Focus Media Reports Fourth Quarter and Full Year 2012 Results

25 March 2013 19 h 34 min Comments Off

SHANGHAI, March 25, 2013  — Focus Media Holding Limited (Nasdaq: FMCN) today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2012.

 

Highlights for Fourth Quarter 2012:

  • Total net revenue for the fourth quarter of 2012 was $250.2 million, of which
    • aggregate net revenue from the LCD display network, in-store network, poster frame network and movie theater network was $244.1 million, within the Company’s guidance of between $237.0 million and $246.0 million.  This represented a slight decrease of 1% from $247.7 million for the third quarter of 2012 and an increase of 2% from $238.8 million for the fourth quarter of 2011; and
    • net revenue from the traditional outdoor billboard network for the fourth quarter of 2012 was $6.1 million, within the Company’s guidance of between $6.0 million and $7.0 million. 
  • GAAP net income attributable to Focus Media for the fourth quarter of 2012 was $76.7 million, representing an increase of 19% from $64.6 million for the third quarter of 2012 and an increase of 107% from $37.1 million for the fourth quarter of 2011, and was adversely affected by the loss from equity method investee, VisionChina, of $38.9 million.
  • Non-GAAP net income attributable to Focus Media for the fourth quarter of 2012 was $95.1 million, within the Company’s guidance of between $93 million and $98 million, slightly increasing from $94.6 million for the third quarter of 2012 and a slight decline of 1% from $96.0 million for the fourth quarter of 2011.  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 $0.57, representing an increase of 19% from $0.48 per fully diluted ADS for the third quarter of 2012 and an increase of 111% from $0.27 per fully diluted ADS in the fourth quarter of 2011.
  • Non-GAAP net income attributable to Focus Media per fully diluted ADS was $0.71, substantially unchanged from $0.71 per fully diluted ADS for the third quarter of 2012 and an increase of 1% from $0.70 per fully diluted ADS for the fourth quarter of 2011. 

Highlights for Full Year 2012:

  • Total net revenue for full year 2012 was $927.5 million, an increase of 18% from $786.5 million for full year 2011, of which
    • aggregate net revenue from the LCD display network, in-store network, poster frame network and movie theater network was $895.5 million, representing an increase of 22% from $737.0 million for full year 2011 ; and
    • net revenue from the traditional outdoor billboard network was $32.0 million, representing a decrease of 35% from $49.5 million for full year 2011.
  • GAAP net income attributable to Focus Media for full year 2012 was $238.1 million, representing an increase of 46% from $162.7 million for full year 2011. 
  • Non-GAAP net income attributable to Focus Media for full year 2012 was $333.1 million, representing an increase of 17% from $284.1 million for full year 2011.  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 2012 was $1.79, representing an increase of 52% from $1.18 per fully diluted ADS for full year 2011.  
  • Non-GAAP net income attributable to Focus Media per fully diluted ADS for full year 2012 was $2.50, a 22% increase from $2.05 per fully diluted ADS for full year 2011.

Highlights for Balance Sheet and Cash Flow Results of Fourth Quarter and Full Year 2012:

  • Cash, cash equivalents, short-term investments and restricted cash were $1,029.8 million as of December 31, 2012, increasing by 14% from $901.1 million as of September 30, 2012.  Our short-term investments consist of longer term dated cash deposits that earn a higher interest rate as compared to cash and cash equivalents.
  • Bank loans were $200.0 million which were all long-term bank loans as of December 31, 2012 secured by onshore renminbi cash deposits, as compared to bank loans of $200.0 million inclusive of short-term bank loans of $100.0 million as of September 31, 2012, which was renewed and converted into long-term bank loans in the fourth quarter of 2012. Long-term bank loans of $100.0 million outstanding as of September 30, 2012, were also extended to 2018 in the fourth quarter of 2012.  The bank loan as of December 31, 2012 consisted of a $200.0 million term loan facility agreement entered into on November 21, 2012 with DBS Bank Ltd., Hong Kong Branch (“DBS”) and was used to repay all of the Company’s outstanding indebtedness under its previous credit facilities with DBS.
  • Net accounts receivable for the LCD display network, in-store network, poster frame network and movie theater network was $275.6 million as of December 31, 2012, a decrease of 3% from $284.1 million as of September 30, 2012.  Days sales outstanding was 100 days in the fourth quarter of 2012 versus 92 days for the third quarter of 2012.  Days sales outstanding was 97 days for full year 2012 versus 85 days for full year 2011.  As a supplementary cash collection metric, the actual cash collection from accounts receivables and prepayments from the advertisers was $281.7 million in the fourth quarter of 2012, as compared to $239.8 million in the fourth quarter of 2011.
  • Net cash inflow from operating activities in the fourth quarter of 2012 and full year of 2012 were $142.4 million and $358.3 million, respectively, representing an 11% increase from $128.8 million for the fourth quarter of 2011 and a 28% increase from $280.2 million for full year 2011, respectively.
  • Net cash inflow from operating activities for the fourth quarter of 2012, after deducting the purchase of equipment and subsidiaries was $137.6 million, an increase of 22% from $112.7 million for the fourth quarter of 2011.  Net cash inflow from operating activities for full year 2012, after deducting the purchase of equipment and subsidiaries was $335.7 million, representing an increase of 47% from $228.0 million for full year 2011.
  • Capital expenditures were $4.8 million and $19.6 million respectively for the fourth quarter and full year of 2012, mostly attributable to upgrading our LCD screens into interactive screens and network expansion in and into lower tier cities in China.

Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, “In the fourth quarter of 2012, our operation’s performance was in-line with our previous expectations as we continue to be affected by a slower overall advertising spending in China.”

Kit Low, the Company’s Chief Financial Officer added, “In the fourth quarter of 2012, the Company’s aggregate net revenue year-on-year growth in our LCD display, poster frame business, in-store and movie theater network was 2%. GAAP net income attributable to Focus Media and Non-GAAP net income attributable to Focus Media for the fourth quarter of 2012 was $76.7 million and $95.1 million, respectively.  In the fourth quarter of 2012, the Company generated a net cash inflow from operating activities after deducting the purchases of equipment and subsidiaries of $137.6 million.”

Fourth Quarter 2012 financial results

Advertising net revenue from the LCD display network was $127.5 million for the fourth quarter of 2012, representing a slight decrease of 1% from $128.4 million for the third quarter of 2012 and a decrease of 7% from $137.4 million for the fourth quarter of 2011.  The decrease in net revenue was due to a weaker brand advertising environment.

Advertising net revenue from the poster frame network was $85.7 million for the fourth quarter of 2012, representing an increase of 5% from $81.6 million for the third quarter of 2012 and an increase of 33% from $64.5 million for the fourth quarter of 2011, which was driven by the strength of promotional budget spending in the market.

Advertising net revenue from the in-store network was $11.1 million for the fourth quarter of 2012, representing a decrease of 23% from $14.5 million for the third quarter of 2012 and a decrease of 31% from $16.1 million for the fourth quarter of 2011.  The decrease was mostly attributable to less advertising spending from domestic dairy producers.

Advertising net revenue from the movie theater network was $19.8 million for the fourth quarter of 2012, representing a decrease of 15% from $23.2 million for the third quarter of 2012 due to seasonal factors and a decrease of 5% from $20.8 million for the fourth quarter of 2011.  The decrease in net revenue was mainly due to a weaker brand advertising environment.

Advertising net revenue from the traditional outdoor billboard network was $6.1 million for the fourth quarter of 2012, representing a decrease of 21% from $7.7 million for the third quarter of 2012 and a decrease of 56% from $13.9 million for the fourth quarter of 2011 due to combination of downsizing of the division and a weaker advertising environment.  Due to medium term advertising spending uncertainties and the continued view of the Company that the traditional outdoor billboard network is not a core business segment, the Company has decided to downsize this business segment by divesting four entities within the segment. Two of which have been divested prior to end of the third quarter of 2012 and the other two were divested in the fourth quarter of 2012. Consequently, $1.2 million of revenues of two divested entities for the fourth quarter of 2012, $4.8 million of revenues of four divested entities for the third quarter of 2012 and $3.8 million of revenues of four divested entities for the fourth quarter of 2011 have been reclassified into “Net loss from discontinued operations” in the consolidated statements of operations.  Other relevant items in the consolidated statements of operations were also reclassified accordingly to reflect the reclassification arising from the discontinued operations of the 4 entities.

Non-GAAP gross profit from the LCD display network for the fourth quarter of 2012 was $98.3 million, representing a decrease of 2% from $99.8 million for the third quarter of 2012 and a decrease of 13% from $113.6 million for the fourth quarter of 2011.  The decrease in non-GAAP gross profit was a result of quarter-on-quarter and year-on-year revenue declines while the cost of sales remained largely unchanged in the LCD display network

Non-GAAP gross profit from the poster frame network for the fourth quarter of 2012 was $56.9 million, representing an increase of 8% from $52.5 million for the third quarter of 2012, and an increase of 58% from $35.9 million for the fourth quarter of 2011.

Non-GAAP gross profit from the in-store network for the fourth quarter of 2012 was $5.8 million, representing a decrease of 36% from $9.1 million for the third quarter of 2012 and a decrease of 55% from $12.8 million in the fourth quarter of 2011 mainly due to the combination of a lower revenue and relatively unchanged cost of sales.

Non-GAAP gross profit from the movie theater network for the fourth quarter of 2012 was $10.9 million, representing a decrease of 25% from $14.5 million for the third quarter of 2012 and a decrease of 21% from $13.8 million for the fourth quarter of 2011 due to a lower revenue and a larger cost of sales as a result of network expansion.

Non-GAAP gross profit from the traditional outdoor billboard network for the fourth quarter of 2012 was $0.8 million, compared to $1.2 million loss for the third quarter of 2012 and a decrease of 62% from $2.1 million for the fourth quarter of 2011. 

Non-GAAP operating expense for the fourth quarter of 2012 was $57.9 million, substantially unchanged from $57.5 million for the third quarter of 2012.   It also represented a decrease of 7% from $62.2 million for the fourth quarter of 2011.

Net cash inflow from operating activities in the fourth quarter of 2012 and full year of 2012 were $142.4 million and $358.3 million, respectively, representing an 11% increase from $128.8 million for the fourth quarter of 2011 and a 28% increase from $280.2 million for full year 2011, respectively.

Net cash inflow from investing activities for the fourth quarter of 2012 was $53.3 million.  In the fourth quarter of 2012, the Company incurred capital expenditures of $4.8 million.  Meanwhile, the Company received net cash inflows from disposal of short-term investments after deducting the placement of restricted cash totaling $57.3 million during the quarter. Short-term investments are longer term dated cash deposits normally with maturities of between three and twelve months that earn higher interest rate as compared to cash and cash equivalents.  Restricted cash is deposited in bank accounts as security for bank borrowings.

Net cash used for financing activities for the fourth quarter of 2012 was $17.8 million, which consisted of a dividend paid by the Company declared in the third quarter of 2012.

full press release

ABOUT FOCUS MEDIA HOLDING LIMITED

Focus Media Holding Limited (Nasdaq: FMCN) operates China’s largest lifestyle targeted interactive digital media network. The Company offers one of the most comprehensive targeted interactive digital media platforms aimed at Chinese consumers at various urban locations. The increasingly fragmented and mobile lifestyle of Chinese urban consumers has created the need for more efficient media means to capture consumer attention. Focus Media’s mission is to build an increasingly comprehensive and measurable interactive urban media network that reaches consumers at various out-of-home locations.

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