Mar. 8, 2011 (PR Newswire Asia) --
SHANGHAI, March 9, 2011 /PRNewswire-Asia/ -- Focus Media Holding Limited
(Nasdaq: FMCN), China's largest out-of-home lifestyle community digital media
group, today announced its unaudited financial results for the fourth quarter
and full year ended December 31, 2010.
Highlights forFourthQuarter 2010:
-- Total net revenue for the fourth quarter of 2010 was $159.7 million, of
which
-- Aggregate net revenue from the LCD display network (including
the movie theater network), in-store network and poster frame
network was $146.7 million, which exceeded by approximately 12%
the mid-point of the Company's guidance range of $130-132
million. This represented an increase of 14% from $128.4 million
for the third quarter of 2010 and an increase of 45% from $100.9
million for the fourth quarter of 2009; and
-- Net revenue from the traditional outdoor billboard network for
the fourth quarter of 2010 was $13.0 million, which exceeded by
approximately 24% the mid-point of the guidance range of $10-11
million. This represented an increase of 46% from $8.9 million
for the third quarter of 2010 and an increase of 30% from $10.0
million for the fourth quarter of 2009.
-- GAAP net income attributable to Focus Media was $47.2 million, compared
to $112.7 million for the third quarter of 2010 (which included one-off
income of $79.0 million resulting from the sale of our Internet
business) and GAAP net loss of $57.0 million for the fourth quarter of
2009.
-- Non-GAAP net income attributable to Focus Media for the fourth quarter
of 2010 was $58.5 million, also exceeding the mid-point of the Company's
guidance range of $52-$53 million by 11%, representing an increase of
13% from non-GAAP net income attributable to Focus Media of $51.8
million for the third quarter of 2010 and an increase of 72% from $34.1
million for the fourth quarter of 2009. 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
$0.33, compared to $0.76 per fully diluted ADS for the third quarter of
2010 and a loss of $0.42 per ADS in the fourth quarter of 2009.
-- Non-GAAP net income attributable to Focus Media per fully diluted ADS
was $0.41, representing an increase of 17% from $0.35 per fully diluted
ADS for the third quarter of 2010 and an increase of 71% from $0.24 per
fully diluted ADS for the fourth quarter of 2009.
Highlights forFull Year2010:
-- Total net revenue for full year 2010 was $516.3 million, of which
-- Aggregate net revenue from the LCD display network (including
the movie theater network), in-store network and poster frame
network was $475.4 million, representing an increase of 37% from
$347.5 million for full year 2009 ; and
-- Net revenue from the traditional outdoor billboard network for
full year 2010 was $40.9 million.
-- GAAP net income attributable to Focus Media was $184.3 million, compared
to GAAP net loss of $213.3 million for full year 2009.
-- Non-GAAP net income attributable to Focus Media for full year 2010 was
$177.8 million, doubling from $88.7 million for full year 2009. 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 for
full year 2010 was $1.26, compared to a net loss of $1.64 per ADS for
full year 2009.
-- Non-GAAP net income attributable to Focus Media per fully diluted ADS
for full year 2010 was $1.21, an 81% increase from $0.67 per fully
diluted ADS for full year 2009.
Highlights forBalanceSheetandCashFlowResults ofFourthQuarterand Full Year2010:
-- Cash, cash equivalents and investments in held-to-maturity debt
securities was $592.0 million as of December 31, 2010, increased by 19%
from $499.4 million as of September 30, 2010.
-- Net accounts receivable for the LCD display network (including the movie
theater network), in-store network and poster frame network was $144.6
million as of December 31, 2010, a decrease of 6% from $153.6 million as
of September 30, 2010. Days sales outstanding on a rolling basis was 85
days in the fourth quarter of 2010 versus 92 days for the third quarter
of 2010.
-- Net cash inflow from operating activities in the fourth quarter of 2010
and full year of 2010 were $108.0 million and $185.2 million,
respectively, representing a 49% increase from $72.3 million for the
fourth quarter of 2009, and a 15% increase from $160.7 million for full
year 2009.
-- Net cash inflow from operating activities for the fourth quarter of
2010, after deducting the purchase of equipment and subsidiaries was
$87.0 million, representing an increase of 67% from $52.0 million for
the fourth quarter of 2009. Net cash inflow from operating activities
for full year 2010, after deducting the purchase of equipment and
subsidiaries was $126.3 million, representing an increase of 119% from
$57.7 million for full year 2009.
-- Capital expenditures were $7.1 million and $18.7 million respectively
for the fourth quarter and full year of 2010, mostly attributable to
high-definition upgrade in tier-1 cities and expansion in lower tier
cities.
-- Purchase of subsidiaries paid in the fourth quarter and full year of
2010 were $13.9 million and $40.2 million, respectively, primarily
attributable to the poster frame network. Of the total $40.2 million
payments for purchase of subsidiaries related to historical acquisitions
for full year of 2010, the cumulative earn-out payments was $36.9
million.
Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, "2010 was
a year of strong and robust growth through refocusing on our core businesses. We
continue to see exciting opportunities ahead of us in 2011. The operating
momentum continued to be strong as we step into 2011. Our core business's value
proposition to advertisers is gaining momentum as the strength and effectiveness
of our core business is becoming increasingly recognized by advertisers.
Meanwhile, we believe the aggressive ad price hikes of traditional TV
broadcasters have presented exciting growth opportunities to us. We have seen
meaningful increases in spending on our network by existing customers as well as
strong momentum in new customers additions. Our focus in 2011 will continue to
be augmenting our core business and improving our value propositions to
advertisers by: 1) Enabling interactivity of our core media resources; 2)
Restructuring of our 1st and 2nd tier cities networks A and B to create more
network capacity resources; 3) Expanding our 3rd and 4th tier cities network so
as to increase our utilization rates in those cities."
Kit Low, the Company Chief Financial Officer added, "We ended 2010 on a very
strong note. Not only did we register strong revenue momentum in the fourth
quarter of 2010, we also achieved very strong cashflow momentum. In the fourth
quarter of 2010, the Company achieved aggregate net revenue year-on-year growth
in our LCD display (including the movie theater network), in-store and poster
frame business of 45%, and quarter-on-quarter growth of 14%. GAAP net income
attributable to Focus Media and Non-GAAP net income attributable to Focus Media
for the fourth quarter of 2010 was $47.2 million and $58.5 million,
respectively. In the fourth quarter of 2010, the Company generated a net cash
inflow from operating activities after deducting the purchase of equipment and
subsidiaries (including earn-out payments) of $87.0 million. As a result, for
the year 2010 the Company achieved: 1) Cumulative net cash inflow from operating
activities, after deducting the purchase of equipment and subsidiaries, of
$126.3 million versus $57.7 million in 2009; 2) A Non-GAAP Return on Tangible
Equity of 24% versus 13% in 2009 (note); and 3) An increase of about 500 new
customer accounts, bringing our total number of customer accounts to about
4,350. We will continue our operating and financial discipline in growing cash
flow and improving our Return on Tangible Equity in 2011."
Note: Non-GAAPReturn on Tangible Equityrepresents Non-GAAP net
incomeattributable toFocusMedia dividedby total shareholders'equity minus
goodwill and net acquired intangible assets.
FourthQuarter 2010Financial Results
Advertising net revenue from the LCD display network (including the movie
theatre network) was $97.3 million for the fourth quarter of 2010, representing
an increase of 12% from $86.8 million for the third quarter of 2010 and an
increase of 46% from $66.7 million for the fourth quarter of 2009.
Advertising net revenue from the poster frame network was $39.6 million for the
fourth quarter of 2010, representing an increase of 23% from $32.2 million for
the third quarter of 2010 and an increase of 48% from $26.8 million for the
fourth quarter of 2009.
Advertising net revenue from the in-store network was $9.8 million for the
fourth quarter of 2010, representing an increase of 4% from $9.4 million for the
third quarter of 2010 and an increase of 32% from $7.4 million for the fourth
quarter of 2009.
As of December 31, 2010, the total installed base of LCD displays in our LCD
display network was 164,575 nationwide, including 157,916 displays through our
directly owned networks, and 6,659 displays through our regional distributors,
as compared to total LCD displays of 149,913 as of September 30, 2010. The total
number of non-digital frames available for sale in our poster frame network was
300,012 as of December 31, 2010, as compared to 276,504 as of September 30,
2010. In addition, as of December 31, 2010, we had 35,810 digital frames
installed in our poster frame network, as compared to 35,983 as of September 30,
2010 due to optimization of our network. The total number of displays installed
in our in-store network was 48,179 as of December 31, 2010, as compared to
45,613 as of September 30, 2010.
Advertising net revenue from the traditional outdoor billboard network was $13.0
million for the fourth quarter of 2010, representing an increase of 46% from
$8.9 million for the third quarter of 2010 and an increase of 30% from $10.0
million for the fourth quarter of 2009.
Non-GAAP gross profit from the LCD display network (including the movie theatre
network) for the fourth quarter of 2010 was $74.4 million, representing an
increase of 13% from $65.6 million for the third quarter of 2010 and an increase
of 46% from $51.1 million for the fourth quarter of 2009.
Non-GAAP gross profit from the poster frame network for the fourth quarter of
2010 was $16.5 million, representing an increase of 35% from $12.2 million for
the third quarter of 2010, and an increase of 53% from $10.8 million for the
fourth quarter of 2009.
Non-GAAP gross profit from the in-store network for the fourth quarter of 2010
was $3.7 million, representing an increase of 9% from $3.4 million for the third
quarter of 2010 and a decrease of 26% from $5.0 million for the fourth quarter
of 2009 due to the Company's settling of a rental dispute and releasing the
corresponding rental liabilities accrued in the previous periods amounting to
$3.1 million in the fourth quarter of 2009.
Non-GAAP gross profit from the traditional outdoor billboard network for the
fourth quarter of 2010 was $3.5 million, representing a 52% increase from $2.3
million for the third quarter of 2010 and a 75% increase from $2.0 million for
the fourth quarter of 2009, respectively.
Non-GAAP operating expense for the fourth quarter of 2010 was $32.7 million, an
increase of 2% from $32.2 million for the third quarter of 2010 and an increase
of 7% from $30.6 million for the fourth quarter of 2009.
Net cash provided by operating activities for the fourth quarter of 2010 was
$108.0 million, more than tripled from $34.2 million for the third quarter of
2010.
Net cash used in investing activities for the fourth quarter of 2010 was $42.3
million. In the fourth quarter of 2010, the Company incurred capital
expenditures of $7.1 million, subsidiary acquisition payments of $13.9 million
and invested $21.5 million in held-to-maturity debt securities.
Business Outlook forFirstQuarter 2011
The Company provides the following guidance with respect to the first quarter
ending March 31, 2011:
Net revenues for the core business (inclusive of the LCD display network and
other, the in-store network and the poster frame network) are expected to be in
the range of $122-$124 million, the mid-point of which would represent
year-on-year growth of 40% and quarter on quarter decline of 16% (due to
seasonality). Net revenues for the non-core business (the traditional outdoor
billboard network) are expected to be in the range of $10 - $11 million. The
Company's non-GAAP net income is expected to be in the range of $36-$38 million.
The Company estimates the weighted average fully diluted ADS count for the
quarter at 143 million, assuming no further share repurchases during the
quarter.
Based on the existing business outlook, the Company expects earn-out payments
remaining in 2011, spilled over from the fourth quarter of 2010, to be no more
than $1.6 million.
Announced Share Repurchase Program
On August 3, 2010, Focus Media announced its intention to increase the size of
its previously announced share repurchase program from $200 million to $300
million and to extend the termination date of the repurchase plan to June 2011
from February 2011. As of March 8, 2011, the Company has cumulatively spent $240
million in share repurchases.
Disposal of 49% Interest in Traditional Outdoor Billboard Division
The Company has entered into a definitive equity transfer agreement (the
"Agreement") with GBL III Limited, an entity controlled by Goldman Sachs and
entities (the "Management Entities") controlled by certain employees, directors
and management members of Focus Media and Shanghai Hua Guang Chuanzhi OOH Ltd.
("OOH"), the outdoor media subsidiary of Focus Media. Under the terms of the
Agreement, Goldman Sachs will acquire a 30% equity interest in OOH from Focus
Media for US$21 million, and the Management Entities will purchase an aggregate
19% equity interest in OOH from Focus Media for US$13.3 million. GBL III Limited
will extend a loan to the Management Entities under certain loan documents to be
entered into between GBL III Limited and the Management Entities. The board of
directors of the Company has approved these transactions. Upon completion of
these transactions, Focus Media will hold a 51% indirect equity interest in OOH.
This is part of our continued effort to divest non-core business. We believe
partial stake disposal affords Focus Media to recoup a majority of the
investments in OOH while retaining upside potential in the business.
Focus Media, GBL III Limited and the Management Entities will also enter into an
equity holders' agreement, pursuant to which GBL III Limited will be entitled to
nominate one designee to OOH's board of directors following completion of the
transaction. The closing of the transaction is subject to customary closing
conditions, including receiving certain PRC government approvals.
Foreign Currency Translation
Assets and liabilities are translated at the exchange rate as of December 31,
2010, which was $1 to RMB 6.6227. Equity accounts are translated at historical
exchange rates and revenues, expenses, gains and losses are translated using the
average rate for the fourth of 2010, which was $1 to RMB 6.6474. Translation
adjustments are reported as cumulative translation adjustments and are shown as
a separate component of other comprehensive income in the statement of equity
and comprehensive income (loss).
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 disposal of previously acquired
subsidiaries and equity affiliates, impairment charges of long-lived assets and
goodwill, write-off of receivables from ex-shareholders of disposed business,
settlement of disputed liabilities in previously disposed wireless business,
impairment and termination charges related to ceasing expansion of digital
poster frame networks and boat-based advertising platform, charges from
expensing IPO expenditures as a result of termination of the IPO process of
Allyes and the profit from the disposal of the internet business. 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 future periods. The Company computes its non-GAAP financial
measures using a consistent method from quarter to quarter, mostly including
Share-based compensation, amortization of acquired intangible assets, profit or
loss from disposal of previously acquired subsidiaries and impairment charges.
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 percentages, share and per-share
data)
(Unaudited)
Three months ended December 31,
2010
GAAP (1) (2) Non- GAAP
---- --- --- ---------
Gross Profit
LCD display and
other: 73,188 129 1,098 74,415
-LCD display
network 73,000 129 1,082 74,211
-Movie theater
network 188 - 16 204
Poster frame
network 14,558 - 1,965 16,523
In-store network 3,745 - - 3,745
Traditional
outdoor
billboard
network 3,080 - 439 3,519
----- --- --- -----
Total Gross
Profit 94,571 129 3,502 98,202
------ --- ----- ------
General and
administrative 16,763 (6,056) - 10,707
Selling and
marketing 29,927 (610) (1,046) 28,271
Other operating
expenses
(income), net (6,296) - - (6,296)
------ --- --- ------
Total operating
expense 40,394 (6,666) (1,046) 32,682
------ ------ ------ ------
Operating profit
from continuing
operations 54,177 6,795 4,548 65,520
Profit before
tax from
continuing
operations 55,989 6,795 4,548 67,332
Net profit from
continuing
operations 47,258 6,795 4,548 58,601
Net profit from
discontinued
operations - - - -
Net income
attributable to
Focus Media 47,154 6,795 4,548 58,497
====== ===== ===== ======
Basic net income
from continuing
operations per
ADS 0.35 0.43
Diluted net
income from
continuing
operations per
ADS 0.33 0.41
Basic net income
from
discontinued
operations per
ADS - -
Diluted net
income from
discontinued
operations per
ADS - -
Basic net income
attributable to
Focus Media per
ADS 0.35 0.43
Diluted net
income
attributable to
Focus Media per
ADS 0.33 0.41
==== ====
ADS used in
calculating
basic income
per ADS 135,679,003 135,679,003
----------- -----------
ADS used in
calculating
diluted income
per ADS 141,661,330 141,661,330
----------- -----------
(1). Share-based compensation.
(2).