,906

3,470

9,517

6,673

Movie theater network

417

489

519

906

996

Traditional outdoor billboard network

524

299

237

823

337

Total sales tax

13,025

10,488

15,257

23,513

27,449

Net revenues

LCD display network

122,052

87,554

103,890

209,606

186,395

In-store network

13,559

12,668

14,936

26,227

24,448

Poster frame network

68,566

65,704

38,178

134,270

74,257

Movie theater network

15,161

18,413

9,105

33,574

17,062

Traditional outdoor billboard network

13,666

15,259

12,853

28,925

23,375

Total net revenues

233,004

199,598

178,962

432,602

325,537

 

 

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. Dollars in thousands)

 

   Three months ended   

    Six months ended    

2012-06-30

2011-06-30

2012-06-30

2011-06-30

Operating activities:

Net income

58,036

42,863

95,547

62,644

Adjustments to reconcile net income to net cash provided by operating activities:

Bad debt expenses 

5,371

3,792

5,157

5,792

Share-based compensation 

16,510

15,396

33,830

30,663

Depreciation

7,212

7,030

14,554

14,107

Amortization of acquired intangible assets

3,053

3,753

6,375

7,544

Loss from equity method investee

3,436

992

6,461

3,766

Change in fair value of contingent consideration liabilities for acquisition of subsidiaries

271

968

Write-off of long-term assets

990

990

Others

384

108

800

143

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

(1,218)

(24,345)

(25,802)

(60,552)

Net cash provided by operating activities 

93,055

50,579

137,890

65,097

Investing activities:

Purchase of equipment and other long term assets 

(4,900)

(11,498)

(9,831)

(17,367)

Payment to acquire subsidiaries, net of cash acquired

(958)

(1,749)

(2,351)

(5,360)

Investment in equity method investee

(12,201)

(61,003)

Cash deposited as restricted cash

(26,514)

Cash received from the release of restricted cash

18,871

18,871

Proceeds received from the sale of short-term investments

82,373

332,010

262,218

387,065

Proceeds used in investment in short-term investments

(66,469)

(318,777)

(248,483)

(431,742)

Proceeds received from disposal of fixed assets

239

149

340

447

Disposal of subsidiaries

7,296

Net cash from/(used in) investing activities

29,156

(12,066)

(5,750)

(120,664)

Financing activities:

Proceeds received from bank loans

37,341

63,794

Cash used for repayment of short-term bank loans

(26,503)

(26,503)

Cash used for share repurchase

(35,478)

(41,445)

(3,000)

Dividend payout

(17,937)

(17,937)

(Repayment to) capital injection  from non-controlling interests

(76)

Proceeds from issuance of ordinary shares, net of issuance costs

251

13

568

Net cash provided by/(used in) financing activities 

(42,577)

251

(22,078)

(2,508)

Effect of exchange rate changes 

(2,518)

4,879

(1,897)

8,303

Net increase (decrease) in cash and cash equivalents 

77,116

43,643

108,165

(49,772)

Cash and cash equivalents, beginning of period

362,267

361,061

331,218

454,476

Cash and cash equivalents, end of period

439,383

404,704

439,383

404,704

Supplemental disclosure of cash flow information:

Income taxes paid 

10,438

27,907

Interest paid

1,089

6,525

2,092

21,291

Supplemental disclosure of non-cash investing activity:

  Accrual for acquisition of subsidiaries

17,973

3,858

17,973

3,858

 

SOURCE Focus Media Holding Limited

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