First Quarter Revenue Increased by 75.4% and Net Income Increased by 72.7% Year-over-year
SHANGHAI, China, May 18 /Xinhua-PRNewswire/ -- Focus Media Holding Limited (Nasdaq: FMCN), China’s largest out-of-home multi-platform life-style media company, today announced its unaudited financial results for the first quarter ended March 31, 2007.
Highlights for first quarter 2007:
-- Total revenues grew 75.4% year-over-year to $58.1 million.
-- Net income for the first quarter was $16.3 million compared to $9.4
million for the three months ended March 31, 2006, growing 72.7% year-
over-year. Fully diluted net income per ADS for the first quarter of
2007 was $0.15. Focus Media also provides 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 first quarter was
$22.7million or $0.21 per fully diluted ADS., above our guidance range
of $20 million to $21 million.
-- Our Commercial Location Network
-- Advertising service revenue from our commercial location network,
including revenue from our outdoor LED network (also referred to as
our iStreet Network) and movie theater advertising network, grew
50.8% year-over-year to $32.4 million.
-- For our Premier Office Building Channel A (“Premier Channel A”),
average advertising revenue per 30-second equivalent time slot
(“ASP”) in Focus Media’s Tier-I Cities (Beijing, Shanghai,
Guangzhou and Shenzhen) was $12,092 in the first quarter 2007, down
from $13,507 in the fourth quarter of 2006, as certain time slots
were sold at a higher discount due to the less-favorable audience
traffic during the holiday season.
-- Our In-store Network
-- Advertising service revenue from our in-store network grew 26.1%
year-over-year to $6.7 million in the first quarter of 2007.
-- The total number of hypermarkets covered by our in-store network as
of March 31, 2007 increased to 1,196 from 1,100 as of December 31,
2006. Substantially all of the revenue from our in-store network
during this period was derived from our LCD network in hypermarkets.
-- Our In-elevator Poster Frame Network
-- Advertising service revenue from our in-elevator poster frame
network grew 108.8% year-over-year to $12.7 million in the first
quarter 2007.
-- The total number of frames available for sale was 124,542 as of
March 31, 2007, as compared to 99,784 as of December 31, 2006.
-- Focus Media Wireless
-- Advertising service revenue from Focus Media Wireless was $6.0
million in the first quarter 2007, as compared to $3.5 million in
the fourth quarter 2006.
-- Other revenues
-- In the first quarter 2007, we derived $0.4 million in the
advertising equipment sales revenues from sales to our regional
distributors and licensing fee from our partner in Malaysia.
Commenting on the first quarter 2007 results, Chief Executive Officer Jason Jiang said, “As expected, our businesses were impacted by the Chinese New Year holiday in the first quarter of 2007. However, all of our businesses has posted solid growth year-over-year. We have also seen a solid sales rebound in sales into the second quarter. Most importantly during the first quarter of 2007, we completed the acquisition of Allyes, China’s largest internet advertising agency and therefore, established a solid position in China’s fast growing Internet advertising market. We expect Allyes to contribute significantly to our future growth.”
First Quarter Financial Results
For the first quarter of 2007, Focus Media reported total revenues of $58.1 million, an increase of 75.4% compared to $33.1 million for the first quarter of 2006, but a decrease of 14.9% compared to $68.3 million for the fourth quarter of 2006, due to industry seasonality and the Chinese New Year holiday during the first quarter.
Commercial Location Network
For the commercial location network, advertising service revenue, including revenue from our outdoor LED network and movie theater advertising network, was $32.4 million in the first quarter of 2007, an increase of 50.8% from $21.5 million in the first quarter of 2006.
The total number of displays installed on our commercial location network in our directly operated cities was 83,256 as of March 31, 2007, increasing from 80,263 as of December 31, 2006, while the number of displays in networks operated by our regional distributors was 4,010 as of March 31, 2007.
For our Premier Channel A, which consists primarily of the office building locations on Focus Media’s commercial location network prior to the Target Media acquisition, the total number of 30-second equivalent time slots sold (“Slots Sold”) in the first quarter of 2007 was 6,414, as compared to 8,533 in the previous quarter. The number of 30-second equivalent time slots available for sale (“Network Capacity”) in the first quarter was 16,320 as compared to 15,939 in the fourth quarter of 2006. Slots Sold in Tier-I Cities were 1,117 in the first quarter 2007 which implies a sell-out rate, or Slots Sold expressed as a percentage of Network Capacity, of 89.6% in the first quarter 2007. ASP in the Tier-I Cities was $12,029 in the first quarter 2007, down from $13,507 in the fourth quarter of 2006, as certain time slots were sold at a higher discount during the holiday period. Advertising revenue from Tier-I Cities for our Premier Channel A accounts for approximately 60.2% of the total Premier Channel A revenues. Slots Sold in Tier-II Cities were to 5,298 in the first quarter 2007, which indicates a sell-out rate of 35.1%. The Premier Channel A accounted for approximately 70% of total commercial location advertising service revenues in the quarter while other channels, our outdoor LED network and movie theater advertising business contributed the remaining 30%.
Other revenue in the first quarter was $0.4 million, which include advertising equipment sales to our regional distributors and licensing fee from our partner in Malaysia
In-store Network
Advertising service revenue from our in-store network in the first quarter 2007 was $6.7 million, an increase of 26.1% from $5.3 million in the first quarter 2006. In the first quarter 2007, we continued to expand the installed base of our hypermarkets to 1,196 stores from 1,100 hypermarkets as of December 31, 2006. The installed base of supermarkets and convenience stores was 842 and 1,897, respectively, as of March 31, 2007. The number of displays installed in our in-store network increased to 40,736 as of March 31, 2007 compared to 38,742 as of December 31, 2006.
For the in-store network, the total number of 30-second equivalent time slots (on a per week per store basis) sold in the first quarter of 2007 was 100,322, as compared to 97,774 in the previous quarter. The number of 30-second equivalent time slots available for sale, or network capacity, was 360,309, as compared to 318,342 in the previous quarter. The network sell-out rate was 27.8% based on the increased capacity. Average advertising revenue per 30-second equivalent time slot per week per store was $67 for the in-store network in the first quarter of 2007, as compared to $80 as in the fourth quarter of 2006 due to seasonality.
Poster Frame Network
Advertising service revenue from our poster frame network placed primarily in the elevators of residential complexes was $12.7 million in the first quarter of 2007, 108.8% from $6.1 million in the first quarter of 2006. The total number of frames available for sale was 124,542 as of March 31, 2007, as compared to 99,784 as of December 31, 2006. The number of frame slots (on a monthly basis) sold in the first quarter 2007 increase 17.2% to 195,603, as compared to 166,825 in the previous quarter. The network capacity calculated based on the number of frame slots (on a monthly basis) available for sale in the first quarter of 2007 was 375,346, as compared to 294,294 in the previous quarter. The network sell-out rate was 52.1% based on the increased capacity. Average advertising revenue per frame slot was $65 per month in the first quarter of 2007 as compared to $83 per month in the fourth quarter of 2006 due to seasonality.
Advertising on Wireless Network
Advertising service revenue from Focus Media Wireless in the first quarter of 2007 was $6.0 million, as compared to $3.5 million in the fourth quarter of 2006.
In the first quarter of 2007, for our commercial location and in-store businesses, we added approximately 187 new advertising clients, bringing the cumulative number of advertisers on the Focus Media commercial location network and in-store network to approximately 2,800.
Gross profit for the first quarter of 2007 was $33.7 million, representing an increase of 82.1% compared to $18.5 million for the corresponding period a year ago. Gross margin for the first quarter was 58.0%, as compared to 55.8% in the first quarter of 2006. In the first quarter 2007, gross margin for the commercial location network (including our outdoor LED network and movie theater advertising business) was 61.7%; the in-store network gross margin was 24.7%; the poster frame network gross margin was 66.9%; Focus Media wireless gross margin was 56.5%.
In the first-quarter of 2007, operating expenses totaled $20.5 million, including $1.9 million in acquired intangible asset amortization resulting from acquisitions and non-cash share-based compensation expense of $4.5 million. Operating expenses as a percentage of total revenues in the first quarter 2007 was 35.3%. Selling and marketing expenses in the first quarter totaled $9.9 million including $2.1 million in share compensation expense, or 17.0% of total revenues. General and administrative expense in the first quarter was $8.7 million including $2.2 million in share-based compensation expense, or 14.9% of total revenues. As a result, operating margin in the first quarter of 2007 was 22.7%. Excluding non-cash share-based compensation expense and acquired intangible asset amortization expense, operating margin (non-GAAP) was 33.8% in the first quarter 2007, as compared to 34.7% in the first quarter of 2006.
Net income for the first quarter of 2007 was $16.3 million, an increase of 72.7% compared to $9.4 million for the same period in 2006. On April 11, 2007, On April 11, 2007, Focus Media effected a change in ADS-to-share ratio which had the equivalent effect of a share split. The ADS to ordinary share ratio was decreased from 1 ADS to 10 ordinary shares to 1 ADS to 5 ordinary shares. All of the per-ADR data reported after April 11, 2007 is based on the new ratio. Fully diluted net income per ADS for the first quarter of 2007 was $0.15. Net income excluding non-cash share-based compensation expenses and amortization of acquired intangible assets resulting from acquisitions (non-GAAP) in the first quarter of 2007 was $22.7million, or $0.21 per fully diluted ADS.
In the first quarter of 2007, cash flow from operating activities was $24.0 million. Total depreciation expense was $3.8 million. Day sales outstanding (“DSO”), excluding Allyes, was 100 days due to seasonality.
Other Recent Developments
In the first quarter of 2007, Focus Media changed the ratio of its American Depositary Shares (“ADSs”) to ordinary shares from one (1) ADS representing ten (10) ordinary shares to one (1) ADS representing five (5) ordinary shares, effective as of April 11, 2007. For Focus Media’s ADS holders, this ratio change had the same effect as a two-for-one ADS split. There will be no change to Focus Media’s underlying ordinary shares.
In March 2007, Focus Media completed its acquisition of Allyes Information Technology Company Limited, the largest internet advertising service company in China. The Allyes acquisition extends our life-style media platform to one of the fastest growing media segments in China, the Internet, reaching high-end urban consumers. Following the close of the acquisition, Allyes became a wholly-owned subsidiary of Focus Media.
On May 15, 2007, the Board of Director confirmed the appointment of Dr. Tan Zhi, president of Focus Media, as a director of the company.
BUSINESS OUTLOOK
The Company estimates its total revenues for the second quarter of 2007 will range from $103 million to $107 million, or $112 million to $116 million in gross revenue prior to the deduction of sales tax. Second quarter 2007 net income excluding share-based compensation expenses and amortization of intangible assets resulting from acquisitions (non-GAAP) is expected to be between $40 million and $41 million or $0.34 to $0.35 per fully diluted ADS based on 117 million total ADS equivalent average 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 operating margin, non-GAAP net income and non-GAAP earning per fully diluted ADS, all excluding non-cash share-based compensation and amortization of acquired intangible assets 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 for the three-month periods ended March 31 2006 and 2007, and December 31, 2006, 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’s liquidity 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 Non-GAAP to GAAP
(U.S. Dollar in thousands, except share data)
Three months ended
2007-3-31 2006-3-31 2006-12-31
(unaudited) (unaudited) (unaudited)
GAAP net income attributable to
shareholders $16,292 $9,433 $30,088
Amortization of acquired
intangible assets 1,932 999 1,704
Share-based compensation 4,517 1,466 3,436
Non-GAAP net income $22,741 $11,898 $35,228
GAAP income per ADS - basic $0.15 $0.11 $0.28
GAAP income per ADS - diluted $0.15 $0.10 $0.28
Non-GAAP income per ADS -
basic $0.21 $0.14 $0.33
Non-GAAP income per ADS -
diluted $0.21 $0.13 $0.32
Shares used in calculating
basic GAAP /Non-GAAP
income per ADS 107,179,635 87,646,418 106,528,150
Shares used in calculating
diluted GAAP / Non-GAAP
income per ADS 110,390,777 93,179,064 109,915,074
GAAP income from operations $13,180 $9,048 $27,556
Amortization of acquired
intangible assets 1,932 999 1,704
Share-based compensation 4,517 1,466 3,436
Non-GAAP income from operations $19,629 $11,513 $32,696
Non-GAAP operating margin 33.8 % 34.7 % 47.9 %
TODAY’S CONFERENCE CALL
Focus Media will host a conference call to discuss the first quarter 2007 financial results and second quarter 2007 business outlook at 9:00 p.m. U.S. Eastern Time on May 17, 2007 (6:00 p.m. U.S. Pacific Time on May 17, 2007; 9:00 a.m. Beijing/Hong Kong time on May 18, 2007). The dial-in details for the live conference call are: U.S. Toll Free Number +1-800-299-8538, Hong Kong dial-in number +852-3002-1672, International dial-in number +1-617-786-2902; Pass code 85296374.
A replay of the call will be available from May 17, 2007 until May 24, 2007 (U.S. Eastern Time). The dial-in details for the replay are: U.S. Toll Free Number +1-888-286-8010; international dial-in number +1-617-801-6888; pass code 85604313. A webcast of this call will also be available live and archived on Focus Media’s website at http://ir.focusmedia.cn .
ABOUT FOCUS MEDIA HOLDING LIMITED
Focus Media Holding Limited (Nasdaq: FMCN) is China’s leading out-of-home multi-platform life-style media company, which operates the largest out-of-home advertising network in China using audiovisual flat-panel displays. Based on an audience-centric approach, Focus Media provides targeted advertising channels which cover specific demographics groups and their daily activities, from office buildings to retail chain stores, residential building, shopping malls, golf country clubs, airports, and airport transit buses. As of March 31, 2007, Focus Media had approximately 90,000 display units in our commercial location network, 40,700 display units in our in-store network, 124,500 advertising poster frames installed throughout China and 200 outdoor LED displays in Shanghai. Over 4,000 international and domestic advertisers had placed advertisements through our multi-platform networks as of March 31, 2007. For more information about Focus Media, please visit our website 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.
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)
2007-3-31 2006-12-31
(unaudited) (unaudited)
ASSETS
Current assets
Cash and cash equivalents $204,563 $164,611
Investment in available-for-sale
securities 21,980 --
Accounts receivables, net 93,720 67,942
Inventories 2,338 519
Prepaid expenses and other current
assets 11,916 6,268
Deposit paid for acquisition of
subsidiaries 19,745 3,526
Amount due from related parties 453 456
Total current assets $354,715 $243,322
Rental Deposits 14,177 11,833
Deposit paid for acquisition of
equipment 5,440 4,301
Deposit paid for acquisition of
subsidiaries 7,945 525
Equipment, net 72,478 70,250
Acquired intangible assets, net 103,158 34,717
Goodwill 630,484 497,801
Long term investments 77 --
Other long term assets 673 723
Deferred tax assets 967 826
Total assets $1,190,114 $864,298
LIABILITIES AND SHAREHOLDERS’ EQUITY
(DEFICIENCY)
Current liabilities
Other short term loans $- $3,115
Accounts payable 18,390 5,988
Accrued expenses and other current
liabilities 56,470 38,489
Income taxes payable 7,386 3,300
Total current liabilities $82,246 $50,892
Non-current liabilities
Liabilities assumed upon
acquisitions 1,281 183
Total liabilities $83,527 $51,075
Minority interests 427 358
Shareholders’ equity
Ordinary shares 29 27
Additional paid in capital 985,188 709,196
Retained earnings (note 7) 111,019 96,195
Accumulated other comprehensive
income 9,924 7,447
Total shareholders’ equity $1,106,160 $812,865
Total liabilities and shareholders’
equity $1,190,114 $864,298
Focus Media Holding Limited
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollar in thousands, except share data)
Three months ended
2007-3-31 2006-3-31 2006-12-31
(unaudited) (unaudited) (unaudited)
Gross revenues (note 3):
- Commercial Locations $35,653 $23,554 $46,495
- In-store Network 7,366 5,818 8,673
- In-elevator Poster Frame
Network 13,854 6,658 15,113
- Mobile Handset Advertising
Network 6,020 -- 3,714
Other Revenue 381 304 1,151
Total gross revenues $63,274 $36,334 $75,146
Less: Sales taxes 5,159 3,197 6,892
Total net revenues $58,115 $33,137 $68,254
Cost of revenues (note 4):
Net advertising service cost
- Commercial Locations 12,417 8,035 11,337
- In-store Network 5,027 3,973 5,123
- In-elevator Poster Frame
Network 4,195 2,397 3,389
- Mobile Handset Advertising
Network 2,614 -- 1,297
Other Costs 165 232 373
Total cost of revenues 24,418 14,637 21,519
Gross profit 33,697 18,500 46,735
Operating expenses:
General and administrative
(note 4) 8,683 4,395 8,750
Selling and marketing (note 4) 9,902 4,057 8,725
Amortization of acquired
intangible assets 1,932 999 1,704
Total operating expenses 20,517 9,451 19,179
Income from operations 13,180 9,049 27,556
Interest income, net 2,693 916 1,693
Other income (expenses), net 1,356 45 1,219
Income before tax and minority
interests 17,229 10,010 30,468
Income tax expense
- Current 1,101 65 624
- Deferred (133) 552 (252)
Total income taxes 968 617 372
Income before minority
interests 16,261 9,393 30,096
Minority Interests (31) (40) 8
Net income $16,292 $9,433 $30,088
Income per ADS - basic $0.15 $0.11 $0.28
Income per ADS - diluted $0.15 $0.10 $0.28
Shares used in calculating
basic income per ADS 107,179,635 87,646,418 106,528,150
Shares used in calculating
diluted income per ADS 110,390,777 93,179,064 109,915,074
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
(U.S. Dollar in thousands)
Three months ended
2007-3-31 2006-3-31 2006-12-31
(unaudited) (unaudited) (unaudited)
Operating activities:
Net income $16,292 $9,433 $30,088
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Minority interest (31) (40) 8
Bad debt provision 796 195 447
Share based compensation 4,517 1,467 3,436
Depreciation and amortization 3,838 2,606 3,893
Amortization of acquired
intangible assets 1,932 999 1,704
Changes in assets and
liabilities, net of effects of
acquisitions (3,369) (9,894) 7,544
Net cash provided by
operating activities 23,975 4,766 47,120
Investing activities:
Purchase of equipment and other
long term assets (6,633) (8,354) (9,574)
Acquisition of an intangible
asset -- -- (6,403)
Purchase of subsidiaries, net
of cash acquired (52,260) -- (444)
Diluted minority interest’s
share -- (57,719) (1,011)
Deposits paid to acquire
subsidiaries (20,069) -- (691)
Expiration of/ (investment in)
available-for-sale
securities (21,980) -- 35,000
Disposal of an investment -- -- 60
Net cash provided by/(used in)
investing activities (100,942) (66,073) 16,937
Financing activities:
Proceeds from issuance of
ordinary shares, net
of issuance costs 117,195 65,664 3,609
Proceeds from short-term bank
loans -- 1,247 --
Capital injection from minority
shareholders 97 250 77
Repayment of short-term bank
loans -- (991) --
Repayment of short-term
other loans (3,115) (79) --
Net cash provided by financing
activities 114,177 66,091 3,686
Effect of exchange rate changes 2,742 426 1,759
Net increase in cash and cash
equivalents 39,952 5,210 69,502
Cash and cash equivalents,
beginning of period 164,611 36,653 95,109
Cash and cash equivalents, end
of period 204,563 41,863 164,611
Supplemental disclosure of cash
flow information:
Income taxes paid $280 $- $124
Interest paid $- $13 $-
Supplemental disclosure of
non-cash investing activity:
Acquisition of subsidiaries:
Value of ordinary share
consideration $154,281 $- $-
Accounts payable $3,892 $- $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 = RMB7.7342 on March 31, 2007.
Note 3: Details of net revenues are as follows (U.S. Dollars in thousands):
Three months ended
2007-3-31 2006-3-31 2006-12-31
(unaudited) (unaudited) (unaudited)
Gross Advertising Service
Revenue:
Commercial Locations
- Unrelated parties $35,608 $21,200 $45,774
- Related parties 45 2,354 721
Total Commercial Locations 35,653 23,554 46,495
In-store Network
- Unrelated parties 7,366 5,216 8,673
- Related parties -- 602 --
Total in-store network 7,366 5,818 8,673
In-elevator Poster Frame
Network
- Unrelated parties 13,854 6,658 15,113
Total In-elevator Poster Frame
Network 13,854 6,658 15,113
Mobile Handset Advertising
Network
- Unrelated parties 6,020 -- 3,714
Total Mobile Handset --
Advertising Network 6,020 3,714
Gross Advertising Services
Revenue: 62,893 36,030 73,995
Less: Sales taxes：
Commercial Locations 3,274 2,082 4,530
In-store Network 688 524 819
In-elevator Poster Frame
Network 1,185 591 1,338
Mobile Handset Advertising
Network 12 -- 205
Total sales taxes 5,159 3,197 6,892
Net Advertising Service Revenue 57,734 32,833 67,103
Add: Other revenue: 381 304 1,151
Net revenues: $58,115 $33,137 $68,254
Note 4: Share based compensations included under SFAS 123R are as follows
(U.S. Dollars in thousands):
Three months ended
2007-3-31 2006-3-31 2006-12-31
(unaudited) (unaudited) (unaudited)
Cost of sales $281 -- $147
Selling and marketing 2,061 337 1,202
General and administrative 2,175 1,129 2,087
Total $4,517 $1,466 $3,436
Note 5: The Company has performed preliminary purchase price allocation on
their acquisition made in the third and fourth quarters of 2006
and the first quarter of 2007 based on an internal valuation
performed by management. The purchase price allocation will be
finalized once the independent valuation analysis is completed.
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.
Note 7: Effective January, 1 2007, the Company adopted the provisions of
FIN 48, “Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement No. 109.” The cumulative effect
on adoption of FIN 48 has been recorded as an adjustment to
increase income tax provision and decrease the retained earnings
as of January 1, 2007 by $1.5 million, respectively.
Focus Media Holding Ltd.
Reconciliation of Non-GAAP to GAAP
(U.S. Dollar in thousands, except percentages, share and per-share data)
Three months ended
2007-3-31 2006-3-31 2006-12-31
(unaudited) (unaudited) (unaudited)
GAAP net income attributable to
shareholders $16,292 $9,433 $30,088
Amortization of acquired
intangible assets 1,932 999 1,704
Share-based compensation 4,517 1,466 3,436
Non-GAAP net income $22,741 $11,898 $35,228
GAAP income per ADS - basic $0.15 $0.11 $0.28
GAAP income per ADS - diluted $0.15 $0.10 $0.28
Non-GAAP income per ADS -
basic $0.21 $0.14 $0.33
Non-GAAP income per ADS -
diluted $0.21 $0.13 $0.32
Shares used in calculating
basic GAAP /Non-GAAP
income per ADS 107,179,635 87,646,418 106,528,150
Shares used in calculating
diluted GAAP / Non-GAAP
income per ADS 110,390,777 93,179,064 109,915,074
GAAP income from operations $13,180 $9,048 $27,556
Amortization of acquired
intangible assets 1,932 999 1,704
Share-based compensation 4,517 1,466 3,436
Non-GAAP income from operations $19,629 $11,513 $32,696
Non-GAAP operating margin 33.8 % 34.7 % 47.9 %
