Fourth Quarter Revenue Increased by 171.4% and
Net Income Increased by 45.6% Year-over-year
SHANGHAI, China, March 18 /Xinhua-PRNewswire/ -- Focus Media Holding
Limited (Nasdaq: FMCN), China's largest digital media group, today announced
its unaudited financial results for the fourth quarter and full year ended
December 31, 2007.
Highlights for fourth quarter 2007:
-- Total revenues grew 171.4% year-over-year and 21.9% quarter-over-
quarter to $184.6 million.
-- Net income for the fourth quarter was $43.8 million or $0.34 per fully
diluted ADS.
-- Focus Media provides gross margin, operating margin, net income and
earnings per ADS on a non-GAAP basis that exclude non-cash share-based
compensation expense and acquired intangible assets amortization
expense to enable investors to better assess the Company's operating
performance. The non-GAAP measures are described below and reconciled
to the corresponding GAAP measure in the section below titled ''Use of
non-GAAP Financial Measures". Net income, excluding non-cash share-
based compensation expenses and amortization of acquired intangible
assets resulting from acquisitions (non-GAAP) for the fourth quarter
was $68.0 million or $0.52 per fully diluted ADS, exceeding company
guidance of $62 million to $64 million.
-- In the fourth quarter of 2007, digital out-of-home advertising revenue
was $111.0 million, up 75.3% year-over-year, and 17.2% quarter-over-
quarter.
-- Advertising service revenue from our commercial location network,
including revenue from our LCD display networks, outdoor digital and
non-digital billboard networks (also referred to as our iStreet
Network) and movie theater advertising network, grew 75.9% year-
over-year and 13.6% quarter-over quarter to $73.4 million.
-- Advertising service revenue from our in-store network was $6.5
million, down 17.4% year-over-year and 8.6% quarter-over-quarter,
due to the relatively more competitive environment in our in-store
business, mainly from CGEN Technology Company Limited. On January 2,
2008, we closed the acquisition of CGEN and this transaction
strengthened our market leadership. The results for 2007 do not
include the results of CGEN.
-- Advertising service revenue from our in-elevator poster frame
network grew 126.4% year-over-year and 35.2% quarter-over-quarter to
$31.2 million
-- Mobile handset advertising revenue grew 355.8% year-over-year and 14.0%
quarter-over-quarter, to $16.0 million in the fourth quarter 2007.
-- Internet advertising revenue was $57.2 million in the fourth quarter of
2007, up 34.5% quarter-over-quarter.
Highlights for the full year 2007:
-- Total revenues were $506.6 million in 2007, up 139.1% as compared to
$211.9 million in 2006.
-- Operating income was $143.9 million in 2007, up 79.0% as compared to
$80.4 million in 2006.
-- Net income was $144.4 million in 2007, up 73.6% compared to $83.2
million in 2006. Net income excluding non-cash share-based
compensation expenses and amortization of intangible assets resulting
from acquisitions (non-GAAP) was $190.6 million in 2007, up 95.9%
compared to $97.3 million in 2006.
-- Fully diluted earnings per ADS for 2007 was $1.19, compared to $0.80
per ADS for 2006. Fully diluted earnings per ADS excluding non-cash
share-based compensation expenses and amortization of intangible assets
resulting from acquisitions (non-GAAP) was $1.57 in 2007, compared to
$0.93 in 2006.
Commenting on the fourth quarter and full year 2007 results, Executive
Chairman Jason Jiang said, ''Fourth quarter results far exceeded our own
guidance. The upside was driven by robust growth in our in-elevator poster
frame business resulting from digital Frame 2.0 upgrade, strong momentum in
our mobile handset advertising business, and continued strength in our
Internet advertising business. We also made improvements in our Internet
advertising business model to increase the gross margin from 23.0% in the
third quarter 2007 to 26.4% in the fourth quarter. The results demonstrated
the strong leverage built into our business model as we move forward to become
the largest digital media company in China. Based on our dialogs with our
large advertising clients, we strongly believe the current growth momentum in
the China advertising industry will continue after the 2008 Olympics, driven
by increasing domestic consumer demand for goods and services as the Chinese
economy continues to expand. Our strategy of building the largest life-style
digital media platform will allow Focus Media to capture a relatively larger
share of this growth. I am fully committed to building Focus Media to be one
of the leading digital media companies in the world.''
Dr. Tan Zhi, CEO of Focus Media, said, ''2008 will be another very
exciting year for Focus Media. Built on the investments and acquisitions we
made during 2007, we see very strong growth momentum in all our businesses.
We will continue our prudent strategy to build the largest media organization
in China.''
Fourth Quarter Financial Results
For the fourth quarter of 2007, Focus Media reported total revenues of
$184.6 million, an increase of 171.4% compared to $68.0 million for the fourth
quarter of 2006, and an increase of 21.9% compared to $151.4 million for the
third quarter of 2007.
Our total digital out-of-home advertising revenue was $111.0 million in
the fourth quarter of 2007, an increase of 75.3% from $63.3 million in the
fourth quarter of 2006 and a sequential increase of 17.2% from $94.7 million
in the third quarter of 2007. In the fourth quarter of 2007, commercial
location advertising revenue, including new businesses such as outdoor LED and
movie theatre advertising, was $73.4 million, contributing 66.1% of total
digital out-of-home advertising revenue. Advertising service revenue from our
in-store network was $6.5 million, or 5.8% of total digital out-of-home
advertising revenue. Advertising service revenue from our in-elevator poster
frame network placed primarily in the elevators of residential complexes was
$31.2 million in the fourth quarter of 2007, or 28.1% of total digital
out-of-home advertising revenue.
As of December 31, 2007, the total installed base of LCD displays and
digital frames in our commercial location network was 112,298 nationwide,
including 107,533 displays through our directly owned networks, and 4,765
displays through our regional distributors. In the fourth quarter of 2007, we
continued to expand the installed base of our hypermarkets network to 1,398
stores as of December 31, 2007. Our in-store network also covers 638
supermarkets and 2,027 convenience stores as of December 31, 2007. The number
of displays installed in our in-store network increased to 49,452 as of
December 31, 2007 compared to 43,315 as of September 30, 2007. The total
number of non-digital frames available for sale on our poster frame network
was 179,649 as of December 31, 2007. In addition, as of December 31, 2007, we
had installed 10,819 digital frames on our poster frame network, mainly in
Beijing, Shanghai, Guangzhou and Shenzhen.
Mobile Advertising Business
Advertising service revenue from Focus Media Wireless in the fourth
quarter of 2007 was $16.0 million, up 355.8% from $3.5 million in the fourth
quarter of 2006 and 14.0% from $14.0 million in the third quarter of 2007.
Internet Advertising Business
Internet advertising service revenue was $57.2 million in the fourth
quarter of 2007, up 34.5% from $42.5 million in the third quarter of 2007.
Digital marketing service accounted for 90% of the total Internet advertising
revenue. Rich Media, pay-for-performance and technology solutions accounted
for the remaining 10%.
Gross profit for the fourth quarter of 2007 was $87.4 million,
representing an increase of 92.1% compared to $45.5 million for the
corresponding period a year ago and a 13.4% increase compared to $77.1 million
in the third quarter 2007. In the fourth quarter 2007, gross margin for the
Company was 47.4%, as compared to 50.9% in the third quarter of 2007, mainly
due to larger revenue contribution from our lower-gross-margin Internet
advertising business and higher intangible amortization expenses resulting
from acquisitions in our poster frame, mobile and Internet advertising
businesses. Excluding non-cash share-based compensation expense of $0.1
million and acquisition-related intangible asset amortization expense of $10.8
million in the cost of revenues, gross margin (non-GAAP) was 53.3% in the
fourth quarter of 2007 compared to 52.6% in the third quarter of 2007. In the
fourth quarter of 2007, excluding non-cash share-based compensation expense
and acquisition-related intangible asset amortization expense, digital
out-of-home gross margin (non-GAAP) increased to 65.9% from 64.2% in the third
quarter of 2007 even though our in-store network gross margin decreased
significantly due to intense price competition with CGEN during the quarter;
mobile handset advertising gross margin (non-GAAP) was 50.1% compared to 57.3%
in the third quarter of 2007 due to upfront investments in new WAP-based
business initiatives; Internet advertising gross margin (non-GAAP) was 30.1%
compared to 25.2% in the third quarter.
In the fourth quarter of 2007, operating expenses totaled $43.3 million,
including $6.0 million in acquired intangible asset amortization resulting
from acquisitions and non-cash share-based compensation expense of $7.2
million. Selling and marketing expenses in the fourth quarter totaled $27.8
million, including $6.0 million in acquired intangible asset amortization and
$3.0 million in share compensation expense. General and administrative
expense in the fourth quarter was $17.0 million, including $4.2 million in
share compensation expense. Our operating margin in the fourth quarter of
2007 was 23.9%. Excluding non-cash share-based compensation expense and
acquired intangible asset amortization expense, operating margin (non-GAAP)
was 37.0% in the fourth quarter 2007 compared to 36.4% in the previous quarter.
Total intangible amortization expenses in the fourth quarter of 2007
resulting from historical acquisitions were $16.9 million. Non-cash stock
compensation expenses were $7.3 million in the fourth quarter of 2007, or 4.0%
of total revenues. Total income taxes were $5.9 million, including $4.2
million provision for uncertain tax positions under FIN 48.
Net income for the fourth quarter of 2007 was $43.8 million, an increase
of 45.6% compared to $30.1 million for the same period in 2006. Fully
diluted net income per ADS for the fourth quarter of 2007 was $0.34. Net
income excluding non-cash share-based compensation expense and acquired
intangible assets amortization expense resulting from acquisitions (non-GAAP)
in the fourth quarter of 2007 was $68.0 million, or $0.52 per fully diluted
ADS.
Fourth quarter 2007 operating cash flow was $65.4 million. Day sales
outstanding (''DSO'') was 88 days in the fourth quarter. As of December 31,
2007, the Company had cash and cash equivalents of $450.4 million.
Full Year 2007 Results
For the full year 2007, Focus Media reported total revenues of $506.6
million, an increase of 139.1% compared to $211.9 million in 2006.
Full year net income in 2007 was $144.4 million, up 73.6% compared with
$83.2 million in 2006. Net income in 2007 excluding non-cash share-based
compensation expenses and amortization of intangible assets resulting from
acquisitions (non-GAAP) was $190.6 million compared to $97.3 million in 2006.
By the end of December 31, 2007, the Company has 5,175 employees.
Other Recent Developments
Focus Media continues to strengthen our product offerings in our digital
out-of-home advertising business. In December 2007, we launched the first
large-size LED digital outdoor billboard, a 1500 square foot LED digital
billboard on a boat navigating roundtrip along the bund area in Shanghai.
Also in January 2008, we closed the acquisition of CGEN Technology Company
Limited, a leading operator of in-store digital advertising network in China.
With this acquisition, Focus Media has significantly expanded coverage of its
digital advertising displays in large chain stores in China.
In March 2008, Dr. Tan Zhi was appointed as Chief Executive Officer of
Focus Media. Jason Jiang will remain as Executive Chairman of Focus Media and
will continue to spend full-time at Focus Media and be in charge of Focus
Media's Internet advertising, mobile handset advertising and other emerging
new media opportunities.
BUSINESS OUTLOOK
Based on organic growth, the Company estimates its total revenues for full
year 2008 to range from $900 million to $930 million, of which digital
out-of-home is expected to contribute approximately 63%, Internet advertising
is expected to contribute approximately 31%, and mobile handset advertising is
expected to contribute approximately 6%. Net income of full year 2008
excluding share-based compensation expenses and amortization of intangible
assets resulting from acquisitions (non-GAAP) is expected to be between $280
million to $300 million, taking into consideration a 15% effective income tax
rate after certain government tax incentives and rebates, or $2.06 to $2.21
per fully diluted ADS based on 136 million annual average total ADS equivalent
shares outstanding. In accordance with SFAS No. 123R, the Company estimates
total share-based compensation expenses in 2008 will be approximately $35
million based on stock options that have been granted as of February 28, 2008.
The Company expects approximately $50 million in acquisition-related
intangible amortization expenses in 2008 including CGEN acquisition, subject
to the finalization of the purchase price allocation for recent acquisitions.
The Company expects its capital expenditure for 2008 to be approximately
$50 million, mainly for the digital Frame 2.0 upgrade and expansion in both of
our residential and commercial networks and digital LED investment in our
outdoor LED business.
The Company estimates its total revenues for the first quarter of 2008
will range from $160 million to $165 million. First quarter 2008 net income
excluding share-based compensation expenses and amortization of intangible
assets resulting from acquisitions (non-GAAP) is expected to be between $44
million and $45 million or $0.33 to $0.34 per fully diluted ADS based on 133
million average total ADS equivalent shares outstanding.
USE OF NON-GAAP FINANCIAL MEASURES
In addition to Focus Media's consolidated financial results under GAAP,
the Company also provides non-GAAP financial measures, including non-GAAP
gross profit, non-GAAP gross margin, non-GAAP operating margin, non-GAAP net
income and non-GAAP earnings per fully diluted ADS, all excluding non-cash
share-based compensation and acquired intangible asset amortization expense
resulting from acquisitions. The Company believes that these non-GAAP
financial measures provide investors with another method for assessing Focus
Media's operating results in a manner that is focused on the performance of
its ongoing operations. Readers are cautioned not to view non-GAAP results on
a stand-alone basis or as a substitute for results under GAAP, or as being
comparable to results reported or forecasted by other companies, and should
refer to the reconciliation of GAAP results with non-GAAP results in the
attached financial information.
The Company believes that both management and investors benefit from
referring to these non-GAAP financial measures in assessing the performance of
Focus Media and when planning and forecasting future periods. The Company
computes its non-GAAP financial measures using the same consistent method from
quarter to quarter. The accompanying tables have more details on the GAAP
financial measures that are most directly comparable to non-GAAP financial
measures and the related reconciliation between these financial measures.
Focus Media Holding Ltd.
Reconciliation of GAAP to Non-GAAP
(U.S. Dollar in thousands, except share data)
(Unaudited)
3 months ended 3 months ended
December 31, 2007 September 30, 2007
GAAP Non- GAAP Non-
GAAP adjustments GAAP GAAP adjustments GAAP
(a) (b) (a) (b)
Gross profit
Commercial
location
network 47,356 126 3,089 50,571 41,764 288 566 42,618
In-store
network (981) -- -- (981) 1,255 -- -- 1,255
Poster
frame
network 19,773 -- 3,830 23,603 16,407 -- 571 16,978
Digital
out-of-home 66,148 126 6,919 73,193 59,426 288 1,137 60,851
Mobile Handset
Advertising
Network 6,269 -- 1,741 8,010 7,880 -- 163 8,043
Internet
Advertising 15,076 -- 2,165 17,241 9,793 -- 926 10,719
Others (63) -- -- (63) (4) -- -- (4)
Total 87,430 126 10,825 98,381 77,095 288 2,226 79,609
Gross margin
Commercial
location
network 64.5% 0.2% 4.2% 68.9% 64.7% 0.4% 0.9% 66.0%
In-store
network -15.2% 0.0% 0.0% -15.2% 17.7% 0.0% 0.0% 17.7%
Poster frame
network 63.4% 0.0% 12.3% 75.7% 71.1% 0.0% 2.5% 73.6%
Digital
out-of-home 59.6% 0.1% 6.2% 65.9% 62.7% 0.3% 1.2% 64.2%
Mobile Handset
Advertising
Network 39.2% 0.0% 10.9% 50.1% 56.2% 0.0% 1.2% 57.3%
Internet
Advertising 26.4% 0.0% 3.8% 30.1% 23.0% 0.0% 2.2% 25.2%
Others -20.3% 0.0% 0.0% -20.3% -3.4% -3.4%
Total 47.4% 0.1% 5.9% 53.3% 50.9% 0.2% 1.5% 52.6%
(a) To adjust share-based compensation expenses
(b) To adjust amortization of acquisition related intangible assets
Three months ended Year ended
2007-12-31 2006-12-31 2007-9-30 2007-12-31 2006-12-31
GAAP net income
attributable to
shareholders $43,816 $30,088 $46,613 $144,436 $83,197
Amortization of
acquired
intangible
assets 16,862 1,704 3,287 24,753 5,774
Share-based
compensation 7,338 3,436 4,679 21,453 8,368
Non-GAAP net
income $68,016 $35,228 $54,579 $190,642 $97,339
GAAP income per
ADS - basic $0.35 $0.28 $0.38 $1.22 $0.82
GAAP income per
ADS - diluted $0.34 $0.27 $0.37 $1.19 $0.80
Non-GAAP income
per ADS
- basic $0.54 $0.33 $0.45 $1.61 $0.96
Non-GAAP income
per ADS
- diluted $0.52 $0.32 $0.43 $1.57 $0.93
Shares used in
calculating
basic GAAP/
Non-GAAP
income per
ADS 125,710,757 106,528,150 122,250,042 118,077,479 101,082,216
Shares used in
calculating
diluted GAAP/
Non-GAAP
income per
ADS 129,831,533 109,915,074 126,370,818 121,665,290 104,307,276
GAAP income
from
operations $44,125 $28,409 $47,122 $143,855 $80,378
Amortization
of acquired
intangible
assets 16,862 1,704 3,287 24,753 5,774
Share-based
compensation 7,338 3,436 4,679 21,453 8,368
Non-GAAP
income from
operations $68,325 $33,549 $55,088 $190,061 $94,520
Non-GAAP
operating
margin 37.0% 49.3% 36.4% 37.5% 44.6%
TODAY'S CONFERENCE CALL
The Company will host a conference call to discuss the fourth quarter and
full year 2007 results at 9:00 p.m. U.S. Eastern Time on March 18, 2008 (6:00
p.m. U.S. Pacific Time on March 18, 2008 and 9:00 a.m. Beijing/Hong Kong Time
on March 19, 2008). The dial-in details for the live conference call are set
forth below: U.S. Toll Free Number +1-800-237-9752, Hong Kong dial-in number
+852-3002-1672, International dial-in number +1-617-847-8706; Pass code:
38373357.
A replay of the call will be available from March 18, 2008 until March 25,
2008 (US Eastern Time). The dial-in details for the replay are set forth
below: U.S. Toll Free Number +1-888-286-8010, International dial-in number
+1-617-801-6888; Pass code 52636178.
ABOUT FOCUS MEDIA HOLDING LIMITED
Focus Media Holding Limited (Nasdaq: FMCN) is China's leading
multi- platform digital media company, operating the largest out-of-home
advertising network in China using audiovisual digital displays, based on the
number of locations and number of flat-panel television displays in our
network, and is also a leading provider of mobile handset advertising and
Internet marketing solutions in China. Through Focus Media's multi-platform
digital advertising network, the Company reaches urban consumers at strategic
locations and point-of-interests over a number of media formats, including
audiovisual television displays in buildings and stores, advertising poster
frames and other new and innovative media, such as outdoor light-emitting
diode or LED digital billboard, mobile handset advertising networks and
Internet advertising platforms. As of December 31, 2007, Focus Media's
digital out-of-home advertising network had approximately 112,298 LCD display
in its commercial location network, approximately 49,452 LCD displays in its
in-store network and 179,649 advertising in-elevator poster frames, installed
in over 90 cities throughout China, and approximately 200 outdoor LED
billboard displays in Shanghai. For more information about Focus Media,
please visit our website at http://ir.focusmedia.cn .
SAFE HARBOR: FORWARD-LOOKING STATEMENTS
This announcement contains forward-looking statements. These statements
are made under the "safe harbor" provisions of the U.S. 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. Among
other things, the Business Outlook section and quotations from management in
this press release, as well as Focus Media's strategic and operational plans,
contain forward-looking 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. 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, F-6 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.
For more information, please contact:
Investor and Media contact:
Jie Chen
Tel: +86-21-3212-4661 x6607
Email: ir@focusmedia.cn
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)
2007-12-31 2006-12-31
ASSETS
Current assets
Cash and cash equivalents $450,416 $164,611
Investment in equity securities 90,145 --
Accounts receivables, net 206,102 61,614
Inventories 1,654 519
Prepaid expenses and other current
assets 62,193 5,199
Deposit paid for acquisition of
subsidiaries 37,094 3,526
Amount due from related parties 4,510 7,853
Rental deposits 28,763 --
Total current assets $880,877 $243,322
Rental deposits 5,302 11,833
Equipment, net 95,478 70,250
Acquired intangible assets, net 155,717 34,717
Goodwill 943,398 739,744
Other long term assets 58,184 6,376
Total assets $2,138,956 $1,106,242
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short term debt $-- $2,769
Accounts payable 50,379 5,987
Accrued expenses and other current
liabilities 190,313 38,674
Income taxes payable 18,947 4,060
Amount due to related parties 12,395 347
Deferred tax liabilities 1,227 --
Total current liabilities $273,261 $51,837
Deferred tax liabilities 6,393 3,303
Total liabilities $279,654 $55,140
Minority interests 1,913 358
Shareholders' equity
Ordinary shares 32 27
Additional paid in capital 1,581,580 709,196
Acquisition consideration to be --
issued 237,879
Retained earnings 239,163 96,195
Accumulated other comprehensive
income 36,614 7,447
Total shareholders' equity $1,857,389 $1,050,744
Total liabilities and shareholders'
equity $2,138,956 $1,106,242
Focus Media Holding Limited
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollar in thousands, except share data)
Three months ended Year ended
2007-12-31 2006-12-31 2007-9-30 2007-12-31 2006-12-31
Gross revenues
(note 3):
Digital
out-of-home
Commercial
locations $80,128 $46,253 $70,173 $240,587 $145,702
In-store
network 7,150 8,655 7,813 30,287 29,710
In-elevator
poster
frame
network 34,079 15,113 25,121 93,401 44,893
Mobile
handset
advertising 16,606 3,714 14,627 48,521 10,880
Internet
advertising 59,318 -- 44,234 129,970 --
Other revenue 310 1,152 117 1,113 1,932
Total gross
revenues 197,591 74,887 162,085 543,879 233,117
Less: Sales
taxes 13,039 6,891 10,693 37,320 21,212
Total revenues 184,552 67,996 151,392 506,559 211,905
Cost of revenues
(note 4):
Digital
out-of-home
Commercial
locations 26,034 11,719 22,825 79,625 42,836
In-store
network 7,456 5,123 5,832 23,502 18,106
In-elevator
poster
frame
network 11,419 3,851 6,656 28,086 13,621
Mobile
handset
advertising 9,725 1,428 6,145 23,193 6,052
Internet
advertising 42,115 -- 32,718 93,238 --
Total advertising
service costs 96,749 22,121 74,176 247,644 80,615
Other costs 373 373 121 797 765
Total cost of
revenues 97,122 22,494 74,297 248,441 81,380
Gross profit 87,430 45,502 77,095 258,118 130,525
Operating expenses:
General and
administrative
(note 4) 17,032 9,074 12,095 49,456 25,723
Selling and
marketing
(note 4) 27,810 9,195 19,081 69,931 25,762
Other operating
income (1,537) (1,176) (1,203) (5,124) (1,338)
Total operating
expenses 43,305 17,093 29,973 114,263 50,147
Income from
operations 44,125 28,409 47,122 143,855 80,378
Interest income,
net 3,530 1,692 1,595 9,752 4,255
Other income
(expenses), net 2,523 367 5 2,568 (287)
Income before tax
and minority
interests 50,178 30,468 48,722 156,175 84,346
Income tax
expense
- Current 5,916 623 2,063 11,763 1,107
- Deferred (267) (252) 46 (719) (63)
Total income
taxes 5,649 371 2,109 11,044 1,044
Income before
minority
interests 44,529 30,097 46,613 145,131 83,302
Minority
Interests 713 9 -- 695 105
Net income 43,816 $30,088 $46,613 $144,436 $83,197
Income per ADS
- basic $0.35 $0.28 $0.38 $1.22 $0.82
Income per ADS
- diluted $0.34 $0.27 $0.37 $1.19 $0.80
Shares used in
calculating
basic income
per ADS 125,710,757 106,528,150 122,250,042 118,077,479 101,082,216
Shares used
in calculating
diluted income
per ADS 129,831,533 109,915,074 126,370,818 121,665,290 104,307,276
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
(U.S. Dollar in thousands)
Three months ended Year ended
2007-12-31 2006-12-31 2007-12-31 2006-12-31
Operating activities:
Net income $43,816 $30,088 $144,436 $83,197
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Minority interest 713 9 695 105
Bad debt provision 920 447 3,655 1,845
Share based compensation 7,338 3,436 21,453 8,368
Depreciation and amortization 6,223 3,893 19,444 13,737
Amortization of acquired
intangible assets 16,862 1,704 24,753 5,774
Changes in assets and
liabilities, net of effects
of acquisitions (10,435) 7,543 (51,591) (19,671)
Net cash provided by
operating activities $65,437 $47,120 $162,845 $93,355
Investing activities:
Purchase of equipment and
other long term assets (18,852) (9,574) (55,776) (22,878)
Acquisition of an
intangible asset -- (6,403) (105) (6,403)
Purchase of subsidiaries,
net of cash acquired (34,041) (1,455) (88,481) (124,063)
Deposits paid to acquire
subsidiaries (15,796) (691) (106,068) (3,710)
Issuance of loan receivables (30,000) -- -- --
Sales /(purchase) of
available-for-sale securities (38,632) 35,000 (88,178) 35,000
Disposal of an investment -- 60 -- 60
Net cash used in investing
activities $(137,321) $16,937 $(338,608) $(121,994)
Financing activities:
Proceeds from issuance of
ordinary shares, net of
issuance costs 326,272 3,609 447,005 157,998
Proceeds from short-term debts -- -- -- 24,598
Capital injection from minority
shareholders -- 77 137 326
Repayment of short-term debts -- -- (4,166) (29,402)
Net cash provided by financing
activities $326,272 $3,686 $442,976 $153,520
Effect of exchange rate
changes 5,785 1,759 18,592 3,077
Net (decrease) increase in
cash and cash equivalents $260,173 $69,502 $285,805 $127,958
Cash and cash equivalents,
beginning of period 190,243 95,109 164,611 36,653
Cash and cash equivalents,
end of period $450,416 $164,611 $450,416 $164,611
Supplemental disclosure of
cash flow information:
Income taxes paid $211 $124 $1,247 $154
Interest paid $8 $-- $14 $245
Supplemental disclosure of
non-cash investing activity:
Acquisition of subsidiaries:
Value of ordinary share
consideration $-- $-- $166,050 $365,660
Accounts payable $16,935 $4,507 $16,935 $4,507
Notes:
Note 1: Basic income per ADS is computed by dividing income attributable
to holders of ordinary shares by the weighted average number of
ADS outstanding during the year/period. Diluted income per ADS
reflects the potential dilution that could occur if securities or
other contracts to issue ADS were exercised or converted into ADS.
Note 2: The conversion of Renminbi (''RMB'') amounts into USD amounts is
based on the rate of USD1 = RMB7.3046 on December 28, 2007.
Note 3: Details of net revenues are as follows (U.S. Dollars in thousands):
Three months ended Year ended
2007-12-31 2006-12-31 2007-9-30 2007-12-31 2006-12-31
Gross Advertising
Service Revenue:
Digital out-of-home:
Commercial locations
- Unrelated
parties 80,021 $42,671 $70,091 238,119 $130,258
- Related parties 107 3,582 82 2,468 15,444
Total Commercial
Locations 80,128 46,253 70,173 240,587 145,702
In-store Network
- Unrelated
parties 7,150 7,713 7,813 28,986 25,330
- Related parties -- 942 -- 1,301 4,380
Total in-store
network 7,150 8,655 7,813 30,287 29,710
In-elevator Poster
Frame Network
- Unrelated
parties 34,025 15,113 25,029 93,157 44,893
- Related parties 54 -- 92 244 --
Total In-elevator
Poster Frame
Network 34,079 15,113 25,121 93,401 44,893
Mobile handset
advertising
- Unrelated
parties 16,606 3,714 14,592 48,407 10,880
- Related parties -- -- 35 114 --
Total mobile handset
advertising 16,606 3,714 14,627 48,521 10,880
Internet advertising
- Unrelated
parties 58,965 -- 43,552 128,830 --
- Related parties 353 -- 682 1,140 --
Total internet
advertising 59,318 -- 44,234 129,970 --
Gross Advertising
Services Revenue: 197,281 73,735 161,968 542,766 231,185
Less: Sales taxes:
Digital out-of-home:
Commercial
locations: 6,738 4,529 5,584 19,904 13,641
In-store Network 675 819 726 2,843 2,803
In-elevator Poster
Frame Network 2,887 1,338 2,058 7,929 3,989
Mobile handset
advertising 612 205 602 1,612 779
Internet advertising 2,127 -- 1,723 5,032 --
Total sales taxes: 13,039 6,891 10,693 37,320 21,212
Net Advertising
Service Revenue 184,242 66,844 151,275 505,446 209,973
Add: Other revenue: 310 1,152 117 1,113 1,932
Net revenues: $184,552 $67,996 $151,392 $506,559 $211,905
Note 4: Share based compensations included under SFAS 123R are as follows
(U.S. Dollars in thousands):
Three months ended Year ended
2007-12-31 2006-12-31 2007-9-30 2007-12-31 2006-12-31
Cost of revenues $126 $147 $288 $979 $147
Selling and
marketing 3,005 1,202 2,017 9,524 2,090
General and
administrative 4,207 2,087 2,374 10,950 6,131
Sub-total $7,338 $3,436 $4,679 $21,453 $8,368
Note 5: The Company has performed preliminary purchase price allocation on
their acquisition made in 2007 based on an internal valuation
performed by management. The purchase price allocation will be
finalized once management has assessed the pending results of
independent third party valuations.
Note 6: The earnings per ADS is based on the new conversion ratio of 1 ADS
to 5 ordinary shares, effective as of April 11, 2007. The
comparative numbers haven been adjusted to reflect the conversion.
Focus Media Holding Ltd.
Reconciliation of GAAP to Non-GAAP
(U.S. Dollar in thousands, except percentages, share and per-share data)
(Unaudited)
3 months ended 3 months ended
December 31, 2007 September 30, 2007
GAAP GAAP Non- GAAP GAAP Non-
adjustments GAAP adjustments GAAP
(a) (b) (a) (b)
Gross profit
Commercial
location
network 47,356 126 3,089 50,571 41,764 288 566 42,618
In-store
network (981) -- -- (981) 1,255 -- -- 1,255
Poster frame
network 19,773 -- 3,830 23,603 16,407 -- 571 16,978
Digital
out-of-home 66,148 126 6,919 73,193 59,426 288 1,137 60,851
Mobile Handset
Advertising
Network 6,269 -- 1,741 8,010 7,880 -- 163 8,043
Internet
Advertising 15,076 -- 2,165 17,241 9,793 -- 926 10,719
Others (63) -- -- (63) (4) -- -- (4)
Total 87,430 126 10,825 98,381 77,095 288 2,226 79,609
Gross margin
Commercial
location
network 64.5% 0.2% 4.2% 68.9% 64.7% 0.4% 0.9% 66.0%
In-store network -15.2% 0.0% 0.0% -15.2% 17.7% 0.0% 0.0% 17.7%
Poster frame
network 63.4% 0.0% 12.3% 75.7% 71.1% 0.0% 2.5% 73.6%
Digital
out-of-home 59.6% 0.1% 6.2% 65.9% 62.7% 0.3% 1.2% 64.2%
Mobile Handset
Advertising 39.2% 0.0% 10.9% 50.1% 56.2% 0.0% 1.2% 57.3%
Network
Internet
Advertising 26.4% 0.0% 3.8% 30.1% 23.0% 0.0% 2.2% 25.2%
Others -20.3% 0.0% 0.0% -20.3% -3.4% -3.4%
Total 47.4% 0.1% 5.9% 53.3% 50.9% 0.2% 1.5% 52.6%
(a) To adjust share-based compensation expenses
(b) To adjust amortization of acquisition related intangible assets
Three months ended Year ended
2007-12-31 2006-12-31 2007-9-30 2007-12-31 2006-12-31
GAAP net income
attributable to
shareholders $43,816 $30,088 $46,613 $144,436 $83,197
Amortization of
acquired
intangible
assets 16,862 1,704 3,287 24,753 5,774
Share-based
compensation 7,338 3,436 4,679 21,453 8,368
Non-GAAP net
income $68,016 $35,228 $54,579 $190,642 $97,339
GAAP income per
ADS - basic $0.35 $0.28 $0.38 $1.22 $0.82
GAAP income per
ADS - diluted $0.34 $0.27 $0.37 $1.19 $0.80
Non-GAAP
income per
ADS - basic $0.54 $0.33 $0.45 $1.61 $0.96
Non-GAAP
income per
ADS - diluted $0.52 $0.32 $0.43 $1.57 $0.93
Shares used in
calculating
basic GAAP/
Non-GAAP
income per
ADS 125,710,757 106,528,150 122,250,042 118,077,479 101,082,216
Shares used in
calculating
diluted GAAP/
Non-GAAP
income per
ADS 129,831,533 109,915,074 126,370,818 121,665,290 104,307,276
GAAP income
from
operations $44,125 $28,409 $47,122 $143,855 $80,378
Amortization
of acquired
intangible
assets 16,862 1,704 3,287 24,753 5,774
Share-based
compensation 7,338 3,436 4,679 21,453 8,368
Non-GAAP
income
from
operations $68,325 $33,549 $55,088 $190,061 $94,520
Non-GAAP
operating
margin 37.0% 49.3% 36.4% 37.5% 44.6%
SOURCE Focus Media Holding Limited
-0- 03/18/2008
/CONTACT: Jie Chen of Focus Media Holding Ltd, +86-21-3212-4661 x6607, or
ir@focusmedia.cn /
/Web Site: http://ir.focusmedia.cn /
(FMCN)
CO: Focus Media Holding Limited
ST: China
IN: CPR ADV PUB MLM
SU: ASI CCA ERN
JH
-- CNTU029 --
0033 03/18/2008 16:05 EDT http://www.prnewswire.com
