SHANGHAI, China, March 24 /PRNewswire-Asia/ -- 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, 2008.
Basis of Presentation
On December 9, 2008, Focus Media (the "Company") announced the restructuring of its CGEN in-store advertising network and the termination of its remaining wireless advertising (interactive marketing) business. Subsequently, on December 22, 2008, the Company announced the sale to SINA Corporation of substantially all of the assets of its out-of-home digital networks, including LCD display networks, Poster Frame networks and In-Store networks. As a result of the above transactions, these lines of businesses have been accounted as discontinued operations in accordance with US GAAP in the financial statements that accompany this press release. Certain results for the total company, however, have been provided to assist the readers in understanding the overall results of the Company relative to the guidance for the fourth quarter of 2008 that was provided by the Company on November 10, 2008. As such, the term "Total Company" as used in this press release includes both continuing and discontinued operations of the Company.
Highlights for Fourth Quarter 2008:
-- Total Company net revenue was $192.1 million, declining 15% from $224.8
million for the third quarter of 2008 and meeting the company's
previous guidance for the fourth quarter of 2008 of between $190
million and $200 million.
-- Net loss was $800.3 million or -$6.22 per fully diluted ADS, compared
to net income of $51.3 million for the third quarter of 2008 or $0.38
per fully diluted ADS.
-- Non-GAAP net income was $50.0 million or $0.39 per fully diluted ADS,
declining 30% from $71.4 million in the third quarter of 2008 or $0.53
per fully diluted ADS and below the Company's previous guidance for the
fourth quarter of 2008 of between $60 million and $61 million.
-- Continuing operations net revenue was $87.2 million and net loss from
continuing operations was $422.2 million; Non-GAAP net income from
continuing operations was $7.3 million.
-- Discontinued operations net revenue was $104.9 million and net loss
from discontinued operations was $378.1 million; Non-GAAP net income
from discontinued operations was $42.7 million.
Highlights for the Full Year 2008:
-- Total Company net revenue was $790.2 million for the full year 2008, as
compared to $506.6 million for the full year 2007.
-- Continuing operations net revenue was $369.6 million.
-- Non-GAAP net income was $221.9 million for the full year 2008, as
compared to $190.6 million for the full year 2007.
-- Net loss from continuing operations was $414.9 million.
-- Net loss from discontinued operations was $353.5 million.
-- Net loss was $768.5 million for the full year 2008, as compared to net
income of $144.4 million for full year 2007.
Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, "The fourth quarter 2008 was particularly challenging period to Focus Media. During the quarter, we incurred significant non-cash restructuring and impairment charges due to severe adverse changes in macro and micro business environments. However, our core business has held relatively well. Though we saw revenue in fourth quarter declined 15% to $192 million from $224.8 million of third quarter 2008, we have significantly improved our account receivable collection and as a result, our account receivable balance has dropped to $278.8 million as of December 31, 2008 from $346.3 million as of September 30, 2008."
Fourth Quarter and Full Year 2008 balance sheet results
-- Cash and cash equivalents for Total Company were $422.9 million as of
December 31, 2008, a 13% increase from $373.2 million as of September
30, 2008.
-- Cash and cash equivalents for continuing operations were $142.4 million
as of December 31, 2008.
-- Cash and cash equivalents for discontinued operations were $280.5
million as of December 31, 2008.
-- Account receivable for Total Company was $278.9 million as of December
31, 2008, a 19% decline from $346.3 million as of September 30, 2008,
mainly attributable to the improved accounts receivable collection and
disposal of CGEN business.
-- Account receivable for continuing operations was 135.3 million as of
December 31, 2008.
-- Account receivable for discontinued operations was 143.6 million as of
December 31, 2008.
To assist the readers in understanding the overall financial position of Total Company, the summary of balance sheet results as of December 31, 2008 are listed as follows:
Discontinued
operations
Continuing (Asset Held for Total Company
operation Sale) (Non-GAAP)
Cash & Bank Balance 142,434 280,481 422,915
Account receivables,
net 135,270 143,582 278,852
Other current assets 62,821 42,982 105,803
Total Assets 466,099 1,066,195 1,532,294
Account payables (67,905) (16,621) (84,526)
Total current
liabilities (158,125) (158,281) (316,406)
Total liabilities (169,706) (160,240) (329,946)
Fourth Quarter 2008 financial results
For the fourth quarter of 2008, Total Company net revenue was $192.1 million, a 15% decline compared to $224.8 million for the third quarter of 2008.
Advertising revenue from LCD display network was $65.3 million for the fourth quarter of 2008, an 18% decline from $79.6 million for the third quarter of 2008.
Advertising revenue from our in-elevator poster frame network was $39.2 million for the fourth quarter of 2008, an 11% decline from $44.0 million for the third quarter of 2008.
As of December 31, 2008, the total installed base of LCD displays and digital frames in our commercial location network was 128,033 nationwide, including 122,597 displays through our directly owned networks, and 5,436 displays through our regional distributors. The total number of non-digital frames available for sale on our in-elevator poster frame network was 290,169 as of December 31, 2008. In addition, as of December 31, 2008, we had 34,195 digital frames installed in our poster frame network.
Advertising revenue from the movie theater and outdoor billboard networks was $21.6 million in the fourth quarter of 2008, representing a 10% increase from 19.6 million in the third quarter of 2008.
Internet advertising service revenue was $62.4 million for the fourth quarter of 2008, a 12% decline from $70.8 million for the third quarter of 2008.
Total Company Non-GAAP gross profit for the fourth quarter of 2008 was $87.9 million, representing a 24% decline from $116.2 million for the third quarter of 2008, mainly attributable to 15% sequential decline in revenue.
Non-GAAP gross profit for the LCD display network for the fourth quarter of 2008 was $43.9 million, representing a 23% decline from $56.9 million for the third quarter of 2008.
Non-GAAP gross profit for the poster frame network for the fourth quarter of 2008 was $23.8 million, representing a 20% decline from $29.8 million for the third quarter of 2008.
Non-GAAP gross profit for the movie theater and outdoor billboard networks for the fourth quarter of 2008 was $7.3 million, representing a 3% increase from $7.1 million for the third quarter of 2008.
Non-GAAP gross profit from our internet advertising services for the fourth quarter of 2008 was $12.3 million, representing a 27% decline from $16.8 million for the third quarter of 2008.
Non-GAAP net income for the fourth quarter of 2008 was $50.0 million, compared to $71.4 million for the third quarter of 2008.
As of December 31, 2008, the Company had repurchased approximately 2.6 million Focus Media ADRs with about $48 million in the open market under our previously announced share repurchase program.
Business Outlook for First Quarter 2009
The Company provides the following guidance with respect to the fiscal quarter ending March 31, 2009:
-- Net revenues from continuing operations are expected to be no less than
$55.5 million;
-- Net revenues from discontinued operations are expected to be no less
than $65.7 million.
Announced Merger
On December 22, 2008, the Company announced that it entered into a definitive agreement with SINA Corporation ("SINA") to sell substantially all of the assets of Focus Media's digital out-of-home advertising networks, including the LCD display network, poster frame network and certain in-store network. The transaction is subject to customary closing conditions and certain regulatory approvals and is expected to be completed in the first half of 2009. Under the terms of the agreement, upon closing, SINA will issue 47 million newly issued ordinary shares to the Company as consideration for the acquired assets. The Company will then distribute the SINA shares to its shareholders shortly after the closing.
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 net income and Non-GAAP earnings per fully diluted ADS, all excluding non-cash share-based compensation, acquired intangible asset amortization expense resulting from acquisitions, impairment charges of goodwill, acquired intangible assets and fixed assets, loss from restructuring of CGEN in-store networks and termination of wireless business and disposal of other subsidiaries and affiliates and write-off of consideration receivables resulting from disposal of previously acquired subsidiaries, back to their original shareholders. 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 percentages, share and per-share data)
(Unaudited)
Reconciliation of GAAP gross profit, operating income and net income to Non-GAAP gross profit, operating income and net income.
Three months ended December 31, 2008
GAAP (1) (2) (3)
Gross profit
-continuing
operation 16,578 -- 3,446 --
Gross profit
-discontinued
operation 64,717 314 3,126 --
Operating income
(loss)
-continuing
operation (423,440) 5,261 6,519 222,587
Operating income
(loss)
-discontinued
operation (356,984) 7,383 4,092 394,934
Net income (loss)
-continuing
operation (422,213) 5,261 6,519 222,587
Net income (loss)
-discontinued
operation (378,056) 7,383 4,092 394,934
Net income (loss) (800,269) 12,644 10,611 617,521
Full year ended December 31, 2008
Net income (loss) (768,466) 42,499 40,981 617,521
Three months ended December 31, 2008
Tax
(4) (5) effect Non-GAAP
Gross profit
-continuing
operation (248) -- -- 19,776
Gross profit
-discontinued
operation -- -- -- 68,157
Operating income (loss)
-continuing
operation 193,792 436 -- 5,155
Operating income (loss)
-discontinued
operation -- 365 -- 49,790
Net income (loss)
-continuing
operation 194,297 860 -- 7,311
Net income (loss)
-discontinued
operation 13,941 1,340 (914) 42,720
Net income (loss) 208,238 2,200 (914) 50,031
Full year ended December 31, 2008
Net income (loss) 288,121 2,200 (914) 221,942
(1). Stock-based compensation
(2). Amortization of acquired intangible assets
(3). Impairment charges of goodwill, acquired intangible assets and fixed
assets
(4). Loss from restructuring of CGEN in-store networks and termination of
wireless business and disposal of other subsidiaries and affiliates
(5). Write-off of consideration receivables resulting from disposal of
previously acquired subsidiaries back to their original shareholders.
TODAY'S CONFERENCE CALL
The Company will host a conference call to discuss the fourth quarter and full year 2008 results at 9:00 p.m. U.S. Eastern Time on March 23, 2009 (6:00 p.m. U.S. Pacific Time on March 23, 2009 and 9:00 a.m. Beijing/Hong Kong Time on March 24, 2009). The dial-in details for the live conference call are set forth below: U.S. Toll Free Number +1.866.713.8310, Hong Kong dial-in number +852.3002.1672, International dial-in number +1.617.597.5308; Pass code: 21201367.
A replay of the call will be available from March 23, 2009 11:00 PM until March 30, 2009 (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 14560416. 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, 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.
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) 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. 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 and Internet advertising platforms. As of December 31, 2008, Focus Media's digital out-of-home advertising network had approximately 128,000 LCD display and digital frames in its commercial location network and approximately 324,000 advertising in-elevator poster and digital frames, installed in over 90 cities throughout China, and approximately 260 outdoor LED billboard displays in Shanghai and Beijing. For more information about Focus Media, please visit our website at http://ir.focusmedia.cn .
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in Thousands)
December 31, 2008
Assets
Cash & Bank Balance 142,434
Account receivables, net 135,270
Inventories 25
Prepaid Expenses & Other Current
Assets 15,117
Deposit paid for acquisition of
subsidiaries 29,676
Amount Due from Related Parties 7,913
Rental Deposit - current 10,090
Assets held for sale-current 467,046
TOTAL CURRENT ASSETS 807,571
Rental Deposit – non current 133
Property, Plant & Equipment, net 6,292
Intangible Assets, net 77,713
Goodwill 30,700
Other Long Term Assets 10,736
Assets held for sales-non current 599,149
TOTAL ASSETS 1,532,294
Account payables 67,905
Accrued Expenses & Other Current
Liabilities 61,911
Income Tax Payable 12,622
Amount due to related parties 15,687
Liabilities held for sale-current 158,281
Current Liabilities 316,406
Liabilities held for sale-non current 1,959
Deferred Tax Liabilities-non current 11,581
TOTAL LIABILITIES 329,946
Minority interest 2,106
Share capital
Ordinary Share & Additional Paid in
Capital 1,659,865
Retained Earnings (529,879)
Accumulated Other Comprehensive
Income 70,256
Total Shareholder's Equity 1,200,242
TOTAL LIABILITIES & EQUITY 1,532,294
Focus Media Holding Limited
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollar in thousands, except Earning per ADS and ADS data)
Three months ended Year ended
December 31, 2008 December 31, 2008
Revenues
Movie Theater & Outdoor Billboard
network 22,380 80,023
Internet advertising 64,622 264,927
Others 3,428 40,441
Total gross revenues 90,430 385,391
Business Tax 3,272 15,837
Net revenue 87,158 369,554
Cost of revenues
Movie Theater & Outdoor Billboard
network 14,399 53,432
Internet advertising 50,128 192,643
Others 2,606 25,024
Amortization of acquired intangible
assets 3,447 13,947
Total cost of revenues 70,580 285,046
Gross profit 16,578 84,508
Operating expenses
General and administrative 16,750 47,661
Selling and marketing 10,253 34,680
Impairment loss 222,587 222,536
Loss from CGEN restructuring 190,466 190,466
Other operating income (38) (340)
Total operating expenses 440,018 495,003
Operating loss (423,440) (410,495)
Non-operating expenses 4,119 1,750
Loss from continuing operations
before income taxes and minority
interest (427,559) (412,245)
Provision from income taxes 3,078 (2,804)
Minority interest 2,268 107
Net Loss from continuing operations (422,213) (414,942)
Net Loss from discontinued
operations, net of tax (378,056) (353,524)
Net Loss (800,269) (768,466)
Loss per ADS from continuing
operations-basic & diluted (3.28) (3.22)
Loss per ADS from discontinued
operation-basic & diluted (2.94) (2.74)
Loss per ADS-basic & diluted (6.22) (5.96)
Shares used in calculating basic and
diluted loss per ADS 128,607,842 128,880,565
Focus Media Holding Ltd.
Total Company Non-GAAP Gross Profit
(U.S. Dollar in thousands)
(Unaudited)
Three months ended
December 31, 2008 September 30, 2008
Net Revenue - Continuing Operations
Movie Theater & Outdoor
Billboard network (a) 21,646 19,609
Internet advertising (b) 62,406 70,767
Others 3,106 9,704
Net Revenue - Discontinued Operations
LCD display network (c) 65,295 79,649
Poster Frame network (d) 39,227 43,961
Others 381 1,123
Total Company Non-GAAP net revenues 192,061 224,813
Adjusted Cost of Revenue - Continuing
Operations (Non-GAAP–Note)
Movie Theater & Outdoor
Billboard network (e) 14,399 12,554
Internet advertising (f) 50,128 54,015
Others 2,606 4,488
Adjusted Cost of Revenue -
Discontinued Operations
(Non-GAAP-Note)
LCD display network (g) 21,322 22,714
Poster Frame network (h) 15,398 14,148
Others 275 697
Total Company Non-GAAP Cost of
Revenue 104,128 108,616
Total Company Non-GAAP Gross Profit 87,933 116,197
Non-GAAP Gross profit Movie theatre & outdoor billboard network (a-e)
(Note)
Non-GAAP Gross profit Internet advertising (b-f) (Note)
Non-GAAP Gross profit LCD display network (c-g) (Note)
Non-GAAP Gross profit Poster Frame network (d-h) (Note)
Note: the amounts do not include amortization of acquired intangible
assets and loss from restructuring of CGEN in-store networks of
$3,446 and $248 for continuing operations, amortization of acquired
intangible assets and share based compensation of $3,440 for
discontinued operations for the three months ended December 31, 2008,
and amortization of acquired intangibles and share based
compensation of $2,604 and $3,894 for continuing and discontinued
operations for the three months September 30, 2008, respectively.
