Focus Media Reports Fourth Quarter and Full Year 2008 Results

Focus Media Reports Fourth Quarter and Full Year 2008 Results

SHANGHAI, China, March 23 /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 ¨C 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¨CNote)          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.     For more information, please contact:    Investor and Media contact:    Jing Lu    Tel:   +86-21-3212-4661 x6607    Email: ir@focusmedia.cn  

Source: Focus Media Holding Limited

CONTACT: Jing Lu, +86-21-3212-4661 x6607, or ir@focusmedia.cn

Web Site: http://ir.focusmedia.cn/

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